Tuesday, December 25, 2007

MERRY CHRISTMAS! ON CHRISTMAS DAY IN AUSTRALIA

Australia is up to 18 hours ahead of the USA in time zones so for American readers this greeting will probably seem a little early -- depending on when they read it. The time here in Australia as I post this is just after 8:30 on Christmas morning



The image above is by talented Australian conservative cartoonist Zeg



A friendly Koala above




An Australian Christmas

For one unlucky person anyway: Victim tells of blue-ringed octopus bite



WHEN 49-year-old Anna Van Wyk went swimming off Stradbroke Island during her annual holiday last weekend she didn't expect to be bitten by a blue-ringed octopus. "I just walked out of the water and saw something on my leg - and instinctively wiped it off," she said. "It didn't swipe off and a looked down and it was a little octopus hanging off my leg."

"I wanted to get a plate to get it so that if something happened to me they could identify it, but by the time I got up there I was history." "I had to sit down because I was fairly sick and I thought I was going to pass out." Mrs Van Wyk said lifesavers on the beach acted very quickly, bandaging the wound and giving her oxygen.

She said she was lucky because the animal was most likely sick, and was not as venomous as it normally would have been. The Energex Rescue helicopter flew to Point Lookout to stablise Mrs Wyk, and took her to the Princess Alexandra Hospital for treatment. Mrs Van Wyk said her lung capacity was tested and she received a tetanus shot before she was released.

The blue-ringed octopus is usually found in shallow waters or rock pools and will appear with small fluorescent blue spots if threatened.

Source






The facts: Education expansion unlikely to do much good

IMAGINE you are Julia Gillard. As the new federal Education and Employment and Workplace Relations Minister, it's your job to reform the Coalition's Work Choices legislation and to implement Labor's election promises on education. You are itching to get started, but wading through the paperwork on your desk you discover two other pressing problems demanding your attention. First, employers are complaining about a skills shortage. After 15 years of sustained economic growth, we are running out of skilled workers. Forecasters predict a shortfall of 250,000 by 2016.

Second, unskilled workers are finding it difficult to get jobs. Official unemployment is at its lowest for 30 years, but many jobless people have been transferring to the Parenting Payment or Disability Support Pension. Many of these people could work but relatively few of them have formal qualifications and most of the new jobs created today are for graduates.

As you ponder how you may solve these two problems, there is a knock at the door and in come representatives of the business community, the education profession and welfare organisations. Speaking with one voice, they demand that you expand education and training. The business groups want an increase in the number of youngsters completing high school. In 1980, one-third of Australian pupils completed Year 12. Today, three-quarters do. But this upward trend has stalled in recent years. The Australia Industry Group says the Year 12 retention rate should be raised to 90 per cent. The educationists agree with this and add that you should expand the universities, too. The number of university places has doubled since 1980 and 40 per cent of young people are in higher education, but the delegation tells you we need more if we want to be a smart country.

The welfare organisations want more training for the unemployed. The Coalition emphasised getting people off welfare and into work. The thinking was that any job was better than no job. But the welfare lobby says jobless people should not be required to take dead-end jobs. They should be trained and given new skills so they can compete for well-paid jobs in the new skills economy.

Relaxing in the bath later, you mull over what you've heard, then: Eureka! You realise you can solve both your problems with the same bundle of policies. Increase Year 12 retention rates, expand university numbers and boost training for jobless adults, and the result will be an increase in the supply of skilled labour and a fall in the number of unskilled, jobless people on welfare. What's more, expanding education and training will be popular. The pressure groups will love you and the voters will get a warm glow. Nobody will criticise you for increasing education spending.

Next morning, you summon your bureaucrats and set out your plans. "First," you tell them, "I want Year 12 retention rates raised to 90per cent." There is some coughing and shuffling of feet before one brave soul outlines the evidence. Pupils doing vocational courses beyond Year 10 receive no benefit when it comes to getting jobs. And while bright students who remain at school improve their earnings and their employability, this is not true for low-ability students. Their risk of unemployment increases with two additional years of schooling and their earnings fall. If you push retention rates beyond their present level, a lot of children will end up taking courses for which they are not suited and that may even damage their prospects.

"Well," you respond, "we can still expand the universities. This country needs more graduates." Another awkward silence. It turns out that 500,000 graduates (more than 20 per cent) are unemployed or doing jobs for which a degree is not required. There are shortages in some specialist areas, but the country is drowning in arts graduates.

You throw your final dice. "Surely," you say, "it makes sense to train jobless people on welfare. Employers report skills shortages, let's train the unemployed to fill these jobs." The same deathly hush. Someone pushes an Organisation for Economic Co-operation and Development report across the desk that shows training jobless adults rarely does any good. Middle-aged women returning to the labour market after rearing families do benefit from training; they are motivated and they have skills that just need brushing up. Few others get anything out of it.

"If you want to solve the skills shortage," one adviser tells you, "it makes more sense to delay early retirements, increase skilled immigration and attract more women back into work. All these people already have skills. "Training unskilled welfare recipients doesn't work."

You send the bureaucrats away. It seems this government lark is more complicated than it appears. Policies that sound attractive don't necessarily work. But how do you break this to the PM? You take a deep breath and pick up the phone. "Hi Kevin, it's Julia."

Source





Sometimes we hate price rises too much

IT'S surprising how often a feel for the insights of behavioural economics can help conventionally trained economists understand the way politics and the economy really work. As a general rule, the people with an intuitive understanding of behavioural economics are the marketers and the politicians. It's the economists who need to study the subject, to overcome the misconceptions they've acquired in their training.

But, as Brian Loughnane, federal director of the Liberal Party, demonstrated last week, sometimes even the pollies' thinking can get muddled. Loughnane admitted that one of the reasons for the Howard Government's defeat was its failure to acknowledge the dissatisfaction people were feeling over the rising cost of living - particularly the higher prices of food and petrol and rising mortgage interest rates. He could have added the higher price of child care.

Kevin Rudd and company made a lot of sympathetic noises about these discontents - which they must have picked up in their focus groups - even though there wasn't much they could promise to do about them. The Coalition's response was generally dismissive. Sure, the cost of some items households buy was up, but the cost of other items was down. Overall, the consumer price index had not been rising strongly (notwithstanding the build-up of underlying inflation pressure).

What's more, real wages were still growing - had been growing strongly for a decade, in fact - with the strong growth in employment meaning that many families had a lot more income to play with. So, whatever the rise in the cost of living, it wasn't stopping continued improvement in living standards. In which case, it's pretty perverse - churlish, even - to ignore all the good stuff and focus on a few things going the other way. That was the Howard Government's perfectly rational attitude, and most of the economic commentators tended to agree (including yours truly).

Trouble is, it's too rational by half. One of the insights of behavioural economics - which is the study of the way people actually think about economic issues, not the way they should think - is that, unlike economists, most people don't add pluses and minuses together to get a net result. Rather than focus on the overall position, they look separately at each component of the sum. An even more important finding is that people hate losses about twice as much as they love gains of the same size. So when the government (or the economy) takes with one hand but gives back with the other, people don't think of themselves as square. Rather, they focus more on the loss and end up feeling hard done by.

It's thus hardly surprising that people who were better off overall were more conscious of negatives such as rising food and petrol prices and rising interest rates. The Coalition would have been better off had it more freely acknowledged these discontents. Part of their problem was a point their pollster, Crosby Textor, understood, but they seemed never able to grasp. It's that the public is focused on the "personal economy", not the macro economy. That is, people focus on their own economic circumstances, not on the national average. So there's a limit to how impressed voters are by the endless repetition of the excellent results achieved on economic indicators such as the consumer price index, growth in gross domestic product and the unemployment rate. They just don't identify with that stuff.

While we're on the subject, behavioural economics does much to explain why so few people believe the CPI - they think bureaucrats make up the figures in a Canberra office - and most think inflation is much higher than the government admits. When people focus on bad news - big price rises - but tend to forget good news - prices that fall or rise only modestly - not to mention probably being oblivious to prices that don't change, it's hardly surprising they end up with an exaggerated impression of what's happening to prices overall.

The public's unwillingness to aggregate gains and losses helps explain another thing economists could never understand: the punters' long-standing suspicion of proposals for a goods and services tax. To economists it was all very simple: sure the GST would raise prices, but this would be offset by a big cut in income tax. In fact, since the whole tax package was significantly "revenue negative", it was obvious most people would be better off in net terms. To this the public's response was predictable: I don't mind a tax cut, but I'm worried about those price rises. Let's forget the whole thing.

Finally, the public's refusal to aggregate and its tendency to weight losses more heavily than gains explains its objection to inflation - even in the days when wages were indexed to consumer prices. To an economist, if wages are being raised to keep up with the rise in prices, wage earners don't have a lot to complain about. Economists' objections to inflation run deeper than that.

The punters, however, never saw it that way. From their perspective, the pay rises they got were richly deserved and hard won, but when they got to the supermarket they discovered the greedy B's had jacked up prices again. Whatever their reasoning, it's just as well the public hates inflation. We'll be paying a high price to keep it under control next year - including, paradoxically, higher interest rates.

Source

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