100th post: Bicycle registration?

I wanted to write a beautiful piece reflecting on two years of blogging for this event – my 100th blog post. But instead, I’ll get down to some nitty gritty analysis of contemporary issues with an economic and environmental twist.

Today’s topic is cycling.

After a charity ride from Brisbane to the Gold Coast last weekend, the local rag has ignited the dry tinder of cyclist resentment present in the Australian motoring psyche (remember the Rex Hunt incident?). I want to deconstruct the emotional Cyclist V Motorist debate to see which positions hold merit, and what type of government intervention could provide benefits for all involved.

Most rewarding careers?

To my loyal readers,

I want to take a break from the usual blog topics and talk about something a little more personal.  For those who don't know, I am an economist working in the public service but find the work most frustrating, intellectually dull, and completely unchallenging.  You may say that this is no surprise, and that I really should have been expecting this situation.  But the pay and conditions are great and these things were very important when I started the job.

I am now contemplating my next career move and am seeking some advice.  My next move should meet the following criteria:
1.  Intellectual challenge
2.  Rewarding - in the way that you feel like you accomplished something at the end of the day
3.  Potentially ourdoors and active

Another idea is to simply sell up the traditional life, buy a sail boat, and take the family around the world - picking up some unskilled work as we go. If not now, when?

I would really appreciate any thoughts and ideas, no matter how 'out there' they are.

Cam

----UPDATE-----
I think the results of this online personality test sum things up, but don't know where that leaves me as far as a rewarding careers goes.

As a Groundbreaking Thinker, you are one of the extroverted personality types. Dealing with others, communication, discussions, and a little action are your life’s blood - and some of your strengths. You are very articulate and love variety personally as well professionally. New tasks, new projects, new people, fascinate you because you are always interested to increase your wealth of experience. Consequently, you have no problem dancing at several weddings; juggling parallel tasks to be accomplished electrifies you, and you are an accomplished improviser.

Your enthusiasm carries others along and enables you to create positive impulses in your team. Mountains of paperwork, endless e-mail correspondences, and solitary work tire you quickly, and bore and frustrate you. The appreciation of your work by others is more important for you than for the introverted Thinker types. You measure your own professional value by the admiring glances of your colleagues and superiors.

The psychologist Keirsey once described the Groundbreaking Thinker as the “soul of the company,” and that can be just as easily applied to an employee position, as to an independent chief of a company. Since risk represents less of a threat than excitement, freelance or self-employment are well suited to you. However, you must take care to have collaborating staff around you, or that you are able to work closely with other teams in order to satisfy your contact and communication needs. You are naturally suited for leadership positions because there you have the ultimate freedom making your decisions and choosing your tasks.

As a superior, you like to let your subordinates operate on a long leash as long as they do a good job, because it is not your thing to exercise power for power’s sake. Additionally, you don’t feel like worrying about the stuff of others. You much prefer that the person concerned disappears after you have handed him his/her task and later shows up with the finished (and naturally excellent) result. Based on your open way to communicate, then you are not parsimonious with praise.

If you are an employee, you should make sure that your company’s hierarchal structures are as level as possible because you have real trouble with authority for authority’s sake. Otherwise, you can handle critique or diverging opinions pretty well because you don’t take them personally, and are prepared to adapt if you can be convinced of the validity of an argument - if in your opinion it is “logical“.

The Value Problem

Economists believe they have solved the old Water-Diamond Paradox by showing how prices are determined at the margins. But how then do we value a large stock of resources when we only know the value of a marginal unit?

Consider this problem. A river catchment has 1,200 megalitres of tradeable water rights. The last trade occurred at a price of $2,000/megalitre. Essentially this means that the last megalitre (the marginal unit), out of the 1,200 megalitre stock of water in the catchment, is worth about $2,000. But are all the other 1,199 megalitres therefore worth $2,000 a pop? Quite simply no. If the government compulsorily acquired half of the water in the catchment, the 600th megalitre would be worth more than the 1200th megalitre – an example of declining marginal value.

Whether the weather increases volatility of markets

I recently read, and thoroughly enjoyed, the book Rigged. In one scene a young trader is asked what factor contributes most to changes in the price of oil - to which he responds, the weather. For example, a cold winter in North America or Europe signals an increased demand for oil and sends the price up. 

So my question is this. Given how weather dependent our agricultural industry, our energy industry, and other essential primaries industries can be, how much less volatile would financial markets be if we had predictable or constant weather?

UPDATE - Turning points

Recently I posted about the spike in population growth experienced in Australia over 2008, and how we cannot simply extrapolate the trend, or we will miss important turning points. I predicted that the rate of population growth will fall from this level over the next few years as a result of

1) reduced migration, and
2) a decline in birth rates due to the ‘bringing forward’ of births encouraged by the baby bonus.

I didn’t have to wait long for some supporting evidence. The ABS today released overseas arrivals and departures data showing a significant increase in departures, and decline in arrivals, since April 2009.  It looks like migration is on its way back down.  When the June 2009 release of the population statistics is published on 3rd December we might just see the turning point in population growth I forecast back in September. 

iTunes v Foxtel

I know; there is no battle between iTunes and Foxtel (yet) but it seems like a good attention grabbing headline. The relevant point here is that Foxtel is releasing a new service where subscribers can download movies and TV programs. Although the service has its drawbacks, it sounds like the next big thing to me.

Whenever I see innovation like this, I can’t help but see it as another example of economics in action. It also makes me wonder what industries will be next to leap into the downloadable marketplace. Given that music and books have taken the leap, probably in response to pirated downloads, movies were an obvious candidate to jump soon. But what next?

Rebound effect in action

The image below is from an email sent by the Queensland Government Climate Smart program.  What an odd prize for a program designed to reduce energy consumption!

Move over horoscopes, forget cold reading, here is… economics!

Derren Brown, famous British magician, mind reader, and all round deceptive yet entertaining fellow, has often discussed the tricks used by psychics and fortune tellers. One particular method, cold reading, involves suggesting non-specific messages, and letting the subject of the reading provide the meaning to the message.

For example, a psychic using cold reading techniques might suggest that there is an old male, or a dog, or another such subject of emotional connection, and let the subject say something like, “yes, my dog Spot died recently”, to which the psychic replies with something like, “I can feel you have a strong bond with those, human or otherwise, that you share your life with”. Essentially, the psychic says nothing except that you are close to the people you are close to. But the delivery of the message makes it appear that the psychic knows something about you that they couldn’t have – unless they have psychic ability.

I will get to economists under the fold.

The value of food security?

Food security, energy security, job security - all political terms that conjure up emotion, deliver electoral support, all the while remaining devoid of meaning.

I have been asked impossible questions in my job. But one comment recently sticks in my mind. It goes:

..there must be some data that they could have used to address the “value” of having future food security.

What value might that be? Do you want a dollar figure that represents the present value of all future value streams from having food security? And do you imply that food security means that Australia remains a net exporter of food?

Wikipedia provides a fairly detailed, but useless, entry on food security. It does not mention national self-sufficiency at all, but merely one’s access to nutrition, and the link with poverty. No surprises there.

I’m all for national pride, but arbitrarily deciding that a country must be self-sufficient in one particular good is a poor philosophical position. If we replaced food security with toilet paper security, or car security, or hat security, we would immediately reveal the absurdity of the argument.

That bloody housing shortage

It seems that the RBA's Anthony Richards may have been reading my blog. His comment today from a national housing market forum includes the following

I said in a talk earlier this year that most calculations available then put underlying demand at something like 180,000 to 200,000 dwellings per year. However, I noted that such figuring was based on simply extrapolating earlier trends in household size and ignored the likely impact of prices on the demand for housing. At some point, the overall demand for housing will be affected by the higher cost of housing. For example, with housing – both owner-occupied and renter – more expensive than in
the past, we might expect to see some young adults choosing to live with their parents for longer. We might expect some households to look for an extra flatmate rather than leaving a bedroom vacant. Some owners of holiday homes or second homes might have become more inclined to sell them, with those houses then occupied full-time.

Hence the ‘undersupply’ of housing might not be as large as sometimes thought. But this is not necessarily something that should reassure us – it may be because the higher cost of housing – partly reflecting supply side problems – has choked off some of the demand that might otherwise have existed.

However, by the end of his statement, fingers are squarely pointed at the pet issue for housing analysts, supply side constraints.  That bloody housing shortage gets a good run in his statement as well. 

I also wonder how we are meant to know the counterfactual demand that might otherwise have existed.  Isn't he just saying that demand for housing follows the law of demand?
 
His remarks are reported as evidence that the housing market is ready to 'take off'. But only time will tell whether the inverse correlation between change in housing shortage and change in price proves reliable in the longer term, or whether the RBA really can forecast market behaviour.

----------UPDATE----------

It looks like I'm not the only one who has interepreted the housing market exactly the opposite way to the RBA and other property bulls.