Ghosts, Ghouls, and Government Expenditure

Economics is silly. If you don’t believe this, either you haven’t studied it, or have studied far too much of it. It often makes a lot of assumptions, some of them frankly ridiculous. This is done because it simplifies things enormously, and we still get meaningful results relevant to theory. In models of the macroeconomy, for example, we often take a single representative agent that maximises their utility over an infinite time horizon. This is clearly unrealistic, but where economics comes in conflict with reality, economics wins.

Our representative agent is infinitely lived - a pitiless individual, without love, fear, and condemned to maximise their overall consumption with mindless determination for all eternity. We are talking about zombies here. Not only that, but our economically representative zombies are surprisingly rational, with a greater knowledge of economic theory than would be expected from the recently disinterred, and the ability to solve present value Hamiltonians in the time it takes to say ‘Braaaaaaiiiiins.’ Our economy, ladies and gentlemen, is represented by the infinitely hungry and infinitely lived zombie of Milton Friedman.

Despite his longevity not everything is smooth sailing for zombie Friedman. Although effectively immortal, zombies are not immune to the ravages of time, and they view their arm hanging by the thinnest rags of rotted flesh with the same pleasure as we do. So the zombie Friedman values his present consumption more than he values his consumption in the future, when it’s possible that he quite literally won’t have a leg to stand on, and will instead be so much cognisant mush of flesh and sentient bones. So, he places a discount rate on the future, and prefers to have his consumption now.

You might be tempted to ask, why does the zombie Friedman not smooth his consumption over his death-time? Surely there has to be a market in which he can buy insurance against the ravages of time; a brain bond to secure interest against his withering infinite life? The truth is that in our alive-ist society, it is very difficult for zombie Friedman to access these markets. It is hard to buy health insurance when the pre-existing condition of being dead is enough to send twittering actuaries scuttling over statistics with alarm; and while blood banks exist, these have been the well-established domain of vampires rather than zombies. It is difficult to make a living when society worries that you’re already dead.

Facing discrimination from all sides, and unable to access the free markets he fought so hard to establish, death for zombie Friedman continues much as it always has: a relentless maximization of consumption in all time periods, broken only by the occasional face-off with werewolf Keynes for territory, or when he kicks Headless Hayek in the nads.

Punintended Consequences

Last night I came across a peculiar type of word play called Tom Swifties. The pun takes its name from the abundantly adverbial series of Tom Swift books, which featured a child prodigy and his inventions (a legion of ghostwriters expanded the series to over 100 books since its inception in 1910, with the most recent being released in 2007). The multitude of authors often went to great lengths to avoid repeating the word ‘said’, embellishing stories with enough adverbs and synonyms to keep a nascent thesaurus industry afloat. Instead of being ‘said’, things were ‘explained’, ‘stammered’, ‘cried’, or ‘demanded'; said 'hotly', 'crossly', 'happily', or '<insert adverb here>-ly'. 

In the 1950-60’s a type of pun developed, where the adverb was linked to the dialogue. 

"I used to be a pilot," Tom explained. (ex-planed)

"Why is it so dark in here?" Tom said delightedly. (de-lighted) 

“It keeps my hair in place,” said Alice with abandon. (with a band on)

“I like a subtle play on words,” said Tom pungently. (pun-gently) 

The best tend to involve multiword puns and names.

“Who invented radium?” asked Marie curiously.

"The Red Sox didn't need the Babe", said Tom, ruthlessly.

“I’ll just have to kill the king,” Reggie sighed.

“I’m not going to drown in Egypt,” Tom said, deep in denial. 

“You should have brought a parachute,” Tom airily explained. 

"Ready or not, here I come!" Tom ejaculated prematurely. 

"I wish I had some flowers," said Tom lackadaisically. 

“Alright, I’ll give you back the pick-up I borrowed,” said Tom truculently.

Lists can be found on the Wall Street Journal and TV Tropes. 

Tom Swift is also the origin of the name ‘TASER’ (Tom A. Swift’s Electric Rifle), which was named for ‘Tom Swift and His Electric Rifle’ (1911). 

“Don’t tase me bro,” said Meyer, shocked. 

A Brand of Inequality

I don’t blog very often now (which is excellent news for anyone who reads my newsfeed - Facebook is classy enough without my thoughts making their way into the congealed soup of 9gag gifs and duckface drivel). However, occasionally something comes alone which I feel deserves a response. In this case, that response is to Daniel Katz’s take-down of the now famous Russell Brand interview by Jeremy Paxman. 

While Katz’s unsheathed barrage is entertaining and thought provoking, my eyebrows rivaled Paxman at his trivial treatment of inequality. 

Katz begins the argument by taking a case of trickle down economics and follows it up by arguing that poverty isn’t such an issue in advanced economies because even the poorest will earn well above the arbitrary international poverty line ($1.25 USD at purchasing power parity, the “condition so limited by malnutrition, illiteracy, disease, squalid surroundings, high infant mortality, and low life expectancy as to be beneath any reasonable definition of human decency.”) as if relative poverty didn’t exist.

While it would be worth two of Paxman’s eyebrows to discuss this issue here, I’ll instead be a good economics student and give a simple  model which illustrates intuitively why we should be concerned about inequality at the policy level. 

We’re going to assume a couple of simple things:

1. A person’s utility is determined by their income. 
2. Utility is a decreasing function of income. 
3. Each individual has an identical utility function.

Utility is an economic concept which can be understood in a couple of ways: as a person’s happiness, the ability to affect their desires, their welfare. 

The first assumption is simple enough: a person’s happiness depends on their income. 

The second assumption is again fairly simple: we are happier with more income, but our happiness increases at a slower rate as our income increases. Going from $0 to $10,000 makes us happier than going from $90,000 to $100,000, or $990,000 to $1,000,000. This is a fundamental result from the branch of economics happily called Happiness Economics. 

The third assumption: people react to income as a whole identically. This is not strictly true - a monk in Tibet probably has a different view of money than a French aristocrat - but it’s the best way to think about it. By treating everyone by a single representative individual, we can ignore the effects of age, gender, ‘whether they prefer a rainy day at the beach or a sunny day at the park’, favourite colour, and whatever other spurious factor you could think of. 

In this, I’m disagreeing with Nietzsche: 

“In a better social order the hard work and misery of life will be allotted to the man who suffers least from it, that is, to the dullest man, and so on step by step upwards to the man who is most sensitive to the highest, most sublimated kind of suffering, and therefore suffers even when life is most greatly eased.”

Whether an aristocrat or a penniless philosopher, there is no reason to suppose that you’ll like money any more or less than anyone else. 

These three assumptions lead to the social welfare function:

Welfare = U₁ + U₂ + ... + U_n 

Where U_k is each individual’s overall happiness or utility. 

What we find is income is optimally distributed when we have complete equality (when the marginal utility of each individual is equivalent).

Before we start a revolution

There’s a fourth assumption: that the total amount of income is fixed. Katz actually addresses this point arguing that wealth is not a zero-sum game. When income is completely equal (a doctor, and an economics student being paid the same regardless of their actions), economic incentive is removed. 

The incentive to become a civil engineer, or work as a labourer, is removed entirely when we have pure income equality, to the point where doing it would be out of pure altruism or interest. It might be cynical, but a society with pure equality would (almost certainly) lead of a collapse of income and overall welfare. Pure inequality (all income belonging to a single individual) would similarly lead to a collapse of incentive. Some inequality is required to act as incentive for individuals to increase welfare as a whole. 

That’s not even close to say that we should ignore the issue of inequality. Inequality is only beneficial to the point that it leads to an increase of overall social welfare. If we pretend that inequality is an issue that doesn’t require explicit intervention, then we implicitly imply that any action to reduce inequality will reduce social welfare overall. It’s an overly optimistic view of current inequality which itself deserves a pair of Paxman’s Eyebrows. 

I’ll finish this post with a thought experiment, which I hope shows the difference between economic efficiency and social welfare.

If society could choose between a billionaire receiving an million dollars, or five hundred individuals receiving a thousand dollars each, which would make society society better off?  

Election Game Theory, Or Why You Probably Voted for the Sex Party

By now most of you will have voted. 

Because I am one of those infuriating people who treat election day as if it was boring man's equivalent of Christmas, I thought I’d go through one of the examples that came up in Game Theory last year, dealing with voting preferences. 

Consider the situation where you have two parties (Douches and Assholes), and an odd-number N voters (we’re not going to allow ties). Voters 1 to k strictly prefer the D to A, and voters k+1 to N strictly prefer A to D. 

Each voter has two possible options - they can either vote for D or A. 

We will take every other voter’s action as given. 

Each voter feels happy if their preferred party wins the election, and sad otherwise. 

We will examine one voter’s decision. For argument, say he prefers D over A.

There are three possible scenarios:

1. More than half of the other voters vote for D. 
Voting for D or A does not affect the result. D wins regardless of his action.

2. Less than half of the other voters vote for D. 
Voting for D or A does not affect the result. D loses regardless of his action.

3. Exactly half of the other voters vote for D. 
Voting for D or A does affect the result. The voter’s decision wins the election.

What does this actually mean? It means that the voter’s decision only decides the election in the case that votes are split equally between the other voters. Even though he strictly prefers D to A it would make no difference to the election if he voted A instead. In Game Theory, we would call the decision to vote A over D a weakly dominated strategy (it is no worse than voting for D in the situation that a clear majority is found without the voter, and strictly worse than voting D when the votes are split).

How does this relate to the current election? In many seats a clear majority exists before the day of the election (call this a safe seat - one which always votes a particular way). In these seats, the individual’s vote doesn’t actually hold that much weight. You’re just as well off voting for a major party, or something like the Sex Party. It’s in marginal seats where a swing can be expected that the election is truly decided. This is reason why the Greens often described as holding the balance of power in the Senate, and why this balance is so important. It’s all about being that  voter. 

The Little Boy

There once was a little boy, who when asked what he wanted to be in life, simply replied: ‘Happy.’

His teacher told him that he wasn’t likely to find happiness in a book, so he wandered into the streets to find someone who was happy.

He first came upon a couple of fisherman, who were telling stories as they cast out their lines. “They sure seem happy,” thought the little boy. So he bought a box of tackle, and cast a fishing line until the sun went down. But he didn’t catch a single thing, and couldn’t get the smell of bait from his fingers for hours.

The little boy then saw a pair of businessmen, who were laughing and smoking cigars as they carried their bulging wallets. “I’ll bet they are happy,” thought the little boy. So he shaved himself for an interview, and filled his wallet with stones until it bulged. However it soon weighed down his pants, and they fell off when he gave out his resume.

The little boy then saw some well-dressed socialites, going to a party. “They look so happy,” thought the little boy. So he bought himself a suit and a hat, and went out to a party. However the trousers didn’t fit well; they flapped around his ankles and tripped him at the entrance.

Then the little boy saw a drunk, singing to himself in the street. “Now there is a man who is happy,” thought the little boy. So he bought himself a bottle of whiskey, but just became sick, and passed out in the gutter.

Finally, the little boy saw a young couple, who were sharing an embrace in the sunset. "They must be happy!" thought the little boy. So he found himself a girlfriend, and immediately thought "Yes, I am happy." But the girl said "I'm unhappy," and promptly walked away.

Melanie

Nearby, a few children were playing a game. The sound of delighted shrieks pierced the air.

Melanie shivered.

Children disgusted her. In their eyes was contained a whole future: pain, suffering; the petty hatreds and jealousies of adolescence; the sex and revelry of their later teenage years and twenties; the prudishness of their thirties; the senility, sickness and despair of retirement. And somewhere in there would be the child’s own children, born after a condom breaks when they are nineteen, or in an elated pre-menopausal midlife crisis; the filthy cycle continuing like a plant that germinates, seeds, and bursts forth in fruit to wither. In their eyes was the future of every dick and sociopath, every pretentious child, every naïve romance and fantasy. And so it would continue, ad infinitum, until her own bones had long been shrivelled to dust.

One of the children fell, scraping her knee. She burst out crying. Her mother rushed over, making hushing noises, while the other kids looked on awkwardly. The game had been extinguished instantly. The cries rose up to shrieks, which burst forth incessantly.

Get used to it, kid. For most of your life you’ll be searching for happiness, and it will always be taken in an instant. That’s the basis of a life. We were born in agony, brought shrieking into the world; most of us haven’t left that state, but have merely become quieter.

Melanie stared down at her coffee. It had grown cold. The milk would have a fatty taste, and a residue of sugar would have settled on the bottom. She left it, and turned to get up. She felt horribly aware of the mass of consciousnesses around her: most of the patrons had turned, awkwardly, towards the screaming girl. The scene concentrated them, channelled it like a flow, and Melanie felt sickened as it washed over her, aware that she was part of the maelstrom.

The screams rose, breaking to a coughing sob, before repeating. What a set of lungs on the child!

Melanie smiled wryly: perhaps she would take up singing. Her parents would make her take piano lessons, and she would be allowed to buy a violin in primary school after much begging. She would play for the grandparents each Christmas, and they would remark how proud they were after each recital.  She would take it in her head to start drawing; after a birthday present of a camera, she would attempt to become a photographer. She would soon convince herself that she had talent, and take pride in it immensely. Her friends would praise her, but she would deflect it deftly - “Oh, I’m quite terrible, really” – and drink in each compliment in secret.  She would read, of course, and dream, and write a diary – considering her thoughts both beautiful and unique. She would read Capote and Plath with rapture, and feel that they had been speaking directly to her. And her parents would be so, so proud when she got accepted to an Art school on a scholarship.

Eventually she would wind up sitting in a café listening to some brat scream.

Melanie bit her lip in a moment of self-disgust. She hadn’t meant for her thoughts to lead that way. A trace of lipstick had been left on her coffee cup. It seemed to her like dried blood.

By the playground, the child was settling down. Her mother was murmuring to her cheerfully, and she was laughing again.

Melanie walked away, a bitter taste left on her lips. 

All Stations

Michael stood in front of the rail tracks, and jumped.

Mentally.

He flung himself out over the chasm that divided the station like a fissure; beyond the lines which demarcated safety, consistency – the certainty of not rushing headlong into a pair of headlights, of not having your legs sheared off by fifty tons of steel and screaming passengers.

He felt himself hit the metal of the track and sprawl out over the gravel; his legs hurt with the impact, and the breath was knocked out of him. His hands grazed, and he felt immediately dusty.

The metal was warm, and vibrated slightly under his fingertips. A woman screamed on the platform; there was the sound of panic and rushing feet.  Michael was aware of it only distantly, as if listening to a conversation underwater. A mother would no doubt be turning her kids away, and a man further on would have buried himself in his newspaper.

The sound of a horn cut everything out, like the apocryphal horn of Gabriel. The line vibrated violently, as if the horsemen of the apocalypse were upon the track, beating the steel with leaden hooves. The roar of the engines combined with the clack-clack sound of carriages on tracks; it’s preceded by a blast of air, drawn out from the tunnel with a leviathan’s fury. A guide-light glared red with uniocular malevolence.

The brakes crescendo to a wailing banshee shriek and Michael has a single momentary view of the driver, a face frozen in a mask of terror. It’s a sight that will forever lie suspended, inscribed upon the glass of an eye’s final glance. Michael’s voice joins in the scream, a mind cauterised of all but terror and regret.

* * *

There’s a brief rush of air, and the train passes harmlessly in front of his eyes. The driver toots the horn to announce its arrival, and a female voice intones over the intercom. “The train arriving on platform three is an airport train, running express all stations from Bowen Hills to Eagle Junction.” There is a hiss of air as passengers disembark. An attendant blows a whistle to that the station is clear, and the train resumes its motion. Michael feels as if he’s about to cry.

“Mum, why is that man standing there like that?”

“Shh, dear. It’s rude to stare. He’s probably just deciding which train to catch.”

Le Fils De L'Homme

There was once a little boy who loved to stick things up his nose. He would stick pens and pencils, seeds and rocks – anything which was small, and would easily fit. It was his favourite past-time, and he considered it a very dignified one at that age.

“Oh now, stop!” his mother cried, as he stuck a coin up his nose. “We don’t have the money to spare, and if you keep sticking things in your nose, something will grow up there.” The little boy was confused. If the dollar would grow, then surely his nose would be a safer investment than the stock market given the state of the current economy. So the little boy didn’t listen.

As he was walking to school, the little boy chanced upon his neighbour, an aborist. A small twig protruded from each nostril like the mighty tusks of a walrus. His neighbour gave an exasperated sigh.

“If you keep sticking things up your nose, it will grow up there!” The little boy gave a happy laugh. Tusk length is a sign of virility among walruses, and a tusk extension could only help his chances come mating season.

At school, the little boy sat at the back of the classroom with an eraser deep within one nostril. He ducked as an eraser came flying towards his head. His teacher burst out, furious: “If you keep sticking things up your nose, something will grow up there!”

Little Betty sighed in the second row: “I wish he would put my heart up his nose so it would grow there,” who at that age had no idea what a terribly unromantic thing that would be.

Walking back from school, the little boy came across a small seed in the middle of the road. He considered it appraisingly, turning it in his hands several times before depositing it in a nostril with artisanal care. Delighted at his newfound fortune, the little boy continued on his way home, making a nasal whistling noise with every breath that he took.

The next morning, the little boy woke to discover a small vine emanating from his nostril. It was slight and green, twisting around his nose like the beginnings of a fine moustache. The little boy was stunned. He was too young for facial hair, let alone any that was green. He curled it contemplatively for a moment before deciding against the rigors of maintenance that a new moustache requires. He yanked against the vine quickly, and smiled as it gave a satisfying ‘snap’.

At school, the little boy was considering which piece of stationary to grant admittance to Chez Nez for the evening, when Little Betty came up to him. “Your moustache is quite pretty,” she said, fluttering her eyelashes. “And green is definitely your colour.”

With a start, the little boy felt towards his nose. Sure enough, curling like the hair of a greased Parisian, was the vine. He dropped the pencil case in despair. The room for rent was occupied.

At the front of the room, the teacher was giving a lecture on parasites. He noticed the vine protruding from the little boy’s nose and smiled.

“Why, there are even plants in the Amazon which are known to grow from a seed high in the branches of a host tree. The parasite sends out little snake-like shoots which curl around the host, strangling the very life out of it. Its roots spread out as the tree rots inside; eventually there’s nothing left except for the hollowed out husk, and a new tree where it once stood.”

The little boy was rooted to the ground with horror, though only figuratively.

Running home from school, the little boy came upon his neighbour again. The vine had begun sprouting leaves, and curved upward like a set of antlers. “You’ve got to help me!” he cried.

His neighbour peered at the branch with a professional interest. “You’ll need to watch closely to make sure it doesn’t get scale or root rot. You see the smallest sign, come straight to me.”

“You’ve got to help me get rid of it!” the little boy cried.

“Why? You’ll make a good tree for my garden!”

The little boy ran home screaming and saw his mother. Wordlessly, he pointed to the developing bush on his forehead. His mother considered it carefully. She had once studied horticulture at university, and was delighted at the chance to show off her skills. “I could trim it if you’d like,” she suggested. “If we get in early, we can shape it into something interesting, like a bunny rabbit or a swan.” Her major had been in hedge manufacture and design.

The little boy burst out crying. He didn’t want to become a rabbit or a swan, let alone one made entirely out of leaves. His tears trickled down his face, where a developing root system drank them greedily.

Resigned to his arboreal fate, the little boy made his way to bed. His mother put out a pot, in case he needed to take root in the night, and couldn’t make it to the garden in time.

In the morning, little boy’s vine had developed into a miniature tree, which sat above his head like a leafy green bowler hat. It would have been unsightly on St Patrick’s Day, and it wasn’t more fashionable now in September. The little boy felt like a bonsai.

At school the teacher was delighted at his transformation. “I had always hoped that you’d branch out into other areas,” he said, and he said it often, as he was proud of the pun.

Little Betty noticed him sitting by himself in the playground. She could see he had wood.

“What are you doing all alone here?” she said. “I think a little foliage adds character to a man. And look – there are even a couple of flowers.” Indeed, the little boy’s tree had burst into bloom with tiny pink and white flowers. “She reached up to pick one, before pulling her hand back with a shout: “Bees!”

Little Betty ran away without a second look.

The little boy’s teacher placed a comforting hand on his back. “Maybe you should just leaf for the day.”

The little boy walked home with a wooden expression on his face. If he was going to become a tree, then so be it. He would just root himself in the soil, and that would be the end of it. A squirrel chattered happily in the branches. The little boy sat down next to a large oak tree in the cemetery and waited.

The little boy sat there patiently, like a botanical Buddha  The wind whistled through his leaves. The squirrel chattered noisily and tried to stick an acorn in his ear. He had been doing his best to think tree-y thoughts, but it was nuts. He jumped up and shook his head violently. The squirrel leapt off in alarm and rushed towards his dislodged acorn. The little boy sat back down, and yelped as something fell into his lap. It was hard, and round, and shiny. The little boy reached up, and sure enough, the tree was filled with apples.

The little boy ran home delightedly. On the way, he ran past Little Betty, who was cradling her stung hand. Without stopping he threw her an apple. Little Betty bit into it carefully, and smiled – he had just become the apple of her eye again.

From that day on, the little boy was renowned for his apples, which were both juicy and sweet, and could be baked into the most delicious of pies. He eventually became quite wealthy with a cider he produced from the fruit, until the FDA caught wind of it, and he was shut down for numerous health code violations.

The Young Duck

Once there was a little town of ducks, called Splashville.

It was a little town in the countryside, filled with lots of ponds. It had a park, and the roads were made of cobblestone, which were hard and apt to hurt a young duck’s feet if she wasn’t careful.

‘Mummy, mummy,’ a young duck cried, as she tripped over a particularly hard cobblestone. ‘Can’t there be a better way to walk across town? The cobble stones are painful, and my feet are always bruised and battered.’

But the mother knew there wasn’t anything to be done, and so life continued as it always had: safe and happy, as long as you knew where to place your feet.

However the young duck was a clumsy one, and it seemed that no matter how hard she looked, or how carefully she stepped out on the stones there would always be a cobble there to find its way under her foot. 

And so, she spent most of her time swimming around in the pond, where there weren’t any nasty cobblestones, and where there was hardly any chance of running into them.

But her friends would all play featherball in the afternoon (which is a played lot like soccer with feathers, and is a duck’s favourite sport). It was played on the cobblestones, and so the young duck could only watch from the sidelines, or risk bumping or scratching or bruising her toes, which always made her sore in the evenings. She was very lonely, and wished that she could play like the other ducks.

One day, while swimming around in the pond (the other ducks had waddled off to play featherball some time ago), she came across a piece of rubber which had floated downstream, along with a piece of ribbon which lay beside it. The young duck was curious, and nuzzled the two inquisitively. The rubber was thick, but soft, and gave away under her touch. The ribbon was a bright red, and had no doubt adorned the hat of some sonsy lass. At last the duck gave a happy ‘quack’. She’d had an idea.

All through the night the young duck worked on her project: pulling and prodding, fashioning and fastening, until finally it began to take shape. Her mother hovered behind her, worried and curious, but the young duck continued her work unheeded, her crest puffed up in concentration.

In the morning a curious sight came into Splashville, and a crowd gathered all along Feather Way. What was in the middle of the crowd? Was it a horrific traffic accident? A fowl crime that would ruffle the feathers of all who saw it, and leave no duck unflappable? No. It was the young duck proudly waddling down the cobbled way. On her feet were two wellies fashioned from the rubber she had found. A piece of leftover ribbon had been tied around her neck and caught the wind and sun as she walked.

The young duck quacked happily as she waddled, giving no notice of the cobbles as she passed, much as you or I would give no notice of a pebble under our boots. The little duck was happy, and went on to have a semi-professional career in featherball, until she was indicted for her part in a match-fixing scandal which saw her banned professionally for life.

Picture credit: Stephen G. Johnson

The Problem of Externalities

Happy New Year! Or Happy Financial New Year at the very least.

It’s been a month since I’ve last written a blog, and while I’d like to say that I’ve been fighting Samoan pirates on the high seas, or staging a daring coup d’état that now sees me placed as the new King of Sweden, the fact of the matter is that I’ve been busy with final assignments and exams. That and I haven’t had a clue of what to write about.

I’ve been on holiday for the last week now, and my stubble has gone beyond the level of ‘acceptably shaggy’ and is well on the way to ‘unemployably scrubby’. I’m letting it go if only to see what grows, like an experimental Petri dish more likely to result in anthrax than penicillin.

As many of you should know, today also marks the introduction of the Gillard government’s new Carbon Tax, which is set to put a price on carbon emissions and give Tony Abbott supporters plenty of chances to wave their fingers and say: “See! See! She lied!” as if it were the first time they had ever watched a political campaign. It also marks the start of a set of offsetting reforms, which include the tax-free bracket increasing from $6,000 to $18,200. I’m a strong supporter of the Carbon Tax, so while I’m as unqualified as an elk to even discuss it, and at the risk of bush-lawyering, I thought I’d write a few words on the basic theory that underpins these kinds of actions.

Left entirely to its own devices the private sector is remarkably efficient in the allocation of resources. Inefficient practices have the effect of increasing a firm’s overall production costs. Over time, this provides an incentive to move to more efficient production methods, increasing overall profit.

 Similarly a free and competitive market provides an efficient allocation of resources as firms bid up the price of goods depending on their individual assessment of their value (two people value a piece of cake, they will continue to bid up the price until it’s just higher than what the other would otherwise be willing to pay). Where individuals can trade according to their individual preferences, the market will theoretically result in an efficient allocation.

The issue comes in when we’re dealing with a common resource (air quality, the environment, fishing stocks, etc). In this situation, individuals are not able to trade according to their own individual costs and benefits, and the resulting market allocation may not be socially efficient.

For example: a washing company may be remarkably effective in washing old socks and underwear in a nearby river, but has the unfortunate effect of poisoning it for everyone down-stream. This is known as an externality – a cost not included in the normal price allocation of supply and demand.

Externalities can be either positive or negative. A beekeeper provides a positive externality in the pollination of local fruits and flowers (and a negative in the increase of beestings). Positive externalities are benefits that can’t be captured by the profit system, and so too little will be produced. Negative externalities are costs that aren’t incurred by the producing firm and so too much will. In either case a market failure occurs, and there is potential scope for the government to intervene. Carbon emissions are a classic example of a negative externality.

The Carbon Tax introduces a base cost to the production of carbon. While the extent that this cost is passed onto consumers largely depends on the degree of market control a firm is able to exert, the effect is an overall reduction in carbon pollution. Over time it provides an economic incentive to innovate and switch to less carbon intensive forms of production.

It must be noted that the current fixed price is only a temporary measure. Eventually an Emissions Trading Scheme is to be implemented, where a number of free credits for the production of carbon are allocated, and the free market determines the price of these credits in the free market. This is generally seen as a more economically efficient model for reducing carbon emissions.

The potential effectiveness of the tax is a divisive issue. The effects of carbon emissions are distributed globally, as opposed to locally or nationally such as in acid rain (a similar example of a national ETS implemented in America) or chemical pollutants, and has led some commentators to declare it a Tragedy of the Commons rather than a matter of externalities.  However I remain personally optimistic in the overall effectiveness of the scheme, and that it will coincide with similar measures being enacted internationally.

Ashmeko

A couple of days ago the door to my bathroom silently and irrevocably decided to become a wall. There was no warning, no creaky or groaning indication – in the night it was a welcoming portal to showery goodness, and in the morning it had seized up completely as if to say, “Hey, remember those communal bathrooms you’ve been assiduously avoiding since first year? Guess where you’ll be going for a while.” In the end, there was no fixing it – maintenance cut through the lock with a circular saw, covering the room with a fine layer of metallic dust, and turning my towel into a steel-shard encrusted piece of sandpaper. I’ve been drying myself with toilet paper.

I’ve decided to post a few of my writings from high school: partly because I was far better at writing back then, and partly because I am a very unproductive uni student and it allows me to procrastinate on what is already an ostensibly procrastinative blog. This will allow me to do all those things I don’t have time for and will never do anyway, like actually giving a textbook more than a precursory glance towards the shelf where it sits alone, dusty and dejected.

In this picture: books I never read 

and textbooks I'll never open again.

To the few that might be interested I hope you enjoy it. To the others that won’t, and who are currently wondering why they made that fatal error of clicking on this blog in the first place: my sincere condolences, may it fill you with the same feeling of joy and satisfaction that kicking a toe on the bedstead does early in the morning.

I’ll end this short entry by mentioning that a friend of mine has recently released a pop single on iTunes. As someone whose usual listening falls closer to progressive death metal and Finnish cello metal, I’ve listened to it several times already since downloading it yesterday: it’s an upbeat, catchy, and genuinely enjoyable release from a pair of ridiculously talented singers.

For the few that read this, and the infinitely rarer breed actually willing to take my music advice I recommend that you give it a listen: 'You and Me' by Ashmeko. 

Kitten Kong

I’ve been down with a cold for the last couple of days. The sounds and things emitting from my mouth would be enough to make Ridley Scott squeal with terror, curl into bed with a stuffed xenomorph plushie and refuse to come out until the lights have been switched back on again. My voice has taken on the gravelly, straight-edged sound of a partial laryngectomy. I’ve been mistaken for Bruce Wayne several times in the street, and it’s becoming more difficult to keep my midnight vigilantism a secret.

Leaping laryngitis, Batman! 

I’ve taken a short break for coffee, which is as close as I’ll get to a ‘three day cleansing binge’ without first strapping my arteries to a vat of cucumber juice and taking all fluids intravenously. One day of caffeine withdrawal later and my voice has disappeared completely. I refuse to consider that the two events are not related, and will never, under any circumstance try to stop drinking coffee again. I’ve been surviving the withdrawal by listening to Meshuggah, which is aural heroin already; and Ministry, which is perfectly suited for a Junkie.

(If you get the Burroughs reference, well done – you’ve earned yourself a naked lunch at your favourite restaurant).

I’ll be honest here and say that this post is a little bit of an experiment. The previous blog post went a little crazy by any definition of the word which does not include asylums and dictionary writing surgeons. While I’m more than convinced that this will only be seen by the usual collection of aunts, incredulous friends and those few tragically misdirected individuals looking up ‘hoes’ in Google Images and receiving gardening implements instead, I’d like to say hi to any Redditors that may come by for a second look after running out of cats pictures in /r/Aww.

The biggest favour you can do yourself today is to
go home and watch all 9 seasons of The Goodies.

Tamám Shud

It’s been a couple of weeks since I’ve last written a blog, which I’ll blame on a series of exams and assignments, insomnia and caffeine induced hallucinations. Now that they’ve gone, I almost miss it, as the vacuum left in its absence has left me scaling walls in the hope that I’ll find something vaguely interesting stapled into the ceiling to save me from this well of boredom.

Which is where this blog comes in.

The thing I miss most from my childhood is the ability to read. By this I don’t mean being able to make sense of a series of orthographic glyphs thrown up on my screen and rendered unattractively in Comic Sans. I mean being able to sit down and consume, devour a narrative in a single sitting; to become so utterly absorbed in a fictional world of swirling type that your family begins to treat the purchase of a new novel with trepidation. This is an ability I have lost, or at least misplaced haphazardly in adulthood.

Today, the places I find time to read seem concentrated solely on public transport – on trains, on planes, at airports, and in cars. Places that are so utterly devoid of stimulation that cracking open a text of P.G. Wodehouse or H.P. Lovecraft (or anyone else that starts with a couple of initials, and ends with a portmanteau) feels like a complete liberation. For a few short hours, I seem able to dive into a story, and when I arrive home it dissolves into a mush of crushed up memes and amusing cat pictures.

This is all laziness, of course - there’s nothing stopping me from picking a book off the shelf and working my way through a Douglas Adams novel except my own lack of will and motivation. But I still miss the feeling of discovering a new book at the library, and finishing it a couple of hours or days later. I remember being denied a book at the library once in grade 8 – it was a Jeffrey Archer novel. The librarian refused to let me borrow it out, saying all of his other novels were fine, but this one she’d feel uncomfortable letting a 12 year old read (it had a graphic sex scene, I found a copy at home just a couple of weeks later ;).

A year later I wandered through the senior fiction section again, Jeffrey Archer consumed and finished. I came across my first novel by Stephen King, ‘Misery’, and wandered over to the check-out, fully expecting to be denied once more. He took one look at it, and asked me if I’d seen the movie, then recommended that I check it out. (“Blood, everywhere.”)

I’ll end this blog by giving a story about the last time I visited bookstore in Brisbane, Archive Fine Books. I was there with a friend from French, and we were browsing (she ended up going home with a steamy, Harlequin French romance - “If you don’t buy it, I will”). I chanced upon a hard-cover copy of the Rubaiyat of Omar Khayyam, which is famous for the stanza “The Moving Finger writes: and, having writ/ Moves on: nor all thy Piety nor Wit/ Shall lure it back to cancel half a Line/ Nor all thy Tears wash out a Word of it." The spine was damaged, so the shopkeeper offered to fix it. As the glue was drying, she asked us if we had heard of the Tamám Shud Mystery.

The Tamám Shud Mystery takes its name from the final line of the Rubaiyat and roughly translates to ‘It is ended’. On the first of December 1948, a man was found dead on Somerton Beach in Adelaide. He was in top physical condition, dressed well - however, he carried no identification, and the tags to his clothes had all been torn off. The man carried no papers on him except for a tiny piece of paper which had been rolled and placed in a fob pocket in his trousers. It had been torn from a rare first edition copy of the Rubaiyat, and simply bore the words ‘Tamám Shud’. Despite intense media scrutiny and police investigation the mystery remains unsolved to this day.

TAMÁM SHUD.

Comedy

The comedian was unfunny, the chair uncomfortable, and I had a sneaking suspicion that my dinner was attempting to make a run for it.

Despite being proclaimed as ‘A Side-Splitting Barrel of Laughter for the Whole Family’ I wasn’t overly convinced. The only thing I could see close to splitting was the dress of the woman sitting next to me, whose heaving gouts of laughter placed a tone of wonder on the miracles of modern fabric design. A family sitting further along seemed divided in opinion: the parents looked on with undisguised mirth; the children seemed to share my distain and sat around listlessly, kicking the chair in front of them. I considered doing the same, but the ex-naval tattoo on the man in front of me suggested, quite politely, that this might not be such an excellent idea.

I allowed my eyes to wander. The bar was one of those derelict places (but almost intentionally so, as if to save on cleaning) which appear cheap, but are simply dingy and populated entirely by college students who don’t know any better. A dartboard hung packed away in the corner, in prescience of the comedian’s performance. A single family populated the table to the right; the remainder were filled with the usual assortment of dull-comics and habitual barflies. A few spiels of laughter rang out occasionally like the dying calls of a moribund bird indigenous to Australia.

I played with the napkin in front of me, and attempted unsuccessfully to shepherd a piece of lettuce to the centre of the plate, where something dark was hiding embarrassedly. I placed down my knife, edged the plate determinedly away and perfected the wings of my origami swan.

“You’re not really listening to this, are you?” a voice from my left asked. The comedian had just descended into a Republican parody which had been lifted clumsily from last week’s Saturday Night Live.

The voice belonged to a woman at my side who look positively enraptured in the performance. I said something to the effect of ‘If I could tear my ears off without making a scene – I would’ and she laughed.

“It’s genuinely awful. Which also means that it’s the best performance I’ve seen in months.”

I looked at her quizzically. She was blonde in a way which spoke more of sunshine than hydrogen peroxide, and had a figure that was svelte instead of ginormously rotund.

“There are few things in life more liberating than seeing something that is a complete and utter disaster. You give up the idea that comedy needs to be structured and controlled - that seriousness needs to be something moody and austere. Instead, you’re left with something that has so left the mark, which has departed so far beyond either the serious or comic that it becomes farce. It becomes wonderful for that. I love it.”

 I stared at her in a way which I hoped displayed befuddlement and bemusement without appearing creepy. She laughed.

“Look at this place – have you honestly ever seen a place as hole-in-the-wall, as awful and dingy and just plain dirty as this is?” Something scurried out from behind her plate, did a circuit around the table and returned slightly abashed, as if that was all the exercise it was willing to do today. She ignored it, and continued. “It’s wonderful. It makes me happy to see that there are still places like this – places where they are so far removed from what should be in society that it becomes beautiful instead. You feel a part of it, the grime, the dirt, the unwashed glass and infested beer. But at the same time you feel apart from it, able to recognise the farce with amusement and incredulity.”

I looked from her to the failing comedian, who had started on an unconvincing impression of the former president.

“Part of you realises this, doesn’t it? You didn’t walk in from the street to see an unsigned comic with the expectation that they would actually be good.” She peered at my clothes. “You certainly didn’t arrive here to meet with someone. No, part of you realises that there is something magical about seeing the terrible in life occasionally. This kid might actually be good one day; he may put all evidence aside and actually make a name for himself. But until then he only retains the potential for that. Now, he is simply awful – determinedly, enthusiastically but above all genuinely awful, and for that it is a gripping performance.”

I spent the remainder of the performance in relative silence, digesting everything that she had said. Eventually, I asked her if she would like to get a drink afterwards.

She laughed. “I like things that are awful, but that would be pushing it.”

I left alone, uncomfortably.

I hate comedians.

Unapologetically Dismal Science

A few days ago I was asked about the title for my blog by a group of inquisitive aunts. Admittedly they were more concerned with the fact that I may have described them all as hiding their ‘cloven hooves’. Just for them, here’s another Wodehouse quote:

“If I had my life to live again, Jeeves, I would start it as an orphan without any aunts. Don’t they put aunts in Turkey in sacks and drop them in the Bosphorus?”
“Odalisques, sir, I understand. Not aunts.”

The name Dismal Science refers to the dark, slightly tongue-in-cheek alternate name for Economics; Unapologetically is simply a word with far too many syllables crammed into a small area, which allowed me to take a bizarrely vacant url. While the term ‘dismal science’ is properly attributed to Thomas Carlyle, it’s frequently used to describe the work of Reverend Thomas Malthus, which is where I first came across it a couple of weeks into first year economics. The dark, pessimistic theory it described was one of the first indicators that I might genuinely love economics, and that the decision to change out of Law was a completely justified one.

Considering this is my first post actually dealing with economics, it’s a little more technical than I usually write, however the concepts are interesting and generally simple, so I hope that you’ll bear with me.

As described in the textbook, Malthus’s theory was constructed in two parts: the amount of food each person requires, and the amount of food that each person can produce. The first part increases linearly – each individual person requires the same bare minimum amount of food, on average, to avoid starvation and survive. It can be described with a simple formula Y=NF where N is the population size, F is the necessary food for each person, and Y is the total amount of food required (because Y not?). 

The second part is a little more complicated, taking into consideration the idea of Diminishing Marginal Returns, which basically means that each successive unit of input produces less than the one which preceded it. The idea for this is pretty simple to follow: Malthus believed that the total area of farmable land was fixed, or limited. A farm which only has a few people working on it can produce far more if another person starts working on it; when you have an additional 50 or 100 people however, they will start getting in each other’s way and produce less individually than that first person’s contribution to the farm. Labour for the farm has diminishing marginal returns. 

The same applies for machinery. A single hoe or tractor can make a massive difference in productivity for a farm. When there are a hundred, the workers will be too busy fighting over who gets to use the shiniest one than actually doing any work. The thing to take away from this is that production does not increase linearly – each individual worker does not produce the same amount whether you have 10 or 50. Individual production decreases as the amount of workers increases.

If you've got gardening problems, I feel bad for you son.
I've got 99 problems, and a hoe for every one.

When the amount of food being produced is more than what’s required by the population, there’s a surplus. People eat more, are happier – live longer, and breed like rabbits. The population increases.

When the amount of food being produced is less than what’s required, there’s a shortage. People starve, and aren’t very happy; the mortality rates increase, and while people might still be breeding like rabbits, the overall population decreases.

The effect of this is that the population approaches an equilibrium, where food being produced is the bare minimum to avoid starvation. At this point there is no tendency for population to increase or decrease - it’s a point of stability in misery. It’s a dismal place to be. 

It must be noted that Malthus’s theories were developed before the rise of the Industrial Revolution, and before the extent of globalisation that we see today. You can produce a lot with a hoe or tractor, but you can produce much more using a combine harvester. Technological progress is one of the defining reasons why we don’t simply subsist in a Malthusian equilibrium.

The theory still has some relevance in today’s society: large parts of the world still live in abject poverty and famine, and certain aspects of subsistence agriculture can still be examined using Malthusian theory. Neoclassical Growth Models in particular bear more than a passing resemblance to the Reverend's work.

More importantly, I can finally explain the name of this unfortunately titled blog.