January 31, 2011

Horse 1141 - Did Not Do The Work

The rewards for labour are wages and salaries. Labour being one of the basic four factors of production, is like any other commodity subject to the forces of supply and demand. Therefore the price of labour is determined not by a person's actual worth of input, but by the market price that that input is valued at.

I think that there a disconnect between actual worth and market value. Many people and especially theoretical economists would disagree with me, but I shall attempt to explain myself.

Suppose that you have a firm making widgets. There are people on the factory floor who operate the widget making machines, and elsewhere you have management, accounting, and ancilliary staff like cleaners and maintenance workers. All of which are important to the effective running of the company, and without them not only the factory but the firm would come to a halt. Their wages however I think do not actually reflect "worth" but market value.

I think that there is a great deal of difference between what workers are actually worth and what they are paid. People who are paid less often return multiples of their wage in value to their firms, whereas at the other extreme, plenty of managers, opera singers and people like premiership footballers are overpaid for what they actually do.
I'm not suggesting that management, opera singers and footballers don't work hard or long for their money. But at some point I think that there is a line where people are paid rewards for the effective work that someone else has produced.

The most obvious example of this is shareholders. Quite rightly shareholders as contributors of capital are paid the due reward for their capital as dividends, but the shareholders themselves contribute no work to the firm whatsoever and without them, there would unlikely be a firm at all.

Personally I suspect that there is a smudgy line which can be drawn; above which point the people who are paid those wages do not actually work for them.

The minimum weekly wage in Australia as at 1 Oct 2009 was $543.78 per week. I assume that this was for a 37.5 hour week giving us $14.50. Assuming that there is a real increase depending on actual skill involved if you double this you end up with $29.00 per hour. Also assuming that instead of working a 37.5 hour week, someone worked an 70 hour week, we end up with $2030 per week or roughly $106,000 a year.

I will go out on a limb and suggest that everyone earning more than $106,000 didn't actually work for their money, but at some point is profiting from the work of other people. I'm not suggesting that this is the result of economic graft, but I am suggesting that it is practically impossible to actually do the work required to earn that money.

The combined payout, which includes benefits and options built over his time with AXA, would give Mr (Andrew) Penn a higher pay than the $16 million received by the Commonwealth Bank CEO, Ralph Norris, last year.

As a shareholder of the Commonwealth Bank I ask the question if Ralph Norris is really worth $16m a year? Did he work for that money or was he paid the because of the forces of supply and demand? I know that I could fulfil that job maybe not as well, but at even 1% of that salary I'm pretty confident that I still would not be able to actually work for it.

January 27, 2011

Horse 1140 - Pay TV 6 - Australia 0

Australia winning the Asian Cup Semi-Final on Australia Day, in a crushing defeat of Uzbekistan 6-0. This is the stuff that legends are built on; this is the sort of thing that writes the story of football in this country and inspires the next generation to follow on the glory trail.


If you didn't happen to have cable television you would have seen NOTHING (except highlights on the news later).

On October 12 2005 (which is a night forever etched into my memory), Australia beat Uruguay 1-0 on home soil to force extra-time and a subsequent penalty shoot-out which they won 4-2. This mean that for the first time since 1974, Australia qualified for a World Cup.

Fast forward 5 and half years, and Australia has made it into the Asian Football Cup Final, but unlike 2005, the events of 2011 will not be seen by the majority of people.
It is utterly disgraceful amidst calls of wanting to "grow the game" in this country that even when the national side makes it into a final, the match isn't shown on free-to-air television.

Of course marketing people will say that it costs money to show live sport and that putting it on pay television puts it into an audience which is prepared to pay for it. But therein lies a conundrum. How do you expand interest to people who wouldn't ordinarily watch the game whilst at the same time those people can't watch the game?

How is it that the people of Uzbekistan saw the Australia-Uzbekistan game LIVE on MRTK1 but the majority of Australians didn't? I bet that more people in Tashkentsaw the match than the whole of Australia on Australia Day. How's that for a sense of national pride?

I think I might move to a third-world country so that I can watch Australia play.

January 25, 2011

Horse 1139 - Government Surpluses and Deficits

Quite aside from whereabouts on the political spectrum you sit, is the discussion of how the economy works. Personally I rather like the "five sector circular flow of income model" because in broad terms it is very inclusive of pretty well much everything.
The Five Sectors in the model are as follows: Households, Companies, Government, Financial Institutions, and Overseas. All of them have different effects and parts to play in the economy.

The basic equation for total income in the economy can be described with a relatively simple equation:

Income = (C+I+G+X) - (S+T+M)

Income = (Consumer Spending + Investment Spending + Government Spending + Receipts on Exports) minus (Savings + Taxation + Payments for Imports)

The reasoning behind this is surprisingly sound. Basic economic theory states that the level of income in the economy is dictated by "all inputs less all outputs". Inputs and Outputs into the economy are otherwise known as leakages and injections, and perhaps it goes without saying that an excess of leakages will shrink the economy and an excess of injections will grow the economy.

The question from my little corner of the Twittersphere has to do with the effects of Government Spending on the economy.

The Government sector in broad terms has both an in box and an out box of money, Taxation and Government Spending. Taxation is a leakage, and Government Spending is an injection.
A Government Surplus occurs when the Government takes more in Taxation receipts than it spends in Spending. Obviously if Taxation is a leakage and Government Spending is an injection and the overall effect is an excess of Taxation, then the net effect is a leakage from the economy and the economy shrinks.
Likewise an excess in the amount of Government Spending, increases the amount of money being pushed back into economy and therefore is an overall injection into the economy and the economy grows.

If I was Grand Poobah and Lord High Everything Else, then I would seriously advocate Surpluses as the economy moved into periods of boom to slow down economic growth and likewise move to Deficits as the economy moved into periods of bust to speed up economic growth.

Of course I realise that Countercyclical Policy sounds exactly like something out of Keynesian economics, but given the results that the Second World War effectively ended the Great Depression, the Stimulus Package in Australia in 2009 meant that Australia was the only country except China in the industrialised world to avoid a recession, and the ongoing policy since 1945 of the USA, I think that it's a sound idea in principle and practice.

Actually when it comes to the overall effect that Government has on the economy it perhaps isn't all that large. Using GDP as a measure, then Government Debt in Australia is only about 8% of GDP and Government Spending accounts for only $71bn which is only 7% of GDP. I don't think people can complain much about that.

Horse 1136 addenda - Scary

SERIOUS criminals might one day be microchipped as a crime prevention measure, SA Police Commissioner Mal Hyde has told a forum in Adelaide.
Mr Hyde said though the remark was "flippant", rapid developments in electronic crime detection would lead to changes not considered today.
"I'd like to microchip a lot of different people, just to be a little bit flippant about it, but I don't think that's going to happen," said Mr Hyde, a key-note speaker at the Asian Pacific Crime Prevention forum.
"I say it sort of flippantly, but who knows, because attitudes change so much?"

Who knows indeed, because attitudes change so much? Criminals tomorrow? Everyone else the day after that?

January 19, 2011

Horse 1138 - Exit Holden, Stage Left - Enter Opel, Stage Right.


Chevrolet's new Sonic hatch and sedan models have at last made their US market debut this week, bringing its one step closer to its Australian launch as the new 2012 Holden Barina.
Known in the US market until recently as the Chevrolet Aveo, the new Barina is expected to go on sale in Australia, replacing the current fifth-generation Barina - at which time it will be nearly six years old.


Following reports last year that a local launch was on the table, General Motors has today announced that its premium European brand Opel will hit the Australian market in 2012.
Among the models confirmed for Australia will be the Insignia (winner of the European Car of the Year award in 2009) along with the new Astra (sold in earlier guises locally as the Holden Astra) and the recently upgraded Corsa (also sold in earlier incarnations as the Holden Barina).

I think that I spot a trend here.
General Motors are deliberately trying to rubbish the Holden brand in Australia, so that people will vote with their wallets and go out and buy Opels. Then once the Australian division falls over entirely, they'll cease production of the Commodore and thus not have to worry about Australia at all.

When you think about it, Holden basically shot themselves in the foot more than 2 years ago. When the Vectra was replaced with the 2009 European Car of the Year, the Opel Insignia, Holden instead of making the logical switch foisted upon Australians the Daewoo Tosca under the nameplate Holden Epica.
Do you know anyone who has or would ever knowingly choose to buy one of these?

Likewise they replaced the Opel Astra with the Daewoo Lacetti otherwise known as the Cruze, and their small car the Opel Corsa which was sold as the Barina was replaced with the Daewoo Gentra which retained the Barina name.
The Barina XC (Corsa) had a four-star ANCAP safety rating and the Barina TK (Gentra) when it was released had a two-star ANCAP safety rating. Even to this day a 2005 model Barina still has a higher resale value than a 2011 Barina according to what I've seen out in the car yards.

Over at Ford they've given us the Focus, the Fiesta and the Mondeo, all of which have either won or have been within 2 points of carrying off the coveted European Car of the Year title at some point, and its starting to show in the sales figures.

I'm wondering what's going to happen when Opel start giving us some of those lovely Opel Performace Centre (OPC) offerings. The Corsa OPC outperforms the Mini Cooper S Turbo in every department and at least in Germany, comes in at 25% cheaper.
Personally I think that it looks a whole heap cooler than the Barina, but not quite as cool as the Mini.

Basically I think that the long term strategy from GM Head Office is thus:
1. Bring in Opel to compete with Holden by selling higher quality cars.
2. When Holden isn't able to justify it's existance through flagging profit margins cull the brand.
3. End production of the Commodore because of Holden's demise.

The current VE had A$1bn spent on developing the platform (Zeta) which became the basis for the Chevrolet Camaro, but when the model cycle ends in 2015, I don't think it will be renewed.

Holden tried to sell the Monaro (as the Pontiac GTO) to the US, and the Commodore as the (as the Pontiac G8), when GM pulled the plug on Pontiac, Holden found that its biggest export market died. Maybe the ploy in Oz is to attack the trunk so that the tree falls over.

Either way, if Holden do continue to sell Crap Dressed up as Cheesecake under their badge, I'm going to buy Chocolate Bavarian built in Bavaria by Bavarians... or is that Black Forest Cake made in der Black Forest by der kleine elfs?

January 13, 2011

Horse 1137 - Southern Sudan - Puönmït

Amidst the news of flooding in Queensland and the shooting of a US Congresslady, there is a spark of hope in the news this week. The people of Southern Sudan have gone to the polls to vote on their independence, and although there have been a few minor scuffles in provinces which border the North, it has been relatively peaceful.

Sudan is Africa's largest country by area, and is administered both from Khartoum in the north and Juba in the south, following two civil wars and other conflicts.

The people of Southern Sudan have gone to the polls for a referendum on their independence and runs from 9th to 15th January 2011. The province of Abyei will hold a separate referendum as will South Kurdufan and Blue Nile which will hold a "popular plebecite".

The BBC World Service has reported that in Southern Sudan a carnival atmosphere has broken out around some polling places, and when they interview people from the country, they seem not to talk of their "independence" but rather of their "freedom" from the North.

Northern Sudan for want of a better word is a nominally Arabic speaking and Muslim country and the South would become a nominally Christian and Animistic country which speaks English a pidgin form of Arabic known as Juba Arabic and several African languages including Dinka.

This of course presents several challenges for not just the fledgling nation should it acheive independence, but poses serious questions for the other nations in Africa. Some commentators are talking about the "Balkanisation" of Africa, with implications for Nigeria and the Congo. Indeed it asks the most fundamental questions as to what does and/or possibly should constitute nationhood.

If Southern Sudan does acheive its independence, then almost certainly it would change its name to reflect the new nation. One of the names which was suggested is Puönmït. Puönmït is a Dinka word which means "Happiness". Surely that would be one of the greatest names for a country that has ever been put forward. I personally do hope the greatest amount of puönmït for Southern Sudan (or Puönmït).

January 04, 2011

Horse 1136 - Tap N Pay

MasterCard PayPass is a new “contactless” way to pay. It is like having exact change wherever you go. A simple tap of your card, key fob, or mobile phone is all it takes to pay at checkout.
It’s ideal when speed is esential, like at participating quick-service restaurants, gas stations, pharmacies, movie theaters, and more.

What a top idea.

We live in increasingly impatient times. Supermarket queues are annoying, and because the chances of being robbed and the incidence of violent crime are also on the increase, carrying cash becomes ever more precarious.

As the PayPass blurb says, it is a “contactless” way to pay for things. All it requires to operate is a simple wave of your MasterCard or the equivalent Visa payWave card near the reader and the exact amount of money instantly transfers between accounts. It couldn't be simpler.

Security however does appear to be an issue though. If someone else were to get hold of your card either through accident or because they stole your wallet or something, then they could just as easily use it to buy things on your account. I believe however that I have an adequate solution to this problem though:

When an animal is microchipped its identification details are entered onto the NSW Companion Animals Register. A certificate is issued to the owner receipting the entry of their animal's details.
Microchips are about the same size as a large grain of rice. They are very safe. Your pet will feel little pain as the chip is inserted quickly and safely under the skin between the shoulders.

You'd never need worry about losing your wallet or your credit cards again. If we could institute a system where people could be microchipped then just as easily as operating the PayPass system, thye could simply swipe their hand near the checkout. A microchip about the size of a large grain of rice wouldn't hurt to have implanted and if we employed very low voltage lithium battery technology, then it could run quite effortlessly for years.

Mind you, it could be said that someone did have this idea long before I did:
All people were forced to put a mark on their right hand or forehead. Whether they were powerful or weak, rich or poor, free people or slaves, they all had to have this mark, or else they could not buy or sell anything.
- Revelation 13:16-17

I don't think that people would be coersively forced to have a chip installed but with the slow phasing out of cash, it might become increasingly difficult for people to buy or sell anything without it.

Of course you might dismiss me as being totally paranoid about "the mark of the beast" and the end of the world but as with any new technology I bet that some people would be willing of their own accord to be implated. In fact some already have been fitted with something similar:

The idea of having my very own microchip implanted in my body appealed. I have always been an early adopter, so why not. Last week I headed for the bright lights of the Catalan city of Barcelona to enter the exclusive VIP Baja Beach Club.

The night club offers its VIP clients the opportunity to have a syringe-injected microchip implanted in their upper arms that not only gives them special access to VIP lounges, but also acts as a debit account from which they can pay for drinks.
This sort of thing is handy for a beach club where bikinis and board shorts are the uniform and carrying a wallet or purse is really not practical.

Take a note of the date here: 29 September, 2004. This was six years ago.

I could of course be talking complete rubbish this point, but the company which supplies the RFID tages for MasterCard PayPass, Visa payWave and microchips for animals are also touting thr benefits of tracking criminals in gaol, and even babies:

HALO is the leading system for infant hospital security, helping healthcare facilities prevent infant abductions, accidental baby switching, and medical equipment theft and loss while providing a safe work environment for facility staff.

Still, you have to admit that MasterCard PayPass and Visa payWave is a pretty cool way to pay for things. I on the other hand, walked out of Bunnings the other day with a spark plug and air filter for the lawnmower using a trusted method that has been in use since c.750BC... cash.

January 03, 2011

Horse 1135 - Having A Barry

"If we don't make a start to projects like the northwest rail link, I don't intend to contest the election after," Mr O'Farrell said.
"I am determined to deliver the infrastructure, to get on with starting those projects that this city and this state needs. I want to be seen as the infrastructure premier, because that's certainly what we need in this state after 16 years of Labor."
- Barry O'Farrell, 27th Dec 2010

I don't understand Barry. It was you who 12 months previous called for the scrapping of the northwest rail link, and yet here we are asking for it to be built again? Perhaps you need a reminder of what you said...

"She needs to scrap the metro that no one wants. It's simply incredible, even within her first day, the former planning minister doesn't seem to have a view as to whether this metro is to proceed or not. It raises real concerns about who's making the decisions."
- Barry O'Farrell, 4th Dec 2009 (from ABC Radio).

Considering that the railway line to Castle Hill promised by the Dibbs government in 1891 still hasn’t been built, don’t hold your breath waiting for Mr O'Farrell to start "those projects that this city and this state needs". Also considering previous NSW Liberal's track record (pun intended) in selling off the State Bank of New South Wales, GIO and NSW Grain Corporation, how long would it be after building the northwest rail link, it would be sold off as well?

Well Mr O'Farrell, what say ye now?