The Disasters of War

The thought came to me that these videos [youtube.com] from Iraq may be the contemporary equivalent of Goya's prints [wikipedia.com].
Image Wikipedia

On Soft Paternalism

An interesting little debate on soft paternalism in Cato Unbound.

Glen Whitman (CSU) writes the lead piece The Rise of the New Maternalism. This is followed by three responses and rejoinders.

• Richard Thaler and Whitman's rejoinder.
• Jonathan Klick and reply.
• Shane Frederick and reply.

Rent controls in Australia - would they really help the housing affordability crisis?

An Onymous Lefty thinks rent controls are a good idea and would help with the shortage of affordable housing in Australia's major cities. If we are going to have to go down this path, I think tax-payer funded subsidies might be the better way to go.

The further evidence is apparently that 'Andrew Bolt and his readers strongly dislike rent controls.' Generally, a tongue-in-cheek argument that makes for a good rule of thumb. But in this case, I prefer the earlier post about the media laying the blame for expensive housing on migrants.

I'm far from convinced that rent controls are a good answer to housing affordability issues. After all, they're the ECON101 textbook case study for a bad type of market intervention and serious misallocations of resources. Ben Bernanke's didn't like them in his Principles of Microeconomics. The relevant pages are in limited preview in Google Books if you search for rent control. Bernanke and Frank do a pretty good job of pointing out the numerous failings that rent controls have. Here's their classic supply and demand curve for good measure:

 

While there's at least some economic argument that can be made for rent controls, it seems most economists agree that the market inefficiencies of rent controls are unlikely to outweigh the problems. Paul Krugman certainly had his doubts. So I'm a little surprised that this argument is coming from Terry Burke, an academic who holds a B Ec (Hons) and Masters of Economics from Monash University.

We should recall that rent controls have actually been tried in Australia (in both Sydney and Canberra) and don't have a particularly flashy record. They were abandoned first in Sydney and then in Canberra. Robert Albon from the faculty of economics at the ANU carried out an analysis of the effects in Canberra at the time and concluded the following:

Redistribution by rent control was both haphazard and costly. Costs were in the form of foregone surplus and administration. Tenants in Canberra received. a benefit while those in Queanbeyan suffered losses. From an efficiency viewpoint, a subsidy is always preferable to a price restriction as it does not create a discincentive to supply. Such a subsidy would, of course, create an administrative cost and would have to be financed from taxation. It is easier to identify and benefit the most needy with a subsidy, rather than with blanket rent control. The most needy probably ended up paying higher rents in Queanbeyan. Distorted signals in the past are now imposing a cost on Queanbeyan landlords. In a very real sense, Queanbeyan has borne, and is bearing, the costs of Canberra’s rent control. Canberra’s rent control also imposed other costs. Tenants and potential tenants endured search costs. ‘Groups’ and young families were discriminated against by risk-averse, maximizing landlords. All in all, Canberra’s experience with rent control has verified the expectations suggested by simple neoclassical andysis. Further, it could not be said that the stated objectives of the legislation were realized.

 Or, as the RBA puts it in this discussion paper:

These policies can have unintended consequences, both in the housing market directly and in terms of macroeconomic outcomes. Rent controls and other measures designed to support tenants can sometimes work to their disadvantage, as they raise required rental returns to investors and restrict supply. For example, the focus on ‘conforming’ rental property in Canada seems to have resulted in relatively high costs of renting compared with owning and very low rental vacancy rates (Traclet 2005), but very little new supply of apartments (Crook 1998).

Beauty and the Bike

A lovely trailer for a 2009 documentary [youtube.com], Beauty and the Bike. The film is about schoolgirls cycling in Darlington, UK and makes a comparison with Bremen in Germany. Some further comment here [hembrow.blogspot.com]. The site for the film.

via Velo Vogue.

Photos Surface of the Day Einstein Died

Some beautiful black and white photos have emerged from Life magazine of the day Einstein died and his funeral.

Via Wired

Wired - this day in tech: April 16, 1943: Setting the Stage for World’s First Acid Trip

I've always loved the story of how LSD was discovered. It's like a good piece of fiction:
Hofmann, a Swiss chemist, was researching the synthesis of a lysergic acid compound, LSD-25, when he inadvertently absorbed a bit through his fingertips...
From WIRED
Image: Wikipedia
Hofmann's account of the events makes for an entertaining read.

Willy the Wizard v J K Rowling

On a lighter note, Mallesons Stephen Jaques partner Natalie Hickey has produced this whiteboard analysis of Willy the Wizard v J K Rowling. [blogs.mallesons.com]

A Dirty Business - Coal Mining in the Hunter Valley, New South Wales

There was a fascinating but frightening report on Four Corners (12 April 2010) about the health concerns held by residents who live near vast coal mining operations in the Upper Hunter Valley.

With about 34 coal mines operating in the region, it would be pretty difficult not to live near one and these mines (some near small towns) are putting ever-increasing quantities of ultra-fine dust particles into the air. The problem stems from the fact that most of the black coal mines in the Hunter Valley are open cut operations where it's pretty much impossible to control the dust even though they spray a bit of water around. In the report, you could see the enormous extent of these mines and all the dust rising into the air.

For viewers in Australia, the Four Corners report is available online (probably for a limited time) on ABC iView.

This has been followed by a report today in the SMH about the Department of Lands resuming Camberwell Common for coal mining, right next to the town.

As one recently published academic study from the Centre for Clinical Epidemiology and Biostatistics at the University of Newcastle notes, 'since 2003, community groups, Greens Party parliamentarians, health professionals and local government councillors have called for a study to investigate the cumulative health impacts of air pollution in this area. To date no such study has been planned.'

The University of Newcastle study calls the situation an 'environmental injustice', which it defines as '...the disproportionate exposure of socially vulnerable groups (e.g., the poor, racial minorities) to pollution and its associated effects on health and the environment, as well as the unequal environmental protection provided through laws, regulations and enforcement...' Some pretty worrying data from the study includes the following:

The Four Corners report reveals that one GP is trying to carry out the study that the State Government has so far refused to fund himself:

Faced with a State Government that refuses to fund an independent study looking at the impact of coal mining and power station emissions on health, one local GP has decided he will do the work the Government won't fund. He's paying for the work himself. Nearly nine hundred school students are already part of his study. His reasons for doing it are simple:

"I think it's like with a general practice in the community. Here I'm more thinking about prevention because nowadays we just concentrate on treating disease but we're not really treating the cause of the problem, if we try to prevent the disease happening in the first place, it is money well spent."

This story has been around for a while. It gets picked up from time to time by the ABC and other media outlets. The Sydney Morning Herald has published a good few editorials and it goes back to on the backburner for a while.

It now looks like there will be one specific study [theherald.com.au] to investigate a 'cancer cluster'. However, this is far from the extensive study into health effects and air monitoring that residents have been calling for.

At the root of it all is money. There's the big bucks in the Australian coal mining industry. According to an industry source, $24 billion dollars of black coal was exported from Australia in 2007-08. The same source asserts that a study shows people in the region feel that the benefits of coal outweigh the negative impacts. But it's not clear that the potential health impacts are fully understood.

Other figures about Australia's energy reserves, including its coal resources, are mind-boggling:

Australia has 5% of global reserves of black coal (~ 40 Gigatons, Gt) and 24% of global reserves of brown coal (~37.5 Gt). With a total annual production of about 390 Mt, Australia is the world’s largest exporter with about 30% of world total coal export trade (250Mt) and nearly 5% of world consumption.

Coal also comprises Australia’s largest single export (~ $A23 billion), an industry with up to 150,000 employees, and is used to generate about 85% of Australia’s electricity.

With a population of about 21.5 million (0.3% of world population, ranking 51st globally), Australia accounts for 2.5% of the world’s energy production (world’s eighth largest producer), with coal being its main source of energy production (Coal 54%, Uranium 28%, Natural gas 10%, Oil 6% and Renewables less than 2%). [Source]

With more coal mines opening in the region, it doesn't look like this issue will go away. Media reports in 2009 were already talking about future class actions [theherald.com.au] against the State Government:

If it was proved in years to come the Government failed in its duty of care, it could potentially face a class action from those who had contracted air pollution-related illnesses while living and working in the Upper Hunter.

We can only hope that a wide-ranging health study is carried out soon and that the economic boon and employment provided by the mining doesn't leave another terrible industrial legacy along the lines of James Hardie.

Le Pain Maudit

The Daily Telegraph (UK) reports on claims the CIA conducted clandestine experiments with LSD in small French village in the 1950s. This may have been part of Project MKULTRA (Wikipedia). There are various theories about the poisoning and this seems to be the most colourful.

A 50-year mystery over the 'cursed bread' of Pont-Saint-Esprit, which left residents suffering hallucinations, has been solved after a writer discovered the US had spiked the bread with LSD as part of an experiment.

via Fabius Maximus

hello

world