Wasn’t this tried once before in one half of Germany?

That this should come from a German politician’s mouth is somewhat ironic.

Spahn, a conservative heavyweight among Chancellor Angela Merkel’s Christian Democrats who recently lost a contest to become the party’s leader, described a knock-on effect of countries attracting doctors from neighboring countries, as is the case with Switzerland taking in German physicians.

That’ll be the “free movement of labour” thing that the EU is so much in favour of then.

Or is the deal that only low skilled labour should be allowed to move so as to keep a downward pressure on domestic wages?

“That cannot be right. We should therefore think about whether we need to create new regulations on the luring away of people with certain professions within the EU, and without fundamentally calling into question the freedom of movement within Europe,” he was quoted as saying.

Bill’s Opinion

The good news is, the Germans have relatively recent experience and understanding on what the solution is to this.

The bad news is, if Trump gets his budget passed, there’ll be a global shortage of workers with the skills to build it for a year or two;

Nostalgia ain’t what it used to be

This is a heartwarming tale of consumer power to save a dying brand from bygone times; a small group of dedicated enthusiasts are keeping the traditional New South Wales’ beer, Resch’s alive by maintaining a Facebook page informing people where it can be purchased.

Admirable stuff.

Ah, those halcyon days of yore when the working man would drink a simple yet honest schooner of Resch’s beer.

Not for these enthusiasts the cynical corporate machine pumping out gigalitres of tasteless piss. Oh no, they’re fighting for the little guy, the artisan brewery doing it tough amidst a market dominated by a duopoly that has taken nearly all of the market share. Bravo!

One of the beer’s younger fans, 22 year old Amelia McGuire, was introduced to Resch’s when she was in year 12 by some male friends. To her, the beer feels part of the local community (although it is owned by Carlton United Breweries).

Wait, what?

Oh, Resch’s is just another of the myriad brands of beers brewed by Carlton United (really, AB-InBev) who, along with Lion Nathan (really, Kirin Holdings), brew and sell 98 of every 100 pints of beers drunk in Australia.

See also, Little Creatures, Four Pines, and every other “craft” beer you’ve drunk in recent years.

Bill’s Opinion

Beer is the second oldest recipe in human history (bread is the first… which resulted in the discovery of beer). Maintaining a diverse range of choices of this ancient beverage is surely a good thing.

In the early 1970s, British beer diversity started to improve thanks to the work of CAMRA.

Similarly, massive improvements have occurred in the USA in the last twenty years with a thriving independent brewing sector producing interesting and award-winning beers after the pissy “Bud” decades.

Australia however, is stuck in the 1970s with their duopoly masquerading as a “craft beer” industry.

So much so, that some silly old farts have formed a society celebrating, in effect, a recipe that’s been bought by Coca Cola.

In the words of Ray Davies;

We are the Draught Beer Preservation Society

God save Mrs. Mopp and good old Mother Riley

Preserving the old ways from being abused

Protecting the new ways, for me and for you

What more can we do?

To which the answer is, “more, but not this”.

[oh, and I resisted the temptation to make fun of Ms. McGuire but feel free in the comments]

What’s that definition of insanity….

….that Einstein probably never said?

Real estate agents are starting earlier this year.

Shame. You’ll be telling us next that divorce lawyers, journalists and politicians are having a hard time, and then we’ll really have to get the tissues out.

Falling prices, tighter credit and uncertainty ahead of a federal election and the final report of the banking royal commission mean a busier year for agents on the country’s eastern seaboard as they sell an increasing stock of homes on the market.

I’m not sure that statement is completely accurate; perhaps replace “busier” with “tougher”?

As several commentators on here have pointed out, in a falling market most sellers will rethink whether they really need to move. There’s a high degree of emotion attached to the perceived value of one’s house and the attitude that “it’s worth $x and I won’t take a penny less” can be deeply ingrained.

So therefore we may well see far fewer properties up for sale this year. Those who have to sell due to death, divorce or unsustainable debt will be the exceptions.

Something else will need to change too, although Eliza McGrath hasn’t spotted it yet;

Our first open [day] is on 19 January. Then we’re extending it to be a five-week campaign with the first auction on 16 February.

Given that fewer than 1 in 2 properties are selling at auction, it seems somewhat poor advice to her clients to chuck a bunch of cash at a marketing campaign and planning for an event that has a higher probability of disappointment than ever before in living memory.

Finance is getting harder to get,” McGrath says. “So getting a five-week campaign is more standard. Some people are asking for six weeks. They know from trying to buy themselves how hard it is to get pre-approval.

She’s not getting the hint, is she? The auction favours the seller only in a rising market, that power dynamic reverses on the way down.

A search for her on Google Images explains why. She looks like she is barely 30 years old. The last time the market was like this she wouldn’t have been potty trained.

Ren Hor Wong seems to have a better idea, however;

“Given the current market condition and low auction clearance rate, vendors’ confidence is low when it comes to selling,” chief executive Ren Hor Wong said.

“We see a surge in listings activity, but majority of them would not go to auction, and some probably don’t even want to go for a marketing campaign.”

Quite.

This is interesting too;

“So it’s imperative for agents to have a database of finance-ready buyers”

He might regret dropping that gem into the interview. He’s just told his competitors a good tip on how to survive this year, if they are clever enough to listen.

He’s got some other intelligent insights too;

Going off market also allows the seller to save marketing costs, a key for vendors at this low point in the market, Wong adds.

“When you can’t ask for a higher price in the market, next thing you want to do is to save money,” he says.

Smart thinking; drop the price and lower your sales costs.

Meanwhile, on Planet Millennial, reality hasn’t arrived yet;

McGrath isn’t sure what will come. The year is likely to start well, but it is hard to see further beyond, she says.

We’ll have a strong start to 2019, like 2018 did, but it’s hard to say what’s after the first quarter, with the election coming up and the royal commission [final report],” she says.

I bet you won’t, Eliza, I bet you won’t.

Bill’s Opinion

For some time now, being an estate agent on the east coast of Australia required nothing more challenging than possession of a cheap suit, a driving licence and pulse.

Things have changed this year. There will be significant consolidation of agencies and a huge reduction in the number of agents employed.

The question is, what does one do as an alternative job if all your previous work experience consisted of handing out leaflets at open houses for the last decade?

The price of Uber journeys and dog waking services in Melbourne and Sydney are likely to reduce significantly.

So what you’re saying is…

….Japanese men compete hardest when there is more cultural “face” to lose, particularly when competing against women?

Here’s an insight from the economic heavyweight that is the Sydney Morning Herald’s Economics Editor, Ross Gittins.

To be fair, he’s achieved one requirement of journalisming; to inform. I, for one, had never heard of this Japanese sport before;

He also explains that there is a vast database of to be mined about how men and women compete in single sex and mixed sex races, both in terms of results and penalties for aggressive fouls.

What does this data tell us?

Wait for it; men are more aggressive than women, even more so when they are competing with women.

Which surprises no-one who has a passing knowledge of Asian culture.

There is then a whole bunch of word salad about something called “gender identity“. 

Bill’s Opinion

Japanese men in competitive sport don’t like losing.

Japanese men in competitive sport really don’t like losing to women.

Japanese women in competitive sport take fewer risks than men.

This research and Ross Gittins’ subsequent regurgitating of it is analogous to the discovery of the double helix by Watson and Crick in it’s importance to the human species. 

It’s possible that blog posts here may reduce in frequency soon, depending on how successful I am in my application for a 3 year research grant to investigate why men and women tend to urinate standing up and sitting down, respectively, and the influence of the cis-heteronormative patriarchy on the cultural appropriation of gender norms in the use of toilets.

In related news, if you want to understand how completely arrogant and boorish Gittins is, risk your mental health by listening to this podcast where he is interviewed by our friend Jess I can use a spreadsheet to diet, and you proles can’t Irvine

Gittins may be hugely qualified in his profession but, my goodness, when speaking he sounds an awful lot like every old bloke in the office you’ve ever met who’s close to retirement and wants to give you unsolicited advice at each opportunity that seems more about explaining how smart he is than being of any practical use to you.

 

 

We’ve always been at war with the Eurasia Group

The usually sound Ambrose Evans Pritchard regurgitates a press release from the Eurasia Group risk report in the Telegraph (Sydney Morning Herald paywall avoidable version here);

The answer to questions like this in headlines is almost always, “No, you’re just trying to get eyeballs“.

Oh, that’s worrying.

By that I mean, it’s worrying that the UN isn’t also in the list of global institutions past their sell-by dates that are in crisis. In the words of Saint Augustine, “Oh Lord! Make me pure, but not yet!“.

Bloody hell, we’re almost on the brink of another world war? There’s no way the government will allow that, just think what it would do to their plans for annual skiing holidays and the values of their Caribbean villas.

It all sounds very worrying though, whatever might be the cause?

Ah, it’s just another #OrangeManBad #LiterallyHitler article.

One of these political thinktank pieces isn’t compete without an economic prediction, of course;

Sure, the EU is going to have a few challenges ahead, especially if the UK is lucky enough to exit without a deal and gets to keep the £39bn ransom, but we’re heading for deflation, are we?

Given that the USA inflation figures for 2018 were 2.54% and projected to be ~2.44% this year, I wouldn’t go holding one’s breath for it to turn negative. Something like a meteor strike would have to happen in 2019 to turn that into deflation.

Oh goodeee, another article telling us the reason why we voted to leave the EU.

Personally, it was Magna Carta, 800+ years of Common Law, legislative sovereignty, the right to determine our own immigration laws and the fact that calling 73 MEPs for a population of 67m “democracy” seems like a sicker joke than anything Louis CK could come up with. But no, Eurasia Group, do tell us why we voted Brexit.

As for the problems between China and the USA, yes sure China is not running as hot as before (-16% sales of smartphones was an interesting recent data point), however, Xi looks to be trying to rapidly build bridges with Trump. It’s almost as if, I dunno, Trump’s strategy is working. Perish the thought.

So, after you’ve scared us half to death, what’s the chances of any of this happening?

“Muddle through”.

We do like a good old fashioned muddle.

Bill’s Opinion

As you were, platoon. We’ll be just fine.

Sometimes “free” is more expensive in the long term

On my Creepbook for Business feed, the following paid content appeared today;

This piqued my interest because I’ve long suspected that, if species preservation of the “big five” in Africa was agreed to be an important aim (excuse the pun), then making hunting an efficient and sustainable industry would be the most probable route to success.

Certainly, if observable results were something one took seriously, nearly every alternative that had been tried so far hasn’t worked effectively

Similarly, if we wanted to significantly reduce the impact of poaching of elephants and rhino for ivory, flooding the market with cheaper farmed ivory might well be the only solution.

I suppose there are two other alternatives; either raise the standard of living in sub-Saharan Africa to a level where there were plenty of other employment opportunities that didn’t involve killing elephants or persuade a billion Chinese people that ivory powder doesn’t cure bone tumours.

Ockham’s Razor suggests farming is the most likely solution.

I’m not an expert on the complexities of African hunting economics, politics and species protection so I’ll defer to others with more insight.

However, the link to ENergise REsources was intriguing. Firstly, that’s a really annoying capitalisation of the 2nd letters and secondly, who are they what are they all about?

From their website;

Ok, on the one hand it’s admirable that they are offering services pro bono to charities. On the other hand, they are clearly quite choosy about which charities they are going to help.

Which charities?

Basically, any that work in the fields of the Guardian’s favourite cause célèbres.

Exhibit A;

Exhibit B;

Exhibit C;

The website shows a list and the profiles of the current members (about 25 of them) and, frankly, there’s nary a single private sector worker amongst them. If you were a charity looking for some pro bono advice from an IT professional with exactly the same ideas and experience as every other IT professional who’s ever worked for you, you’ve come to the right place.

What’s really amusing though, is the unthinking acceptance of the Guardian/BBC/NY Times prioritisation of issues to be solved. If you hadn’t read the previous paragraphs on this page and I had asked you to write a list of the top 10 priorities for left wing charities, I imagine you’d have repeated nearly all the content on their website.

This is an alternative approach that they have not considered however;

Bjorn Lømborg’s Copenhagen Consensus.

Bill’s Opinion

The refreshing thing about the Copenhagen Consensus is their recognition that, when talking about about finite resources, environmentalists almost always forget that economic resources and human hours are also finite; a dollar spent on the solution to a problem cannot be spent on another problem. Similarly, an hour of your time spent on one solution can’t be re-spent somewhere else.

In fact, it’s worse than that; there are a myriad of potential solutions to the same problem, and logic states these should be prioritised by likely success and impact.

In effect, what the Copenhagen Consensus recognises that few others in the field do, or choose to ignore, is the concept of opportunity cost.

Once you apply that economic lens, our old friend Vilfredo Pareto can bring his ruler into play and measure which activities we should do first and which we should drop because they only feel nice rather than doing any good.

But if you really want to confirm that Lømborg is an outcome-driven, facts don’t care about your feelings sort of chap, sign up to the website; when you’re asked to select a country of residence, they list USA first, not Afghanistan.

This is a group that logical thinkers can get behind without having to suffer the ideological crap.

How refreshing.

Incentives matter, #7538

How on earth will I manage to find something to be cynical about this?

Greece has awarded citizenship to three migrant fishermen – two Egyptians and an Albanian – who rescued Greeks from a devastating fire near Athens last July.

At a ceremony the Greek President, Prokopis Pavlopoulos, thanked the fishermen for showing “solidarity and humanity” by rescuing dozens of people.

“You are now European citizens too, and so you can teach all our partners who don’t realise the values of Europe, to do what they ought to do,” he said.

Bills Opinion

The three men did a great thing and deserved a reward.

The problem is, the Greeks have just indicated to the market that the price of a European passport is to heroically save a life from a fire.

Most illegal immigrants won’t do anything malicious based on this price signal.

There will be some who will, however. My prediction is that there will be at least one fire set simply to enable an illegal immigrant so “save” a life. Let’s hope nobody dies as a consequence.

The Kouk; troll or fool?

One of the Australian Labor (sic) Party’s advisors on matters economic is a shy and retiring character by the name of Stephen Koukoulas, AKA “The Kouk”.

I don’t tend to waste spend much time on social media these days but, in between large meals and long walks, I came across this provocative tweet by the person who, should Bill Shorten become Australia’s next Prime Minister for the obligatory 18 month term, will be whispering sage advice to the highest office in the land;

If, like me, you aren’t a professional economist, you will be wondering why this claim simultaneously seems to make sense but also seems like it shouldn’t be correct.

We’ll explain why it’s wrong shortly, but first, let’s recall an old brain teaser that used to go around in the school playground in various versions;

Three friends decide to split the bill after a meal at a restaurant. The waiter says the bill is £30, so each guest pays £10.

“Later the waiter realises the bill should only be £25. To rectify this, he takes £5 from the amount to return to the group.

“On the way to the table, the waiter realises that he cannot divide the money equally. As the customers didn’t know the total of the revised bill, the waiter decides to just give each of the three friends £1 and keep £2 for himself.

“Each guest got £1 back: so now each guest only paid £9; bringing the total paid to £27. The waiter has £2. And £27 + £2 = £29 so, if the guests originally handed over £30, what happened to the remaining £1?

If you haven’t come across this puzzle before the explanation is here.

It’s a classic misdirection.

Which is precisely what The Kouk is doing with his tweet.

The explanation as to why his statement is incorrect can be found here in an excellent and highly-recommended free PDF of a classic and easily read lesson on economics for mere mortals such as you and I. Treat yourself to a quick education before opening the next festive bottle.

The mistake or misdirection Koukoulas is guilty of is, helpfully, described in the very first chapter. In it, Hazlitt re-explains Bastiat’s Broken Window Fallacy and the concept of “opportunity cost”.

The explanation is so precise and economic (pun intended) in its use of words that I won’t recreate it here, but hope you follow the link and see it for yourself.

Bill’s Opinion

It is almost inconceivable that a professional “economist” is not aware of this fallacy (the first in the book!).

I can think of three possible explanations; either The Kouk is playing a festive game of trolling OR he’s deliberately misdirecting his followers for some other reason OR he’s not a very competent economist.

Of course, economics is a pseudoscience anyway. For proof of this, one only need look at the history of the so-called “Nobel Prize” for the subject; it was created as an effort to lend the subject some scientific credibility.

Brexit BATNA

The suggestion that Brexit negotiations are going poorly for the UK is a difficult one to refute.

By any objective measure, the “deal” Theresa May has been touting as the best possible outcome clearly doesn’t implement what the voters demanded she implement; The United Kingdom would still be subject to the majority of rules and regulations of the EU institutions but without the current ability to influence (albeit fractionally) the creation and amendment of said rules.

Negotiation is a very specific skill requiring a thoughtful strategy, access to as many relevant data points as possible and the maturity and strength of character to compromise or hold to key principles.

Many professionals earn a good living from undertaking the role of negotiator on behalf of clients; depending on the transaction one is undertaking, a lawyer, for example, is acting as your negotiator.

However, the one aspect a professional negotiator or, in the case of Brexit, a huge army of negotiators, can’t control is the competence and moral character of the “client”.

Imagine, for example, if the Prime Minister and cabinet were firmly of the opinion that the British public had chosen the correct option in the referendum and that the EU was a corrupt den of anti-democratic authoritarians who couldn’t be trusted to negotiate in good faith. The Brexit negotiations’ timeline might have looked something like this;

– 24th June 2016 – Article 50 delivered to the EU along with a telephone number printed on a business card with the words, “Your call is important to us. Please do let us know if you have an offer which you feel may be of interest to the people of the United Kingdom. Please note, this number will only be staffed between 2pm and 3pm on the first Tuesday of each month“.

– 24th June 2016 – The “Direct Debit” arrangements from all UK government bank accounts to the EU are cancelled.

– 24th June 2016 – The responsibility for the detailed planning for a move to WTO rules on 24th June 2018 is delegated to the relevant agencies and peak industry bodies. Note; delegated not micro-managed, as this is what they get paid for.

– That’s it. If the EU offered any deal that improves on WTO arrangements whilst still resulting in the UK leaving, a separate team would be tasked with reviewing and comparing it. However, work on the WTO option would continue at full speed.

That this, or a version thereof, wasn’t the approach tells us (and, more importantly, told the EU negotiation team) one crucial fact. The UK government has never had a credible BATNA. There was no palatable Plan B ready in case the EU negotiated in bad faith, nor was one even contemplated.

The EU haven’t played this particularly well, they didn’t need to, the UK negotiators were hamstrung from the start by a clear requirement from the “client” that a deal must be done at all cost…… which is the equivalent of trying to negotiate the price of an ice-cream while you have a crying child with you.

Bill’s Opinion

In years to come, Theresa May’s incompetent handling of the negotiations will be seen as a case study in what not to do.

That statement assumes, of course, that she really did intend to implement an exit from the EU, its rules, regulations and institutions.

Many observers might question that assumption.