Does the government and the BBC actually believe that English = white?

I’m serious. As I read this on the road today (passenger, not driver), it did rather blow my mind.

Probe into housing ‘unfairness’

An inquiry into the “widespread perception” that immigrants are jumping housing queues is to be launched by the Equalities and Human Rights Commission.

Its head, Trevor Phillips, said the belief migrants were gaining “unfair advantages” was fuelling tensions.

And the question of “whether the housing system is being abused to the detriment of anyone – including white families” had to be finally settled.

…

In a speech in Birmingham, Mr Phillips said people were “realistic” about migration and accepted they had to share services such as schools and hospitals with new arrivals.

But he added: “What, however, does drive tension and hostility is a widespread public perception, that new migrants too often get an unfair advantages to which they are not entitled.

“And one area where this idea of unfairness is most frequently alleged – is in housing allocation.

“Specifically that white families are cheated out of their right to social housing by newly arrived migrants.”

At no point in their story does the BBC indicate that they, at least, understand that “English” does not equal “white”; that migrants can also be “white”; or that residents and citizens can also not be “white”. They do offer this:

He said there was “no reliable evidence to back up this claim” and public feeling was “driven by careless media and racist parties”.

He must be referring to (a) people who give speeches equating citizenship in the UK with being “white”, and/or (b) media organisations who reproduce such speeches with no insertion of common sense. Right?

Perhaps the rest of us just get to let our hair down, while the Tories rattle the chains of Enoch Powell. All things being relative, and so forth. I look forward to a resurgence in the socially-acceptable racism of newspaper articles about Gypsies, in the coming months.

Quantum Mechanics

New book (for me).

Quantum Mechanics and Experience, by David Z Albert

Some of it is readable at Google Books (truly a great contribution to book-previewing). From the Harvard University Press page:

The more science tells us about the world, the stranger it looks. Ever since physics first penetrated the atom, early in this century, what it found there has stood as a radical and unanswered challenge to many of our most cherished conceptions of nature. It has literally been called into question since then whether or not there are always objective matters of fact about the whereabouts of subatomic particles, or about the locations of tables and chairs, or even about the very contents of our thoughts. A new kind of uncertainty has become a principle of science.

This book is an original and provocative investigation of that challenge, as well as a novel attempt at writing about science in a style that is simultaneously elementary and deep. It is a lucid and self-contained introduction to the foundations of quantum mechanics, accessible to anyone with a high school mathematics education, and at the same time a rigorous discussion of the most important recent advances in our understanding of that subject, some of which are due to the author himself.

It is very easy to follow, and quite interesting (so far).

Who in hell would mine under a river, anyway?

I mean, I realise that I just wrote, below, about agents and self-interest, but this was – to me – a lesson in recklessness; that’s even allowing for the fact that we’re talking about coal-mining.

Mines blamed for threat to water supply

Unrestricted underground coal mining south of Sydney is cracking riverbeds, draining swamps and putting the city’s water supply at risk, experts say.

…

In one of the most dramatic cases, longwall panels 500 metres beneath the Waratah Rivulet, to the west of Helensburgh, have cracked the sandstone bedrock, in some places 20 metres across, split rock ledges and tilted the riverbed. Water flows have disappeared down fractures along a 2 kilometre stretch of river, environmentalists say.

Within 20 years, 91 per cent of the Upper Nepean and Woronora catchments will have been undermined, the Sydney Catchment Authority has told a government inquiry. Dams in these areas are the sole source of water for the Illawarra, Camden, Campbelltown, and part of Wollondilly, and provide water to the Prospect water treatment plant.

It appears that this is filtering out via an inquiry into the effects of coal-mining beneath water catchments. The return to the government is AUD600m per year. The process:

Longwall mining removes a panel of coal by working a face of up to 300 metres wide and up to two kilometres long. The main problem is subsidence, most of which happens as soon as the mining begins.

Nor is this peculiar to NSW. Subsidence, the collapse of overlying rock layers into the void created by the mined-out coal (i.e. pretty bloody predictable) is inexorably going to follow longwall mining. All over.

Martin Krogh, in his submission to the inquiry (that link is to a .pdf), provided the following (by all appearances fairly accurate) summation:

“The short-term gains in increased efficiency of coal extraction (and profit from sales) may come at the expense of the long-term sustainability of Sydney’s metropolitan drinking water supply and environments,”

His submission is quite interesting, as are a bunch of others, findable by wandering aroung on Google. It still strikes me as idiotic to hollow-out out a mass of rock, with another mass above it and a river above that. Especially when we bloody need that river for drinking.

I look forward to the burgeoning market for the technological ‘fix’ to re-extract the fresh water from the bottom of a polluted coal shaft. Water-mining. You read it here first.

“…there are “unavoidable” inflationary pressures in the economy.”

From the papers.

Prime Minister John Howard has effectively conceded an interest rate rise is inevitable this week, saying there are “unavoidable” inflationary pressures in the economy.

The Reserve Bank of Australia is widely tipped to raise official interest rates to 6.75 per cent on Wednesday – the sixth consecutive rise since the 2004 federal election when Mr Howard vowed to keep rates at record lows.

While Treasurer Peter Costello believes “consumers’ inflation” is well behaved at an annual rate of 1.9 per cent, the RBA’s favoured measure of underlying inflation show prices rising to the top of its 2-3 per cent inflation target band.

I’ll leave aside discussion of what a demonstrable tit each such act of central bank responsibility makes the chairman of the Federal Reserve, here. What is more important is

1. We really did not need the Prime Minister to accept an(other, and the 6th) increase in interest rates
2. The Prime Minister has nothing to do with it. Raising a white flag? He’s not even supposed to be in the battle.

To the extent that he had a saving grace:

Mr Howard did not go as far to say that interest rates would go up on Wednesday, the day after the RBA board meeting.

“That’s a matter for the Reserve Bank,” Mr Howard said.

We tie government/politics to central bank activities entirely too much, these days, and we do so at our peril.

This one, finally, was great:

Deputy Prime Minister Mark Vaile said the Government was doing all it could to offset the drought, which has forced food prices higher.

“The best thing we can do is to share some of the prosperity generated in Australia,” Mr Vaile told the Ten Network.

“We have done that year on year on year with tax cuts and we have done it again with our commitment during the course of this election campaign with $34 billion worth of tax cuts to try and help middle to lower income earners to deal with those cost pressures.”

The finance minister is insisting that putting AUD34bn into peoples’ pockets is not inflationary. He even says plenty of economists agree with him. I’ve studied and taught Economics (and studied alongside others who’ve graduated with Economics degrees). I’ve seen what it takes to earn a mere Bachelor’s degree in Economics and – feasibly – label one’s self thereas, thereafter. I can tell you: it isn’t much.

Until the finance minister lines those men and women up in front of us, so they can tell us (a) how qualified they actually are, and (b) what other crazy shit they believe, I’ll just continue to assume they’re not a club to which it is in my interests to belong. In the meantime, the Reserve Bank has not choice but to increase interest rates. With both parties effectively promising demand-pull inflation in their electioneering attempts to ameliorate cost-push inflation, there is no other option (“core” inflation notwithstanding).

HowTo: The Prisoner’s Dilemma. Or, strikes are neither good nor bad economics. Just economics.

This has been bothering me since I saw it (which is to say, since I began to have no time for anything but dealing with exams and looking up Mos Def clips on Youtube – what?).

From the Huffington Post, sometime during the weekend (just prior to the writers’ strike).

… the representatives of the Writers Guild have to remember is that all union contract negotiations are to set minimums, and that the effect of the change in residuals from DVDs and New Media they are seeking will not rise to the level of revenue they are asking for – or what the strike is going to cost the Guild’s active members. Once again, the eventual cost of a strike will exceed the financial gain being sought.

Going on strike to lose more than you gain is not smart negotiating.

The writer (Ari Emanuel) is making more than just this point, but this point is still his central one, and it betrays a lack of understanding of at least game theory.

Simultaneous Games

Let’s simplify the game a bit. Two players (writers and studios, i.e. a Duopoly) are bargaining for revenue (the payoff). They can co-operate or not co-operate (writers can strike or not strike; studios can pay the writers demands or not pay). This gives us the Prisoner’s Dilemma, and the following payoff matrix:

Or does it? In Payoff Matrix 1 (before-the-comma = Writers, after-the-comma = Studios), I’m suggesting more-or-less a zero-sum game, working from the status quo (i.e. revenues are re-distributed). Each player’s Dominant Strategy varies: Studios should not co-operate, but writers should – i.e. striking is, as Ari Emanuel suggests, a bad move (but not, I would remind you, bad economics – we’re having fun, right?). This is following his suggestion that they lose more than they gain (reflected in the payoffs). Striking is not the Nash Equilibrium.

Suppose instead that the payoff to co-operation includes some compromise, but ‘winning’ by non-co-operation secures higher payoff (since you then do not need to compromise – Gingrich revolution, anyone?). Then we’d have another imaginary payoff matrix, such as:

Here the Dominant Strategies converge to the classic Nash Equilibria of non-co-operation, and it’s perfectly sensible, since these are as the Dominant Strategies dictate (the Dominant Strategy is the one that has the highest payoff, irrespective of what the other player does).

The real lesson, I hope you saw, was that that we don’t really know the payoffs, and changing the payoffs changes everything. Clearly the writers believe that non-co-operation will benefit them. The other lesson is that we should be careful about dealing with this as a simultaneous game.

Sequential Games

Suppose that, rather than this paper-rock-scissors-simultaneity, the Guild of whomever and the studios bargain in an ongoing game, of which this is one episode. There is no Nash Equilibrium needed, necessarily, because repeated games inter-act (or, at least, their players do).

This then generates the real question: to what end does this strike tend? Is it designed to secure a higher payoff than co-operation in this game? Or is it designed to secure higher payoffs in future games? My thoughts are that it is more likely to be the latter.

The key to a good bluff, after all, is that, sometimes, you do need to be holding all the cards (Bernanke could do with being reminded of this, for example – if you can tear him away from cutting interest rates everytime he gets 4 other people into a room).

This, then, makes the writers’ strike an excellent game-theoretic move. Studios need to be reminded that there is punishment for repeated non-co-operation (remember, their Dominant Strategy was non-co-operation, so they will do that always) – periodically they will need to be punished for this. Every such player in every such repeated game needs such a reminder (Democrats might do with being reminded of this fact, if they can remember where they stashed away their backbones, back in ‘95).

So, to Ari Emanuel’s claim that political posturing is going to interfere with good economics (question mark): the posturing – political or not – is part of the economics. He also closes his argument with calling for consideration of everybody else affected:

… not only for the sake of the writers, the studios, and the networks but for the millions of people in the community who will be hurt by a strike, including below-the-line workers and all those who aren’t in show business but whose livelihood is dependent on a Hollywood that is up and running.

That is, sad to say, bad economics. None of those people were in the game, for a good reason: they are not in the game. The writers’ guild is not responsible for the outcomes to non-writers. If those players want to participate, they ought to form collective representation and make the writers another offer not to strike – i.e. compensate the writers themselves, for the losses they will incur by leaving the studios to take advantage of them (again). Or compensate the studios for co-operating.

Something, though. The Dominant Strategies are the Dominant Strategies, and anyone trying to overcome those on behalf of negative externalities needs to come up with compensation to shift those Dominant Strategies to ones without negative externalities (the Coasean solution to negative externalities in repeated games – I think I just earned my Nobel prize).

The Agency Problem

A final problem, not addressed in the article, but still relevant with unions and industrial action. Consider the following:

Who strikes? The union.

Why? To secure better outcomes for the members of the union.

Really? Not necessarily, no.

What does the Union have to gain? More than just good outcomes for its members. What does the GOP have to gain from rail-roading Congress and the Senate away from a properly-functioning house of democracy? The people lose, but the GOP looks tough for its members – who re-elect them, support them, etc.

Unions can push a strike earlier than when a strike is deemed to be properly necessarily. They can push – and maintain – a strike when, in a repeated game, they come to be perceived as weak. This is the agency problem: the union telling you that you need to strike is the same one that will sell it to you.

We don’t like to think this way (I don’t – I’m Australian, for Cliff’s sake). However, we also do not like to think this way about doctor’s, dentists, lawyers (maybe not lawyers), politicians – the list goes on and on. Climate change scientists. Engineers. Why not unions?

This is, I should say, also neither good nor bad economics – just economics. People work according to their own self-interests. We assume unions push a strike because their self-interest accord with those of their members (like government, like the medical profession, like the sciences); there’s no reason why this always has to be the case, though. If their self-interests diverge, the Union, as an economic agent, will still operate in its own self-interest.

So: strikes. Neither good economics, nor bad. Just economics.