Politics is not the Point

I have received a surprisingly large number of calls, emails and text messges this morning - most of them from women. Just when I thought it was dying, Facebook has gone nuts.

Julia Gillard is notable for a number of reasons - she's from the factional left, she's Victorian, she likes AFL, she's not married and she's a woman. She would be perfect, if only she supported Carlton.

From a political perspective, the fact that she's female is one of the less interesting aspects of the recent coup. Many people aren't happy with the PM being replaced through an internal process, rather than a general election. Many Liberals are unhappy because they were looking forward to a Rudd-Abbott election. Divisions in political views will persist. Not everything, though, is confined to politics.

Less than a decade ago, I was studying towards an electrical engineering degree. Academically, I was perfect for engineering - I was good at maths and science and I liked to build things. Despite this, I hated it. I had come from an all girls school and the culture shock was radical. The teaching style was very aggressive, put-downs and adversarial responses from lecturers were the norm, staff had very poor communication skills and questions were treated as signs of incompetance. I did well in units run by the maths and science faculties, but poorly in those taught by the engineering faculty.

To make matters worse, the course was full of group work and young men (many straight from single-sex schools) at an age where they were both terrified but strangely intrigued by women. It was often hard to find groups to work with. On a couple of occasions, the young men I was working with assumed that 'group work' meant that we were dating.

In around the second year of my degree, I relayed this experience to one of my uncles - himself an electrical engineer - and mentioned that I thought many of the females in my course were struggling with similar issues. His reponse was to explain to me how "women's aptitudes" were not at all suited to engineering and he wasn't surprised I was struggling.

At the time, I really couldn't beleive what my uncle was telling me. I had met men who hated me outright for being female and having opinions. What I found shocking was that, for my uncle, the idea that women had inferior capabilities was so ingrained in his consciousness that he hadn't heard anything I'd said. He was genuinely trying to be supportive by pointing out that my struggles with the culture were in fact intellectual failings and that I should have expected this because I was genetically inferior*.

This type of gender discrimination has always been the the most troubling for me and anecdotal evidence suggest that many women have had similar experiences. Formal, structured barriers are now uncommon but subconscious prejudice (not just in relation to geneder issue) persists. More disturbingly, I've often struggled with how you try to address a bias that people will not (or possible cannot**) admit to having.

One of my Facebook updates this morning was from a friend who is a died-in-wool Liberal stalwart. She was lamenting Labor processes and calling it a "dismal day for the Australian people". She appeared even more incensed by the fact that this process had led to "our first female PM". Even in the midst of being a one-eyed supporter, the significance of the first female Prime Minister was not lost.

Why, in this age where women can earn an income and get mortgages in their own names, does everyone seem so overwhelmed by having a female Prime Minister? I can assume that it's because, at some time, most women with certain ambitions have faced up to the proverbial "caring uncle" and have learned that there is no point in trying to argue - some people just need to be shown.

* At the time I found this response completely baffling. If you, too, find this behaviour odd I can recommend this article on the Dunning-Kreuger Effect.
** See above article.

Religious Education

A friend recently told me a story regarding her four year old son, who has recently started prep at a local state school.

They were on a long car trip and she had been coming up with games to prevent him from getting irritable. In one game, she named an object and he had to think about how long it would take to build. It was a particularly good game because with limited input she could keep him occupied for quite a while. The question "how long would it take to build a house?" became a discussion about what parts a house has and how long it would take to build each of them. This game was going well and the boy was getting better at it, so she thought she'd stretch him a little with "how long would it take to build a whole city?". The boy replied "don't be silly, God made the cities".

This response obviously came as a surprise to someone with no record of church attendance and a child at a non-denominational school. It turns out the school had introduced a religious education program.

The fact is, kids are fed 'information' from a whole lot of sources and I don't consider the occasional hour of RE to be a major concern. I spent most of my school days at either Catholic or Anglican schools. While most of those who conducted my theological educaltion were intelligent and well-rounded, I did come the occasional crazy who had weasled into a school to try and push an ideological agenda onto impressionable minds. I find comfort in the lack of success in attempts to indoctrinate me.

Years of listening to Christian sermons basically just left me with a good store of parables and a better understanding of the frequent biblical references in literature and movies. By way of contrast, years worth of advertising have meant that now, in my late 20s, I still occasionally feel compelled to buy a box of Coco Pops.

The thing I find concerning is that someone has evidently told this kid that "God made cities". Despite my many years of attending chapel services, I can't say I remember that part of the bible. From a teaching perspective, this is like having your kid come home and tell you that "their" and "there" can be used interchangeably, because their English teacher couldn't be assed explaining the difference.

Third Wave of Bullshit

Around six months ago I was wandering through town on a Saturday and happened upon a new cafe at the back end of a department store. With half an hour to spare before meeting a friend, I wandered in.

I like coffee, wine cheese and other things that fit firmly in the category of "stuff white people like", but I try not to be too much of a wanker about it. I like things like single origin coffee, Japanese syphons and cat poo coffee because I find it interesting to see what people can make from a product when they apply their efforts to getting the details right. However, I don't rave on about these things to people that don't care and when I'm visiting my parents I can share an instant coffee (white with one) without the need to wrinkle my nose. I like winery tours, but I also like anonymous carafe wine drunk from water glasses.

So there I was, sniffing my way through the "200 coffee flavours" and watching the young men with uniformly bad facial hair gazing at their syphons. I flicked through the menu and picked out a $5 syphon coffee.

$5 is expensive for a coffee. I'm sufficiently commercially cynical that I realise that while the dedicated baristas believe single origin coffee is all about art, the good shop owners actually know about earning higher gross margins and artificially differentiating in a commodity market.

The barista interjected. "Oh, you want the premium beans from the high plateau regions of Mount Kenya?"
"Yes."
"That's a great coffee, but I reckon you should have the Colombian coffee made from 16 coffee beans harvested from the north west side of the sacred tree descended from the original Jesuit imports from 1730."

The advice or staff in a restaurant should always be respected but should always be regarded with a grain of cynicism. If the staff at a restaurant recommend the chicken, this could mean "the chicken is the bast dish on the menu". It could also mean "we have three chickens left over from last night and if we can't get rid of them at this lunch service we'll need to toss them out". I know this because I've been the staff.

"No - happy with the Kenyan."
I sit down and wait for my indulgent purchase and while I'm doing to I skim over the menu on my table. As I'm doing so, something catches my eye. That Colombian coffee that the mo-fo at the counter casually slipped into conversation is $25 for an espresso. A fact he completely failed to mention.

I haven't been back. I like their fit out and Tolix chairs and I like their coffee. I don't like someone trying to screw me with a $25 coffee.

I had only really been compelled to wander into this department store cafe because I knew that the cafe owner had been delivering on my caffeine (and miso soup*) requirements since my uni days and continued to do so through a venture just near my house. The latter was a personal favourite of mine, but I've recently promised myself I'll stop going back there, too**.

The fact is, I like good coffee and I don't mind spending a bit more every now and again to try something out. But if you want to sell a premium product, don't do it by getting having some obnoxious 20 year old kid with bum fluff on his chin try to make me feel insecure about what I'm ordering. I have far more important things to be insecure about.

*miso soup is a top-notch hang-over cure; try it.
** consider this material for a potential sequel

The Shitbox Premium

I bought a house late last year. The whole process was horrible. I don't know why Melbourne became so enamoured with auctions as a means of selling houses, but it seems that now that everyone is doing it, everyone must continue. I experienced a few occasions where an owner was going to sell on the private market, but as soon as anyone made an offer near the asking price they panicked and switched to an auction.

Interestingly, after months of observation and trying to make sense of the bullshit prices that real estate agents quote on properties (add 20% for most and 25%+ for Biggin&Scott or Hocking Stewart), I eventually came to the realisation that it was possible to apply the "preferred habitat" theory to the real estate market. Not only did I find this interesting, I also enjoyed the pun.

The "preferred habitat" theory is an explanation for the shape of the forward curve of interest rates. The idea is that some people want to invest their money for a short period of time and some people want to invest for a long time. However, if long term interest rates are high, people who prefer short term investments will invest for a long period, and vice versa. Basically, it says that people will shift from their preferred strategy, but require a premium payment to do so.

When we were looking at houses, we found that other prospective buyers had a "preferred habitat" that fell into one of two categories; they were either looking for a renovation project, or they were looking for a finished home.

This strategic disjoint led to an interesting outcome; those houses that were well finished and beautifully presented, unsurprisingly, appeared to sell for a premium. More surprisingly, at the other end of the spectrum, houses that were falling down and smelled like cat piss also seemed to sell for relatively high prices; a phenomenon I dubbed the "shitbox premium".

The shitbox premium seemed to rely on renovators underestimating the cost of renovations, and the expectations that whatever price they paid whould be a 'bargain' given the house was so delapidated. Meanwhile, tired looking houses with ugly 1980s facades seemed to sell at a relative discount. It seemed like many of the wide-eyed renovators had an optimistic view of how easy it would be to whack on a second story and move the downstairs toilet, but both the renovators and the 'perfect home' buyers struggled to see past terracota tiles and green marble in the bathroom.

The Unelectable

Over the past couple of days across several different media I have heard people raise the question of whether "Tony Abbott is unelectable". This conversational motif triggers rings alarm bells in my head. My social influences tend to be middle-class, left-leaning, urban, progressive types. They discuss issues at length. As a general rule, this means that if they reach the point that they're having earnest conversation about something this probably means generally means that the "working families" of Australia accepted it as a reality six months ago.

Ideologically, I guess I belong to a class of Liberal voters exiled to the wilderness for a generation as the consequence of some Liberal party factional rivalry that I don't fully understand. Practically, I'm just a "swinging voter" and like most others I know, I can't help but feel like the upcoming federal election is a bit like a choosing between a punch in the head or kick in the proverbial balls.

I guess I should be upfront about the fact that I don't like Tony Abbott all that much. As a (relatively) young, educated female I feel like that's a bit of cliche. It took me a while to pin down exactly why but then I remembered the issues with the RU486 abortion debate back in 2005/06. And then I remembered that inopportune use of the word 'gift' and realised that the though still has the power to bring a bit of vomit to the back of my mouth. This quote from his days writing for his university student paper doesn't sit well with me either:

"I think it would be folly to expect that women will ever dominate or even approach equal representation in a large number of areas simply because their aptitudes, abilities and interests are different for physiological reasons."

I said some dumb stuff as a 21 year old, too, but I didn't believe it fervently enough to write articles about it for the student paper.

Despite having no great affection for the "churchy loser", I'm not waving the "Kevin '11" flag, either. The current government has an uncanny ability to screw up on the PR front and for that to impact its effectiveness. The problem is that 'power' and 'authority' are often self fulfilling. In the US, Barack Obama affirmed his political power by getting a health care bill through Congress. He may have had to significantly compromise the bill, polarise voters, add to the (already potent) vitriol of Republicans and personally beg favours from half of Washington; but it doesn't matter because he 'won' in the eyes of the nation.

By contrast, in Australia, the ramifications of the political disaster of the CPRS are still reverberating. By failing to get this key piece of legislation through, the Government was forced into a position of having to make excuses. They've since been mauled on a whole range of non-issues and handled the fallout very poorly.

To make matters worse, the RSPT, irrespective of its prospective merits or pitfalls, smells a bit like a desperate throwback to good, old-fashioned class warfare. Unfortunately, while the Government was a loser in the CPRS bill failure, the mining industry is fresh off a win, full of confidence in its ability to influence policy and rearing to go.

In the depths of my mind of nerdy analogies, I feel like we're sitting near the mean of a positively skewed distribution. To the left are all the negative potential outcomes of re-electing a Labor Government. They're minor issues that will almost certainly occur; more home insulation-type problems, weak explanations of policy and wasted Treasury resources. To the right is a long tail of negative potential outcomes under a Coalition Government; events that are unlikely but severe. Hanson-era refugee policies, major shortfalls in infrastructure investment, Tony trying to make abortion a political issue.

Risk-aversion suggests we should hope Kevin gets re-elected. If for no other reason than to avoid the terrible irony of the country being run by an Abbott and a Bishop.

Women Lie: A Mathemetical Example

Some months ago and after around 10 pints of ale, an acquaintance and I had a discussion about women and sex. My drinking buddy, like most men I know, was adamant that he had slept with far more women than his girlfriend had men.

I find this position intriguing. Most men seem to think this and I've always seen it as an act of self-delusion. I know lots of women and the stories they tell me may not necessarily correspond with what they tell potential suitors. Unfortunately, women are still compelled to flatter men's egos in this regard. Women can present a mythical number when called upon just as easily as you tell your boss that your job interview tomorrow afternoon is a "doctor's appointment".

If you consider all intra-species, heterosexual coital encounters it's necessary that just as many women were involved as men. Most men can accept this, they just don't think it was their wife or girlfriend involved.

The fact is that for most men the precise opposite is true: the woman you are sleeping with has probably slept with more people than you have. And there is a mathematical proof.

This radical claim is an extension of something called the "Friendship Paradox". I will avoid trying to get into the mathematical details, but the principle is that someone who has had fewer sexual partners is far less likely to be sleeping with you than someone who has had many. If a woman has only ever slept with one man, it's unlikely it will be you. If she has slept with many men, then you may be in with a chance.

Assume the following diagram shows that sexual interactions between eight heterosexual friends; four men and four women:The table below shows the number of lovers each person has had, how many lovers their lovers have had in total and on average:

Note that the average number of lovers each person has is two. However, their partners have on average had almost three partners each.

Of course, the same can be said for the women: their average partner will have had more partners than them. However, in my experience women seem far less interested in convincing themselves otherwise.

Three points on RSPT

Three points about proposed "Resources Super Profits Tax" that I wish people would talk about more:

1. Dutch Disease
Dutch disease starts when you build a mine and start exporting your resources. If you are a miner, this is great news because you're making money. Importers go to foreign currency markets, trade their own currency for Australian dollars and use the AUD to pay you. Fantastic. If you're a miner.

However, if you're involved in farming or manufacturing this whole transaction is a whole lot less attractive. As demand for Australian dollars increases, the currency appreciates. You have nothing to do with mining and there's been no change to your business model. However, the cost of your produce from the perspective of your overseas customers may have just gone up 20%, and now they don't want to buy as much from you.

This phenomenon is not restricted to Australia - it's a critical issue with respect to the developing world. However, I have never heard anyone use it as a justification for the RSPT. It is important because it means that when the case is presented for other states to benefit from the natural resource wealth of WA and Queensland, it's not just a 'cash grab'. It actually reflects the fact that mining has made material inroads into screwing up the earning potential of non-resource rich states.

2. Mining and Manufacturing Are Different
I have heard arguments protesting against this tax on the basis that it sets a dangerous precedent for other industries. Undoubtedly, rapid changes in tax law may increase the perceived sovereign risk of investing in Australian assets. However, it's drawing a long bow to suggest the RSPT sets a precedent across industries.

The theoretical underpinning for this type of tax is that the capital used to produce resource profits is derived from a common resource. That is, stuff in the ground is owned by the government (and by extension, citizens) until it is dug up and sold. This is not an issue for most industries. In manufacturing you buy inputs, add value through labour, capital and technology then sell them. In banking, you buy money, add value and sell it.

Seen in a different light; the argument about the RSPT is not so much about thinking about how to tax profits, it's about negotiating how much mining companies should pay for their inputs. The government just wants to use profits as one of the factors in setting the price.

3. A Fair Tax Rate
There seem to be two sides to this debate; those who think mining companies should pay more and those who think they already pay too much. Surely, the issue should begin with the question of what constitutes an appropriate level and structure for mining taxation?

The failure to answer this question cuts both ways. Those who support the tax say that miners
should pay "more", but their failure to quantify a limit suggests they would be happy to raise the tax rate to the point of removing all profits and making the industry unviable. Those who argue that current tax rates are already too high fail to present any objective economic argument as to "why?".