This has GOT to stop.

31 July, 2006

The incident in Qana today is the latest of a catalogue of events which communicates the obvious – there are no winners in war. The battle of spin has raged across the international community with the US, Israel and Tony Blair making use of one set of language and Iran and Hezbollah another, while hundreds of civilians of at least two nationalities and five religions are slaughtered. The talk, the delays, the endless talk, but no-one seems to genuinely care about the people, both Israeli and Lebanese, either losing their lives or livelihoods or in fear of doing so.

The part which is of most concern is that some nations are immune to international law while others are persecuted by it. The case of Iran is interesting – unlike North Korea, Iran has not broken any international laws. Iran also has not violated any other country’s sovereignty. It has cooperated with the IAEA. However, the international community insist on moving the goalposts as a means to control Iran’s activities within what the US and several European countries consider an acceptable set of limits which they have in effect unilaterally imposed on Iran. The end result has been an increasingly entrenched position from Iran, and a feeling that abiding by the rules is useless as they will not be rewarded for it.

Israel has on four occasions invaded other countries, and at present illegally occupies part of Syria (Golan Heights) as well as the Palestinian territories, in contravention of UN resolution 242. They continue to receive billions of dollars of aid from the US, and we now know that the US is supplying deadly munitions to them via a compliant UK administration (which may soon fall from internal outrage about its complicity in this affair).

UN resolution 1559 (2005), which Israel and the US make considerable use of in their rhetoric, was passed in a set of circumstances where Lebanon was trying to shake off a foreign power which had dominated its political life for the previous 30 years. UN resolution 1441 (2002) was creatively interpreted to allow the US to go to war. Yet UN resolution 242 (1967) calling on Israel to retreat to its borders has been left to dry, and any attempt to pass any resolution criticising Israel today is vetoed by the US under the archaic post-war system which allowed the five leading countries to hold veto powers.

Is a war crime a war crime or not? The Lebanese president was certainly in no doubt of that when he addressed the media today. But who gets prosecuted? While Saddam’s war crimes case is wrapping up in Baghdad, complete with seemingly biased judge, questionable process and certain verdict, one can be fairly sure that the international community, whose first responsibility should be to the citizens of the world always, will dismiss this as some kind of mistake or justify it in terms of Hezbollah’s attacks on Israel. Those too are crimes against civilians that should be proscuted, but they probably will be – my question is why two civilians can die and one receives justice and the other a kick in the guts by wealthy Western leaders and their media entourages.

It is my hope that the Qana incident (actually the second Qana incident – the last atrocity there is documented in a link from the BBC story) will be a catalyst to stop the spin and help the people who need it most. Commission of unpunishable war crimes only gives rise to helpless anger and a desire to avenge, which in turn is a detriment to Israel’s future security needs.

Recommended reading:
* Philippe Sands (international jurist) – “Lawless World” – documents both the rise of international law and its abuse in recent years.
* Viewpoint from the Arab world (26 Jul) – found on another blog.

* Declaration: The author believes that Israel has the right to exist and a need for secure and peaceful existence within its borders. The author is only 3 generations removed from European Jews, at least 13 of whom died in Treblinka and Dachau, and fears the consequences of excessive Israeli force to its future security and that of a future viable Palestinian state. The author is also from Northern Ireland and is more than used to pointless standoffs where innocents on both sides die and both armed sides have their hands covered in blood.


Calls for long-term mortgages from financial institutions meet with concern

30 July, 2006

It seems the world of finance is responding to the unsustainable boom in housing prices and the inability of young people to enter the market by extending the term over which the loan is repaid. In an ideal world, this means that the monthly repayments, and the pressure on families’ budgets, would decrease considerably. Lender GE Money already offers a 40-year mortgage and reports today suggest at least two of Australia’s major banks are considering offering 40- and 50-year options. Obviously, the longer the bank has the money, the more interest they collect, so the financial incentive for them to offer such plans is obvious.

Labor’s Wayne Swan has told the ABC Insiders program that “people are up to their eyeballs in debt” and that he would be “extremely wary about another facility out there which encourages Australians to go further into debt”.

My concern from an economic viewpoint is the result of reducing monthly repayments. The market works on supply and demand. If you reduce the amount that people are paying each month, their capacity to pay more per month increases, which puts strong upward pressure on prices and drives housing prices even more out of the market.

In addition, a 50-year loan taken at age 25 means that one would still be making full repayments at age 74. For many years there has been concerns about a looming crisis surrounding Australia’s aging population and the effect this will have on the economy and the ability of older people to be sustained by a shrinking tax base of younger workers. Furthermore, many people die before age 74 – what happens to the debt then, or the people living in the not-yet-paid-for house? There’s also the risk of a future flood of bank-owned property forcing prices down unnaturally and penalising those who are mortgaged to the hilt and wish to sell.

There are too many questions and not enough answers about this proposal. Too often, the banks and financial institutions act in a way which benefits their own bottom line while not representing responsible social behaviour.

50-year home loans plan finds support (ABC Online)
Labor wary of 40-year loans (ABC Online)

An interesting perspective on minimum wage

30 July, 2006

A friend of mine wrote an interesting piece on the minimum wage, which I essentially agree with, arguing that in an environment where employers (buyers in the labour market) have too much influence in setting wage levels, and that the minimum wage actually serves to correct an imperfect market, rather than impose unreasonable constraints.

It’s obvious to me (and to most Australians I would think) that giving people money over and above survival allows them to recycle the money through the Australian economy rather than on low-profit survival stocks and getting heavily into debt.

I heard someone on the radio yesterday talking about the old arbitration commission, and how the unions “overbid” wages while business groups gave “reasonable” ones, and therefore when the amount is determined, the new wages were “overvalued”. The guy was pushing for the removal of minimum wage, and had no problem telling everyone that such a thing will “be good for the economy”.

Let it be said, first of all, that this is true in a perfectly competitive market. It is *not* true in a monopsony however. A monopsony is the inverse of a monopoly; there are many sellers but only one buyer. This situation can apply to the labour market, when there are few relevant employers.

Assuming that every worker gets paid the same amount of money for the same job, the marginal cost of employing workers in a monopsony increases very rapidly, resulting in less people being employed, and a wage that is far less than optimal for the economy.

The interesting thing about a minimum wage is that it actually pushes the intersection of the cost/revenue curves to the right (forcing it closer towards a competitive market system), thereby INCREASING both employment and wages at the same time. What is most remarkable about this situation is that even if the minimum wage is above the most appropriate wage there is still a net increase in total wealth generated, compared to the initial raw monopsony. In other words, even an over-valued minimum wage is better for monopsony based labour markets.

Monopsonies have been shown to exist in numerous labour markets, particularly in markets where the employer has (mon/olig)opoly traits. In a small economy like Australia, this is quite common (even if it is only done via cartels). In other words, a minimum wage causes a loss of employment/wealth on the “competitive” swing, but makes it up on the “monopsony” merry-go-round. At the very least, the social gains by ensuring availability of health/education/choice outweighs the costs.

The only thing that does fall in a minimum wage is the net profit of that single buyer, in a similar way that monopolies usually have lower profits when there are competitors around. But few people apart from the business themselves would say that a monopoly is good for the economy. If they wish to promote the idea that no minimum wage is good, they should at least be honest and say it’s great for a small increase in *profits*. To say it’s good for the economy is only partially true and arguably misleading. I don’t see the business interest groups clarifying this though.

Smart card introduction a serious worry

25 July, 2006

Recently, the Federal Government has been talking of a new “smart card” to access Centrelink and other benefits. Supporters of the idea have envisaged something of a one-stop shop where all the information is carried on the card, with the risk of duplication between agencies and possible fraud being reduced.

Articles can be found here:

ABC 26/4/06 – Smart card gets cabinet approval (7:30 Report)
ABC 26/4/06 – Banks warming to smart card idea: Hockey (ABC Online)

The federal services minister, Joe Hockey, has been pushing the idea in recent days of making the cards usable from bank EFTPOS machines, but has yet to resolve issues regarding interchange fees and the like with the banks despite what by all accounts appear to be quite forceful negotiations.

It is well documented that Centrelink has real trouble coping with its caseload as things stand – their IT systems often screw up or produce unpredictable results, especially with cases operating intermittently over a number of years, and understaffing and lack of training have been problems for years, although to be fair, Centrelink has been working on these issues and many of the most critical ones that plagued them in the late 1990s are now consigned to history. Also, the EFTPOS system is operated by banks which have been increasing both fees and profits over the entire 10� years that Howard has been in office.

From an ICT transition or risk management point of view, there’s a significant logic gap in the Minister’s statements.

Firstly, integration, while a highly desirable aim, comes with considerable risks, especially when large amounts of old data are involved. Risks inevitably mean time and money, and few people outside the ICT industry seem to appreciate this when dealing with ICT projects – the belief is that hiring a large enough contractor like Oracle or HP will resolve this problem all by itself.

Secondly, when developing additions to an existing system, it is essential that the existing system works within its existing brief and determined requirements.

Thirdly, change management issues are often not well understood by government – they confuse having legislative or executive power with the actual ability to govern, and their capacity to pass laws and to publish or air advertisements as being a public education campaign which people will carefully follow and obey. However, expecting millions of users and thousands of operators to uncritically adopt any new system, especially one that is hard to use or is accompanied by penalties for accidental misuse, presents a change management challenge. Many large projects have been derailed and/or dropped (at a cost of millions to the community) by the failure to anticipate consequences or risks at the implementation stage.

The consequences of poorly-planned public-sector projects can be clearly observed with another smart card project being developed by Transperth for handling public transport fares. The project, SmartRider, is already more than 6 months overdue, has had considerable cost overruns, still has implementation issues, and a confusing mesh of the old and new systems are still in operation. The new system introduces requirements on ordinary public transport patrons which will most likely result in chaos (or even electoral consequences) if the system ever goes fully “live”.

Before jumping in the deep end, the Minister should determine whether such a project is in fact in the best interests of the community, given the likely duration and cost of development and implementation, as well as the unanswered questions about the banks and what happens if a card is lost or stolen.

Breaking the spin – Israel/Lebanon

18 July, 2006

Just thought I’d share an article from Shmuel Rosner of Haaretz who takes the mickey out of the leaders on all sides of this weird conflict.

Article 1
Article 1

Overall, I’ve found Rosner’s commentary on this conflict to be a rare voice of perspective and balance in this increasingly polarised and polemical discussion.