Archives

Categories

Near irrelevance of university lectures

Lectures at my university almost by obligation need to be presented in Powerpoint format* and almost all are aurally recorded.  In a few cases a video is taken and that distinction seems to be the fairly arbitrary dividing line used by administrators in classifying courses as being presented in “face-to-face” format or “online”.   In fact student attendance at almost all lectures is so low these days that all subjects taught are, in terms of student numbers, effectively almost all online.  Students simply do not attend lectures.  A few years ago attendance rates were around 30-35% but my guess is that these levels have now about halved.  Only about 1/6th of students enrolled in most courses actually attend lectures and attendance at tutorials is about on a par with this.  If continuous assessment is conducted in tutorials many students do not attend these forms of assessment and either claim “Special Consideration” status at the end of the course or just sacrifice the marks.  Administrative pressure is now being applied by university administrations to allow student choice over assessment procedure that will presumably facilitate such strategies. Continue reading Near irrelevance of university lectures (400)

Real estate agents providing financial advice

A snippet that interests me.  The Ray White Group (one of Australia’s largest real estate brokers) is to move into the financial planning industry.  They earn commissions on real estate transactions and I assume they will earn commissions on the advice they give.  They seek ASIC approval and expect to get it.  My devious, perverted, economist mind asks some obvious questions which I am too modest to articulate.

http://www.moneymanagement.com.au/news/financial-planning/2014/could-ray-white-s-planning-push-create-conflicts (176)

An economist views asylum seeker policies

Deriving sound asylum seeker policies is partly a moral issue. It is also a concern that analytical disciplines like economics can throw light on.  I have been asked to provide views on asylum seeker policies as an economist.  The views below are preliminary and I welcome polite comment. What I want to do is to think about are what most people would agree are reasonable objectives for policy and then use economics to think about how these objectives might be met. Continue reading An economist views asylum seeker policies

(204)

Retirement finances

I have been reading my favourite work on investment – the most recent edition (2011) of Burton Malkiel’s “A Random Walk Down Wall Street” – for some advice on managing wealth in retirement.  I first read Malkiel in the mid-1970s and find him to be a perceptive and balanced advisor on investment strategies.  These issues become important to me now as I am very likely to leave full-time employment over the next few months.  The trick with investment planning for retirement is to try to “live as well as you can without running out of funds if you live longer than expected” – this is the “drawdown dilemma” or “longevity insurance” .  If you have a bequest motive for your progeny this needs to be restated to be “living as well as you can without leaving a grossly depleted inheritance”.

Malkiel favours an overall investment strategy for individuals that reflects the stage they have arrived at in their life cycle – young worker, middle aged, about to retire, retired.  Obviously as one ages there is less time to work through a sustained equity market collapse so that risk-aversion suggests a higher proportion of wealth being placed in bonds and in stocks that pay high dividends but have less prospects for capital appreciation.  For those aged in their late thirties -early forties Malkiel recommends 5% of one’s portfolio in cash (money market funds) , 20% in various bonds , 65% in equities and 10% in real estate investment funds (REITs).  For ages from the late 60s and beyond he suggests 10% in cash, 35% in bonds, 40% in stocks and 15% in real estate investment funds. In the sort of superannuation scheme I am a member of these allocations can be easily made online at low or zero cost while with other private asset holdings some selling and buying is necessary.

Malkiel does support the partial use of annuities for retirement. Annuities guarantee that you will not outlive your income although such a service is expensive unless you can find them provided without sales commissions.  This seems a moot discussion in Australia given the negligible size of the local annuities market although for some an effective annuity arrangement is via the “defined benefit” option of their superannuation scheme. Unless this is backed by a government guarantee  (as it is for the case of civil servant superannuation) it is unclear how secure such “defined benefit” provisions are – employers such as universities no longer agree to finance gaps in funding needs*. But beyond the use of such annuity arrangements anyway Malkiel recognises retirees will want to manage at least a portion of the assets themselves when the allocation rules above apply.  How much should you spend from the optimised portfolio each year?

Malkiel suggests using a “4% solution”.  In simple terms spend no more than 4% of the value of your asset nest egg annually.  Thus you would need a nest egg of about $2.5m to yield $100,000 annually.  4% sounds low since the total return on an equity portfolio should exceed this (more plausibly in Australia long-run returns will be 8-11%) but inflation reduces the real value of  holdings (by about 2% I suppose) and there will inevitably be “bear” markets that could endure for quite a while.  Spending at 6% of value during a bear market could markedly cut into financial staying power. A slump like 2008 would impose real difficulties.

Following Malkiel literally a person of my vintage should keep about 8% of  wealth in the money market, about 30% in bonds, 13% in REITs and about 50% in equities. That is a couch more conservative portfolio than I currently hold which has always been (apart from the family home) heavily geared towards equity.  I’ll think about it.  A shift to bonds and money market holdings might make sense given uncertainties about current equity and residential real estate markets – the latter are part of my wealth through my fully-owned family home. That isn’t the motivation for the Malkiel prescription but it adds weight to my adopting his prescription.

I need to state that I have no qualifications as a financial advisor and am thinking aloud about my own fate rather than suggesting advice to others.  Of course I am (as always) grateful for views from others on the reasoning.

* I didn’t join such a scheme myself as my guess is it will under-perform simple accumulation schemes.  A residual must be retained from savings simply to help assure that the scheme will remain viable. (301)

Good monetary policy

There are competing claims about the current stance of Australian monetary policy and attempts by the Reserve Bank to balance the desire for a lower Australian dollar  by lowering interest rates against the problems that would be created by creating an asset price bubble.  Ross Garnaut suggests lowering interest rates still further and dealing with consequent effects on housing markets in other ways – presumably by “talking up” the risks as the RBA has been doing and perhaps even evoking quantitative restrictions on the private banks.  These last suppositions are guesses since Ross doesn’t point out what precisely he wants to do. Garnaut assumes the economy faces real dangers because of the collapse in mineral (specifically iron ore) prices but I think this is an exaggeration.

Warwick McKibben in this morning’s AFR rejects Garnaut’s view arguing that the risks of a housing bubble are too great and that competitive devaluations elsewhere in the world will make it difficult to devalue the Australian dollar using monetary policy anyway.  He suggests not lowering interest rates but improving the real terms of trade (roughly the ratio of export pricers to import prices) in Australia not by devaluing the exchange rate but by lowering domestic prices by cutting costs. This would be achieved by encouraging productivity improvements not by picking winners but through smart innovative ideas.    The latter sounds like the sort of economic advice you would never want to reject – we are wealthier if we can engineer the types of productivity changes Warwick suggests irrespective of the state of the economy.  I am skeptical of the ability of policymakers to make significant inroads into improving productivity – as opposed to simply getting people to work harder – even in the medium term.

It is true the value of the Australian dollar is determined by both Australian actions and the monetary policies of our major trading partners.  The US dollar will almost certainly rise and my view is that responsible monetary policy in bubble-prone China makes appreciating the RMB a good policy also – and consistent with the Chinese Government’s policy of switching expenditures away from exports and investment towards imports and consumption.  Longer term the Australian dollar will depreciate for these reasons.  The housing market in Australia – and asset markets generally – look prone to make a significant downward adjustment.  It is important to limit the size of this adjustment by doing what the RBA is now doing – by “talking up” risks in the housing market.

On balance I don’t think the RBA is doing a bad job.  I don’t favour the moves suggested by Garnaut as I don’t want a massive asset market bubble bursting.   I am supportive of McKibbin’s policies because who could not support moves to increase productivity.  But I doubt these policies will have a significant enough effect to matter much even in the medium term.  Like McKibbin (and John Bell in his recent book) I question whether Australia’s future is as Garnaut suggests.   The benefits of the mining boom were exaggerated and, even with greatly reduced commodity prices, our miners will do well by exporting larger volumes post the boom.

These are some rough notes. Revisions very likely as I try to think through these issues. (199)

Where is the economics?

I attended some economics honours student presentations on Friday and what was noticeable in most of the studies was a lack of any economic theory.  Yes there was usually a data base and, yes, statistical techniques were applied to that data base (along with (occasionally) some quasi-theoretical reasoning about what might or might not be “exogenous”) but in most cases no economics model or even qualitative economics reasoning was used. Later in the day I heard a faculty member present a seminar talk on “peer group” effects on learning outcomes in schools. Apart from describing such effects as “externalities” there was, again, no economics.  Nor, for that matter, was there any appeal to learning theory or educational psychology.  Whatever happened to economics? Whatever happened to economic (or any other) theory?   I select a couple of instances on particular occasions but it seems to me a trend in much, modern so-called economics “research”.

In principal there is nothing wrong in “letting the data talk” without reference to a priori model but in my experience the insights gained from this approach are meagre – invariably the results are conditional on the quality of the data and fairly inconclusive statistical tests. Often there are no strong insights at all.  The core difficulty, as usual, is that the world is complex and letting selected facts speak for themselves won’t work – interpretative a priori insight is a crucial ingredient of understanding and explanation. I doubt any policy maker would be prepared to devise policies on the basis of purely data-driven insights.  Of course the immediate question to defenders of this approach is: If the approach is valid why are we devoting years of effort teaching undergraduate students macroeconomics, microeconomics, public economics, international economics etc etc if this is not to be used?

The sneaking suspicion I have is that the data+econometrics direction that is increasingly becoming fashionable has its own economics explanation – it economises on the need to think, to read and to reflect. The less costly option is to just assemble pre-collected data and apply a technique from a statistical package.  This also provides an immediate pseudo-novelty: data bases can be exploited in innumerable ways using nearly as many statistical techniques*.  This is important when “low hanging fruit” insights have been pretty well picked over.  On the last point I recently acquired a complete set ((back to the 1930s) of an Australian economics publication – the Economic Record.  Articles in the 1930s through to the 1960s tackled the big economic issues of the day whereas the modern version of the same journal gets bogged down in minutae with, again, an emphasis on the atheoretical data base + statistical technique methodology.  Much more prestigious journal’s such as the American Economic Review are much better in insisting on basing work on a model and some reasonable a priori hypotheses but the drift in even these more prestigious journals is similar.

Don’t get me wrong I am not an opponent of econometrics. I just think that as an approach it has come to dominate economics in ways that are harmful both with respect to providing policy-relevant insights and towards getting students (and economics faculty!) to exercise their brains.  Econometrics should serve economics and not be its master.

* Using data and econometrics-intensive technology is also a risk-averse strategy for students seeking a degree (or faculty seeking promotion). It simply becomes more difficult to reject inadequate thinking and a lack of understanding of fundamentals. (510)

Redundancy

Yesterday I made an application to depart my university of employment and to accept a redundancy.  It was an emotional moment for me as I had never contemplated exiting employment in this way. I always thought I would work until I dropped.   My decision partly reflects what I want to do with my life in the future (more leisure, greater freedom from obligation) but it mainly reflects my pessimistic assessment of where the Australian universities are going.  I enjoy teaching and doing my research but side issues, related to the way universities are being currently administered, provide an overwhelming rationale for my decision.  Irrational managerialism and scant regard for academic merit are the order of the day. What is unfolding is a national educational tragedy.

My application for departure may not be accepted but I suspect it will.

Having worked pretty hard all my life the thought of not being obliged to work is daunting.  The loss of a regular income is, of course, also an issue.  Provided the redundancy goes through I’ll give being retired a trial for a few months and probably then begin to look around for, at least, part-time work. This will not happen until after  the sought redundancy decision is confirmed. (706)

Distortions in the patent market

Distortions in the patient market for new drugs mean that drugs are overwhelmingly being developed for people who will die anyway from conditions the drugs are designed to address. There are few incentives to provide preventative medicines and this distortion costs lives.

As the Economist states:

“The data paint a bleak picture. The economists find that pharmaceutical companies conduct 30 times more clinical trials for recurrent cancer drugs than for preventive drugs (the effect persists even after adjusting for market size). The authors also show that firms divert their R&D expenditures away from more curable, localised cancers and focus on incurable metastatic and recurrent cancers instead. The patent system encourages pharmaceuticals to pump out drugs aimed at those who have almost no chance of surviving the cancer anyway. This patent distortion costs the U.S. economy around $89 billion a year in lost lives.

A one-size-fits-all patent system does not cater to the specifics of innovation in the pharmaceutical industry. But tailoring patent law may encourage lobbying and corruption. A careful reform of the patent system is necessary: outright abolition of patents will not be enough to save cancer patients’ lives”.

The paper that provides the basis for these views is available gratis from the Journal of Economic Perspectives. As its authors Michele Bodrin and David Levine conclude:

The case against patents can be summarized briefly: there is no empirical evidence that they serve to increase innovation and productivity, unless productivity is identified with the number of patents awarded—which, as evidence shows, has no correlation with measured productivity. Both theory and evidence suggest that while patents can have a partial equilibrium effect of improving incentives to invent, the general equilibrium effect on innovation can be negative. A properly designed patent system might serve to increase innovation at a certain time and place. Unfortunately, the political economy of government-operated patent systems indicates that such systems are susceptible to pressures that cause the ill effects of patents to grow over time. Our preferred policy solution is to abolish patents entirely and to find other legislative instruments, less open to lobbying and rent seeking, to foster innovation when there is clear evidence that laissez-faire undersupplies it. However, if that policy change seems too large to swallow, we discuss in the conclusion a set of partial reforms that could be implemented.

(443)

Around the Block

This is a preposterous, improbable Australian movie. A young American women gets a group of young aboriginals to do a performance of Shakespeare’s Hamlet.  Based in Redfern, Sydney. The movie is not even going to be released in conventional cinema.  But I loved it and scenes moved me to tears.  A great Australian film that trounces Hollywood and the garbage we are delivered via the mainstream cinema.  Entranced and moved by this gorgeous Australian-motivated and Australian-made movie. (198)

What will happen to Australian asset prices?

Low interest rates that are unlikely to increase any time soon and property as well as equity markets that are growing strongly, both in Australia and overseas, create the basis for gearing up and taking high levels of risk. People ask me – as an economist – how it will all end. I confidently predict it will end in tears with many people losing everything and margin calls driving asset prices to levels where those few smarties with plenty of cash will make a killing. This matters a lot for older people who are either retired or about to retire and for whom a 20-year wait for market values to be restored would be a disastrous possible outcome.

What I don’t know is when the disaster will impact. Selling out now might leave investors missing good gains. My best advice however is to cut back gearing and not to overextend. Indeed holding a fair bit in cash or short-term bonds makes sense – even if, as Christopher Joye points out, after-tax returns on these assets are negative at present.  The fear is that if another crash occurs soon it will be a doozy.  Of course I may be wrong or suggesting precaution too early in which case investors will forego gain. There are no guarantees despite what the spivs currently flogging red hot property deals all over town are suggesting – indeed their raucous noises make me less confident about the future rather than more.  But this strategy does provide insurance against a real possible asset market meltdown short-term.

Please don’t take any of this as financial advice but don’t consult your paid financial advisor either.  I don’t know but they don’t know either and, like Socrates, I am superior at least to the extent that I know I don’t know.

  (331)

Unemployment & immigration

The Australian unemployment rate has hit a 12-year high at 6.4% – the highest since 2002 and higher than the US unemployment rate for the first time since 2007. Good market for equities markets this means the RBA will almost certainly not increase interest rates any time soon and may cut them further.  Of course disastrous for people such as myself who will probably soon be on the job market.   While the Treasurer has argued that these figures provide motivation to pass the budget – they do no such thing – the obvious candidate for policy is our immigration intake.

Currently Australia is taking in net 240,000 immigrants annually – it adds nearly a million people to our population every 4 years.  709,000 immigrants have arrived since the beginning of 2011 and 380,000 of these have got jobs. During that period 400,000 jobs were created net.

There are Ripley Believe-it-or-not economic theories  (often propounded by ANU economists) that these immigrants create jobs by adding more to aggregate demand than supply but this clearly is not the case at present.  What can be expected is that as unemployment increases the demand for immigration will weaken a little.

As much as I am concerned about the current unemployed I am even more concerned by forecasts that, at this rate, Australia’s population will be 40 million by 2060 and 50 million by 2100.  Sydney’s population will grow 80% and Melbourne’s population will double by 2060. Do Australians really want to live in mega-cities

It is almost politically incorrect among the latte left to criticize anything relating to unrestrained high immigration but I do.  The implications of high rates of immigration for the economy are modestly positive at best.  With high international capital mobility most of the labour market benefits from a liberal migration program accrue to the migrants not to resident Australians.  Economies of scale arguments are irrelevant in an economy that trades with the world. At the same time we must put up with more crowded cities and less people-free, biodiversity-rich landscapes.

I’d prefer a migration policy that stabilises the Australian population at something less than 30 million.   I am selfish enough to prefer living in open, low density landscapes where nature is not extinguished. (391)

Proposed Australia-China Free Trade Agreement

I have been working on this FTA over the past week or so and trying to get up to speed on ideas in this area.  Some provisional notes – comments very welcome.

Continue reading Proposed Australia-China Free Trade Agreement

(602)

William Blake done by Allen Ginsberg

My interest in William Blake’s poetry dates back about 40 years to performances of his “Songs of Innocence and Experience” by Allen Ginsberg.  They were on an 1969 LP I had that got nicked while I was living in Surrey Hills Sydney.  Searching  I found YouTubes of several performances from this album. I particularly liked the mantra like version of “The Sick Rose” recorded here:

The Sick Rose/The Nurse’s Song

All of the Ginsberg Blake performance are now available at this University of Pennsylvania website:

http://writing.upenn.edu/pennsound/x/Ginsberg-Blake.php

  (553)

Inefficient though fairly effective carbon pricing

IT is now widely understood (i) that current carbon pricing has fairly marginal impacts on electricity prices and that (ii) current electricity prices are high because of excessive investment in network costs which stems from the way electricity prices are regulated: Ross Gittins provides a simple explanation of this second issue.  Australian  electricity prices are very high and this electricity is largely generated in coal-fired power stations.  Thus the inefficiency in transmission creates the high prices which reduces the quantity demanded of electricity. Indeed this quantity – along with associated carbon emissions – have fallen over recent years.  Are we getting an effective carbon price as a consequence of the distribution network inefficiency?  Not really since there is real inefficiency here because there is a waste of resources, particularly capital, in the electricity sector. In terms of resource allocation it would be preferable to provide households and firms with much cheaper electricity and then to tax the carbon emissions severely enough so that demand was significantly curtailed.  In addition, high electricity costs in themselves do not provide the correct market signal to switch away from coal to less polluting sources of electricity such as gas although this switch has been occurring since 2008 well before carbon pricing came in operation.  They do however provide incentives to switch towards solar energy by households and firms trying to insulate themselves from higher electricity prices.  The interesting feature of the latter switch is that it increases the excess capacity of the electricity sector and makes more electricity price increases likely. This virtuous “downward spiral” accentuates the decline in demand for carbon-based electricity supplies and does have positive although imperfect effects in addressing climate change.

For these reasons I strongly favour retaining incentives for solar and wind energy because of the effects this will have on the conventional power sector.  On the other hand, as Ross Garnaut has pointed out to us, the effects of growing excess capacity in the electricity sector are likely to undermine the effects of the Emissions Reduction Scheme subsidies proposed by the Coalition Government.  Power stations with excess capacity are likely to draw on carbon reduction subsidies by closing down plants with uneconomic excess capacity and then by operating remaining plants at closer to full capacity. This might mean that the carbon reduction subsidies might have very limited effect in reducing emissions – they will simply provide subsidies to the uneconomic (and often privately foreign-owned)  power firms.

http://www.theage.com.au/comment/carbon-tax-merely-a-blip-in-power-price-scandal-20140715-zt7na.html (679)

Retain carbon pricing

I was one of the 50 economists who signed a letter urging the retention of carbon pricing. Keeping limits on carbon emissions is the most severe environmental problem the world has ever faced. Not controlling greenhouse gas emissions possibly threatens the survival of human and non-human life on our planet but, at the minimum, will change our lifestyles in drastically costly ways – these costs will increase the longer action to address climate change is delayed.  Australia is one of the world’s wealthiest countries and cannot ignore its obligations to address this issue.

Every basic economics text – even those written by those on the right-wing of politics, such as Gregory Mankiw – endorse carbon pricing as the cheapest way to address climate change.  Over the last week Ross Garnaut has proposed a compromise which, while not ideal, would keep the architecture for pricing in place by setting a very low price (40 cents per ton CO2)  and by enabling international purchases of emissions permits.  This was promptly rejected by the Coalition but it should not be.   The price of 40 cents is very low but would rise as other countries practice carbon emissions control.  This is one way of meeting a key (though misleading) objection to carbon pricing that Australia is “going it alone”. Pricing would only become significant when other countries act.

Of course I would prefer a much higher price than this and a firm commitment on the part of Australian policy makers to enforce a switch away eventually from the use of all carbon-based fuels but at a minimum the Garnaut proposal should be considered.

http://economics.com.au/wp-content/uploads/2014/07/2014-ECONOMISTS¹-OPEN-LETTER-SUPPORTING-A-PRICE-AND-LIMIT-ON-CARBON-POLLUTION.pdf (1116)

La Trobe economics staff cuts

The heading “holds out” is strong but economics staff do think the proposed staffing cuts are not in the interests of the university. This is not only an issue of self-interest. The School of Economics needs to be restored to the strong, growing school that it was up to 2012. This would not be difficult though it will be very difficult to carry out such a restoration if proposed cuts go through.

http://www.theaustralian.com.au/higher-education/la-trobe-holds-out-on-cuts-to-faculty/story-e6frgcjx-1226974174753# (576)

Attempts to downgrade economics education at La Trobe University

These are views of the Economic Society of Australia (Victorian Branch). My only qualification to these views is that they do not stress strongly enough that this attempted downgrade economics will be self-defeating from the viewpoint of the University’s own objectives of improving its financial viability and attracting higher ATAR students. It is difficult to understand how a research focus can be sustained in the business studies without a strong economics component.

http://esacentral.org.au/vic/files/2014/06/140613-La-Trobe-University.pdf (819)

Listening to Cormac McCarthy’s novels being read

I have been listening to recorded versions of Cormac McCarthy’s Blood Meridian (abridged) and All the Pretty Horses (unabridged, read by Frank Muller). Enjoyed both immensely – McCarthy evokes vivid images and his writing is intensely poetical.  I enjoyed reading both these books but hearing them read adds an extra dimension.  They become a poetic yarn as well as attractive literature.  I regret not getting the unabridged version of Blood Meridian which can be obtained from Audiobooks. These listenings are about my fourth successful attempt at recorded books – I have enjoyed William S. Burroughs, James Joyce (Ulysses, Dubliners but Finnegans Wake remained incomprehensible to me).

Audiobooks is an interesting business, allied to Amazon.com, with over 100,000 recorded books available.  If I cannot borrow further titles from local or university libraries I’ll subscribe to AudioBooks.  It offers a spoken novel per month for $14-95. The works are available to you permanently and are accessible from the Cloud.

http://www.bookdepository.com/book/9789626349946?redirected=true&viewCountry=AU&selectCurrency=AUD&gclid=COyE-Ifsnr8CFZKCvQodvlcA8w

http://www.amazon.com/gp/product/0062119265/ref=ox_sc_act_image_3?ie=UTF8&psc=1&smid=ATVPDKIKX0DER (540)

Prisoner’s Dilemmas, ethics & courage.

The Prisoner’s Dilemma is a key idea of modern game theory. It describes the difficulties of sustaining cooperation when individuals have reasons to defect from a cooperative agreement. This paradigm has even been used to define ethical behaviour.   Kant’s Categorical Imperative requires that for a moral maxim to be ethical (for an individual) it must be both universalizable  (everyone must, in principle, be able to live in accord with it) and the individual must will  (want) to live in a world where the maxim obtains.   Thus, if there are two moral choices: act non-selfishly (to achieve a good social outcome)  or act selfishly (to gain individual benefit) then the CI is generally consistent with acting non-selfishly.  It is certainly universalizable (everyone could live with this maxim) and individuals would want to live in a world where everyone acts non-selfishly (even if, in fact, they did not act non-selfishly).

For example, the citizens of the world would be better-off if all countries mitigated climate change-inducing carbon emissions.   Individually, however,  each citizen would be better off if they didn’t mitigate irrespective of what others do.  Libertarians and Australia’s IPA advocate the immoral action of non-mitigating  - it is the self-interested “defect” option in this Prisoner’s Dilemma.   More moral citizens advocate addressing climate change because we would all be better-off if every country mitigated so that, even if they didn’t in fact mitigate, the moral stance is to mitigate because we would prefer to live in a world where everybody did.  Indeed the difference in viewpoint here is that the moral citizens see the Prisoner’s Dilemma as an obstruction that limits worthwhile action whereas the immoral, self-interested libertarian types see it as a sound reason for doing nothing. The libertarians don’t see game theory strategic interdependencies 0- individuals make choices which suit themselves without adverse social consequences emerging.

In negotiating situations, where agents are confronting some evil, one can either act with courage (and everyone gains) or be a silent coward (and hope that others will act courageously in the face of your cowardice). The ethical stance, according to the CI, is to act courageously.   Of course it is difficult to put your neck on the line when you see widespread cowardice around you.  Indeed acting courageously in the face of widespread cowardice might convey to others that you are a bit of a crazy and that might be true.  In other situations the courage required simply reflects the risk that others will not act morally and you will find yourself stranded. That the moral stance is to be courageous is true even if the cowards discreetly praise your moral behaviour and make discreet, constructive suggestions on how you should stick your neck out further.  They gain possible advantages at your cost.  Such cowards are typically non-repentant and see their self-interest as simply human nature whereas those who see part of the reason for existence as arising from collective goals see such inaction as cowardice.

In short solidarity in seeking a worthwhile outcome facilitates an ethical equilibrium.  Some may not judge that the objective as not worthwhile and need not be unethical.  But those who understand that the outcome as desirable but defect for reasons of private self-interest are unethical cowards.

  (786)

High Wired update: Climate of opinion

(From The Australian).

Blood on the floor in the dismal science: La Trobe economics professor Harry Clarke is calling it a “bloodbath”. The university is proposing to cut its economics school from 28 staff to just 10. And now everyone needs to bid for the positions that are left, including four professors battling it out over just one professorial position in the new structure. The news prompted sympathy from RMIT economist Sinclair Davidson who blogged, “There are some fine academic economists at La Trobe and there are tough times ahead for them. This is not a good time to be looking for an economics job. The public service is retrenching across highwired@theaustralian.com.au and sign up for the High Wired newsletter

An opportunity for rivals: The scale of the cuts and the seniority (three professors and three associate professors will be going) suggests La Trobe doesn’t seem to care much about maintaining its economics research profile. La Trobe economics rated a “3” on ERA, with only the Go8 and the excellent UTS recording better results. In Victoria, La Trobe is neck and neck with rival Deakin, which also scored a 3. La Trobe says its changes will ensure the discipline’s long term sustainability, but the danger is that La Trobe will end up with only a token presence and no profile, meaning students wanting the breadth that economics offers, as opposed to the more narrow utility of business and finance, will shun La Trobe as the natural alternative to Melbourne or Monash, and instead go to Deakin. On the positive side HW hears that Deakin, Swinburne and RMIT are all looking to build in economics, which is still the discipline that brings the most street cred to any business school or faculty. HW isn’t sure this is the best way for La Trobe to attract high ATAR students to its business faculty, but then maybe the target is vocationally focused students. Isn’t that Victoria University’s market? And aren’t they doing well. Not. It is the same market the fast moving privates will target come 2016. Gulp. (785)