Catallaxy Files

The NBN business plan is here. The pricing section contains this table

The following table describes wholesale access pricing for NBN Co services.

Table 1 – NBN Co monthly wholesale access pricing (source: NBN Co Corporate Plan, Dec 2010)

I don’t know what retail prices this will turn into, though I’ll bet there will be ISP bashing alleging “price gouging”

I pay (ADSL 2+ with TPG) $50 a month and get a speed of 10-15 mps. My guess is that the retail price under NBN will be higher than this.

The upload speeds are pretty much what they are now with ADSL2+. I believe that demand for higher uploads will increase as users do more in the cloud. I have a backup in the cloud – it took me about two weeks for the first one. Fortunately TPG does not charge for uploads.

The plan contemplates a total capital expenditure of  $35.9 billion (that excludes the $11 billion going to Telstra) with the government contribution at $27.5 billion. The balance will be borrowed. Does that really keep it off the government’s books?

Apologies in advance to those who believe that Catallaxy should stay away from all this nerdy stuff. I do find it fascinating.

In Unleashed or The Drum (I still don’t know which is which) Bob Ellis comments on the Christmas Island disaster (and I’m willing to use that word). He repeats his Caravan Park solution – that towns all over the country be invited to put up refugees in their local caravan park. I don’t think that solution makes sense but I agree with Ellis that the current policy needs change, and perhaps to make it more compassionate.

But as Ellis gets older his bile is vented more and more often and gets more and more bitter.

But the one thing that is certain is Gillard should have nothing to do with it. And this goes double for Abbott, Bishop and Morrison, who will be doubtless saying this morning, ‘Boy, we sure stopped that boat. Let’s do it again. That was fun’.

Whatever the process, the outcome will only ever be some variant on my Caravan Park Solution

As I get older I get less and less tolerant of gratuitous nastiness. So, I shall send a polite complaint to the ABC complaints unit. No doubt they will remind me that  Unleashed/The Drum is for “robust debate”.

I invite anyone who agrees that Ellis has gone too far to file their own complaint.

Simon Chapman built his career in the anti-smoking movement. He ran, for many years, an organisation called Action on Smoking and Health.

He then became a professor of public health at the University of Sydney. His current campaign is against screening for prostate cancer. He set out his case in a SMH article a few weeks ago and, it seems, has written a book on the subject under the name Let Sleeping Dogs Lie.

Chapman’s argument is that men should not have the PSA blood test to see if they have prostate cancer because it might lead to unnecessary treatment.

What happens is this – a PSA test that is higher than normal and stays there for a while is a pretty good indicator of prostate cancer cells in the body. That test is followed by a biopsy, taking samples from the prostate. The PSA score and the results of the biopsy are combined to try to get an indication of the prognosis of the cancer.

Based on that, a decision is made on treatment, most commonly surgical removal of the prostate. Chapman says that this usually leads to impotence and sometimes incontinence. I am not sure about his figures – he says 77% and 12%. Many surgeons use a “nerve sparing” technique which, according to my reading, gives a very good chance of maintaining potency. Still, there are significant risks.

Chapman then says that prostate surgery saves few lives – most men dying in their 80s have prostate cancer but they die of something else before that cancer gets them. They die “with” rather than “of” prostate cancer. There is no conclusive way of identifying the aggressive prostate cancer that will kill.

Chapman quotes a figure that of 50 men treated for prostate cancer only one would have otherwise died from it. I believe this figure is disputed.

He says that the average age of death from prostate cancer in Australia is 79.8 while the all-up average at death is 76 so “on average, men who die from prostate cancer actually live longer.” Can you spot the fallacy in this comparison? Chapman stops just short of the comment, which some anti-PSA campaigners make, that most men with prostate cancer are pretty old and so were going to die pretty soon anyway.

Chapman’s conclusion is “don’t even ask, you don’t want to know if you have prostate cancer because it might lead to unnecessary treatment.” (My paraphrase).

I have quite a few friends and acquaintances who have had prostate cancer treatment. I don’t now how many are impotent (blokes don’t talk about that sort of thing) but I know of none who regret the treatment, whatever the side-effects. They believe the treatment saved their lives and though they do know that it was not certain that the cancer would have killed them they say “now I know it won’t”.

Like most public health academics, Chapman has no medical qualifications. He is a sociologist. He has never faced a patient with a diagnosis of cancer. He has never faced a patient dying of cancer who he earlier persuaded not to have the PSA test. He has never faced a patient.

I have given all this a lot of thought and have read pretty extensively on the subject and discussed it with GPs and urologists. I do have regular PSA tests and if I had a high result that hung around for a while I would have a biopsy. Then, with the best medical advice I could get, I would decide whether to have treatment.

Chapman says we should not put ourselves in the position of having to make this decision. Ignorance is better.

Pinchgut Opera’s production of Haydn’s neglected opera L’Anima de Filosofo (Orpheus and Eurydice) has been very well reviewed in the SMH. ”another Christmas delight” says Peter McCallum.

Three performances left – Saturday 7:30 PM, Sunday 5:00 PM, Tuesday 7:30 PM at City Recital Hall Angel Place. Pinchgut is the only opera company in the world that makes a money back offer.

For those unfortunate enough not to live in Sydney the production will be broadcast on ABC Classic FM at 7:05 PM Sunday. It will be streamed for a week or so after from the Classic FM website. A cast list and synopsis is online. The libretto – sung in Italian – and translation are here.

One day I will write the story of how Liz and I (with a lot of help from several friends with great musical talent) accidentally set up Pinchgut ten years ago.

I am not a rabid believer in privatisation. I believe that it probably did not make sense to sell the airports and that a long term lease or management contract over the terminals would have been better. I also have my doubts about capital intensive projects like highways. There is little entrepreneurial skill in managing a road . They are mostly an exercise in capital raising, which theoretically a government can do at lower cost. I realise there might be a flaw in this argument, though I can’t spot it.

But there is no doubt that with any activity that requires a few management skills, the government will be rubbish. I have written here about the Sydney Ferries, a great example of this principle. Since I wrote that, services have been reduced and fares increased, usually not a winning business strategy.

Another example is the post office.

We get our mail delivered to a post office box. I won’t bother you with the reasons – they have to do with a postman who did not always want to deliver the mail and who was known to smash the letter box of anyone who complained.

I have to go to the post office each day to collect the mail. We are charged to rent the box ($80 a year) and also pay a fee ($70) to instruct the post office not to give our mail to the postman but instead to put it in the box. Now, the box is pretty small so if anything arrives that won’t fit or which needs a signature, they put a card in the box asking me to go to the counter. There is usually a long line at the counter, sometimes out the door. The post office does all sorts of other things as well as handling letters and selling stamps. They process passport applications, which seem to take about ten minutes. They  sell inkjet printers, DVDs, toys and  telescopes. So the line moves very slowly. The new CEO of Australia Post. Ahmed Fahour, who used to be with NAB, understandably wants to  take them into the banking business. That is unlikely to shorten the lines.

I also use a service called Mail Boxes Etc. I get large parcels, cases of wine and anything  that needs a signature delivered there. They do photocopying, printing and other office services. The funny thing is that there is never a line. They know me and as I go through the door they are usually ready with my parcel. Once the manager stopped me in the street to remind me they had a parcel. MBE is not government owned.

I am surprised that there a still people about who believe in government ownership of business.

The Greens want the NBN to never ever be privatised. Bob Ellis says nothing should ever be privatised. Academics are arguing against sale of Queensland Rail. But none of these people live in what some of us call the real world – they have never, so far as I know, had to produce anything and then persuade customers to hand over money for it.

What I do wonder, though, is whether any of them has been to a post office?.

For example Al Gore

“It is not a good policy to have these massive subsidies for (U.S.) first generation ethanol,” said Gore, speaking at a green energy business conference in Athens sponsored by Marfin Popular Bank.

then

He explained his own support for the original programme on his presidential ambitions.”One of the reasons I made that mistake is that I paid particular attention to the farmers in my home state of Tennessee, and I had a certain fondness for the farmers in the state of Iowa because I was about to run for president.”

HT the always worth reading Coyote Blog.

I wonder which Australian politicians will, in 20 years time, admit that they really did not believe something but had to push it for political reasons?

Has anyone read Quiggin’s Zombie Economics: How dead ideas still walk among us.?

I haven’t read it and haven’t been able to find a review from a respected source. There is a brief one in The Guardian which, unsurprisingly, thought it good. I haven’t seen any in the major papers.

I would be interested in the views of someone able to read it reasonably objectively.

However good the content, it must be a finalist in the Worst Cover Design of 2010 award. I know a bit about graphic design and this is utterly dreadful. Perhaps the publisher (the very respectable Princeton UP) was shooting for the airport bookstall market and wanted something to catch attention. If so, I reckon they will get complaints from some who bought it in a rush, thinking it is one of those graphic novels about zombies.

I have just read  - on the Kindle – Michael Lewis’s book The Big Short. It is about the subprime CDO crash from the point of view of the bears who saw it coming  and figured out a way of shorting CDOs.  Felix Salmon of Reuters says “it is probably the single best piece of financial journalism ever written”. A bit strong perhaps, though I found the book fascinating.

One part of the story that sticks in my mind was about teaser rates. A variable rate mortgage would start at a very low interest rate, say 2%, then after a couple of years it would go up to the market rate – 9% or so. Many borrowers had little hope of servicing the loan at the higher rate or of refinancing, so they would default. This was not the only or perhaps the main reason for defaults. Others explain it more simply as the bursting of a bubble destroying the owner’s equity in the property. Many US mortgages give the lender no recourse beyond the security so borrowers could and did simply walk away.

I recommend the book to anyone interested in this stuff.

Footnote: Watching TV recently I saw a Suncorp Bank ad. inviting new customers to take their credit cards balances over for an interest rate of 1.9% for 15 months. Then “at the end of the balance transfer offer period your interest rate will revert to the cash advance interest rate for the Suncorp Clear Options Gold card which is currently 19.75% p.a.”

It intuitively makes sense that speculators drive up prices. They buy expecting prices to rise and sell when prices do rise. So speculators are easy to blame when prices rise. Just like short sellers are easy to blame when prices drop.

The ABC picks up a story from something called World Development Movement claiming “opportunistic trading has contributed to hunger in some developing countries.” There will be an event in London on 26 October to air this problem. There is even a Facebook page.

Does any reputable economist believe any of this?  Traders are both buyers and sellers – they don’t produce the stuff or consume it. Whatever they buy, they must sell – and vice versa.Basic economics says that over time they have no effect on prices other than to provide liquidity and reduce volatility.

Is this still fundamental economic principle? Or has it been changed since I studied it? I must admit I have not kept up.

Footnote – I used to know a bit about the cocoa market mentioned in this Guardian article. It is a small market as commodities go, with the greater part of the crop used by five or six major manufacturers. They had sophisticated weather tools (well, sophisticated for those times) and all counted pods and did other research in the origin countries to help forecast the crop. Every now and again a speculator would discover the market and be taken to the cleaners by the manufacturers with their superior intelligence. They would wait for the next one to come along. These days I suspect that intelligence is more widely spread so traders sometimes win. But fundamentally I doubt that much has changed.

JC, have you ever tried your hand at cocoa?

An interesting post by the always-worth-reading Will Wilkinson on Larry Summers, Brad DeLong, academics in the US rotating between universities, government and Wall Street and regulatory capture.