Can machines be entrepreneurial?

Stephen Schwartz has an op-ed in the Daily Telegraph today talking about machine marking in education. All up I agree with his arguments – but this paragraph struck me as being wrong.

Critics also claim that computers will never be able to measure creativity. This is not true. Computers learn to assign marks by mimicking those given by humans. If the marking rules require human markers to assign higher marks to creative essays, the computer will mimic the markers and reward creativity as well.

Okay – now maybe we’re just quibbling over the definition of a “creative essay”. If it is possible to a priori identify what a creative essay is (so for example an original short story crafted by the students) then mechanistically the machine could add a random mark to all the grades and “reward” the creativity. That is trivial – but doesn’t to my mind “measure” creativity and then “reward creativity”.

The issue to my mind is actually identifying creativity when you see it. Now I’m happy to accept that computers and machines generally can work longer and harder than humans, are more consistent than humans, and so on. They are also profoundly and fundamentally stupid. Any deviation from predetermined and pre-programmed norms is a  innovation to a machine – but we know not all innovations are valuable or correct. Sometimes things students say are incredibly profound, other times just wrong. I’m not convinced that a machine can tell the difference unless a human foresaw every instance of student creativity in advance and programmed an appropriate response into the machine. Yet if it can be foreseen, how is it creative?

Posted in Education | 25 Comments

Australia’s new energy policy and its dishonest depiction

The government’s electricity “reforms” merely confirm the existing subsidy arrangements for renewable electricity, with consumers paying the renewable tax till 2030.

Its “reliability guarantee” adds no greater certainty but will entail a vast new inflexible bureaucracy.

The measures will not result in the forecast lower prices.

Here is a piece of mine just published in Quadrant.   In it I conclude

Josh Frydenberg must understand these deficiencies of the energy policy he is marketing. Presumably his nightmare is that unless the present situation is stabilised, the renewables share will be further boosted, and the economy ruined, by the high prices and diminished reliability this entails.

But in stabilising the renewable energy at its present and 2020 projected level we can be certain that Australia’s former comparative advantage in energy costs — the very same advantage present policies have destroyed — will not be restored and our living standards will be very much lower than they would otherwise be.

Posted in Uncategorized | 30 Comments

Opening statement to House Standing Committee on Tax and Revenue Inquiry into Taxpayer Engagement with the Taxation System

Chris Berg and I appeared before a House of Representatives committee this afternoon talking about the Blockchain and taxation. Our opening statement is below.

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We have been asked to make some points about the effect blockchain and similar technologies will have on taxpayer engagement with the taxation system.

The RMIT Blockchain Innovation Hub was established earlier this year as the world’s first social science research centre into the blockchain economy. The Blockchain Innovation Hub will measure and understand the economic, political, social and legal implications of blockchain, and advise governments, firms and communities on how best to take advantage of this exciting new technology.

We’d like to make a few points that we hope might stimulate further discussion and consideration. We are going to be speculative by necessity.

First, this new technology is an opportunity for Australia. We can attract high value knowledge workers by having a competitive tax and regulatory system. Governments should focus on making it easy to host cryptoeconomy services in Australia.

Second, blockchain services are going to change some of the fundamental structures of market capitalism. The twentieth century was dominated by large public companies. In the future, firms will look more like shifting networks managed by blockchains rather than the hierarchies we are used to.

This will have a number of consequences. Australia is heavily reliant on corporate tax revenue. These new firm-like structures are going to be harder to tax than the monolithic firms of the 20th century. We’ve published sceptically about the parliament’s efforts to prevent profit shifting by multinational firms. However, the born-global nature of blockchains will supercharge these trends. We do not believe there will be any easy regulatory solution to this, and parliament will need to rethink not just how it taxes, but what it taxes.

Another consequence of the networked firm is that more people will earn their living as contractors rather than employees. This will have wide-ranging consequences for superannuation, payroll tax, and so on. The tax and industrial relations system has traditionally struggled to integrate contractors into its frameworks, and this is likely to be a bigger issue in the future.

Blockchain applications make possible real-time reporting and payment of tax obligations. A large public company could place its accounts on a publicly verifiable blockchain. This would eliminate the need for auditing.

We are not proposing real time blockchain reporting as a regulatory requirement, but would urge shareholders in public companies to consider demanding this of management.

We can also see some attraction for small and medium sized firms of real time blockchain reporting, which would make automate tax compliance and make business activity statements redundant.

The ATO should develop guidelines for real-time taxpayer blockchain reporting that it would consider compliant. The ATO should also rethink its internal systems to facilitate voluntary real-time reporting.

Real-time tax reporting raises different issues for individual taxpayers. Privacy is an overriding problem here. There are new technologies that have been developed with the blockchain – such as zero-knowledge proofs – that provide opportunities for privacy-protecting public services in the future. This is a something we plan to work on in the future.

Blockchains are likely to bring about enormous changes to the way we work. For now, and to conclude, we will leave it that any use of new digital technology for government revenue raising has to place fundamental values such as privacy and the rule of law at the centre.

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Unfortunately our time got cut short by a vote in the House.  In the time we had there was some very good questioning from the committee members and I’m hopeful that Australia will be in the forefront of adoption of this new technology.

Posted in Cryptoeconomics | 21 Comments

This will be THE major issue at the next election

Greens, Labor sink Peter Dutton’s citizenship crackdown:

Immigration Minister Peter Dutton’s overhaul of Australian citizenship laws have suffered a major setback with his reforms unable to pass the parliament ahead of a Senate imposed deadline — an outcome hailed as a “major victory” by Labor and the Greens.

The proposed shake-up would have increased the permanent residency requirement for citizenship from one to four years and imposed a tougher English language requirement on aspiring Australians.

The changes — which would also have required applicants to demonstrate they had integrated into Australian society — were due to take effect from the date of their announcement by Mr Dutton on April 20.

Mr Dutton said the government remained “committed to strengthening citizenship”, and flagged that negotiations would continue with crossbench Senators, although no-timeline has been set on the passage of any revamped package.

“It’s a shame that Bill Shorten is so weak that he has to capitulate to the hard left of the Labor Party against the national interest,” Mr Dutton said.

And from the comments. The top 20 and not one supporting Labor and the Greens:

According to Green Senator Nick McKim “Peter Dutton tried to tear down multicultural Australia and remake it in his own hateful image.” Why is improving the quality of immigrants by showing they are willing and able to integrate “hateful”? Interesting that the Green’s loyalty is to foreigners over Australian interests. If the Greens had their way, by about Easter we would be overwhelmed by hundreds of thousands from the worst societies in the world and Greens would celebrate this apocalypse and victim factory as “compassionate”. Deranged.

Yes I can see why Labor and the Greens would not like the proposed citizenship test. You might actually need some intelligence and education to pass it.

Labor and The Greens working for Get Up!/ George Soros. Dumped files show influence of George Soros on Western politics

“Hailed as a “major victory” by Labor and the Greens.” The message here? Labor and the Greens get into power again its open borders and more boats. Its like ground hog day.

More damage done to this country by the left-leaning unrepresentative swill.

Just shows that if Labor get back into power it will be refugee-a-rama. Non stop boats from all directions.

When I applied for citizenship it was dependent on four or five years permanent residence. I believe that persisted throughout the Howard years. Presumably the one year requirement was another “progressive” move by the comrades.

There’s something strange and quite disturbing about Labor and The Greens show more allegiance to foreigners than they do Aussies. It’s an absolute disgrace.

FFS! Whose side are labor and greens on? Ours or some militant islamists?

The ALP/Greens veto of Dutton’s law changes is outrageous and my real thoughts to this bastardry would be unprintable. Beyond contempt.

Australian citizenship is a privilege, not a right. 1 year of residence is not enough to earn this!!

May as well call an election and get it over with. Labor and the Greens are already using the Senate to control the country.

The dreaded dysfunctional Senate strikes again. Making it very hard for the Government to Govern. Time to dispose of the Senate once and for all.

& the One Nation vote just jumped another couple of percentage points!

Labor and the greens will open borders and destroy this country. A big loss for Australia

What is so very wrong with what Dutton is proposing. I support him 100%. There are those in the Senate without a brain cell between them, and they usually vote as a bloc, so I guess we get just what we vote for.

Labor and the Greens consider Australian citizenship cheap.

People smugglers in Java will be checking that their boats are fueled up. (Seaworthiness not a consideration.)

This Bill Shorten is really a piece of work. The average Aussie supports Dutton on this as we have had enough of mass immigration and poor quality immigration. Bill you have it wrong big time!!!!

Labor and the Greens celebrate the continuing abuse of Australia. They will do absolutely anything to try and get the ethnic vote

We know all about the Greens but it’s now abundantly clear Labor doesn’t care about this country. It’s all about power at any cost. We have an energy crisis that will only get worse and it’s a threat to the health, wellbeing and lives of millions of Australians but Labor would rather play cheap politics than work towards a long term solution. Massive growing debt – don’t look to Labor to help resolve it. Now Dutton tries to sharpen up citizenship laws and Labor says no to that too. They are despicable.

Might also mention that Dutton has the right idea on climate change as well.

Posted in Australian Story, Politics | 117 Comments

Thoughts on university reform

This caught my eye this morning:

Universities would lose control over the salaries of vice-chancellors under a plan floated by Liberal Democrat David Leyonhjelm.

“Australian public universities are crying poor while the averag­e salary package for their vice-chancellors is now almost $900,000,” Senator Leyonhjelm told the HES yesterday.

“Last year 11 of them earned more than $1 million.”

His party plans to introduce amendments to the government’s $2.8 billion higher education savings bill that would give the ­Remuneration Tribunal control over vice-chancellors’ salaries to ensure they are “financially ­viable” for the institution.

Already controversial, the high salaries of university chiefs have been seized on by Education Minister Simon Birmingham in his political struggle with the sector.

I have two theories:

  1. The Australian confused David Leyonhjelm of the LDP with British Overseas Citizen “Senator” Nick Xenophon.
  2.  David Leyonhjelm has been infected by a very, very bad case of statism.

Central wage setting is an IR system that Australia abandoned some decades ago and while I understand nostalgia – being of a certain age myself – one should restrict nostalgia to 80s music and some movies.

To be blunt the Remuneration Tribunal cannot possibly be the solution to over-paid VCs because it already overpays politicians, public servants, and judges. Why will it be any different for universities?

Now the problem is this – Australian universities have a governance problem. That problem manifests itself in many ways – one symptom being over-paid VCs. It manifests itself in other ways too – far, far too many people on staff who do not, will not, and cannot actually teach or research. To be clear – some support staff are necessary and universities run on a core of people who ensure the day to day operations of the organisation run smoothly.

Universities should be run in the interests of students and not in the interests of senior management or in the interests of the federal education minister.

That means two changes need to be made:

  1. The academic boards of universities must be made up of individuals who out number senior management on the board and of individuals whose careers and promotion are not beholden to senior management. In short – full professors of the university.
  2. University Councils must be elected by alumni and financial donors. Now there is a good argument for ex officio appointments and the like, but a majority of council members should be elected by the ultimate customers of the organisation – the students.

Having the government set wages is not LDP policy and should not become LDP policy. If the government wants to reform Universities it should start by linking HECS payments to good university governance and, of course, the abolition of the abomination that is compulsory student unionism.

Posted in Education | 50 Comments

Wednesday Forum: October 18, 2017

Posted in Open Forum | 1,513 Comments

Read it and weep – The Case Against Free-Market Capitalism

In Project Syndicate, Ngaire Woods presents the Case Against Free-Market Capitalism.

Ngaire is Dean of the Blavatnik School of Government and Founder of the Global Economic Governance Program at the University of Oxford.  This is the final paragraph from her article:

The orthodoxy established by Margaret Thatcher and Ronald Reagan in the 1980s – to roll back the state, after a decade of profligate and bloated government – is guilty as charged. A new consensus is emerging that more active and effective government is required to boost growth and expand opportunity. The jury is still out, however, on whether governments will be given the tools and support they need to rehabilitate the defendant.

Yep.  Overload the car.  Put chewing gum in the locks.  Throw sand in the fuel tank.  Let a bunch of idiots drive the car.  And when the car breaks it is the car’s fault.

Bring on Jeremy Corbyn and Bernie Sanders to fix the problem.

Follow I Am Spartacus on Twitter at @Ey_am_Spartacus

Posted in Uncategorized | 41 Comments

Is Treasury leaking against the government?

This story reported in the Australian caught my attention:

Labor treasury spokesman Chris Bowen has quoted an email exchange between disgraced former Treasury official Godwin Grech and the government’s preferred candidate for ASIC chairman, John O’Sullivan, in justifying Labor’s campaign against Mr O’Sullivan.

Okay – so the question is: How did Chris Bowen get the email? It seems to me that there are two possibilities.

  1. Someone in Treasury leaked it to the opposition.
  2. Chris Bowen has a stash of documents and emails in his possession from his time in government.

Either way it is not a good look.

Posted in Politics | 17 Comments

Jeffrey A. Tucker: How Much Homogeneity Does Society Need?

It feels strange writing about this topic, some 25 years after I had it completely settled in my mind. But nothing is ever really settled, I suppose. The claim that I had long ago concluded was a basic historical and economic fallacy is back in a big way. The claim is that society needs homogeneity to be orderly and free. It is a core claim of the alt-right and its sympathizers (and, in a different way, of the alt-left). It is what leads them to reject freedom as a path forward and embrace state control of demographics.

It’s completely wrong. If you have ever been confronted with this claim, I’m writing this article for you.

Here’s the anecdote from my past. Before his death, the now-famous “social nationalist” writer and theorist, and self-proclaimed fascist, Samuel Francis and I were talking at some luncheon. I was prattling on about liberty as usual. And he interrupted me and said, paraphrasing: “Human rights and liberty are slogans we use. Much more fundamental is demographics. You have to have homogeneity for society to be orderly and operate properly. Without that, you can forget about rights and liberties.”

Was Francis Right?

Liberty is not the outgrowth of homogeneity. It is the solution to a seeming problem of heterogeneity.

I said nothing because I hadn’t really thought much about that. Was this right? You don’t hear such claims in college. People who talk like this are politically incorrect, and don’t say such things in polite company. This thinking leads to forbidden thoughts, and trends toward the celebration of civic sins like racism, sexism, and xenophobia. So I had never really come to terms with it. I didn’t have to. But that also meant that I was caught off guard. I sat there a bit confused.

It took a few days but I happened upon a realization. Liberty is not the outgrowth of homogeneity. It is the solution to the seeming problem of heterogeneity. Liberty creates institutions like commercial settings, opportunities for trade and exchange, settings for mutually beneficial trade and learning. It is precisely how liberty reconciles differences among people–and creates wealth out of disagreement–that is the very source of its great magic.

Why is there not chaos? Why is there coexistence? 

Think back to the end of the religious wars. Enlightenment thinkers proposed that the solution to religious difference is not the burning of heretics and the imposition of an official creed. It was to allow people to believe whatever they wanted so long as they didn’t hurt others. And the system worked. How many other ways would this idea of freedom work? Gradually, it came to be rolled out to affect speech, the press, and trade. Eventually it led to broad emancipation of slaves and women. It created a new world, in which the power of the state was restrained and contained, and dismantled the old world of imposed hierarchy.

You don’t have to know history. Visit the bustling commercial district of any major American city and observe the crazy quilt of ethnicity, language, religion, race, and culture, where people are around buying, selling, and associating according to their own lights. Why is there not chaos? Why is there coexistence? Because the presence of commercial freedom allows everyone to pursue his or her own self interest in a way that also benefits others. Here is the beauty of the invisible hand at work.

The claim that liberty is preconditioned on the sameness of the population is to wish away the very problem that liberty is much adept at solving. After all, what is the problem that social order is trying to solve? It seeks to provide a setting in which people thrive as individuals even as the entire group is granted an opportunity for a better life. Differences between people are solved by freedom. This was an insight that changed the world for the better.

The trouble is that a homogeneous and isolated tribal unit managed from the top will always be poor.

In fact, I realized, if you have a small tribe of that same race, language, religion, and cultural norms, the question of liberty does not have to be raised at all. Group coordination happens due to personal knowledge, verbal communication, and shared expectations of other’s similar needs, and it usually features a single leader.

The trouble is that a homogeneous and isolated tribal unit managed from the top will always be poor–mostly living hand to mouth, as small tribes in the Amazon do today–because the model doesn’t permit the expansion of the division of labor. It can work under some rarified conditions. But for the most part, life under imposed homogeneity eventually defaults to what Thomas Hobbes said of the state of nature: nasty, brutish, and short.

The Drive to Integrate

Liberty, on the other hand, rewards ever more integration of people of all kinds. It becomes profitable for everyone to do so. You are free to feel bigotry, racism, loathing of all other religious views, of different lifestyles and so. But when it comes to improving your life, you prefer dealing with the Jewish doctor than having a heart attack, grabbing lunch at the Moroccan restaurant, hiring the Mexican immigrant to tile your bathroom, listening to your favorite African-American pop band, and so on. And guess what? Gradually under these conditions, the primitive and tribalist ethos begins to subside.

This is precisely why any regime that seeks to enforce homogeneity must necessarily turn against the market and toward force. Recall that the Nazi Party had at first only encouraged peaceful boycotts of Jewish businesses, protest signs in front of stores, and so on, and laid out explicit instructions that no one be hurt. That didn’t work. The Nurenberg Laws were a desperate measure to address the “problem” that the market wouldn’t work to exclude people.

There is another insight that makes the whole claim about homogeneity a bit silly. As it turns out, no one is the same. And you know this. Think of a friend who shares the same religion, race, language, and sex, and think about your different values. There is always the possibility for conflict because no two people are alike. Your friendships survive despite this because you value your friendship more than being enemies. Expand that model to the whole of the social order and you begin to understand how and why differences lead not to conflict, disorder, and acrimony but rather to friendship, prosperity, and enlightenment.

All this talk of doing away with diversity is a shibboleth. There is no pure race, no truly orthodox religion, no one language without variation, no final unity between any two people in thought, word, or deed. No one acts or thinks as a group or collective. The social world will be, always and forever, a constellation of difference. We need the best possible social system for dealing with and making something beautiful come of it.

The New Realization

I was so pleased to work through the problem in my own mind. As with most intellectual conflict, you end up better off as a result. I came away with a greater appreciation and understanding of what liberty means for the world. Further studies reinforced my conviction that the whole purpose of liberty is to make radical heterogeneity work for everyone.

This is why I became so enraptured by the Convivencia, the 700 period before the High Middle Ages when Islam, Judaism, and Christianity coexisted to their mutual betterment (that all groups benefited from the association is not in dispute, despite the ongoing debate about just how much tolerance for difference there really was).

To understand the awesome power of heterogeneity is to adopt a different outlook on society itself. It is to embrace the core liberal claim: society doesn’t need top-down management because it contains within itself the capacity for its own management. You come to be enraptured by Frederic Bastiat’s emphasis on harmony as the means by which we live better lives.

The opponents of liberty have been barking up this tree for some 200 years.

In contrast, the mental posture that homogeneity is a necessary condition leads to a series of strange obsessions over unending conflicts in society. You begin to exaggerate them in your mind. It seems like you are surrounded by a plethora of intractable wars. There is a war between blacks and whites, men and women, gays and straights, Christianity and Islam, the abled and disabled, our nation and their nation, and so on. This is the very mindset that the left and right have in common.

And guess what? If you build a large state, these conflicts do indeed appear to be more real than they are, simply because the state pits people against each other. You begin to hate that group because its members didn’t vote for your candidate, it gets more of the tax loot, it favors various forms of imposition on your liberty. Thanks to this interventionist state, you feel as if you are surrounded by enemies and lose track of the possibility for human understanding.

Freedom and Difference

Let’s return to the original claim by Mr. Francis, now widely shared and promoted by the alt-right and its sympathizers. It turns out that this is nothing new. The opponents of liberty have been barking up this tree for some 200 years, as I explain in my new book.

“You have to have homogeneity for society to be orderly and operate properly,” Francis says. This claim amounts to a rejection of liberalism itself. So let’s correct this. You have to have liberty to deal with the inescapable reality of heterogeneity. It’s the longing for sameness that leads to conflict, despotism, and impoverished human lives.

Postscript: for readers interested in the liberal theory of society, its origin and development, I highly recommend the first third of Mises’s Socialism. Here he formulates a theory of cooperation and what he called the law of association, which are powerful elaborations on the theory of the division of labor. The result is a robust and serious social theory–one that Mises himself never again explained in this degree of depth in any of his works. I personally find it the best explanation of society and property and progress I’ve read. 

Jeffrey A. Tucker


Jeffrey A. Tucker

Jeffrey Tucker is Director of Content for the Foundation for Economic Education. He is founder of Liberty.me, Distinguished Honorary Member of Mises Brazil, economics adviser to FreeSociety.com, research fellow at the Acton Institute, policy adviser of the Heartland Institute, founder of the CryptoCurrency Conference, member of the editorial board of the Molinari Review, an advisor to the blockchain application builder Factom, and author of five books, most recently Right-Wing Collectivism: The Other Threat to Liberty, with a preface by Deirdre McCloskey (FEE 2017). He has written 150 introductions to books and many thousands of articles appearing in the scholarly and popular press.

This article was originally published on FEE.org. Read the original article.

Posted in Guest Post | 83 Comments

Renewable energy and government policy: the plot thickens!

In the Spectator-on-line I address the latest developments of the energy policy, the gist of which is being selectively leaked by Josh Frydenberg.  Here is an extract

The government’s abandonment of the expanded renewable energy target that the Finkel report recommended represents a careful compromise.

The Prime Minister remains a rusted on fan of renewable energy which he considers marks the future. Malcolm Turnbull has put himself through multitudes of hoops to salvage this prospect – including the absurd plan to implement Snowy II and pump water uphill to allow it to supply more profitable time slots.

Like all renewable energy apostles, the Prime Minister is bewitched by confident forecasts that sometime in the near future advances in technology will make renewables cheaper than fossil fuels. Such forecasts have been promoted by idealists and carpetbaggers since the 1980s but the fact is that renewable energy still costs $115 per MWh and, as recent work by the Minerals Council showed, a new Australian coal power station would profitably operate at under $50 per MWh.

Tony Abbott represents the opposite pole. Now freed up from having to listen to wide eyed advice from the bureaucracy and self-serving forecasts from energy businesses which prefer the certainty of government subsidies to the risks of entrepreneurial investment, he has recognised the disaster he presided over. In several addresses, culminating with that in London, he demonstrated that the renewable energy program is busting the Australian economy and has been the key factor in domestic households’ near 50 per cent increase in electricity prices.

The last ditch supporters of the renewable program retained their faith and some found sustenance in the recently released ACCC report which assigned only 16 per cent of the recent price increases to green schemes. What such interpretations overlooked was the fact that the green schemes had also forced out low cost coal generators. This means they were directly and indirectly responsible for at least 60 per cent of the increases and, because of the dispersed nature of renewable supplies, would also have contributed to the 40 per cent of the increase attributable to network prices.

Even Malcolm Turnbull would have had to recognise that things were not going to plan when the wholesale electricity price jumped from under $40 per MWh in 2015 to $90 at present and with forward prices showing no respite. And the South Australia blackout experience together with AEMO chief Audrey Zibelman’s desperate search for band aids to shore up reliability showed a very real prospect of an increasingly unreliable system as a result of renewable requirements. Ms Zibelman’s interventions may paper over some cracks but also undermine market responses. The appointment of Drew Clarke as Chairman of AEMO is a considered step to rein in her activism.

Josh Frydenberg – probably the smartest politician in the political “swamp” – could clearly see the disaster emerging. In June responding to Finkel, he adverted to the costs imposed by renewables by ensuring the Party room knew that they require a ‘firming’ insurance premium (though he put this at a wholly inadequate $16 per MWh). Frydenberg knows that the existing program whereby we have to reach 23.5 per cent renewables by 2020 (up from 16 per cent today) means the closure of at least one other major coal generator and the associated permanent price boost and reduction in reliability.

 

The unwinding of the renewable con-job is to be welcomed. But it can at best stabilise the damage that has been created. The only way forward is to totally abolish all subsidies with immediate effect, including those that the recipients will claim have been guaranteed. We are spending some $4-5 billion a year in a vain attempt to accelerate a future based on renewable energy and as a result have lost the comparative advantage of cheap power that has been the backbone of the economy.

 

Posted in Uncategorized | 37 Comments