A new blog on Behavioural Economics

Hi all

I've started a new blog on Behavioural Economics

http://behaviouraleconomicsaustralia.blogspot.com.au/

Please take a look

Mark S

Haven't they ever watched "The West Wing"?

Surely these two political leaders would be students of The West Wing. 

Surely they would have watched the presidential debate episode "Game On"

Surely they'd remember the moral of the story when Jeb Bartlett's wife Abbey cuts his tie in half moments before he goes on stage. To fire him up.

Surely they understand that passion matters in a debate!!

The misogyny poll bump

And weren't they there during PM Gillard's misogyny speech?

Of course they were there. It was fiery, passionate. You might even have said it was slightly out of control.

It generated a nearly 10 point bump for Labor in the polls as well.

Passion, fire, they work. Australians aren't stupid. We want to see the "real" Kevin Rudd and the "real" Tony Abbott.

Perversely, the hyper-controlled Abbott might just be the real thing; but this robotic Rudd?? No.

If you want us to pay attention, start believing in it - with passion. Last night was terrible :(

Let me know what you think

Mark S

Abbott's company tax cut is disingenous

First, let me make this clear, I am in favour of the lowest appropriate taxes for individuals and businesses. BUT, Tony Abbott's decision to cut company taxes in Australia by 1.5% is simply bad policy and worse, it wrongly appropriates the Henry Tax Review to justify it.

Why Abbott's use of the Henry Tax Review is wrong

The first of the key directions read:

Maintain the company income tax rate towards the lower end of the small to medium OECD economy average, with a reduction to 25 per cent over the medium term. This aims particularly to increase the level of business investment in Australia across all sectors, including foreign direct investment; promote more entrepreneurial activity; and reduce incentives for profit-shifting offshore.


So this would seem to support Tony Abbott...but wait, there's more.

Ken Henry also recommends sweeping changes to the tax system, including a land tax (and resources tax) and many other sweeping changes. So, Abbott's plan is to remove the resources tax, not add a land tax and cut the company tax rate.  That just doesn't stack up.

Abbott-nomics, Reaganomics and the Laffer curve

While he explicitly named the Henry review to support this cut, I'm more concerned about the implied throwback to the 1980s and Ronald Reagan's economic policies described by the great catchphrase "a rising tide lifts all boats". It didn't.

One of the big theories that Reagan used to support his policy was the Laffer curve.  This theory suggested that in some circumstances that a cut in tax rates would result in increased government revenues. Legend has it that one of his economics advisors, Arthur Laffer sketched this curve on a restaurant napkin.

Laffer Curve: suggests that revenue increases if high tax rates are cut

However, Laffer also pointed out that spending discipline is required in the short term, to increase government tax revenue in the long term.
The Laffer curve has been discredited for a long time. There are many papers that have been written to debunk the Reagan and Bush supply-side policies...yet Abbott thinks he can roll out the same discredited theories.

Spending cuts will be required

So, even if we put aside all of our misgivings about the Laffer curve, supply-side economics and Abbott's plan, there is one thing that can't be denied.

Spending cuts will be required. Even Arthur Laffer said so.

Tony Abbott. Be accurate. Treat us like adults. If you are going to cut revenue through company tax cuts, tell us what other revenue you will raise, or what spending you will cut. Reagan or Bush would.

Let me know what you think.

Mark S

It's an election so it's time to blog...about polls

Let's start with polls. Properly constructed polls don't lie. Yes, there are increasing challenges in polling now that people don't answer landlines but pollsters work their way around that.

However, there are differences between each of the polling techniques so that gives different results. At the moment, most of the major polls have the Coalition in front on both a primary vote and two party preferred basis.

Newspoll: L-NP 52%; Labor 48%
Essential: L-NP 51%; Labor 49%
Roy Morgan: L-NP 50.5%; Labor 49.5%
Galaxy: L-NP 50%; Labor 50%

The bounce has stopped

What's more important is that the Coalition has been in front for almost all of the past two years. PM Gillard got a fillip after the misogyny speech. PM Rudd got his recent bounce.

But there is no sustained trend. The Coalition has remained in front. One bounce does not an election win make.



How could Labor win from these polls?

There's only one way I can see for Labor to win. It comes from the Morgan Poll.

Morgan is the only firm to ask voters for their preferences. The other firms calculate it from the 2010 patterns. Morgan claims that the preferences from minor party votes will flow stronger to Labor than in 2010, and their poll has been showing a better result for Labor than the other polls as a result.

If they are right, Labor will hold seats that the other pollsters expect them to lose. If, if and if ... probably not.

From where I stand, the prospect of Tony Abbott as leader of Australia is not a pretty thought - but at least there appears no chance now of the Coalition controlling the Senate.

Let me know what you think

Mark S

"Zero tolerance" McGuire must resign

On the weekend, Eddie McGuire made the very strong point that there is "zero tolerance" for racial intolerance in response to the 13 year old Collingwood fan calling Adam Goodes an ape.  Yesterday, Eddie broke his own rules when he suggested that Goodes could be used to promote the musical King Kong.  Zero tolerance is what it says - Eddie must resign, and his comments overnight indicate that he may do that.

Toorak Eddie or the Broady boy

Eddie McGuire really has been a leader in the public debate against racial intolerance. For decades, he has been a respected businessman and media personality.  Yet, he is still the boy made good from the rough streets of Broadmeadows to the rarefied air of Toorak.

Eddie McGuire - the statesman

Playing to his audience, the lowest common denominator

Here is where the Eddie McGuire story gets murky. He is a positive role model in so many ways, but he also understands his audience because that is where he has come from. He was the successful host on the lowbrow "The Footy Show", playing the straight man to the highly politically incorrect Sam Newman. 

On Triple M, he knows he is talking to largely the same audience as the Footy Show, and his role is to pepper the show with humour, even lowbrow humour. This is the unfortunate background to his comments yesterday - the environment in which he operates is one in which an off-the-cuff racial comment is commonplace.

Eddie on The Footy Show with Sam Newman and Trevor Marmalade

Eddie's slip of the tongue is clearly racist and his audience are too

Eddie understands the depth of his error.  Unfortunately many of his listeners do not.

Reading the comments to his official statement posted on Facebook is simply depressing, and reflects the ingrained racism and lack of understanding of these people...

Liz Gazeas I didn't think the comment was racist at all. Not Eddie's comment nor the young girls'. If the comment was racist to me I believe that would mean I think ALL indigenous people look like apes. I don't think that so to me the comment was not about race.

Sandi Pike This whole Adam Goodes issue...is a joke...freedom of speech...have a shave Soft cock Goodes because you look like an APE...

Zac Godfrey Eddie wasn't being racist. He was making a tongue-in-cheek reference that has been received badly. What if an indigenous 13 year old girl had called Goodes an ape? Are people from different races allowed to say different things? That doesn't seem right to me. I lovingly call my nieces little monkeys all the time...

...and on and on they go, demonstrating the incisive truth of what Collingwood player, Harry O'Brien said yesterday that casual racism is ingrained in parts of our society, who simply do not acknowledge their racist content.

Eddie, you are not a racist, but what you said was racist

You have been a great role model, but what you said was unacceptable by your own standards and you must set an example by standing down.  You need to reach out to those commenting on your club's own page to make it clear that they are missing the point. 

Australia is developing an unfortunate reputation as a racist country, and you can continue your good work by reaching deeper into your own audience.

Let me know what you think

Mark S

The truth will set you free, Lance?

Lance Armstrong is right that the truth will set you free, but what will it free him of?

No more money

First, it should free him of his money. All of it. We have a range of laws that require people to be recompensed for wrongs done against them and the list of those who have been wronged by Armstrong is very, very long.

As he is an American, those who have been wronged won't be bashful in suing him to get their rightful money back. By the time it is all finished, there shouldn't be any money left of his fraudulent wealth. 

Trust and relationships

The truth also sets him free of any trust he has in most of his close personal relationships. His children and family will never trust him.

It won't matter what he does or says or how long he does it for, that trust will never return.

Many of those relationships are gone forever. They will never return. He is free of them. 

Lance as you knew him is gone

Lance, you are still delusional if you think people will forgive you. If you want the truth to set you free, you need to let go of the entire lie that your life has been. 

That means not expecting anyone to forgive you. It means going to jail. It means accepting that you are not who you thought you were, and tried to show other people you were.

This really would set you free. If you leave the old fake person behind. 

It won't happen.

My bet is that most of this won't  happen. Lance won't tell the whole truth. Lance won't own up to his deceit to himself. Lance will keep trying to spin a story. Lance will never be set free. 

But I do hope he goes to jail. We need justice in our world for the rest of us to retain our trust. 

Let me know what you think?

Mark S

The end of get-rich-quick schemes (for now)

The last 20 years has been pretty unusual.  There has been a lot of opportunities to get rich quick (or get poor if you messed up). There was the Internet boom and bust, a few stock market booms, rising house prices, rising commodities prices, low unemployment, a housing boom and huge wages for mining workers.

Source: Reserve Bank of Australia

So, whether you were white collar or blue collar, there have been plenty of ways to get rich if you took a few risks.

It's over!

Back to the old days - do things that people want

What is going to happen now is simple. If you offer products or services that people want, they will be bought, at a fair price. If you are a healthcare worker, there is a lot of demand for your services - you will be able to get work and charge a fair price for it. If you are a manufacturing worker in Australia, there is less demand for your services.  You will need to be one of the best manufacturing workers, or reskill, or do something different.

More importantly, as a society, we need to think about what people want, and create those products and services.  Before mobile phones, few people thought that having a mobile phone would be a necessity. They were a luxury item.  In hindsight, we can see how useful they are, and mobile phone companies have done very well.

Before the washing machine, the idea of having a mechanical way to do laundry wasn't obvious. But once the washing machine was invented, every washing person (mainly, women) wanted one. (Watch Hans Rosling's great talk for more on this). And increasingly, we are happy to pay for the services of others to do other cleaning for us.

What happens next?

Now, it is up to us, to identify what the next washing machine is.

Ask yourself, what do I want? What does my neighbour want?

Ask yourself, how can I do what I already do better, faster, more effectively?

Ask yourself, how can I "sell" my great services better.  I know that what I offer to my firm, or my customers is valuable.  I need to communicate that value better.

Every transaction has to offer value to both sides.

Ask yourself, am I doing something that nobody wants or needs any more? If you are handwashing clothes, while everyone else is using a washing machine, sooner or later, your customers will politely stop paying for your services.  Make sure that you keep up with the times.

We will get wealthier as we continue to be more productive

By doing all of these "normal" things, we will get a little more effective every day.  Our incomes will grow a little every day, and our standard of living will grow a little every day.  It won't be a get-rich-quick scheme.  The improvements will often be so small that you won't notice it - much like healthy eating - one day you look back and realise that you have taken off weight.

So, in 2013, let's all get rich moderately quickly.  Let's all try to do just a little bit better in what we do, or change what we do and choose something different. When we all do that, we all benefit.

In 2013, let's be innovative, productive, and creative.  By the end of the year, you will notice the difference.

Let me know what you think

Mark S

Loving in Japan

Greetings from Tokyo. 

One of the interesting things about being in a different place is that different social norms and customs generate a commercial requirement for different types of services. 

Many single people in Tokyo live in small studio apartments, not much bigger than a student dorm room. They choose to do this to have personal privacy rather than to live in shared accommodation like many inner city dwellers in Australian cities. 

You can hear your neighbors! You need a love hotel. 

So you are single in your 20s. You pick up at a bar. You live in a dog box with clothes hanging from the ceiling and not enough room to swing a cat. 

You aren't going to impress your new friend at home, and with some enthusiastic intimacy, you will break a whole bunch of rules with your neighbors. 

What do you do? Go get a room. And thankfully, a whole industry called love hotels will rent you a really nice room for a perfectly decent price for either 3 hours ($40-50) or overnight.

Where are these love hotels? Right around the corner from the nightlife districts. It's a great example of the market delivering supply to satisfy a need. 

Let the market do its job - there is so much we can learn from other countries

The worst abuse of statistics by Rev Peter Jensen

Tonight on Q and A, we witnessed one of the worst abuses of statistics - and it causes real harm.

A correlation is not causation

Peter Jensen - you sinned by misusing statistics

Anglican Archbishop Peter Jensen asked for a sensible debate about the health issues of being gay, on the basis that gays have shorter lifespans on average than non gay people.

This is the most heinous misuse of statistics.  A correlation (when two things coexist at the same time) does not mean that one thing causes the other.

Observe the following facts:
- People who live in Africa have a shorter lifespan than people who live in Australia
- People who are overweight have a shorter lifespan than average
- Men have a shorter lifespan than women
- People who are gay have a shorter lifespan than average
- Indigenous people have a shorter lifespan than average
- Smokers have a shorter lifespan than average

Does this mean...
- Africans are genetically weaker?
- If you are overweight, you should lose weight to live longer?
- If you are a man, you should become a woman to live longer?
- If you are gay, you should become straight to live longer?
- Indigenous Australians are at fault for their shorter life spans?
- To live longer you should stop smoking

Clearly, some of those statements are nonsensical, some are provocative, but they are all equally plausible (or implausible) from the data.  None of them should be stated without more facts.

What is really going on?

• Africans and indigenous Australians have a poorer standard of nutrition, water and healthcare among other things.  It is these things that cause shorter life spans.  The reasons that these groups and others around the world have these conditions is complex and varies from location to location.  However, this does not means that Africans or indigenous Australians are at fault for their shorter life spans.
• People who are overweight, and men have a higher risk of certain conditions which end your life.  Diabetes and heart failure are two of these.  Would losing weight reduce your risks? Yes, controlled studies have shown this.  Would becoming a woman reduce a man's risk? Who knows - there have been insufficient studies of transsexuals to evaluate?
• Gay men live on average shorter lifespans than average.  Why? There are a myriad of possible factors including higher rates of mental illness, which does shorten life spans.  Why do gays have higher rates of mental illness? There are many contributing factors, but the suggested solution that gays should try to not be gay is more likely to increase mental illness than decrease it.

• Smokers have shorter lifespans, because smoking increases the risk of lung cancer.  Lung cancer will end your life.  Therefore: smoking - causes - lung cancer - which causes death.  This is the only one of these statements that is a proven causation.

Misuse of statistics is not an accident

Peter Jensen, you are a learned man.  You studied the rigorous discipline of law, you have multiple degrees.  You know the difference between a correlation and causation.  You know that you are being deliberately mischievous when you were asked to comment on Jim Wallace's quote that included...
"The life of smokers is reduced by something like seven to 10 years and yet we tell all our kids at school they shouldn't smoke...But what I'm saying is we need to be aware that the homosexual lifestyle carries these problems..."

He is trying to argue that there is a causal relationship between both smoking and death and a gay lifestyle and death.  There is a relationship for smoking.  There is no relationship for a gay lifestyle.

You know the difference Peter Jensen.  You know.
 

Peter Jensen, your knew your comments would get traction. You misused statistics deliberately.  That is sinful. Christ would not have done that.

A solution to the foreign sale of Australian farms

The emotional and political debate about the sale of Australian agricultural assets, particularly to Chinese interests,   needs a more objective perspective. 

Two types of assets

Cubbie Station - a political football

What is an asset like Cubbie Station?  It's actually two assets. One is the land and resources under the land. The second is the right to produce food or crops from farming. 

This isn't just a technical point, it's critical to the security of Australia and to the debate. 

Separate the assets

A lot of the debate quite rightly surrounds the ownership of large tracts of Australia by foreign owners, especially foreign governments.

There is also acknowledgment that Australia lacks the capital and commitment to farm our arable resources to their full capacity. So, we need to work with foreigners to make productive use of the land.

So, we can lease the asset, rather than sell it. 

The UK model

For centuries, the UK property model has sold long term leaseholds over residential property.  If you "buy" a flat you are most likely buying a 90 year lease, not the freehold. 

We should adopt this model for significant Australian agricultural landholdings. Sell a 100 year lease. It provides food security for the Chinese buyer, but does not relinquish the ultimate ownership of the Australian land. 

Selling long term leases of Australian agricultural properties is a win-win for all. 

Let me know what you think. 

Mark S 

Happy Carbon Tax Day

So, today was the first day of the Clean Energy plan, highlighted by the introduction of the carbon price on major emitters.

There are 294 companies to pay the tax

So, let's set a couple of things straight.  There are 294 liable entities for the 2012/13 who have to pay the carbon tax.  No, it isn't 500 companies as been widely reported.  It's just 294.

Most of them are involved in energy or mining, plus a number of councils who operate landfills.

Hardly any impact on the average person

How is this going to affect the regular person? Well, some prices will go up, but the average person will be compensated, so there will be very little impact.  In fact, many people will finish off better off.

Given that prices go up and down for various reasons, it will be very surprising if the carbon tax impacts are as noticeable as the GST.  It isn't as if prices will suddenly go up by 2% this week.  Instead, companies that have to pay the carbon tax will carefully consider their pricing, and will make decisions as to whether they will pass the price on.

Companies that increase their prices will risk losing customers, so that is quite a disincentive. And given the level of industry support, there is a good chance that many won't shift their prices, at least not straight away.

So if people won't lose and companies won't put prices up, how does this work?

Just to clarify, there will be some price rises.  But, the real way that the carbon tax will work is to penalise companies that pollute and advantage those that are clean.

Very quickly, capital will move towards the green companies (we are already seeing that happen). And the big energy companies are accelerating their green programs.

Dirty coal plants like those in the Latrobe Valley will be phased out, and workers in those plants will transition to other jobs.  Some will stay in the energy industry and others will do something different altogether.

Economists call this the productive use of resources. I call it helping to get workers out of dead-end industries.  There are hardly any blacksmiths any more, and that's because there are a lot less horses being shod.  In a few years time, there will be a lot less brown coal workers, and that will be because we will have weaned ourselves off brown coal.

Any change is contentious and emotional.  The carbon tax is a good change.  Time will show this to be true.

Let me know what you think

Mark S

P.S. Check out the http://www.cleanenergyfuture.gov.au/ website for more information

Why can't we see that life is still very good?

We don't know how good we have it.

We Australians have a very good life.

The fundamentals of the Australian economy are very good.  Most people have a job.  Businesses are still profitable. Health care is the best it has ever been.  The quality of our food is high.  So why is there a pall of gloom hanging over us?

We compare ourselves to what we had 

Rightly or wrongly, humans evaluate our state in terms of gains and losses. Rather than looking at how wealthy we are or how much food we have, we instinctively assess whether we have gained or lost.  During the mid 2000s boom, most people had more money (even if a lot was on credit), jobs were very easy to get, asset prices were booming and confidence was high. 

Now, everyone feels like they have lost (unless you are one of the small number who work in mining).  We are all a little behind what we were at the peak.  Oddly, although our logical brain knows that Australia is in a strong position, and much better than the rest of the world, our emotions win the day. We feel the losses. It is those feelings that dominate. 

Unfortunately, our emotions then have a big say in our decisions. Our logical brain says "everything is fine - we have plenty of money, just not as much as 2008".  Our emotions say "look at how much money we have LOST. Let's batten down the hatches."

Sentiment then feeds off itself 

Once the emotions win the battle, the negative feedback turns into reality. People stop spending. Businesses start failing. People lose jobs.

Job hunters queuing for 50 jobs at London Zoo

We can override these emotions. We need a different frame of reference. Rather than comparing to the past, we can compare to other benchmarks. We can compare ourselves to the British or the Americans. These are western nations that we can relate to. 

We need stories comparing the average Briton, or American to the average Australian. We need to see our current state as a WIN not as a LOSS. 

If we don't do something quickly to defeat our emotions, they will make our very fears a reality. 

Let me know what you think

Mark S

Government report on micro-betting misses the mark again

Today the Federal Government's draft review of the 2001 Interactive Gambling Act was published.  I have a particular interest in this legislation as I used to be in the online gambling industry.  Now I am just an interested observer, and I'm still surprised at the misunderstandings that exist, like this big one...

Recommendation 25: Because of the greater harm associated with ‘micro-betting’ from a problem gambling perspective, ‘micro-betting’ should be prohibited irrespective of the electronic medium (that is, telephone, internet, etc.) by which the bets are placed.

You'd think this would be based on some research, or merit, wouldn't you?

Fear trumps evidence, again

In the same section of the report,

• Racing and Wagering Western Australia noted that: ‘in-the-run micro-betting’ ... would be akin to games of chance for the majority of the target audience and expose greater risks of problem gambling ...

AND

• Betfair noted: According to a report conducted by the UK Gambling Commission in 2009, there is no evidence that online in-play betting (including ‘micro-betting’ after an event has commenced) poses a “specific, identifiable risk to problem gambling as opposed to other forms of betting or online gambling.

So, a government department makes a scary claim, and a private organisation quotes a reputable study, but the report chooses to go with the scary claim with no evidence.

It's no wonder I got frustrated when I was in this industry.

The scary claim is wrong.  Plain wrong.

After the release of the report, various people have come out to have their say, including "independent gambling researcher, Sally Gainsbury" on the ABC.  She said:
"If you are looking at something that's like ball-by-ball betting on outcomes that are popping up within a game, this is a form of gambling where gamblers could chase their losses, could spend more than they intended, and it really could be an excessive form of gambling,"

Sorry Sally, but you are just guessing.

A screen shot of our micro-betting - live, real, online

Why do I know? Because I am the only person in Australia who has actually operated micro-betting, legally on the Internet.

Our company provided microbetting services to Ladbrokes, the UK's largest betting company.  And the results were clear.  These microbets were just novelty bets.  The punters placed small wagers.  They didn't increase their bets, and everyone just treated it as a bit of fun.

Our business made a very small profit - much less than we had expected - because the bets were small, and the punters' losses were very controlled.

Eventually, Ladbrokes replaced our service with an in-house product, and because we couldn't offer our service to an Australian operator, we went out of business.

You can lose more, faster, with the TAB!


What really makes me shake my head about all of this is that the betting we were offering is no faster than what is available right now with the TAB in any of the States.  Any day, you can place a bet every couple of minutes on a race.  On a Saturday, that would be at least every minute.

The microbet that we were offering is only available every 4 minutes or so - the average time it takes to play a game of tennis.  So, it's actually less likely to be a form of betting where punters will chase their losses than our beloved horse racing.

I have no qualms about being out of this business, but I do have concerns that wild claims will be believed over solid evidence.

We should be able to rely on our public servants to make considered decisions based on fact and not fear-mongering.



Let me know what you think


Mark S

Joe Hockey lies on Sunrise

Joe Hockey: you didn't tell the truth on Sunrise

This morning Joe Hockey blamed the increased cost of electricity on Labor's carbon tax. This is an outright lie.

He said to Tony Burke that people are "concerned about rising electricity costs, and it's because of your carbon tax"

The facts about electricity price increases

Here are the key facts about the electricity price increases:

• Electricity prices began rising from 2005, when the Liberal government was in power
• Electricity prices have risen 30% over the past four years
• The largest factor in price increases is the need to replace and upgrade the ageing poles and wires of the national electricity grid, some of which have been in service for more than 40 years.
• Increases in demand have increased wholesale prices and transmission and distribution prices
• Renewable energy certificates (RETs) must be purchased by energy retailers (nothing to do with the carbon tax) which have increased costs
• State and federal governments regulate the price of electricity through the National Electricity Market (except WA which has a separate regulator). They consider the cost increases incurred to set the prices.

References:

Clean Energy Australia
Reserve Bank of Australia
Roger Dargaville, Uni of Melb


Joe Hockey knows the facts

These facts about electricity pricing are well known to Joe Hockey, he just chose to ignore them when he made his claim this morning. He must be brought to account.

Politicians and other public figures cannot be allowed to make statements that are blatant lies

Let me know what you think.

Mark S

We underrate the fast thinking of footballers, nurses and police

Doug Hawkins - famous in AFL for footy smarts despite low IQ

What are the fast thinking qualities that make a great poker player, midfield footballer, chess player or many other pursuits where there is very limited time for complex decision making? What we do know is that traditional intelligence doesn't measure it very well at all. Football (all codes) is littered with examples of players with  football smarts who are very unintelligent in the "real world". Chess success is also less correlated with IQ than you might imagine.  So what are these smarts?

Let's take a look at what makes good decision making.  

There are four key elements. 

1. Background knowledge.
For example, in football, you really need to understand the rules and the various strategies. If the coach talks about a zone v man on man defence, you have to have all of that knowledge stored away. You need to know which side your opponent prefers to kick with, and a champion Chess player needs to know all of the main opening lines.

2. You need to capture the relevant information at the time.
Scientists and analysts conduct research to collect their data (I'm in that category) but footballers need to gather a lot of critical information in a few seconds. Where is the ball, where are the players, where are they all moving to and more.  Collecting the relevant information quickly is vital. 

3. Processing the information. 
When the high IQ people in the world process information they often use statistics, computers, data models and a whole range of techniques. You can't do that in football and unless you are a computer you can't in Chess either. There isn't enough time.  So, smart players have an alternative method of processing this information that they've captured almost immediately. We know that some of this is innate and some is learned.  We also know that the thinking system they are using is a completely different one to the system I use when I am doing rigorous analysis. 

4. Act on it
The best players sum up all this information and make a decision - generally within one second. Once they have made that decision they have to execute it. A kick to a player, a tackle, a chess move. Actually picking up a chess piece and placing it where you decided to is pretty easy. Kicking a ball through a small gap when you are running full pace is not. 

So what is all this about?

We know that different thinking styles exist and are relevant to different careers. Nurses and police are more like footballers than analysts.  We need more nurses and police, so we need to understand more about this fast thinking style.  We are only scratching the surface but rather than focusing only on analysts like me, let's make sure our education and societal systems recognize the importance of these fast thinking approaches. 

This area hasn't had enough study. I will keep looking out for more information and let's all start to champion these differences as equals.

Let me know what you think

Mark S

Studying Apple is useless for business

Apple's share price has increased from $3 in the '80s to nearly $600

AAPL:Apple is one of the most valuable companies in the world.  It is now valued at $528 billion. Its products are loved by millions. Steve Jobs is revered as one of the great visionaries of our time,  So why is Apple irrelevant for business study?

Precisely because it has been so successful.

Apple is a fluke

When I wrote The Complete Guide to Australian Gambling in 1991 I told a story of how if Moses and Jesus had both been playing Lotto since they were born that by now Moses would have been likely to have won Division 1, but Jesus would not (he is younger!).  Winning the major prize in Lotto is a fluke.

What's that got to do with Apple? Let's consider how many InfoTech start ups there have been in the USA since 1970.  According to the US statistics bureau, there have been a bit over 500,000.

Now consider how many spectacularly successful InfoTech companies there have been since that time.  Microsoft, Apple, Google, Cisco, Intel, Oracle.  So, that's SIX.  We can argue the toss over a few others that have stood the test of time, but in terms of massively successful InfoTech enterprises that have launched since around 1970 in the US, there are about SIX.

So, ladies and gentlemen, there are your odds of being an Apple - 6 out of 500,000!

So why not shoot for the stars?

I hear you.  OK, even if you have only got a 1 in 80,000 or so chance you still want to try.  Fine.

I think there is a better way than trying to be an Apple.

Let's go back to the US census bureau data,  The most recent data shows that there were 34,543 Information companies that have survived since 1993 or earlier.  And there are only 117,000 in total (so about 400,000 of our start ups have closed down).

Take a look at the 34,543 success stories.  Now you have about a 1 in 15 chance of being one of those.  The odds still aren't great, but they are realistic.  Study these companies.  Rather than hitting it big with iTunes, these companies have developed and maintained solid businesses through the ups and downs of business cycles.  Some are quite large, and others are mom and pop operations, but they have all stood the test of time.

Smaller, resilient businesses didn't have the incredible luck of Gates, Jobs and Co. to be born at the right time and fall over the next big thing.  That's why their lessons are meaningful to you.

Behring Breivik shows how racism must not be given any air

I really don't like writing about evil people, it only gives them oxygen. Yet on the other hand, not commenting allows their evil to grow quietly. Anders Behring Breivik is evil. We need to talk about this.

I don't think he is insane. 

In fact, he was very successful.  It's a terrible conclusion I've had to come to.  To be insane requires a lack of normal mental functioning. That's not the case with Behring Breivik, he is considered and very logical. He thought about why he was taking action, how to do it, and what would stop him from achieving his goals. He executed his plan extremely well. Indeed, as horrible as the thought is, there are many lessons to take from his approach that can be applied to the successful execution of other projects. That's not insane. It's intelligent, sophisticated, rigorous and tough. All of the qualities we would want on our own side.

He is the latest in a long line of killers in the name of race or religion

Srebrenica massacre memorial

When Osama bin Laden masterminded the September 11 attacks, most of the world launched a war against him. But not all, he had tens of thousands or millions of supporters for his killing in the name of Islam and against the West.  When Slovodan Milosevic ordered the genocide of 8,000 Bosnian Muslims which was meticulously carried out by Radovan Karadzic and Ratko Mladic the world was horrified.  The UN and international community have engaged in years of investigations, trials and convictions against the perpetrators. Yet again though, there were thousands prepared to support and carry out this atrocity directly against Muslims, because they were Muslims.

These are just two examples through time.  Most major racial groups have been guilty of shocking racial/religious crimes and often they have been victims as well, at different times in their history.  Christians, Jews, Protestants, Catholics, Hutu, Japanese, Turks, Indonesians, British, Germans, French, Russians, Chinese... Race, religion, ideology - all combining into considered deliberate attempts at genocide.

Breivik is no better or worse than all of them. We must stop all racial/religious intolerance. 

So Behring Breivik is just the same. He had a considered agenda. There are many Europeans with his Islamaphobia. He was the most recent to carry out a heinous act in the name of racial intolerance. We must stop all racial intolerance or we allow ourselves to be slaughtered, or to become the slaughterers.  Marine le Pen must be stopped in France. Ahmadinejad must be stopped in Iran. Rick Santorum must be stopped in the USA. But more importantly all the snide racial comments and jokes must be stopped in our living rooms.

Racism and religious fear and hatred must be stamped out before it takes its first breath. 

Let me know what you think

Mark S

Why Gen Y are holding us back

I don't really want to believe this, but the evidence is building.  Gen Ys might be responsible for the economic slowdown in Australia's non-mining States.  Let me explain.

Mortgage rates are low but mortgagees are worried

Over the last month some interesting data was released.  First, the Westpac/Melbourne Institute consumer confidence figures showed that mortgage holders are much less confident than they were. At the same time, the ANZ published some stats showing that housing affordability was its best for a few years.

This doesn't make much sense really.  Interest rates are low by long term standards.  Even though the banks put their rates up last year, and ANZ put theirs up a smidgem recently, the Reserve Bank cuts mean that home loan rates are lower now than they've been for a long while.  This isn't the sort of situation that should make home owners less confident.

House prices are down - maybe that's it

The best reason I can find for this loss of confidence is that house prices are down.  Hmm, that would make sense if they fell in 2012, but they didn't. House prices fell last year, and confidence is down this year.

I can't believe that everyone was blind to the falls in prices in 2011.  Every newspaper was talking about it - we all knew our house prices were sliding.

So what have Gen Ys got to do with falling confidence then?

My daughters are Gen Y, so like any parent I don't want to believe anything bad about these perfect angels, but then again, they've had it rather good!  Seeing the world from their point of view, over the last decade, they've had jobs, had a place to sleep, someone to bail them out and a booming economy.  Of course, they haven't always used those parental safety valves - but they've appreciated them being there.

Now, rather than the economy being a 10 out of 10, it's only an 8 out of 10.  For those of us old enough to remember 4 out of 10 economies, 2012 is pretty good.  yes, unemployment is pushing into the high 5s, but most people still have jobs, and even with issues in Europe, the world isn't falling apart.

For Gen Ys though, any whiff of a problem is scary.  Euro debt problems - aargh! China is slowing - Nooo! Tony Abbott says prices will go up because of the carbon tax - Yikes! If there is one thing that Gen Ys want it is certainty, and even though the fundamentals in Australia are strong, these are uncertain times.

You have shown a link to mortgagees

Gosh, you are right.  So let's get to that.  First of all, a lot of these Gen Ys are the ones who have bought the new houses in the 'burbs over the last few years.  They are loved up, and taken out their first mortgage, and suddenly have responsibilities.  You mean the bank wants me to pay this money EVERY MONTH?? So, it's perfectly understandable if the little dears are a bit worried about everything.

No wonder Gen Y parents look worried!

What about all those young renters, they aren't mortgagees? Well, no, but their parents are, and that's where the parental safety net kicks in.  The kids are getting worried, and what do you think they are going to do - that's right - put their hands out for free rent.  Not my kids of course, it's your kids. And that must make you worried, surely.

There we have it, because the world isn't perfect anymore and Gen Ys have to stand on their own two feet, its their parents who cop it.  Thanks kids!

Let me know what you think

Mark S

Atheist Convention - just a thinly veiled phrase for anti religion. So come out and say that.

I'm finding myself increasingly puzzled by the Atheists. This week Melbourne hosted the Atheist Convention. Essentially as Richard Dawkins said that is a convention of non believers. So I'm trying to think of any other situation where people have a convention to show that they DON'T believe that something exists.  Nobody holds "Tooth Fairy non believer" conventions, so why hold a "Judaeo Christian God non believer" convention?

Is it a reason convention?

Perhaps it's less dramatic to hold a conference on reason and logic but isn't that what Atheists are supposed to stand for. Aren't they simply people who have considered all the reasoned evidence and have concluded that there is no god. Aren't they just trying to emphasize the importance and value of critical reasoning?

I'm all for logical reasoning and objective evaluation of the facts. But the focus of an Atheist convention is the narrow topic of objectively analyzing whether there is a god, and everyone agreeing that there isn't one.

So does being an Atheist mean you make a commitment to Atheism?

Atheist are just as committed to their belief in atheism as believers in other religions are in their deities. And yes, it does include an element of belief because even when we analysts assess data we still have to form a view based on the most likely interpretation, and we have to leave open the possibility that there is a better one.

Yet being an atheist requires a commitment to the conclusion that there ain't a god. That sounds awfully close to a value system to me.

Atheism looks just like another religion

I have this debate with a number of people about what makes a religion. Given that you can believe in any number of religions or cults (religions without many followers) involving none, one or many gods, doesn't a fervent commitment to Atheism look just like a fervent commitment to any other religion?

The Atheists say no. But then again, we are back to opinion based on belief. I say that Atheism is actually the belief that religions based on a God are harmful and wrong.

Frankly, I think there is some merit in that argument, but it moves an Atheist from being a non believer to being an anti-religion campaigner. It makes Atheism a system of thinking based on the unshakeable view that there is no God.

That looks awfully like a religion to me.

Call it for what it is: the anti religion convention

Maybe  "non believer" is tame, "Atheist" is strong and "Anti religion campaigner" is likely to set lynch mobs on you. That could be why the real anti religion ethos isn't front and centre.

I think that's a shame because it is clouding the issues. If the campaigns are really about removing subsidies for religious institutions, then say it. If the campaigns are really about ensuring that every child at every school is taught the scientific facts of evolution, then say it. If the focus is on casting aspersions on the mental capacity of anyone who believes that there is a God or Gods, come right out and state it.

The whole Atheist movement is confusing. There are some very valuable contributions being made to society by Atheists because of the way they understand the world, but I don't see how it matters whether they are Atheists to make those contributions.

After all, if there is no God, then believing or not has nothing to do with it. 

Let me know what you think

Mark S

Paul Howes - somebody IS benefiting from the higher dollar

Today Paul Howes has come out criticising the Reserve Bank's charter, and claiming that "One of the real issues that our country has to come to terms with is that a high Australian dollar is good for nobody."

Sorry, but that's just plain wrong.  Here is some proof that the Australian dollar is good for somebody.

Overseas travellers have benefited

Since the appreciation of the Australian dollar, overseas travel has boomed.  There are nearly an extra 200,000 people a month travelling overseas now compared to 2008.

ABS: Short term resident departures

People buying televisions and computers have benefited

According to the latest ABS data, Audio, visual and computing equipment is down 18.8% in the last year (to Dec 2011).  That means major savings for anyone who wants to purchase these products.  It means that equipment that may have been too expensive for some people, has fallen into an affordable range.  It means that the rise in the Australian dollar has been good for somebody.

Australians buying property overseas

With the higher Australian dollar, that means that Australians can buy property overseas at a much lower price than previously.  It is now in the realm of the middle class income earner, with properties in Europe now attainable for $100,000. Property buyers lured to foreign affairs

Whether it is a lifestyle choice, or an investment, this means that Australians are owning real assets in other countries.  This means that the higher dollar is benefiting those buyers.  Those people are somebody.

Paul Howes - are the Unions as economically inept as Katter

The calls from Paul Howes to review the charter of the Reserve Bank are echoes of Bob Katter's crazy claims to sack the RBA board.  The well managed Australian economy through the Hawke/Keating, Howard/Costello and Rudd/Gillard/Swan years has been nothing short of stellar.  And the independence of the Reserve Bank with its charter and formal agreement with the Treasurer to maintain underlying inflation in a target range of 2-3% PLUS achieve full employment has been a critically stable influence throughout.

Whenever radical statements are made by any side of politics, people listen and get confused between the nonsense and the sensible.  We must remain economically rational.

Let me know what you think

Mark S