The book industry vs book readers

Australia’s literati think that we owe them a living. In the Weekend Australian today, author Michael Wilding complains that

Through the years Australian governments have consistently disadvantaged books and writers,

but what he really means is that Australian governments have become less inclined to advantage book publishers, sellers and writers, at the expense of readers and taxpayers.

Wilding’s criticisms aren’t even consistent. He starts by complaining that the GST made books more expensive, yet his very next complaint is about the abolition of retail price maintenance – which prevented booksellers from discounting to make books cheaper!

He says relaxation of copyright rules, so that booksellers could bring in foreign books not published by local copyright holders within 30 days, undermined the importation business he used to maintain his small Australian publishing firm. Unless he was being very inefficient I am not sure why. He could still overcharge provided he did it quickly.
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The problem of Ministerial discretion

All this week, The Age has been in campaign mode on corporate political donations. But the problem with their analysis (you don’t need to read it, or help from me, to guess what line they are pushing) was there in the very first paragraph on Monday:

CORPORATE donors to the Victorian Labor Party are almost invariably companies with lucrative public contracts or development, gaming or alcohol interests at the mercy of Government discretion. (emphasis added)*

Isn’t the problem, then, that businesses are at the mercy of Ministerial decisions, rather than that perhaps some try to minimise the risks posed to their income by sending a few dollars the ALP’s way? Wherever possible, governments should set rules of the game that are neutral between businesses, and let the outcome be driven by how they play by the rules, rather than by picking winners or playing favourites.

While it is improper to try to influence a tender outcome or property development approval with donations, there is nothing wrong with backing a party that proposes rules of the game that are consistent with how a business or other organisation sees the world. Renewable energy companies should be allowed to back the Greens, unions should be able to back Labor, and corporate Australia should be able to back the Liberals in their occasional tax cutting mood.
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Should companies impose fuel surcharges?

Four years ago I puzzled in a Catallaxy post as to why airlines had started imposing fuel surcharges. Why didn’t they just add it to the fare? That mystery has now been cleared up. They add the surcharge to flights redeemed on frequent flyer points and only pay travel agents commissions on the base fare. Particular characteristics of the airline industry make surcharges more lucrative for airlines than fare increases of an equivalent amount.

But now The Age reports that the practice is spreading to other industries:

From construction material suppliers and trucking companies to florists, businesses are considering imposing a special levy to offset fuel prices.

There are less aribtrary ways of imposing surcharges than the way airlines do it. FedEx, for example, has a scheme based on monthly movements in actual fuel prices, rather than the flat dollar amounts imposed by airlines without any direct link to fuel costs. With the FedEx scheme, falls in fuel costs are passed back to customers.

But overall I think this is a bad practice. The claim by Shane Oliver in The Age that businesses were ‘adopting fuel levies because they offered greater price transparency’ seems doubful to me. The only transparency I am interested in is how much, in total, I have to pay – I don’t want to have to think about industry cost structures when deciding whether or not I can afford to make a purchase. One of the annoying things about daily life in North America is that you have to do extra mental arithmetic in adding taxes and tips before making purchase decisions.

I doubt surcharges are really good for business either. When booking airline tickets I always getting the feeling I am being conned with the surcharge, despite not feeling the same way about the wide price differences between the same seats on the same flight, but with slightly different terms and conditions.

Why do for-profit higher education providers have a small market share?

In this week’s Campus Review, John Quiggin in polemical mode takes aim at for-profit higher education. He claims ‘for profit education has been a consistent failure in all times and places’ , with some ‘limited exceptions’ in vocational training.

Curiously, he provides very little evidence of the failure of for-profit higher education. He reports some of the legal troubles of the University of Phoenix, but it has 250,000 students and has operated successfully for many years, as have various competitors in the US market. The legal troubles relate to violations of student admissions and loans regulations, not the quality of their courses. The statistic he cites on their graduation rate refers to a market they barely target, full-time and first-time college attendees (as here, US completion statistics are of poor quality).

Apart from the Singapore-based but partly Australian owned U21 Global he doesn’t even mention any of the Australian for-profits, though there quite a few of them, with nearly 30 signed up for FEE-HELP (some with common owners). The players in the for-profit market include the stockmarket listed and profitable Navitas, the Australian College of Natural Medicine, and the various providers owned by Amadeus Education.

But there is an interesting issue here: why is for-profit higher education relatively rare? Even in the US, the for-profits have only about 1 million students out of a total enrolment of 17.5 million. (In 2006, about 20 Australia for-profits reported 5,094 students to DEST, but they were only obliged to report students receiving FEE-HELP.)

Professor Q’s answer is:

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Laissez Faire Books, RIP

It’s not yet mentioned on their website, but an e-mail over the weekend announced that libertarian bookseller Laissez Faire Books is closing down. As they explain it:

The book market has changed tremendously over the past 30+ years, and it has gotten harder and harder for a small niche bookseller to cover expenses. I suppose the market has spoken.

And those who advocate the market must accept its verdict. But I am sorry to see Laissez Faire books go. In my twenties (and maybe earlier, I can’t remember now) I was an enthusiastic Laissez Faire customer. I wasn’t ideologically (or perhaps nearly as importantly, temperamentally) inclined to sign up to all their enthusiasms, especially for Ayn Rand, but better Friedman, Hayek, Sowell et al. than the swooning over the state of much of the Australian intelligentsia.

Though I am sorry to see Laissez Faire close, I am one of the reasons they are going. Even when a Laissez Faire email alerted me to a new book I wanted, I would usually end up buying it from Amazon. Once, Laissez Faire was the only place I could locate many libertarian books, but Amazon caters to just about every niche market. After taking into account the cheaper postage when buying several books at once, Amazon was usually the less expensive option too.

So Laissez Faire have been caught up in the creative destruction of their ideology. Amazon does a great job of making libertarian books accessible, but it is has helped wipe out a specialist libertarian bookseller in the process.

Can business students do their sums?

This morning’s Higher Education Supplement in The Australian gave the lead story to various interest groups complaining about the Budget decision to reduce Commonwealth subsidies to commerce students by about $1,000, with universities being allowed to increase student contribution amounts by about $1,200.

“It is hard for us to see how this is going to attract more people into doing those courses. In fact, it might turn them away.”

… said Geoff Rankin, chief executive of CPA Australia, which represents 112,000 finance, accounting and business professionals. …

It is a great worry to us,” University of Western Sydney vice-chancellor Janice Reid said.

“It will be a significant disincentive for students who might have seen a bachelor of business or bachelor of commerce as a viable alternative to a bachelor of arts or a general degree in the humanities.

As usual, these arguments assume that prices have a big impact on which courses students choose. Yet a study (pdf) released a couple of years ago put the average income premium from a business undergraduate degree, compared to a Year 12 qualification, at $542,000. The maximum extra cost that could be imposed on a student would be 0.66% of that. Prospective business students who can’t work out that the course is still a good deal have no aptitude for financial reasoning and – as Janice Reid suggests – should perhaps do Arts instead.
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Liberalism and discrimination

The Peel is a Melbourne gay bar that, according to its owner Tom McFeely, isn’t gay enough. He applied for an exemption to the Victorian Equal Opportunity Act, legislation that would otherwise forbid him from keeping out women and straight men. And yesterday in the Victorian Civil and Administrative Appeals Tribunal he was granted that exemption.

According to The Age, the decision was not met with universal support:

WHEN Collingwood hotelier Tom McFeely decided to fight for the right to refuse entry to heterosexuals, he braced himself for a backlash. And a barrage of angry talkback callers proved him right yesterday.

But should McFeely even have had to apply for such an exemption? Anti-discrimination law is an issue that has divided liberals. There is a version of liberalism which holds that the way the state should treat its citizens – as impartially as possible – is a model for all institutions in civil society as well. Liberal states create space for people to live according to their own assessment of what makes for a good life, whether or not other people approve of it. But in a liberal society, the state may be the most powerful single institution, but private power has a large impact as well. To create space for the liberal individual, private as well as public power needs to be regulated. In alliance with egalitarian philosophies, this liberal idea helps explain why we have legislation prohibiting discrimination based on a wide variety of attributes.

Another version of liberalism holds that anti-discrimination law undermines freedom of association, the right to choose who we associate with and on what terms. Continue reading “Liberalism and discrimination”

Political shopping

A few weeks ago, the ACCC action Sinclair Davidson and Tim Wilson are taking against Fairtrade coffee sparked the lengthiest-ever debate at this blog. But how many people might be interested in getting some social justice with their coffee?

The ABS General Social Survey 2006, the first results from which were released this week, provides some answers. It found that, over the last twelve months, a quarter of those surveyed had ‘boycotted or deliberately bought products for political, ethical or environmental reasons’. The fashion-prone young were not the most likely to buy or not buy for these reasons; on all measures of activism including this one they were below average. It was the middle-aged 45-54 year olds who were the most socially aware consumers, with 30% taking political, ethical or environmental considerations into account.

The 2005 Australia Survey of Social Attitudes asked a very similar question, except that their time period was 2 years rather than 12 months. Doubling the time period also doubled the proportion taking these factors into account, suggesting that for some consumers political purchasing is a very occasional event, rather than an everyday one like coffee (or perhaps the Fairtrade coffee is so bad that once is enough).
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Does the ‘fairness’ of Fairtrade coffee matter?

According to The Weekend Australian, regular commenter Sinclair Davidson and Tim Wilson of the Institute of Public Affairs are going to the Australian Competition and Consumer Commission, alleging that Oxfam has engaged in misleading or deceptive conduct over its Fairtrade coffee. According to Oxfam:

The term Fairtrade refers to an independently audited product certification and labelling system that ensures those who grow and produce coffee get a fair go. It does this by:

Paying farmers and workers a fair price for their work
Helping them gain skills and knowledge to develop their businesses in the global economy
Providing a certification and labelling system to ensure Fairtrade standards are met and that the benefits of Fairtrade get back to the farmer who produced the product

But according to Tim, drawing in part on this Cato article:

there was evidence that Fairtrade products could do more harm than good for coffee producers in undeveloped nations. He cited reports alleging producers had been charged thousands of dollars to become certified Fairtrade providers and some labourers received as little as $3 a day.

I know nothing about how much Fairtrade affects coffee producers, but if we were to be a little cynical about Fairtrade consumers it perhaps doesn’t matter much whether it is good for producers or not. As I have long argued (eg here and here) there is a market for political gestures, and how effective the gesture is likely to be doesn’t seem to be a huge part of the calculation.
Continue reading “Does the ‘fairness’ of Fairtrade coffee matter?”