Friday, 28 April 2017

Mobile network mergers - what happens?

If you've got any interest in what happens when competition increases or decreases in an industry, you've got to read this excellent paper, "Evaluating Market Consolidation in Mobile Communications". Especially as it's not only important, but easily missable: I only came across it by accident thanks to this helpful post on The Irish Economy blog site, which referred me to this conference.

The three authors set out (as they say on p3) to "study the relationship between prices, investments, and market structure in the mobile telecommunications industry. We use an empirical approach by looking at the experience of thirty-three countries in the period 2002-2014. We collect what is, to our knowledge, the largest dataset employed to-date for works of this kind".

And you'll be pleased to know that, unusually, the data include New Zealand. While our official statistics have got better (and will get better still), across official and private sector data we can be short of what's available overseas, and I've lost count of the number of cross-country econometric studies where we don't feature. This time we do, though we don't get any country-specific mentions.

First, here's a rather amazing finding - what's happened to prices in the mobile market, with national prices converted into euros at PPP rates.

As the authors say (p10), my italics, "Overall prices steadily declined by almost 50% during this period, amounting to an average decline of 2.2% per quarter". Isn't that remarkable? And, in passing, doesn't it leave you wondering how, despite this massive technological progress and similar advances in the rest of the ICT sector, official measures of countries' productivity growth appear to show a slowdown.

But on to their main focus. "The dataset", they say (p3) "spans a time period long enough to capture changes in market structure (especially entry via licensing, and exit via mergers) that provide ideal variation in the data to assess how market structure impacts on prices and investments, holding other factors constant".

And what they find is pretty dramatic.

On prices, they find strong positive links between concentration and prices:
prices decrease by about 15.9% in markets with four operators compared with the comparison group of two or three operators (p17)
an increase in the HHI has a positive and significant impact on increase in the HHI by 10 percentage points (for example from 0.3 to 0.4)* would increase prices by 20.37%. Similarly, a 4-to-3 merger in a symmetric industry (raising the HHI by 8 percentage points from 0.25 to 0.33), would increase prices by 16.3%. This is an average effect based on the sample of all countries post-2005. While this effect is statistically significant, it has a relatively wide 90% confidence interval, between 7.9% and 24.7%...How important is this effect against the background of the general price drop of 47% over the same period of eight years? Given that the price trend is -2.2% per quarter, a hypothetical merger that increases the HHI by 10 percentage points is roughly equivalent to going back to the price level of about 8 or 9 quarters ago (p18)
On investment, they also find strong positive links with concentration:
An increase in the HHI by 10 percentage points raises investment per operator by 24.1% using the first instrument set... and by 27.9% using the second instrument set...In both cases, the effect is statistically significant at the 5% level. Perhaps more concretely, a 4-to-3 merger in a symmetric industry (raising the HHI by 8 percentage points) would raise investment per operator by about 19.3% (under the first instrument set) (p19)
They can also use their modelling to estimate the effects of some real world mergers, which is also highly interesting. Full details are in their Table 6: there are wideish confidence intervals, but in every case prices went up, but so did investment.

And that makes merger approvals very tricky indeed: their research
is the first time that the dual impact of market structure on prices and investments has been assessed and found to be very relevant in mobile communications, both from an economic and from a statistical point of view. Our findings are therefore of utmost importance for competition authorities, who face a trade-off when confronted with an average merger similar to one captured in our sample. Ceteris paribus, a merger will have static price effects to the detriment of consumers, but also dynamic benefits for consumers to the extent that investments enhance their demand for services (p29)
They say that efficiency arguments pointing to the possible pro-consumer benefits of higher investment get short shrift, at least in Europe:
In European merger control, merging parties face tough hurdles when putting forward an efficiency defence and, as such, it remains questionable whether efficiencies will ever play an important role in decisions under the EC Merger Regulation in any but the most exceptional cases. However, this is not to say that advisers should abandon enquiries about the rationale for mergers or any anticipated efficiency gains (p29)
But in jurisdictions where there's an more open mind - and I'd include New Zealand and Australia - I'd suggest these arguments are worth running with. Higher prices, but 5G or 6G or Umpteen G three years faster than you'd get it otherwise - that could be both correct and have some persuasive local resonance, given that we are already down the totem pole when it comes to global rollout of some goods and services.

If I were a regulator, I wouldn't necessarily be a sook for every "we need higher prices to fund good stuff" line: after all, what are the capital markets for? But on this evidence, there might be a stronger case than you might have previously thought.

*They use a HHI with a scale from 0 to 1 rather than the more familiar 0 to 10,000. So what they call an increase from 0.3 to 0.4 is what we'd usually describe as 3,000 to 4,000.

Thursday, 20 April 2017

An "ugly casserole" indeed

So we've tightened up our immigration settings, again. Opponents are saying it's fiddling at the margins. I hope the critics are right: while it's dismaying that they've felt the need to bend with the prevailing political winds at all - "an ugly casserole of prejudice, resentment, economic envy and xenophobia from which New Zealand is not exempt", as Vernon Small put it in his Ä«nsightful Dom-Post article - I hope it's the absolute minimum the government could get away with.

Not that it's without its own political dangers.Throwing scraps of meat out of the sleigh as the wolves close in may delay the chase, but wolves soon learn to chase sleighs for reward, and will be after you fitter and faster than before.

And I certainly didn't like the "Kiwis first" messaging around the thing. That's more the sort of jingoism you expect from the Aussies, and indeed got this week in their own tightening of their immigration regime, which more obviously pandered to the likes of One Nation and is more likely to do real economic damage. Early reactions suggest they've shot themselves in the foot, making it harder for employers to fill hard-to-recruit vacancies.

Let's not pretend, either, that there's anything remotely linked to the economy behind this. It's pure politics.

For one thing, the cyclical state of the labour market is very strong. Wanna see a picture of a thriving labour market? Here's one from the ANZ's Bank's latest tot of job ads.

Wanna see another? This is MBIE's latest tot of vacancies - jobs available right now. High, and climbing steadily,

If you're concerned that unskilled emigrants are driving down wages and stealing the everyday battlers' jobs at the hard end of the labour market, the greatest rise in vacancies in recent years has actually been for unskilled and semi-skilled jobs.

So it's extraordinarily hard to make any case that immigrants have soaked up the available jobs. Despite a recent large increase in net migration, there are more vacancies available than ever, even at the low wage end.

As for the fable that immigrants are putting pressure on already stressed infrastructure, it's either a marginal effect or complete bollocks. Higher levels of net immigration are a relatively recent phenomenon - the last three years or so - whereas the infrastructure, especially in Auckland, was already stuffed every way to Sunday well before that. 

Here's the clincher: as an economist colleague helpfully pointed out when I was tweeting about this, there was very little difference between Statistics New Zealand's population projections for Auckland's population ten years ago and what has actually happened. We knew there was a surge coming, and didn't plan for it, and still aren't - that's the reality, under national and local administrations of all political hues. It's got very little if anything to do with migration, and everything to do with systematic underfunding of infrastructure and obstructive land-use and other regulation. Our politicians have preferred to run dairy farms, mine coal, deliver letters and keep prime housing land to grow onions, rather than deliver the social and physical infrastructure for a high-income economy.

And that's something else the anti-immigration crew are missing. Far from being a burden on the economy, many migrants are actually alleviating the roadblocks to growth we've inflicted on ourselves. Across the road from us, one of those terrible Asian property investors - probably got one of those suspicious Chinese-sounding surnames - has started to turn two houses into five. Round the corner another of these awful leeches has already redeveloped one house into three. Employment for two gangs of tradies, five extra houses. Not bad for two parasites.

Maybe I shouldn't be surprised about these latest turns of events here and in Australia. Liberal values and sensible economics are under attack pretty much everywhere, from the clowns in Washington to the Brexit-deluded in the UK through to the more sinister operators in (for example) France, Hungary and Poland. It's especially sad to see people "of the left", who might be expected to take a more progressive, internationalist view of the world, going along. 

But maybe there's hope around the corner. As this excellent article, 'In defence of liberalism', points out, the liberal values and better economic policies that created post World War Two prosperity are certainly under attack. But it concludes
the things we value can’t all be realised simultaneously and made compatible with each other. A liberal society is the best method yet devised of recognising this multiplicity of aims. It stresses value pluralism in the face of political and religious dogmatism, and of spurious appeals to national unity for the common good. I’ll doggedly stick to it.
So will I, even though in the short run the probability of a socially liberal, economically responsible government emerging from our next election looks to be half of five eighths of sod all.

Tuesday, 18 April 2017

A quiet word in your ear...

First of all, a quiet word in the ear of parties appearing before the Commerce Commission.

Look at para 38 of the written reasons for the SkyTV/Vodafone decline. I've bolded the bit that's most important. The para reads
We collected and reviewed some useful evidence from which to construct the factual and counterfactual and our competition analysis. However, we also note that a number of parties provided some submissions on the merger that did not seem, to us, to accord entirely with statements made by the submitters elsewhere, including in internal records. We did not consider that all evidence of past or present conduct or events provided a reliable predictor of future likely impact.
This, folks, is somewhere in the general territory of a reproof, rebuke, and warning, and it's a good reminder (as I've advised before) not to take an opportunistic approach to competition or regulation proceedings. One of your biggest assets is your credibility, and your advisers'. While you will be tempted - of course you will - to run arguments that are inconsistent with what you've said somewhere else, to run with the incumbent hare and hunt with the new entrant hounds, don't do it.

And a quiet word in the Commission's ear, too.

At [15] the Commission says (I've italicised the bit I want to talk about)
We make a pragmatic and expert assessment of what is likely to occur in the future with and without the merger
which rang a bell, since something very like it appears in the Mergers and Acquisitions Guidelines, except that there (in para 2.35) it reads
We make a pragmatic and commercial assessment of what is likely to occur in the future with and without the merger
Perhaps this upgrade is a good 'deference' card to have in your hand in the appellate courts. But on the other hand you wouldn't want one of them saying something like, "We have difficulty seeing how an 'expert' tribunal could come to those conclusions on the facts before it", would you?

Bit more humility, lads and lasses. It's the Kiwi way.

The details of SkyTV/Vodafone

Just before the Easter weekend the Commerce Commission published its written reasons for turning down the SkyTV/Vodafone merger. Like other competition tragics, I read it over the holiday - all 566 paragraphs of it.

Like everything that comes in the Commission's door these days, the Sky/Vodafone fell in that twilight zone where you can make a decent case for both sides. In the event, the Commission said No: the merged entity would be able, and incentivised, to offer Sky Sport based bundles of pay TV and broadband/telco services that other Internet Service Providers (ISPs) and telcos wouldn't be able to match. There would consequently be a real chance of a substantial lessening of competition (SLC) as Sport-less rivals were less able to compete.

Sky/Vodafone was especially problematic because it fell into two of the more difficult areas for regulators to assess - the alleged use of market power in one market to gain advantage in another, and allegedly exclusionary bundling. These are always going to be line ball calls: the ACCC for example stopped the Aussie supermarkets from giving out large petrol discount vouchers ("shopping dockets") to buy petrol from them, because they thought the supermarkets were using their market power in the grocery trade to drive the petrol stations out of the petrol game (I thought the ACCC could be wrong about that).

And anti-competitive bundling is just as tricky, not least because the economics is not settled (you lawyers at the back, stop sniggering). As the abstract from one review article said
While the [economics] literature has demonstrated the possibility that bundling can generate anticompetitive harm, it does not provide a reliable way to gauge whether the potential for harm would outweigh any demonstrable benefits from the practice. As a result, the widespread application of the antitrust laws to bundling by firms can generate significant error costs by erroneously condemning or deterring efficient business practices. In the future, economists should seek to expand their understanding of both the anticompetitive and procompetitive reasons firms engage in bundling.
So given all the inherent uncertainties, I think the Commission came to a reasonable conclusion. And I think it fits well with what regulators should do in fast-moving sectors, which (as I argued here) is take a conservative view (though it is not always obvious whether doing something or not doing something is the conservative course), don't give leg-ups to anything, and generally try to let events unfold, but deal with any anti-competitive rorts that survive the Schumpeterian storms.

What struck me most about the whole thing was, why did Sky and Vodafone go for a clearance ("there is no SLC") rather than an authorisation ("there is an SLC, but there are compensating benefits")?

Maybe they genuinely believed there would be no SLC; maybe they didn't want the relative hassle of an authorisation (typically longer and more expensive, and the associated conference process isn't everyone's cup of tea, either). But having gone that route, they were stone cold dead if the Commission found an SLC (or, strictly speaking, couldn't be satisfied that there wouldn't be an SLC). That can prove a difficult barrier to get over when, as here, it's a dynamic sector where anything might happen, and it only takes one plausible enough ("real chance") scenario where there might be an SLC for the Commission to throw its rider at the fence.

But with an authorisation, you're still alive with the second leg of your argument: there are SLC downsides, but more than compensating benefits. And there were benefits: as the Commission said, for example at [198], "consumers may be better off in the short term as the merged entity offers better bundles (including better prices) and rivals react with their own bundles (and lower prices)", or again at [226], "it is likely that the bundles offered by the merged entity would be lower priced and/or higher quality, with more additional features than those available without the merger, or compared to those available on a standalone basis".

The Commission may still have jibbed at an authorisation, because it clearly worried that any short term consumer benefits would be taken back when the Sky/Vodafone entity had seen off some of its competitors, but it would have been a better route to go. An argument along the lines, "clear short term benefits in the (semi-predictable) near to medium term, but uncertain detriments in the (much less predictable) medium to long term" was a real runner, particularly as the Commission said at [358] that it is "difficult to predict with any certainty what effects might occur in the medium to long term". A bird in the hand today, versus more heavily time-discounted and more uncertain detriments sometime in the future, could have snuck through.

Especially (if Sky and Vodafone are minded to appeal) as the Commission has taken a somewhat debatable view on how hard it would be for ISPs to get into the post-merger game. The evidence shows that there are heaps of them today, all giving it a go despite the much heavier firepower of the big guys. This suggests easy conditions for entry.

Of course, the Commission would respond, that was then, what about the post-merger world?  But I for one would be inclined to think that (for example) a determinedly "cheap and cheerful" barebones ISP (or several of them) could still keep the merged entity honest. I wouldn't rule out the possibility of some other innovative bundling by competitors, or other attractive add-ons. And I also had quite a bit of sympathy for the point that NERA made, quoted at [454]: "NERA advised that if consumers were attracted to the merged entity’s discounts, then they would equally revert back to other TSPs [telecommunications service providers] if those discounts were reversed. If so, the merged entity would not be able to exercise market power".

If there was anything else I'd quibble with, it was the Commission's view that content and the means of delivering the content are becoming more the same thing in consumers' eyes. For example it said at [170] that
As services become more converged, consumers are likely to start associating them as part of the same purchasing decision – the content and the method of delivery become more closely linked in the minds of consumers
and again at [386.4] where it said that
broadband and mobile services become more closely aligned with the delivery of content
Personally, I'd agree that delivery services are indeed converging, but I'd argue that they're becoming commoditised, and that content is increasingly standing alone, which is what the rest of 386.4 says:
the importance of content to competition in relevant telecommunications markets is also likely to increase
Who provides Game of Thrones, and over what infrastructure, is of the utmost indifference to me. They're not - for this sample of one - becoming all the one deal, wrapped up with the series itself. Rather, they've become markedly more separate. Though if you follow that logic further, you start to think dark thoughts about entities monopolising a market for premium sports content (the Commission found at [259] that there is one). There's a lot happening in the commercial and policy space around telecoms and convergence: I wonder if some regulation of 'fair access' to premium sports is lurking in the mix.

Wednesday, 5 April 2017

That touchy-feely stuff

Life's too short, and you can't do everything, and one of the things that fell off my radar for a while was Masterchef. Lately, though, I've caught up with it again (the 'professionals' series), and I've found it as compulsively watchable as ever.

But I was struck by something that goes beyond cooking.

People aren't used to getting praise.

Especially in the early rounds, where you've got people who haven't yet climbed into the higher branches of the professional tree, you can see that they've had little or no positive feedback at all in their careers.

A kind word from any of the judges, and you have some contestants going all teary-eyed. They've rarely had people in their professional lives tell them they're doing a good job.

And it's not just a  bit of recognition from Michelin-starred Marcus Wareing that's got people going all gooey. Sure, you might be a bit overwhelmed, too, if the big guy in your line of business said you were pretty good. But a bit of appreciation from Gregg Wallace (whose autobiography is well worth reading, by the way) or from Monica Galetti will do it too. You can see that praise has been thin on the ground for the contestants, even though - almost by definition given that they've entered this competition - they're talented and motivated people.

And it got me thinking about the poor business culture we've created. There's little or no leeway for making mistakes, there's a very low tolerance for risk (manifested, for example, in businesses' very high 'hurdle rates' for investments), there's bugger all appreciation of the difficulties of making decisions under uncertainty (the RBNZ in particular tends to get it in the neck, as I've argued), and hence or otherwise there's a focus, and with 20:20 hindsight at that, on shortcomings and blame.

You ever been through one of those corporate 'performance reviews'? "Well, I see you had 12 KPIs for this year, and you've achieved ten of them. Now, let's talk about those other two, shall we?".

Some companies are finally getting the gumption to dump the damn things, as you'll find in this fine Harvard Business Review article, 'The Performance Management Revolution'. Two brief extracts: it concludes by saying that
Performance appraisals wouldn’t be the least popular practice in business, as they’re widely believed to be, if something weren’t fundamentally wrong with them
and earlier says that the something fundamentally wrong thing is
With their heavy emphasis on financial rewards and punishments and their end-of-year structure, they hold people accountable for past behavior at the expense of improving current performance and grooming talent for the future, both of which are critical for organizations’ long-term survival 
I wouldn't usually bother wandering into management theory, except that I can't help feeling that poor management practices are part of our long-standing productivity under-performance. A while back I posted about some research which found that
43.5% of the productivity gap between us and the [United] States is down to our relatively weak management capabilities (and it's interesting that Australia, with a somewhat similar business environment to ours, comes out with a similar number, at 45%)
What I didn't add at the time, but Masterchef  has now prompted me to, is that, in turn, a lot of our relatively poor overall management practice is down to bad performance management and really bad people management. As this paper found, "People management is the weakest area for New Zealand manufacturers with the country ranking fourteenth among [seventeen] participating countries". Here's what the data looked like.

Other than on the terraces at the game, or after a few jars, we don't do that inspire-y motivation-y gooey praise-y thingy. We tend not to open up, and especially not if it risks being a bit confrontation-y. Look how we score (below) on 'addressing poor performance': by international standards, we just don't want to go there. 

Everyone, this election year, seems to have a list of policies that might help turn our productivity around: the New Zealand Initiative came out with one the other day, to mixed reactions. So here are two more from me.

The less important one is, Fred in Sales and Wilma in HR have been a drag on the business for years. You know it, their colleagues know it, and you've let it drift. Fix it.

The more important one is, focus on what people have been doing well. Let them know, and help them get even better. There aren't huge numbers of win-win policies, but praising a job well done not only makes people happier, but the research shows it improves personal, business and national performance.

Beating the academic paywalls

We've all got to make a living, and people are entitled to a return on their work, but there's a justified feeling that the paywalling of academic research has gone too far - not least because in many cases we're paying for it twice, once through government funding of the original research and again through the often hefty journal subscription fees of the academic publishers.

So I was interested to find, via Twitter - hat tip to Prof Diane Coyle who retweeted the original tweet from Prof Dennis Dittrich - the announcement about Unpaywall, which is an extension for Chrome which with a bit of luck will find the full text of an academic paper you're after. Totally legal: as the folks behind it say, "it’s powered by an open index of more than ten million legally-uploaded, open access resources".

At this stage it looks mostly oriented towards the physical sciences, but toujours gai - I thought I'd give it a go and see how it worked on economics journals. So I installed the extension - a doddle - and picked an article at random from the latest issue of the American Economic Review, 'Escaping the Great Recession'.

Not that I've got anything against the AER - quite the reverse, it's cheap to get at, and one of the AEA's sister publications, the always interesting Journal of Economic Perspectives, is free to all - but just as a test run of Unpaywall.

It works, for all practical purposes. It didn't storm the ramparts of the AER itself, that's not how it works, but it did find the same article on EconStor, where it had appeared as a working paper in the Fed of Chicago's series.

So at a minimum it saves you the hassle of searching by author names on the likes of EconStor or SSRN, and cuts to the chase.

Sample of one and all that, but it worked straight out of the box. Recommended.

Tuesday, 4 April 2017

If it's tech, let it play out

After an earlier draft decision to decline, last week the ACCC definitively declined an authorisation application from three big banks (the Commonwealth Bank, National Australia Bank, and Westpac) and one decent sized one (Bendigo and Adelaide).The banks had wanted to engage in a collective negotiation with Apple over Apple Pay, its mobile phone payments app, and to engage in a collective boycott of Apple Pay in the meantime.

There were several incongruities about the application from the git go. One was the unusual spectacle of the big banks getting together to increase their bargaining power against one tech company: you don't normally have an image of the banks needing much regulatory help with their negotiations. Another was the absence of the ANZ, which has signed up with Apple Pay - you may have seen those quite good "an epic way to pay" ads on the TV - which again would have left you wondering why the other lot needed a helping hand. And yet another was the unlikelihood of Apple agreeing to what the Aussie banks wanted, even if the banks were allowed to bulk up as one bargaining entity. As the ACCC's Summary said (page v)
The ACCC notes that Apple has taken a global decision to offer an integrated mobile payment service on iPhones which does not allow open access to the NFC [I'll explain the NFC in a minute]. Apple submits that even if authorisation is granted it will not grant NFC access, and therefore the proposed conduct cannot lead to any of the public benefits claimed
However, any group is entitled to have a go at the ACCC's 'authorisation' process, if they can show that what would normally be an anti-competitive gang-up has, on the facts, benefits that outweigh the anti-competitive detriments. We have the same arrangements here.

There were all sorts of torpedoes running, for and against, but the banks' best argument was that if they got their way, there would be greater competition in the market for processing mobile phone payments. They hoped that their collective heft would be enough to push Apple into letting the banks access the 'NFC controller' in Apple phones - no, I didn't know before this decision what it was either, but it's the hardware and associated software that manages the close-distance wireless communication between devices like phones and check-out terminals.

That would mean that the banks could, via the the NFC controller, direct payments into their own payments systems, rather than into Apple's: everything is, typically, inhouse for Apple, and Apple Pay transactions get processed in Apple's own back office payments system. And the banks said that having the threat of diverting the payments away from Apple would constrain Apple's payments handling fees, which would benefit consumers.

And the ACCC agreed (page vi of the Summary):
NFC access is likely to result in a significant public benefit from increased competition in mobile payment services on iPhones. This increased competition, particularly in the short term, is likely to provide a competitive constraint on Apple in its pricing for Apple Pay
On the downside, however, there were problems that tipped the scale the other way.

One was that the ACCC thought there would be a loss of consumer choice between two clearly alternative models: the Apple/iOS way and the Google/Android way. If the banks got their way, the differences would be smudged over: my words, not theirs, but that was the gist. As the ACCC said (p ix)
this would affect Apple’s current integrated hardware-software strategy for mobile payments and operating systems more generally, thereby impacting how Apple competes with Google. In particular, NFC access may involve modifications to Apple’s software or hardware that lessen the degree of differentiation between the iOS platform and the Android platform
Another issue was Apple's 'accept all kinds of cards into the Apple digital wallet' approach ('multi issuer' in the jargon). For consumers, that's a good thing because you are less locked in to any one financial institution (p ix):
Multi-issuer digital wallets such as Apple Wallet and Android Pay are likely to increase competitive tension between payment card issuers by increasing the ease of consumer switching
The banks' versions of digital wallets, however, would be likely to maintain the current system of being, to some degree, tied to one institution (page ix):
The incentives of issuers to favour their own wallets over multi-issuer digital wallets are likely to have the effect of reinforcing the use of one payment card as a default card; whereas multi-issuer digital wallets would not have the same effect...To the extent NFC access would bias the development of issuer digital wallets over multi-issuer digital wallets, these potential benefits are likely to be lost
But perhaps the big take-away from the whole thing was the ACCC's reluctance to intervene in the early stages of a fast developing market - "the emerging markets for digital wallets and mobile payment services are subject to rapid innovation and change, which is already producing an increasing variety of mobile payment services, mobile payment devices, and digital wallet apps" (p vii) - where it is anyone's guess how things will play out or what the longer-term effect of early regulatory intervention might be. The best approach is surely not to try and second-guess when even the industry gurus aren't sure, and when large amounts of money are being placed on different runners.

And to the (limited) extent the ACCC could see impacts from allowing the banks' access, it didn't like the look of them in these freewheeling tech circumstances. For example (p ix)
Assuming that Apple opens access to its NFC controller as a result of the proposed conduct, this is likely to distort competition in mobile payment services by artificially directing the development of these emerging markets to the use of the NFC controller in smartphones. This is likely to hamper the innovations that are currently occurring around different devices and technologies for mobile payments
A lot of mergers and authorisations these days have this 'where will the tech go' element: here in New Zealand it's front and centre in both SkyTV/Vodafone and Stuff/NZME. Mark Berry, the chair of our Commerce Commission, said in February when knocking back the SkyTV/Vodafone one, that "uncertainty as to how this dynamic market will evolve is relevant to our assessment".

None of this is to say that any old anti-competitive rort should be ignored in dynamic markets, because it'll all get swept away by The Next Big Thing in the end. Tech companies may well get up to stuff that breaches section 27 of our Commerce Act, or section 36, and should be pinged (if s36 were in fact practicably enforceable in New Zealand). But if Mark's view can be unpacked a bit into something like "we can see the short-term impacts, but who the hell knows what's round the corner, and anything we authorise might make things worse", then he - and the ACCC - are on the right track.

Saturday, 1 April 2017

More good books - April 2017

A history of Britain's Census may not be many people's first idea of a good read, so you'll be pleasantly surprised by Roger Hutchinson's The Butcher, the Baker, the Candlestick Maker: The story of Britain through its census, since 1801. It's full of interesting themes and 'fancy that' detail: the 1841 census, for example, was the first to record people's names and ages (the previous ones were effectively just enumerations), but among the details it got wrong was Queen Victoria's birth date ('about 1821') when in fact it was 1819. As Hutchinson says (pp60-1), "If the national census could consistently get wrong the personal details of the Queen of Great Britain and Ireland and future Empress of India, what hope had anybody else?".

But that's to do the early census takers a bit of an injustice. In the days when the IT infrastructure was paper, pens and horses, the early censuses got the job done remarkably quickly: first results from the census of March 1 1801 were published in June 1801, and 600 pages of summaries and abstracts in December 1801. I doubt if we could manage the same today. Our technology has improved out of all recognition, but so have assorted deadweight managerial costs and, especially, mission creep. You should see the form that our census enumerators will be using in 2018 to record answers to the religion question, which includes at its most detailed level 167 different 'Religions', 'Beliefs' and 'Philosophies', including Satanism, Maoism, and the Church of the Flying Spaghetti Monster (aka Pastafarianism).

Some of the recurrent themes remain highly topical. The late 19th century influx of Jews from eastern Europe, as documented in the 1891 census, got the racists slavering: as the author says (p225) "Right-wing populists denounced an 'alien invasion' which was apparently taking British jobs from British workers. Ratepayers were, according to the Manchester Evening Chronicle, being bilked of excessive poor relief" (the rates-financed social welfare of the day), just like today's incoherent reactions where immigrants are supposedly both stealing jobs and bludging on the dole. An inquiry as part of the 1901 census, however, found that in the archetypal Jewish refuge, the East End of London, "The proportions of indoor Paupers [i.e. totally destitute and reliant on workhouse relief] among the general population and among the European Foreigners were 15.1 and 1.7 per 1,000 respectively" (p233). And among those damn job stealers were people like Michael Marks (first counted in the 1891 census), who had the temerity to go on and build Marks & Spenser. Shouldn't be allowed.

We've moved on from that, haven't we? Then you read on Wikipedia that in the 2011 UK census, "Other new questions involve asking migrants their date of arrival and how long they intend to stay in the UK; respondents also required to disclose which passports they held". But no doubt that's all intended to inform sound policy analysis. In any event, you'll find yourself following Hutchinson down all sort of interesting historical side alleys, and learning a fair amount of economic history on the way. It's a good read.

I try to stay in touch with Aussie politics, and my latest foray is David Marr's Faction Man: Bill Shorten's Pursuit of Power, a short portrait of the Australian Labour Party leader that is an updated and extended version of a 2015 Quarterly Essay. Shorten has made it to the top of Labor via the Australian Workers' Union, where he was initially an organiser, then National Secretary from 2001 to 2007, when he became a federal MP. I knew next to nothing about Shorten before this book, which broadly makes the case that he is a rough-house player of Australia's factional politics, with little commitment to any settled philosophy beyond self-advancement: a Paul Keating without a programme. I'll be interested to learn more beyond this initial worrying impression.

I've been having a good run with fiction. Top of the list is debut author Jane Harper's The Dry, a riveting and extraordinarily well written novel about murders in rural drought-ravaged Australia: even if you're not normally a crime/murder reader, make an exception for this one. I came to Jonas Jonasson backwards - I read his later Hitman Anders and the meaning of it all ahead of his earlier (and now filmed) The 100-year-old man who climbed out the window and disappeared - but they're both good, though hard to categorise (black comedy? satire on modern Sweden?). If time's short, try Hitman Anders and see if you like the style. And I very much enjoyed David Thorne's East of Innocence, where an ex City of London lawyer is now reduced to scraping by in Essex and gets involved with police brutality and the local Essex hard men.

In 'more of the same but just as enjoyable', there's the fourth (Silk Chaser) in Peter Klein's series about an Australian professional better on the horses who finds himself caught up, Dick Francis style, in industry shenanigans, this time the serial murders of 'strappers' (horse grooms). And there's the latest (Tatiana) in Martin Cruz Smith's series about Russian police investigator Arkady Renko, where an investigative journalist falls foul of the Russian powers that be.

Good intelligence/espionage novels can be hard to find, so you might want to try Alan Judd's series about a chap making his way up through the British security service. I've finished Legacy and am half-way through Uncommon Enemy, with Inside Enemy still to come. And then there's the ever reliable Gerald Seymour's latest, Jericho's War, about a semi-officially-sanctioned raid on high value Al Qaeda targets in the back blocks of Yemen. All good stuff. And let's hope that one of the great maestros of the genre, Alan Furst, gets his mojo back into top gear this year.