Has it really been so long since there was a post here on the Mule? It would appear so and my only excuse is that I have been busy (isn’t everyone?). Even now, I have not pulled together a post myself but am once again leaning on the contributions of regular author, James Glover.

From pictures of the transit of Mercury you might think that Mercury is really close to the Sun and that is why it is so hot that lead is molten! In actual fact Mercury is about 0.4 Astronomical Units (AUs) from the Sun (Earth is about 1AU) and only receives about a 7 fold increase in sunlight intensity. So it is hot but not that hot. Mercury is about 40 solar diameters from the Sun. If the Sun were a golf ball then Mercury would be about 6 feet away and the Earth about 15 feet away. On Mercury the Sun subtends an arc of 1.4 degrees compared to 0.6 degrees on Earth.

Mercury Transit

Pictures of the Moon in front of the Earth seem to have the same effect, to me at least, of making it look much closer than it is, whereas in reality the Moon is about 30 Earth diameters away. Roughly the same “size of larger body to distance of smaller one” ratio as Mercury is from the Sun.

Moon in front of the Earth

This optical effect (modesty prevents me from giving it a name) seems to occur when photographing one astronomical body over another. It can’t be that we are using the relative sizes as a proxy for distance since Mercury/Sun is very small and Moon/Earth is relatively large. Lacking other visual clues, that a terrestrial photograph might provide, my guess is that we use the diameter of the larger body as a proxy for the distance from the smaller one. Mentally substituting  “distance across” for “distance from”. Or maybe it’s just me?

One possible explanation is that there is insufficient information in a 2D photo like this to determine the distance between the objects. But if asked “how far do you think the one in front is from the one behind?” rather than say “I can’t tell”, you choose one of the two pieces of metric information available, or some function of them, such as the average. Perhaps the brain is hardwired to always find an answer, even a wrong one, rather than admit “I don’t know”, “I have no answer” or “I have insufficient information to answer that question, Captain”. That would explain a lot of religion and politics.

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Direct Action

by zebra on 27 September 2015 · 3 comments

It has been a very long time since there has been a post here on the Stubborn Mule. Even now, I have not started writing again myself but have the benefit of a return of regular guest poster, James Glover.

This is a post to explain the Australian Government’s policy called “Direct Action”. I will spare you the usual political diatribe. So here is how it works. The government has $3bn to spend on reducing carbon emissions. At a nominal cost of $15/tonne that could be 200m tonnes of Carbon.

Okay so how does it work? The government conducts a “reverse auction” in which bidders say: “I can reduce carbon emissions by X tonnes at a cost of $Y per tonne”. You work out what is the biggest reduction for the least cost. You apportion that $3bn based on the highest amount of carbon reduction. Easy peasy. That $3bn comes from government spending so ultimately from taxpayers. [Editor’s note: while not directly relevant to the direct action versus trading scheme/tax discussion, I would argue in true Modern Monetary Theory style that the Australian government is not subject to a budget constraint, beyond a self-imposed political one, and funding does not come from tax payers].

As our new PM Malcolm Turnbull says why should you have a problem with this? There is a cost and there is a reduction in carbon emissions. There will always be a cost associated with carbon reduction regardless of the method so what does it matter if this method isn’t quite the same as a Carbon Pricing systems previously advocated by the PM and his Environment Minister Greg Hunt? As long as there is a definite amount, Xm tonnes reduced.

Well here are a few thoughts:

1. if a company is currently making a profit of, say, $500m a year, producing electricity using coal fired power stations then why would they participate in this process? There is no downside. Maybe.

2. Okay it is a bit more subtle than that. Suppose the difference between the cost of producing electricity using coal or renewables works out at $15 a tonne. You might reasonably bid at $16/tonne. In reality there is a large upfront cost of converting. There is a possibility that an alternative energy provider takes that $15/tonne and uses it to subsidise their electricity cost. That could work. That encourages a coal based provider to move to renewables. But so might a coal based electricity provider at $14/tonne to undermine them. What we call a “race to the bottom”.

3. It seems to be an argument about who exactly pays for carbon pollution. Well here is the simple answer: you pay. Who else would? And you pay because, well, you use the electricity.

4. There is no easy answer to this. Which approach encourages more electricity providers to move to renewables? That is hard to say. Every solution has its downside. I decided while writing this I don’t actually care who pays. As long as carbon is reduced.

I started out thinking Turnbull was just using the excuse “as long as it works who cares?” but I have moved to the view that it doesn’t matter. All carbon reduction schemes move the cost onto the users (of course). There are many subtleties in this argument. I personally think a Cap and Trade system is the best because in a lot of ways it is more transparent. But in the end, as PM Turnbull says who cares, as long as carbon is reduced. Presumably as long as that is what really happens, eh?

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The Role of Cycles in Charting the Unknown

23 April 2015

After penning a paper on the insidious Sleeping Beauty problem last year, Giulio Katis returns to the Mule with this guest post exploring the central ideas of The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses by Eric Ries. Starting with the immediate application to business startups, Giulio develops to a broader view: […]

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Bitcoin and the Blockchain

14 March 2015

It’s hard to believe that a whole year has passed since I last wrote on the topic of bitcoin, and my remaining 1 bitcoin is worth rather less than it was back then. During the week I presented at the Sydney Financial Mathematics Workshop on the topic of bitcoin, taking a rather more technical look at […]

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The New Normal

8 March 2015

With the Intergenerational Report now released, the meme of “intergenerational theft” is spreading. Bill Mitchell has already shredded the core assumptions of the report, and now first time guest author Andrew Baume brings to the Mule brings the perspective of a financial markets practitioner to our possible future wealth. In broad strokes, he concludes post-paid retirement […]

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Bob

5 February 2015

Last year I wrote on a couple of occasions about the Sleeping Beauty problem. The problem raises some tricky questions and I did promise to attempt to answer the questions, which I am yet to do. Only last week, I was discussing the problem again with my friend Giulio, whose paper on the subject I published […]

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Musical Education

9 November 2014

On our longer family drives I take an old iPod crammed with even older music. Usually I take requests, and almost inevitably the children choose They Might Be Giants, and preferably the tracks Fingertips and Particle Man. But, our last trip was different. Instead I took the opportunity to the children some exposure to artists formative in the history […]

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Sleeping Beauty – a “halfer” approach

29 September 2014

If you read the last post on the Sleeping Beauty problem, you may recall I did not pledge allegiance to either the “halfer” or the “thirder” camp, because I was still thinking my position through. More than a month later, I still can’t say I am satisfied. Mathematically, the thirder position seems to be the […]

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Sleeping Beauty

26 August 2014

For the last couple of weeks, I have fallen asleep thinking about Sleeping Beauty. Not the heroine of the Charles Perrault fairy tale, or her Disney descendant, but the subject of a thought experiment first described in print by philosopher Adam Elga as follows: Some researchers are going to put you to sleep. During the two days […]

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Getting Australia Post out of the red

19 June 2014

John Carmody returns to the Mule in his promised second guest post and takes a close look at Australia Post’s profitability with some (ahem) back-of-the-envelope calculations. There are many forms of communication which underpin the function and productivity of a modern society like Australia. Despite the Cassandra-commentary from Mr Ahmed Fahour (the well-paid CEO of Australia Post), regular mail […]

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