Boomers Should Pay

Several people have asked me to post this opinion piece I wrote for the Dominion last week. They changed it around a little. The point I was trying to get across wasn't that the baby boomers should work longer, but that student debt was going to hit all of society... it was lost a little I guess...

Boomers Should Pay

I remember quite distinctly towards the end of my seventh-form year, the school’s deputy principal talking to our class about the importance of the exams we were about to sit. Our entire future was on the line, he said. If we did not commit ourselves now, we would get to middle age and regret it.

He continued on to talk about how much the system had changed since he went to university. In his day, if you got an above-average mark, you were not only guaranteed entry into university, but your bursary paid your way. And, chances are, you were lucky enough to get paid a small income while you studied.

Our generation was not going to be that lucky: an A or B bursary would equate to about the same as the cost of a first year text book (if that), only the best and brightest few would win scholarships, and only those from low income families would be eligible for an allowance.

This memory came to mind a few weeks ago when I was talking to a graduate friend of mine. He talked about how unfair the current system was: student debt was spiralling out of control, fees were going up, access to student allowances was falling, and a supposedly left-wing government appeared unwilling to do anything about it. Student leaders are always very good at making demands and accusations, claiming free education and a universal allowance are the answer to all the countries problems, but not so good at actually following this up with workable solutions. But he had a plan.

Student debt is effectively intergenerational debt. The baby boomer generation had benefited from free education, and then, during the 1980’s, cut taxes so they could save for their retirement, which effectively meant that free education was going to be out of reach for our generation. We would instead be crippled with student debt, making it difficult for us to buy a house, have children, or, eventually, save for our retirement.

Several solutions to student debt have been mooted recently. Using the government surplus to “pay off” student debt is one. Dr Cullen has said this is out of the question, and who could blame him? It would hardly make good fiscal sense not to be economically prepared to support the baby boomer generation in their dotage, would it? The Green Party has proposed using the Super Fund instead. This raises the same problem. With such a large demographic about to head into retirement, it is little wonder Grey Power were more than a little concerned about this.

The other edge of the sward is that as student debt gets larger, it’s going to hit society in general, with no exception given to the elderly. This is a group in society that is more dependent on our healthcare system than any other. With the average doctor’s debt estimated to be around, $65,000 they could be forgiven for charging more for their services, or heading overseas where the pay is considerably better. This translates into longer waiting lists for vital operations (like hip transplants) or forking out a greater chunk of their pension to go to a private health provider. Where’s the quality of life in that? Aren’t your golden years supposed to be just that, not spent living on a waiting list or off the smell of an oily rag?

My friend had one simple solution to curing the issue of inter generational debt: gradually raising the retirement age, over time, to 67. This would save the government enough money to give most students an allowance, to lower tuition fees to just over $1000, and to make student loans interest free, assisting those students who have already graduated. As life expectancy goes up, it would be fully plausible to work for a slightly larger length of time before you were eligible for superannuation. This is especially pertinent with a larger demographic heading towards retirement; less workers supporting more retirees, who are going to live longer is hardly a sustainable situation to be in without raising taxes or cutting the pension – two options which recent opinion polls suggest are political suicide.

I know what you’re thinking: it’s very easy for someone in their early twenties to talk about raising the retirement age. Yes; it’s going to be some time before retirement even enters my mind. But student debt is a societal problem that, left unfixed, is going to hit everyone in the next few years. That is why the system needs to be overhauled, and a sustainable solution instituted before it gets out of control.

Exam Time

I'm not going to make a habit of publishing emails which get sent to me, but I found this one quite amusing...


Instructions: Read each question carefully. Answer any five questions you choose.
Time Limit: One hour. Begin immediately.

1. HISTORY - Describe the history of the papacy from its origins to the present day, concentrating especially, but not exclusively, on its social, political, economic, religious, and philosophical impact on Europe, Asia, America, and Africa. Be brief, concise, and specific.

2. MEDICINE - You have been provided with a razor blade, a piece of gauze, and a bottle of Scotch. Remove your appendix. Do not suture[stitch up] until your work has been inspected. You have 15 minutes.

3. PUBLIC SPEAKING - 2,500 riot-crazed aborigines are storming the classroom. Calm them. You may use any ancient language except Latin or Greek.

4. BIOLOGY - Create life. Estimate the differences in subsequent human culture if this form of life had developed 500 million years earlier, with special attention to its probable effect on the English parliamentary system. Prove your thesis.

5. MUSIC - Write a piano concerto. Orchestrate and perform it with flute and drum. You will find a piano under your seat.

6. PSYCHOLOGY - Based on your knowledge of their words, evaluate the emotional stability, degree of adjustment, and repressed frustrations of each of the following: Alexander of Aphrodisias, Ramses II, Gregory of Nicea, Hammurabi. Support your evaluation with quotations from each man's work, making appropriate references. It is not necessary to translate.

7. SOCIOLOGY - Estimate the sociological problems which might accompany the end of the world. Construct an experiment to test your theory.

8. ENGINEERING - The disassembled parts of a high-powered rifle have been placed in a box on your desk. You will also find an instruction manual, printed in Swahili. In ten minutes, a hungry Bengal tiger will be admitted to the room. Take whatever action you feel appropriate. Be prepared to justify your decision.

9. EPISTEMOLOGY - Take a position for or against Truth. Prove the validity of your position.

10. PHYSICS - Explain the nature of matter. Include in your answer an evaluation of the impact of the development of mathematics on science.

11. PHILOSOPHY - Sketch the development of human thought, estimate its significance. Compare with the development of any other kind of thought.

EXTRA CREDIT - Define the Universe. Give three examples.

Mars

Got emailed this this morning. I don't know how true it is, but anyway...

The Red Planet is about to be spectacular! This month and next, Earth is catching up with Mars in an encounter that will culminate in the closest approach between the two planets in recorded history. The next time Mars may come this close is in 2287. Due to the way Jupiter's gravity tugs on Mars and perturbs its orbit, astronomers can only be certain that Mars has not come this close to Earth in the Last 5,000 years, but it may be as long as 60,000 years before it happens again.

The encounter will culminate on August 27th when Mars comes to within 34,649,589 miles of Earth and will be (next to the moon) the brightest object in the night sky. It will attain a magnitude of -2.9 and will appear 25.11 arc seconds wide. At a modest 75-power magnification

Mars will look as large as the full moon to the naked eye. Mars will be easy to spot. At the beginning of August it will rise in the east at 10p.m.and reach its azimuth at about 3 a.m.

By the end of August when the two planets are closest, Mars will rise at nightfall and reach its highest point in the sky at 12:30a.m. That's pretty convenient to see something that no human being has seen in recorded history. So, mark your calendar at the beginning of August to see Mars grow progressively brighter and brighter throughout the month.

Share this with your children, grandchildren, teachers, students, etc. etc.. NO ONE ALIVE TODAY WILL EVER SEE THIS AGAIN

The Market Rulz...

... or so I'm going to set out to prove in the case of Airports in New Zealand for my thesis.

Last night I went to a ISCR lecture by Auckland University economics Professor Tim Hazledine on competition on the Trans-Tasman Air Routes. Professor Hazledine used the trans-Tasman air market to prove that there is greater price discrimination for the consumer on a route which is serviced by multiple carriers as opposed to a route which a carrier has a monopoly. This doesn't necessarily mean that it is better for the consumer (although I imagine it probably is), but there is greater variation of the price of flights on routes with multiple carriers.

One point he made had specific reference to the topic of my thesis. He spoke briefly about frequency/share curves. This is where a carrier has, for example, 20% of the frequency of certain route, but is only able to capture 15% of the market, while conversely, the carrier which has 80% of the frequency captures 85% of the market. Hazledine concluded that it costs secondary carriers about 20% more to service a route than the dominant carrier.

This is not isolated to airlines. Richard de Neufville found that the same was the case with airports within the same system or region competing for market share. An airport with 80% of the flights would capture 85% of the market, and vice versa.

I plan to show that this is differentiation is more prevalent in an environment of privatized and deregulated airports, than it is in a situation where airports are municipally owned.