I bet you any money George Bush wins…

Check out this price/volume graph from online betting firm Betfair. I just bet $8 at $2.50 return and caught the edge of the Republican rocket, going up, up, up…

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Volatile Americans

As you can see, the best indicator of electoral success comes in the lead up to the election, somewhere between three and four weeks out. That is when things are settled, there is a “time factor” included in the pricing and more than anything, people are honest about their intention yet open minded enough to actually put their money where their mouth is.

Crazy people got on Kerry in the last few days until he was favourite. Only in the last few minutes have people actually realised Bush is going to win and he shot to favouritism.

Not that I am an avid gambler, but I am more interested in studying the proposition that the flow of money in risk managment is often a far better predictor of outcomes than an opinion poll or other such measurement which is open to bias, manipulation and media spin. One of the most recent academic papers has predicted a Bush victory (albeit narrowly) based purely on the flow of money in betting markets.

The Call: Bye Bye John Kerry

Voting is still well underway in the US election, but then again so are some of the early results.

George Bush leads in Florida, Michigan and Ohio, some of the key states the Democrats had to win to clinch the White House.

I can’t see how John Kerry will make up the difference. California? Nope – he already had it in his pocket. New Mexico? A state who holds bugger all electoral college votes? Colorado?

And where Kerry is ahead, in his traditional strongholds of New York and Illinois, the voting college representation has dropped – hence an eroding support base for the Democrats – therefore making it even more important that Kerry win other states.

Nope – he can’t do it. Kerry is GAWN!

Bush has it won. It’s not where you will win, it’s where you will beat your opposition, take states off them. Kerry looks as though he won’t be able to do it.

George – four more years! What I don’t get is that the odds of Bush winning the Election on Betfair are still $2.53???? What? I don’t get it. I’m going to put the $8 of winnings from the Australian election and get onto Bush.

A Matter of Numbers: What is Joyce thinking?

Peter Costello has made a very good point today (as per usual). Ron Boswell and Barnaby Joyce (two of the Queensland Nationals Senators) do not hold the balance of power. They do not control the outcomes in the Senate.

All of the 38 Coalitions Senators do! Barnaby Joyce somehow thinks that because he was one of the last Senators to reach quota, he holds the balance of power? Dear me.

The fact is, the numbers elected, whether elected forst or last, are all equal. They have equal power over the vote, equal power over outcomes in the Senate and equal weighting.

Just because one Senator happened to be the last one in the door doesn’t mean his mandate is greater than any other. If Barnaby Joyce thinks he has a special privilege or say in the outcome of Senate voting, he is a goose. Remember, this is from a state whose population is against daylight savings because they think it “fades the curtains”. I kid you not. This stupidity has even been debated in NSW Parliament, because not only Queenslanders believe it fades the curtains but, seemingly, many people from country New South Wales do as well.

When will the Queensland branches of the Coalition actually preselect intelligent candidates? There is something unique about the politicians they preselect; Barnaby Joyce is proving to be no different.

Free trade is music to my ears

The fear and loathing which has poured from the creative industries about the upcoming Free Trade Agreement (FTA) with the US is an ill-informed and ill-performed stage show. The creative industries have got to be less outraged and more aware of what the FTA truly means, as they stand to benefit from such a change in our terms of trade.

There are multiple barriers to entry and distortions that governments all over the world set up in the name of protectionism. However protectionism serves only to destroy economies and harm the ability of consumers to pick and choose the best, rewarding the best and most efficient producers. Protectionism promotes complacency from the protected companies and producers of product and it lessens the ability for consumers to pick and choose goods and services that meet their needs the best, whether from Australia, the USA or any other country.

With the removal of trade barriers, the biggest winners are consumers. We find products at lesser prices, with a greater range. The savings we make on cheaper products we either save or spend on more products. The economy grows and the “dead weight loss” of protectionism leaves us wealthier.

However there are vested interests and arguments that have skewed the coverage of the negotiations. Whether these arguments are spurred by anti-Americanism (hypocritically, while the creative industries have their main source of inspiration and Mecca in the US, they find it easier to mock and ridicule its influence), or whether it is a total ignorance of economics and the advantages of allowing willing and informed people to trade with one another without the interfering arm of Governments standing in the way, or whether it is an unwillingness to stand accountable to investors and critics, the creative industries have been rabid. But much like Governor Schwarzenegger’s most recent films, their argument is a lot of interesting hype and no substance.

The Australian film and TV industry has been particularly vociferous in their argument over the retention of Aussie content on film and TV. They argue for the retention of quotas due to their perceived easy substitutability of foreign product. As their argument claims, TV shows are much of a muchness – an Aussie drama is the same as an American drama only more expensive – therefore we have to protect the Aussie content from being overrun.

Also, because the TV broadcast quotas affect the consumption of the product, that is that TV shows are services and as such are simultaneously produced and consumed and cannot be stored on the shelves and purchased later, they argue quotas are necessary otherwise it is possible that there would be no means for Australians to watch Australian TV shows.

These arguments are totally false in that they assume that people’s tastes are irrelevant and that they will consume what is served up to them, come what may. This is the same stupid argument that is used when people argue against other corporate (read American) behemoths such as Coke, McDonalds and Starbucks.

“Local restaurants will close and all we’ll have to eat are Big Macs,” they proclaim. “My local espresso shop will be driven out of business”. Their argument implies that all it takes for world domination is enough money and geographic spread. The tastes, preferences and simple, plain obvious evidence that people like their local coffee shop or local fashion label or local sport or local TV show because it provides something different and unique at high quality are ignored in this absurd argument.

A similar argument exists in the music industry. Radio quotas mean that Australian radio is obliged to play Aussie music at least 25 per cent of the time. Without these quotas, the music industry argues, radio stations would blindly adopt playlists of foreign radio stations and there would be no Australian music on the radio. This would, they argue, result in the end of the Australian Music industry. However this argument is again fundamentally flawed.

First, what is “Australian Music”? Radio stations that play a new song by Kylie Minogue could barely be playing Australian music, could they? A song funded by an English record company, written by foreign songwriters, published by a multitude of foreign music publishers, recorded, mixed, mastered overseas and sung by an artist who herself lives a majority of the year in the UK could barely be called “Australian content” could it? But it IS! AC/DC, a band that has not lived, nay visited, Australia in years is still regarded as Australian content for radio purposes. As is Natalie Imbruglia, who was signed out of BMG UK (therefore controlled and marketed from the UK) and for all intents and purposes is an English artist. If the basis of broadcast quotas is to encourage Australian culture, then how is it being aided in these instances?

Second, unlike the TV industry, Australian radio content laws apply only to the playing of music in terms of its role as a promotional tool. Unlike TV which has no other means of consumption, music is primarily produced to be purchased, with radio only playing the part of promotional tool (albeit a major one). Even if Australian radio failed to play Aussie music, it would not cause holocaust (just ask George, who were BARELY played on commercial radio and still managed to sell double platinum and win, ironically, the “Best New Talent” at the 2002 Commercial Radio Awards). And when was the last time a commercial radio station played a John Farnham song?

Furthermore, with the explosion of streaming music stations and portable music formats, radio is finding itself largely irrelevant in the discovery of new acts. How can a quota possibly cope with or be relevant in five years time when most likely we will be able to listen to a wireless digital webcast from a station anywhere around the world?

Third, if quotas were removed, local radio stations would STILL have a commercial interest in playing local music. Just as all politics is local, all radio is local. Radio plays the music that the local audiences want to hear otherwise their ratings suffer and their ability to attract advertisers suffers. Just like the earlier argument in the context of McDonalds and Starbucks, people DO want something unique and interesting; they do want things that are local, Australian, part of their community and importantly of equal or better quality than the other product.

New Australian music will still be played on the radio as long as it is better than the next best alternative. The same applies in every venture; people have unique tastes and local people cater better than foreigners – if they don’t then there has been no loss – we could have had the American Idol broadcast here but instead we have had our own!

Fourth, people are huge fans. People who are fanatical supporters of artists, whether Aussie or otherwise, will always support their band through thick and thin. They will not simply “substitute” their affection for one act for another just because they are playing a similar style of music. Something for Kate fans will not replace their preference for “like” bands and accept it as an alternative – they will want to hear Something for Kate.

There is an argument that in the long term bands such as Something for Kate will not exist to create a fan base if not for the quota system. However these bands currently struggle to get airplay until the quality of their songs, the fortitude of their record company and the size of their fan base (built through touring and other means of promotion) is good enough to convince recalcitrant Music Directors.

The point being if young bands are not good enough, then they don’t get played anyway. They have to be just that bit better to play in a free system. They get better by writing more songs, playing more gigs, taking more time in the studio – the outcome being their songs are very, very good when they are launched upon the world. What’s wrong with that? How is that any different to any other competitive environment?

Free trade has thankfully opened up industries which were bloated and inefficient and has created lean, efficient and largely far more successful products than ever before. The Australian car industry is a great example of this. For years we struggled with low quality, overpriced and generally unappealing locally made cars. When tariffs were reduced, car quality got better as the local manufacturers found themselves less “safe”. Yes, some jobs were lost. Yes, Nissan closed its manufacturing plants. But at the same time, Toyota, Holden, Ford and Mitsubishi have found that the utilisation of skilled and creative Aussie labour has meant cars are now made here which are exported all over the world – this never happened in the “good old days” of protectionism! They could have imported 100 per cent of their cars but they realise that not only is Australia a relevant market to cater to but a relevant market to export from. This is the outcome that Australia’s creative industries should be aiming for.

If (and it’s a very unlikely if, but if) the FTA means the removal of quotas it will hardly make a difference. The fact is that if the product is good, it will get a run in any case. The corollary being if the product isn’t good enough to compete, then what’s the point of even pushing it? If it’s not good enough to compete, will it sell? Highly unlikely. If it can’t get on radio by virtue of the fact that it doesn’t cut the mustard with the latest Madonna or Coldplay single, will it mean the end of the act? NO! It will mean an improvement, a greater incentive to provide a better product from the artist and the company. And the better the product, the more satisfaction from the consumer, and we ALL win.