Knowing the reaction it would elicit, an old friend of mine sent me a link to an article entitled “Shocking Graphic Reveals Why a Big Mac Costs Less Than a Salad”, which featured the chart pictured here. I did indeed find the graphic shocking, but not for the reason the headline writer intended. The graphic in question, which originally appeared in the Consumerist, shows a pair of charts comparing the levels of subsidies different food types receive in the US compared to recommended dietary intake of corresponding food groups. Needless to say, the foods receiving the largest subsidies are the ones that should be consumed in the smallest proportions and the conclusion: no wonder Americans are getting fatter.

The idea that the US government’s agricultural policies appear to be producing decidedly unhealthy outcomes is one I have been reading about in the fascinating book The Omnivore’s Dilemma: A Natural History of Four Meals (its tale of the sex-life of corn alone makes it worth the price) and so this was not what I found shocking about the graphic. What shocked me was the travesty of data visualization used in the graphic: pyramid charts.

It should not be surprising that charts like this are becoming increasingly common since so many charting tools try to lure you into using them. The screenshot below shows the options that the current version of Microsoft Excel offers under the heading “Column” charts. I would argue that everything below “2-D Column” should be banned from the arsenal of the thinking chart-user. These variants on three-dimensional graphics all represent the trap “chart junk”: fancy extra details that, at best, add nothing to the information being conveyed and, at worst, result in distortion. Cones and pyramids fall well into the distortion category.

No doubt echoes of the “food pyramid” trope made the choice of pyramids an irresistible temptation for the Consumerist. The problem is that the data is represented by the height of each segment of the pyramid, but we tend to perceive the apparent volume of each layer. As a result, the layers near the top appear much smaller that they should relative to the lower layers. This serves to drastically exaggerate how little government funding in the US is directed to fruits, vegetables, nuts and legumes. Using a more prosaic bar chart instead shows that, while the funding of meat and dairy is certainly far greater, the ratios are not as extreme as the pyramid suggests.

The bar chart has the added advantage of making it easier to gauge the funding proportion for each category. Also, having each layer stacked one on top of another makes it harder to compare one figure with another. The bar chart eliminates the need for moving the shapes around in your mind in an attempt to make these comparisons. Note how close the funding levels are for grains compared to sugar, oil, starch and alcohol, while the pyramid chart  makes the funding of grains look significantly higher.

The original graphic compensates by quoting each of the figures, but this defeats the purpose of using a chart. If your chart does not make the numbers evident, use a table instead! The extent of the distortion that the pyramids produce is even more apparent in the case of the recommended diet data. While the recommended intake of sugar, oil and salt is certainly low, on the bar chart this category is no longer vanishingly small.

Another visualisation alternative would be to use pie charts. While pie charts do have a bad reputation in statistical and scientific circles, and are often used and abused in many a business presentation, they allow more straightforward comparisons of the contributions categories make to the whole. In the pie chart it is much easier to see at a glance that vegetables and fruit should make up about a third of a regular diet, while protein combined with sugar, oil and salt should make up about a quarter. On the other hand, it is harder to use a pie chart to scan numerical values. For that purpose, the bar chart excels (no pun intended). So when choosing a chart to represent data, it is essential to first decide what aspect of the data you are aiming to highlight.

The pyramid charts were indeed intended to shock, but there was no need for the authors of the post to resort to misleading exaggeration. The figures should be allowed to speak for themselves. Even when using dispassionate bar charts, it remains clear that the US government is funneling a disproportionate amount of money into the types of food Americans are already over-consuming.

Earlier this week, @pureandapplied brought to my attention the emissions data that has been published by the Department of Climate Change in Australia. Their report comprises data for the 2008-09 reporting year provided to the Greenhouse and Energy Data Officer by corporations whose greenhouse gas emissions exceeded 125 kilotonnes*. A few corporations are missing from the list for a number of reasons, including failure to provide their data in time for the report’s publication (a sorry excuse indeed). Nevertheless, the data makes for some interesting reading. As @pureandapplied remarked, for example, Qantas was responsible for more emissions than Shell: those air points are producing a lot of CO2-equivalent emissions!

The data is reported in two categories, “Scope 1″ and “Scope 2″ emissions. The definitions of the two scopes are as follows:

Scope 1 emissions are the release of greenhouse gases into the atmosphere because of activities at a facility that is controlled by the corporation. An example of this would be gases emitted by burning coal to generate electricity at an electricity production facility (i.e. a power station).

Scope 2 emissions in relation to a facility, are the release of greenhouse gases emitted at a second facility because of the electricity, heating, cooling or steam that is consumed at the facility. An example of this would be greenhouse gases emitted to generate electricity, which is then transmitted to a car factory and used there to power the car factory’s lighting. The greenhouse gas emissions are part of the factory’s scope 2 emissions. It is important to recognise that scope 2 emissions from one facility are part of the scope 1 emissions from another facility.

The report is very careful to note that these two scopes should be used warily. In fact, it warns that the two figures “should not be used individually, or added together” to estimate liabilities under any emissions abatement scheme. That is a red rag to a Mule, so I will indeed look at them individually and added together. The chart below shows the top 25 emitters in the Scope 1 category.

Top 25 Scope 1 Emitters

It should come as no surprise that the big Scope 1 emitters are primarily power generators, although there are a number of mining companies in there, along with Qantas thanks to its burning of jet fuel. Scope 2 tells a somewhat different story.

Top 25 Scope 2 Emitters

Here “poles and wires” make an appearance: Transgrid and the like, move energy from place to place that has been generated elsewhere. So, the Scope 1 emissions are counted by the generator, but the tranmission company wears the Scope 2 emissions. Woolworths manages an impressive fifth place, perhaps thanks to the lights in all of their supermarkets? Wesfarmers, the owners of the Coles supermarket chain, rank higher still.

Finally, here are the top 25 emitters by the combined total of Scope 1 and Scope 2 emissions. Not surprisingly, the generators dominate once more.

Top 25 Scope 1+2 Emitters

Also included in the data is the total amount of energy consumed by each corporation. It is in these numbers that I stumbled upon something of a puzzle. Envestra produced a reasonably sizeable 627,161 tonnes of Scope 2 CO2-equivalent, but had one of the lowest levels of total energy consumption at only 193 GJ. What have they been up to? Guesses are welcome!

* Also included are those corporations holding a reporting transfer certificate.

Last weekend, the Mule Stable* was launched as a forum for discussions that may tie in to topics here on the Stubborn Mule, and then again may not. A number of discussion groups have already been set up there, including groups on modern monetary theory (aka chartalism), economics, and politics.

For anyone already familiar with the twitter social network, finding your way around the Stable will be breeze. But for those less familiar with the conventions, here is an introductory video showing you how to get started on the Stable. Keep an eye out for more videos explaining more advance tips and tricks you can use at the Stable, and don’t forget to sign up and join in!

If you are finding this video a bit too small, there is a larger screen version.

* Thanks again to the StatusNet developers responsible for the software that powers the Stable.

Today’s “Chart of the Day” from Business Insider’s Clusterstock blog presents an alarming picture of the US economy viewed through the prism of bank business lending. The chart, which I have reproduced below, shows a precipitous collapse in lending*, described in dramatic language as “falling like a knife”. There is no doubt that the US economy remains in very poor health, but should we be getting as excited as Clusterstock?

Annual Change in US Commercial and Industrial Loans

Closer examination of the chart reveals that it is in fact quite misleading.

For a start, it makes the very common mistake of plotting a long series of data without adjusting for the fact that over time the value of the dollar has declined through inflation and the US economy has grown. As a result, more recent movements in the data take on an exaggerated scale.

Also, the chart shows annual changes without providing any sense of the base level of lending. Not only that, while attention is drawn to the US $300 billion annual decline in lending, the increase of close to US $300 billion just over a year earlier is ignored, when in fact the two largely offset one another. Certainly lending has declined, but rather than taking us into historically unprecedented territory, as the Clusterstock chart suggests, it actually means loan volumes are back to where they were in late 2007.

Both shortcomings are addressed in the chart below, which shows the history of loan volumes themselves rather than annual changes and overlays a series scaled by the gross domestic product (GDP) of the US to represent lending in “2010 equivalent” dollars.

US Commercial and Industrial Loans

Changes in lending do provide a useful reading of an economy’s health. But, it is important to be careful when using annual changes to read its current state. The change from January 2009 to January 2010 is affected just as much by what happened a year ago as by what happened last month. Since monthly data is available, we can in fact look at changes over a shorter period. The charts below show monthly changes, which are probably a little too volatile, and quarterly changes which are probably the best compromise. Since these charts extend only over a five year period, it is not as important to adjust for changes in the value of the dollar and the size of the economy.

Monthly Changes in US Commercial and Industrial Loans

Quarterly Changes in US Commercial and Industrial Loans

Both of these charts reveal an economy that certainly remains unhealthy and lending volumes are still declining. However, the declines of the last couple of years evidently reflect an unwinding of the enormous increases of a few years earlier. So rather than fretting that lending is “falling like a knife”, we can take some comfort from the fact that the rate of decline is diminishing from the worst point of the third quarter of 2009. The moral of the story is that charts can mislead as easily as words and should always be treated with caution.

* The data is sourced from the St Louis Fed “FRED” economic database.

There have been a lot good discussions arising in the comments section of posts here on the Stubborn Mule. But in many ways, the “blog post and comments” format is a rather constraining framework for discussions. If someone has a thought that is only tangentially related to a post, they may be reluctant to add it as a comment. Likewise, a comment on an existing post does not always seem the best place to suggest ideas for future blog posts or just to suggest interesting links to other blogs or articles. I do publish my contact details, but when someone emails me directly, no-one else can see what they have to say unless I end up writing on the topic.

So, for some time now I have been thinking about setting up some kind of discussion forum to complement the Mule. Now, finally, I have done something about it can and hereby announce the launch of the Mule Stable.

The Stable is a place to share links, ideas, suggestions and anything else that interests you. Anyone who uses twitter will see a very familiar format: you can post brief notices (currently limited to 140 characters, but I plan to increase that in the future), follow what other users are saying and engage in conversation. In fact, if you have ever seen identi.ca, it will look even more familiar, which is because the Mule Stable is built on the same platform. More than a year ago I wrote about the future of microblogging. The idea of open microblogging pioneered by indent.ca was a key inspiration for that post and I have been toying with the idea of trying out their software ever since.

But am I re-inventing the wheel? After all, I already use twitter and there is plenty of discussion going on there. But, twitter is enormous and growing. This is its strength, but also its weakness: there is just too much going on to tie it back to one particular area of discussion. The idea of the Mule Stable is to create a smaller, more focused forum for discussion. Of course, I will continue to use twitter, but hope to get a lot out of the Mule Stable too.

So, please consider registering as a user at the Mule Stable and and listening in on the discussions. Better still, put your two-cents worth in too. The stable door is open, but the Mule won’t be bolting.

The shadow finance minister, Barnaby Joyce, has been waxing hysterical of late about Australia’s “unsustainable” public debt. This is not a new line to take in Australian politics. Last year when the then leader of the opposition, Malcolm Turnbull, began attacking the government’s stimulus package, I argued in “Park the Debt Truck” that there was very little reason to be worried about Australia’s public debt.

This phobia of government debt is not unique to Australia. In the US, national debt is one of the primary bug-bears of the “Tea Party movement” that emerged in 2009. Widespread concern about government borrowing is helped along by the sort of simplistic fear-mongering evident in the so-called “debt clock” (and yes, I am aggrieved to say, there is an Australian version of the debt clock).

The catalyst for the current focus on sovereign debt is the crisis faced by Greece. Stimulus spending to combat the economic fall-out of the global financial crisis has led to significant growth in government debt around the world, prompting fears that Spain, Portugal, Ireland or even the United Kingdom or the United States will be the “next Greece”. This week, Business Insider published what it dubbed “the real list of countries on the verge of sovereign default”. Sourcing its information from a Credit Suisse paper via the FT Alphaville blog, they rank United States government debt as riskier than Estonian debt. That alone should raise eyebrows and suggests that Credit Suisse needs to join Barnaby Joyce in some remedial lessons in economics.

The basis of Credit Suisse’s sovereign risk ranking is mysterious. It supposedly takes into account, amongst other things, the market pricing of credit default swaps (CDS). However, they are clearly not listening too closely to the market, otherwise Argentina would be at the top of their list and the United States at the bottom (the chart below shows the actual Credit Suisse ranking). Of course, the market is not always right: just look at the tech bubble or the US housing bubble. Indeed, I know of one person working in the markets who refers to sovereign credit default swaps as a device for “taking money from stupid people and giving it to smart people”, so perhaps Credit Suisse are right not to put too much weight on these prices.

Credit Suisse Sovereign Risk Ranking*

It would appear that Credit Suisse is primarily concerned about the amount of public debt each country has (although if this was the sole criterion, Italy would rank above Greece).

Many who fret about the risk of government debt appeal to an analogy with a household budget. Just as you and I should not live beyond our means and put more on the credit card than we can afford to repay, so the government should not spend more than it earns in the form of tax. This analogy is simple and compelling. However, just as H. L. Mencken once wrote, “For every problem, there is one solution which is simple, neat and wrong,” this analogy is simple neat and wrong. The circumstances of the government are fundamentally different from yours or mine.

In “How Money Works” I explained the difference between money which derives its value from being convertible to something else, such as gold or US dollars, and “fiat money” for which there is no convertibility commitment. As I wrote in that post,

However, in a country with fiat money, the central bank makes no convertibility commitments…It has monopoly power in the creation of currency. So, the government simply cannot run out of money.

The United States, United Kingdom and Australia are all examples of countries with fiat money with floating exchange rates. None of these countries can ever be forced into default. Contrary to the alarmists, none of these countries are reliant on China (or anywhere else) for their money. Here is a simple thought experiment: when China “lends” the US government money by buying Treasury bonds, where does that money come from to buy the bonds? From US dollar mines by the Yangtzee river? No. All of the money comes from China taking US dollars as payment for their exports. So China is “lending” the US government money that was all created in the United States in the first place. While any of these countries could decide for political reasons not to repay their debt, that is extremely unlikely in current circumstances. So the United States, United Kingdom and Australia and indeed many other countries with fiat money and free-floating exchange rates should all be considered to pose an extremely remote risk of sovereign default.

But what about Greece? Unfortunately for the Greek government, ever since they joined the European monetary union and adopted the euro as their currency, they lost the power to create their own money. While the US government cannot run out of dollars, the Greek government certainly can run out of euros. To make matters worse, they are subject to the tight controls of the Growth and Stability Pact as part of the Maastricht Treaty which severely restricts their ability to use the sorts of stimulus measures Australia, the United States and others have turned to in the face of economic downturn. In fact, their national debt levels are already well over the Pact maximum of 60% of their gross domestic product.

Like the other members of the monetary union, Greece is effectively operating on a gold standard only substituting euros for gold. In A Tract on Monetary Reform, John Maynard Keynes referred to the gold standard as a “barbarous relic” and the European Union is now learning how right he was. They adopted a common currency with an eye on the benefits of streamlining commerce between member countries, but without understanding the implications for times of economic crisis. The Union is now in a bind: do they allow Greece to fail, only to see Portugal, Spain and others tumble in its wake? Or do they ignore the rules of the Pact and bail Greece out, a course of action which would doubtless leave Ireland feeling that their fiscal austerity measures were an unnecessary hardship? In all likelihood, they will find a way to dress up a rescue package with all sorts of tough language and pretend that the union is as strong as ever. The fact remains, that the euro is the real reason Greece finds itself facing a debt crisis.

But what of Estonia being less risky than the United States? The Estonian kroon is pegged to the euro, so despite not yet being part of the European currency union, Estonia has chosen to give up sovereign control of its currency. As long it goes down this path, Estonian government debt has to be considered a far riskier proposition than US government debt. Clearly Credit Suisse’s sovereign risk analyst does not understand this. Little wonder it is lost on Barnaby Joyce.

* India, which ranks between Egypt and Italy, is not shown in the chart because no CDS data is provided. The “CDS spread” represents the annual cost of buying protection against an event of default. This cost is measured in basis points (1 basis point = 1/100th of a percentage point). For example, in the chart above, the CDS Spread for Australia is reported as 50 basis points (i.e. 0.5%). This means that to buy protection against default on $100 million of Australian government bonds would cost $500,000 each year. A typical credit default swap runs for five years.

My friend and prolific blogger, Neerav Bhatt (@neerav on twitter), asked me to write a guest post for his Rambling Thoughts blog about how much debt is too much when it comes to buying a house. In pulling the post together, @dlbsmith was very helpful, allowing me to tap into her knowledge of bank home-lending practices. Here is an extract of what I wrote.

So you’ve saved up a deposit for your first house, you want to take advantage of the government’s first home owner grant while you still can, and the bank is actually prepared to lend you money. But how much should you borrow?

While Australia has not had the same problems with “sub-prime” borrowers finding themselves too deep in debt for a house which has collapsed in value (house prices can and do go down as well as up), there are certainly still people who have borrowed too much and are struggling to make their mortgage payments.

Once upon a time, many banks had rules of thumb for the maximum size for a home loan. A common rule was to lend no more than three times the borrower’s annual income (before tax). These days, even in the wake of the “global financial crisis”, it is not uncommon to hear of people being offered loans or four or five times their annual income.

Just because a bank is prepared to lend you enough to buy the house of your dreams doesn’t mean that the loan they are offering you isn’t too big! Borrowers have to decide for themselves how much is a safe amount to borrow and how much is too much.

You can read the full post here.

In today’s Sydney Morning Herald, Ross Gittins has an opinion piece entitled Mealy-mouthed pollies see voters as a bunch of suckers. In it he argues that politicians are not to be believed when they start talking about taxes: they are more interested in playing issues for their electoral effect than actually saying what they believe about a tax. After all, if Labor really believed all their arguments against the goods and services tax (GST) back in the days of Kim Beazley’s 2001 “Rollback” campaign, wouldn’t you expect to hear something from the current Labor government about the GST?

Perhaps this goes some way to explain why no politician in Australia is brave enough to enunciate the unavoidable fact that if, as a nation, we want to reduce carbon emissions, there will be a cost.

This is true regardless of whether your scheme of choice be Labor’s proposed emissions trading scheme (ETS), a carbon tax or the latest offering from the coalition, an emissions reduction fund. The reason is simple. The bulk of Australia’s power generation is sourced from coal-burning power-stations and this is because coal is cheaper than any other source, including natural gas, solar, wind or geothermal. Achieving a meaningful reduction in Australia’s carbon emissions will require a gradual phasing out of coal-burning power stations, replacing those reaching the end of their life with generators using more expensive alternative sources. Ultimately someone, somewhere must bear this cost if the shift is to occur.

Some would argue that “the big polluters have to pay”. That is easier said than done: these polluters would want to preserve their profit margins and so in practice any additional costs imposed on power generators and other industrial polluters would be passed directly on to their customers anyway.

Others would prefer to rely on people opting to reduce their own emissions. One avenue for this currently open to Australians is provided by the GreenPower program. Established by Commonwealth Government in 1997, GreenPower allows energy retailers to provide their customers with an accredited “green” option. This allows households and businesses to buy some or all of their power from lower emission generation sources. Needless to say, these options cost more than the standard offering. According to the 2008 GreenPower audit, 947,268 customers were using a GreenPower product, representing around 10% of Australian households. While this may appear at first glance to be an impressive take-up in 10 years, digging into the figures a little deeper gives a different picture. For many of the retailers, close to 90% of the retail customers have elected to buy the cheapest GreenPower product which only sources 10% of the householder’s power from alternative sources. For businesses the number using the 10% option is even higher. So, relying on customer choice alone, the GreenPower program has only resulted in a shift to lower emission sources of about 1 or 2%.

Both emission trading schemes and carbon taxes aim to provide a far bigger shift by closing the price gap between cheap but carbon-intensive power sources and the more expensive alternatives. Economically the key difference between a tax and a trading scheme is that the cost of carbon imposed by a tax is fixed by the government, while the price imposed by a trading scheme would vary with supply and demand.

Most economists are attracted to trading schemes, pointing out that the problem with a tax aimed at reducing emissions is that you do not know how high to set the tax to get a desired reduction in emissions. While government can progressively tweak the tax to get to the target, it still requires significant guesswork. In contrast, under a trading scheme, the emissions target can be set in advance and then an appropriate number of “emissions permits” are issued (at which point, some environmentalists get queasy at the thought of providing business with the right to pollute, but that is an emotional distraction). These permits can be bought and sold, so any polluters unable to reduce their emissions to the level of the number of permits they have can purchase additional permits from others who can achieve greater reductions. In the process, the price should automatically adjust (thanks to the famous–or infamous–invisible hand of markets) to a level that achieves the desired reduction target. Any emissions not backed by permits are subject to punitive financial penalties set at a sufficiently high level to make the purchase of permits preferable.

For carbon taxes the price is known in advance, but the amount of reduction achieved is unknown. For a trading scheme, the reduction is known in advance, but the price is not.

That is the theory at least. In practice, both approaches have enormous practical complexities, not least the challenges of monitoring compliance. Furthermore, the trading scheme proposed by the Labor government, known as the Carbon Pollution Reduction Scheme (CPRS), is not quite as pure a trading model as economists would like since it comes with a price cap. This means that, while the market is allowed to determine the price of carbon, the price cannot trade above a pre-determined level. Under the proposal, the cap would be set at $40 per ton of carbon for the first few years. This means that if the market price of emissions was in fact higher than $40 per ton, the CPRS scheme would in fact operate more like a fixed-price carbon tax.

As for the coalition’s reduction fund, it resembles a carbon tax approach to some extent in that it does not impose a particular emissions target. But the key difference between the reduction fund and either a carbon tax or a trading scheme is that it would be up to the government to determine the most promising approaches to reducing emissions and offering financial inducements to pursue these approaches. So it involves the government “picking winners”, to use a phrase favoured by free-market enthusiasts who consider markets far more efficient than governments at making decisions about allocation of scarce resources and, presumably, the best approach to dealing with climate change. To see the Labor government advocating a market solution and the Liberal/National Party coalition advocating a government-led approach is perhaps the most peculiar aspect of the current climate change debate.

While there are many reasonable discussions that could be had about the relative merits of all of these schemes, sadly the debate driven by the politicians is far more likely to be which scheme is or is not a “great big new tax”. The fact that a trading scheme is not a carbon tax does not somehow mean than taxpayers and other consumers will not end up paying for the emissions reductions. Equally, the money in a reduction fund has to come from somewhere and, since the scheme is being advocated by a party with a deep-rooted fear of government deficits, it is safe to say that it will come from increased taxes, reduced public spending elsewhere or a combination of the two. Again, someone will pay.

The last Federal election and opinion polls held before and since then all suggest that, recent visits by Lord Monckton notwithstanding, the majority of Australians want something to be done about reducing our country’s emissions. Is it too much to ask of our politicians to stop shouting “It’s a tax!”, “No it’s not a tax, yours is!”? I hope it is not, but in the process, everyone else has to accept the fact that reducing our emissions will come at a cost and do not believe any politician who tries to claim otherwise.

Fifteen-year-old South Australian Carly Ryan was murdered in 2007. The 50-year-old man found guilty of her murder had used fabricated online identities to attempt to seduce the girl and, when she ultimately rejected his advances, he used another identity to lure her to a beach-side town where he bashed and drowned her.

Independent South Australian senator Nick Xenophon now intends to introduce a private member’s bill which would make it an offence for an adult to misrepresent their age online for the purpose of meeting minors. Carly’s mother, who plans to establish a foundation to promote awareness of the risks children face online, has said she supports the bill.

The story of Carly Ryan is terrible. Just hearing the story triggers a shiver of disgust and horror and those who are parents themselves may well be worrying about the risks posed to their own children by shadowy online stalkers. Politicians are human too and react the same way. Indeed Nick Xenophon’s reaction follows a common pattern that has emerged around the world in recent decades.

The pattern starts with a terrible crime committed against a child. This is followed by extensive and sometimes lurid media coverage. A politician will then call for new laws to “prevent this happening to others”. It would be a brave politician who would argue against such a law and thereby risk appearing insensitive to the plight of the victim and the grief of their distraught family. So they do not oppose it and new laws are passed. The pattern is clearest in the United States. The archetypal example is Megan’s Law. In 1994 seven-year-old Megan Kanka was raped and murdered by a repeat sexual offender. Her name has since been attached to laws introduced across the country requiring a public register of sex offenders. Other examples fitting the pattern include Jessica’s Law in Florida which imposes a minimum 25-year sentence on sex offenders. Nick Xenophon’s “Carly’s Law” could well be another in this sequence.

But, how effective are laws like this in curbing the criminal behaviour they are targeting? In 2008, the US Department of Justice funded a study of the efficacy of Megan’s Law. The authors found that “Megan’s Law showed no demonstrable effect in reducing sexual re-offenses”. Furthermore, it observed that the cost of implementing the registers had continued to rise. Their executive summary concluded phlegmatically:

Given the lack of demonstrated effect of Megan’s Law on sexual offenses, the growing costs may not be justifiable.

One of the problems with laws of this kind is that the offences that give rise to them are in fact extremely rare. The level of media attention they receive distorts accurate perceptions of the risks involved. According to the victims of crime data published by the Australian Bureau of Statistics, the incidence of kidnapping or abduction of children in 2008 was 8 in 100,000. Of course, included in this figure are abductions by people who are known to the victim (varying by State from 30-50%), including estranged family members and not all would involve sexual assault. Overall rates of sexual assault are higher (the Bureau does not provide a breakdown by victims’ age group at a national level), but an even higher proportion of perpetrators of sexual assault are known to the victim.

Now some would dispute the relevance of figures such as these. After all, if legislation is able to save even one child, isn’t that worth it? The problem with this reasoning is that our society has finite resources. While the politicians who pass these laws can simply move on to the next issue, the public sector is saddled with the cost of implementing it. The laws must be policed if they are to serve any purpose at all and those in breach of the laws must be tried. But this means that police and court time, which is already stretched, must be diverted to these new laws. While one child may be saved from a “stranger danger”, it could well be that others would suffer at the hands of drunk drivers missed by the police, or perhaps abusive family members not restrained by the courts. We would never know, but certainly laws don’t come for free any more than lunches.

In recent years, the pattern has shifted from the broader issue of sexual assault of children to online “predators”, to use the term that has become so common in media reports. The image conjured up is that of the paedophilic older man masquerading as a teenager; in other words, precisely the target of Nick Xenophon’s new bill.

At first glance, there are statistics that suggest that the internet may well be rife with such predators. The US National Center for Missing & Exploited Children has conducted surveys which indicate that one in seven children in the United States between the ages of 10 and 17 who use the internet have received a sexual solicitation online. However, digging deeper into the data suggests that the stereotypical image of the predator is not particularly accurate. In 2008, University of New Hampshire researchers published an overview of the research into online sexual victimization, Online “Predators” and their Victims: Myths, Realities and Implications for Prevention and Treatment. They conclude that most of these advances are in fact made by other youths, which in itself suggests that more attention could be given to problems of cyber-bullying. Even when the solicitation is made by an adult, they observe that:

In the great majority of cases, victims are aware they are conversing online with adults. In the N-JOV Study, only 5% of offenders pretended to be teens when they met potential victims online.

A better understanding of what is actually taking place would suggest focusing on the broader problem rather than on the lurid but exceptional examples such as Carly Ryan’s case. To this end, the paper concludes by arguing

While online molesters take advantage of developmentally normal adolescent interests in romance and sex, some youth may be particularly at risk. This group includes boys who are gay or questioning their sexual orientation; youth with histories of sexual or physical abuse; and those who frequent chatrooms, talk online to unknown people about sex, or engage in patterns of risky off- or online behavior. While there is little research about online child molesters, they appear to occupy a restricted range on the spectrum of the sex offender population and include few true pedophiles or violent or sadistic offenders. We need frank, accurate prevention programs for youth, thoughtful treatment for victims, and continued research.

I suspect that none of these recommendations will be taken up in Senator Xenophon’s bill.

Last year, The Economist argued the case for reforming sex laws in America and elsewhere due in large part to cruel unintended consequences arising from the well-meaning legislation such as Megan’s law. Senator Xenophon has already anticipated some complexities associated with his new bill, noting that it will not apply to adults shaving a few years off their age while using online dating. However, the lesson of past attempts at legislation in this area is that the bills do little to reduce the crimes they are targeting and instead divert resources and cause problems. Better then not to pass a Carly’s law in the first place. It will not bring Carly back and it is very unlikely to do anyone else any good either. Time and resources of our legislators, police and judiciary is better spent elsewhere.

In anticipation of tomorrow’s Australia Day holiday here in Australia, this guest post by John Carmody examines whether or not 26 January is really the most appropriate date for Australia Day. John Carmody is a Sydney-based writer on medical and cultural history and (in the interests of full disclosure) is closely related to the Stubborn Mule.

January 26 is a nettlesome date for the official celebration of the Australian nation and as a commemoration of our colonial foundation.  Apart from the significant nuisance that it falls so close to the end of the holiday season when our minds and emotions are trying to deal with more pressing obligations, it really asks a serious philosophical and moral question.

For indigenous Australians, conscious of their fraught history since 1788, it is no cause for celebration at all.  Understandably, they consider that it was the beginning of an invasion and see no reason to rejoice in it.  White Australians and, indeed, all immigrants can only respect that attitude; but we must do that reflectively.  The fact is that there are several distinct reasons to discard 26 January as that festive occasion.

The first point is that the date is not when the founding fleet arrived in Terra Australis: that was, rather, at Botany Bay on 19-20 January, 1788.  It was only because the officers were so disillusioned by how little resemblance that coast bore to Joseph Banks’s glowing descriptions and because of an indifferent water supply, that Governor Arthur Phillip made a reconnaissance to Port Jackson (which Captain Cook had not entered) that the venture was transferred to Sydney Cove. Even then, in the afternoon of 26 January there was little time for formalities or any grander celebration than hoisting a flag and drinking the health of the King and the success of the colony with a few glasses of Porter, followed by the flourish provided by a round of rifle fire.

Just as members of Parliament do not become ministers when the Premier announces a new Cabinet, but only when sworn-in by the Governor, so it was not until 7 February that the Colony of New South Wales officially began.  This was when the Judge-Advocate, David Collins, publicly read the commission to Phillip which King George III had issued on 25 April 1787.  At least by early February tents had been erected and the marines’ band could provide some music and, when the official readings were completed, could intersperse a few bars of “God save the King” into the three rifle volleys which the marines produced.

Then, extending that festive atmosphere, as Manning Clark described it in his History of Australia, “After the ceremony, Phillip invited the officers to celebrate the occasion at a cold collation in his canvas house”.  It all has a wonderfully Australian improvisatory feel about it, though for many of us that might not of itself be sufficient reason to change the date of the national day.  The real reason, I think, is far more fundamental to our sense of our ethical selves.

This stems from what was included in Phillip’s royal instructions.  Apart from requiring that there be a public reading of the commission which invested the governor with his considerable powers and at the same time gave detailed orders for the setting up of a court system, the King laid down some remarkable procedures covering the treatment of the native Australians.  ”You are to endeavour by every possible means to open an intercourse with the natives, and to conciliate their affections, enjoining all of our subjects to live in amity and kindness with them.  And if any of our subjects shall wantonly destroy them, or give them any unnecessary interruption in the exercise of their several occupations, it is our will and pleasure that you cause such offenders to be brought to punishment according to the degree of the offence”.  Thus, in June 1790, Phillip could report to the British government that, “the settlers have little to apprehend from the natives, against whom I have never thought any defence necessary”.

Immensely regrettable though it was that so many later settlers were ignorant of that royal command (perhaps feeling secure in their distance from Sydney, let alone from London), and even though there is no denying that those colonists considered that the land was theirs to usurp, official policy was benign in its general intent. There was none of the official barbarity of the Spanish South American colonies, for instance.

It could be the case, therefore, that a change of our celebration to 7 February might not only be a recognition that this is, historically, the more apt day but it might also be morally beneficial for us all.  It should remind indigenous Australians of what might have been.  Even more important, it could be a regular stimulus to our collective national conscience, an annual reminder of the sentiments which the Prime Minister expressed in Parliament in February 2008, and a spur to us all to a humbler and more worthy view of our history.