Youtube Subscription Bar

I do not like Youtube's new subscription bar that appears when you try to view your subscriptions. It gets in the way of all the other buttons you need to press. It's unfortunate that Youtube didn't give users the option to turn it off.

Benefits of Brumby's Expansion of Melbourne

Today the Victorian parliament voted to extend Melbourne's urban growth boundaries (read Green Land Cut Back as Melbourne Grows Much Bigger). When I read this news, I thought to myseld, "Brilliant! Great idea. Houses are very expensive in Melbourne, and making Melbourne bigger would make it easier for first-home buyers to afford houses."

But reading the comments in the Age news article I linked to above, it would seem as if Premier Brumby had just been caught sexually abusing a child. Why are so many people whinging about an extention to the urban growth boundaries?

I don't pretend to know exactly what the Victorian government intends to do when implementing this policy, but based on what little I have read, everything seems positive.

Wouldn't it increase congestion because more people will have to travel to the city?

According to the news article, suburbs like Footscray, Broadmeadows, Frankston, and Dandenong will be "designated business districts." WIth the expansion of Melbourne's urban growth boundaries there will, I hope, be more commercial and industrial zones outside of Melbourne's CBD. Once many residents are established in the outer suburbs, many businesses that are headquartered in the CBD will feel great monetary pressure to relocate from the CBD to new business districts like Frankston and Dandenong where they will be close to many new outer-suburban citizens and where rent would be cheaper. Lower rent means higher profitability.

Suppose very many workers still travel to the city rather than outer-suburban business districts. If that is the case, the cost in terms of congestion, time, and petrol for workers to travel to work is high, and these workers will demand a higher wage from employers to compensate, which means businesses based on the CBD will need to increases wages. If these businesse move to Dandenong or Frankston, congestion would not a big issue.

Basically, work moves with the people. If people move away from the city, so too businesses will move away from the city to follow the source of labor.

A larger Melbourne will create social division because rich people will live near the city while poor people will live in the outer suburbs.

This is already happening. Rich people in Melbourne already live near the city while poor people live far from the city. Even if Melbourne does not grow geographically, it wouldn't fix this problem. In fact, it would make things worse. If Melbourne did not expand, and if we assume demand for housing remains high, house prices would be high everywhere, even in the outer suburbs. At least if we expand Melbourne we increase the number of houses in the market, which pushes house prices down, giving the poor an opportunity to afford to put a roof over their heads.

If the government expands Melbourne and also increases the amount of commercial and industrial zoning in the outer suburbs, this should make living in the outer suburbs more attractive since it those who work there can more easily travel to work.

What about the green wedges?

Most of the green wedges in Melbourne are actually just garbage tips and farms. It makes no sense to have these things in the city. An argument can be mounted that urban sprawl will harm the environment by clearing forest and increase carbon emissions, but both these problems can be fixed with either taxation or cap and trade. To prevent deforestation or carbon emissions, tax it heavily or sell off permits to individuals or companies to allow deforestation or carbon emissions. This way the government can set how much deforestation or carbon emissions it wants. If citizens or government decide that deforestation or carbon emission is a problem it can increase taxes on deforestation or sell off very few carbon pollution permits. This makes urban expansion very costly for property developers or individuals to buy new land, which makes high-rise apartments more economical.

What about the extra traffic?

Extending the urban growth boundary will allow for the construction not only of houses but also roads and train tracks. Because more roads are built, congestion should not really increase. If very many roads are built relative to houses and businesses, we should actually see a net reduction in traffic congestion.

Impressing Others

I have been reading The Simple Dollar, and one blog post there is called Ten Big Mistakes #5: Worrying What Others Think of You.

The author is a frugal man who keeps a blog to teach others how to be frugal with money. He certainly has not been a saint for all his life. When he was younger he was a big spender. He spent money on luxury cars, fancy clothes, up-scale restaurants, and so forth.

Even though the author claims that you should not care what others think of you, I personally find that it's difficult to not care at all what others think of you. I try hard not to let other people's opinions of me matter, but I find that it does matter. This is especially the case with, say, the clothes I wear. I have a lot of old clothes in my wardrobe. In fact, I approximate that about 95 per cent of the clothes in my wardrobe is out-of-fashion. I find that I cannot wear really old clothes in public. It would be like wearing pajamas in public. People would stare at me and I would feel self-conscious.

The author says, "Spend money on what you value, not what other people value. I buy automobiles based on reliability and gas mileage and safety, not how they look in our driveway or whether the neighbor will be impressed." I would agree. I purchased a fairly cheap car about four years ago. However, because I am a male I am glad I purchased a sedan and not a small girls car like a Nissan Micra or a Ford Ka. It would be terribly embarrassing if I drove one of those. I think conforming to gender stereotypes makes people feel more comfortable, and this definitely applies to me. I have admitted this to my friends, but some of them tell me that I should just do what I please, e.g. if I wanted to wear a dress then I should just do it and not be worried. I quickly showed them that they too were influenced by fear of what others thought because I dared them to wear a dress in public or to come to work with blue hair. Many people seem to like to think they are immune from the opinions of others, but when you really test them it seems as if they are just acting rebellious to impress you.

Beware of Online Shopping! My Post Office Experience

I like shopping online because generally prices can be cheap. Shopping online allows you to find prices of many suppliers, thereby increasing competition. The fact that these suppliers don't need to pay rent on a store means that they can pass the savings to the consumer in the form of cheap goods. However, there is a major problem with online shopping that I will share with you.

I like online shopping because I don't have to deal with people. I can order something online and have it delivered to my door. It is extremely convenient.

However, one day I ordered some mugs online. I waited about two weeks and the mugs never came to my house. I emailed the supplier and asked why my mugs were taking so long, and they replied by saying that their supplier came to my house but becaue no one was there the mugs went to my nearest post office. I just had to go to the nearest post office to pick up the mugs.

Because I work full-time, I am often not home, so apparently I needed to sign the courier's package to acknowledge that I received it.

I was annoyed that I had to go to the post office. I purchase things online because I want the convenience of not having to drive to an actual place, and now I have to drive to the post office! I went off the post office and told the woman there that I had a package for me. I told her approximately when it should have arrived. They asked me for some reference number. I didn't have any reference number. The supplier didn't give me one. After about five minutes, during which the woman rummaged around, I finally got the mugs. The woman at the post office was extremely rude as well! At least when I shop at a physical store the person there is very kind to you because being rude to a customer is not good business. When an online store sends a good to a post office, it is incredibly difficult because post office employees are government workers who cannot be fired regardless of how bad their customer service skills are.

This incident scarred me for a while, and for about a year now I have stayed clear of buying things online. How in the world can this problem be solved? I don't want to have to go to the post office again but I still want the cheapness and convenience of buying online. I don't know what to do!

Inflation Much Worse than Deflation

According to The Alpha Strategy, which in my opinion is one of the greatest books on investing ever in the world, there are three things one can do to preserve purchasing power: lending, investing, and buying.

Lending includes keeping money in a bank account since you are lending it to the bank and the bank pays interest for this privilege. It also includes buying government bonds, which effectively is lending money to the government. Investing refers to owning a business and sharing in the profits of that business. Investing includes actually starting your own company or buying shares. Buying refers to buying actual tangible things like gold or land.

There are two major problems with lending: inflation and taxation. When you lend money, the money you receive back is taxed, which eats away into any profits you could make. Another problem is that inflation eats away at purchasing power. If you keep $100 in the bank and get $103 at the end of the year in interest, inflation running at 3 per cent per year means that you are no better off by putting your money in the bank.

Lending then is only good when there is deflation. The problem with investing for deflation is that deflation tends not to happen often, mainly because government is so scared of deflation that they will do what they can to prevent it, which means that they are willing to create inflation, even though inflation hurts people by reducing the purchasing power of their wealth.

Inflation can be seen as good because inflation motivates people to work hard and spend. With the price of everything going up due to inflation, people are forced to work even harder and harder in order to afford to live. If the state is seen as an apparatus of slavery then government-induced inflation is the way that the slave owners (the government) can whip (create inflation) his slaves (the citizens) in order to get them to work.

Assuming you are able to keep your job in a deflationary recession (not a realistic assumption for most jobs) then deflation is not a bad thing because the price of goods goes down. Because deflation is not a major disaster and because it is rare, I think that it pays to not devote so much of your wealth to preparing for deflation.

Many financial advisers talk about risk tolerance and asset allocation. Asset allocation refers to the percentages you devote to certain types of investments, mainly stocks and bonds/cash, i.e. how much you will invest and how much you will lend. If you are willing to take on more risk, you invest more in stocks and if you are more of a conservative investors, you invest more in bonds/cash. In my opinion, because inflation is so much worse than deflation (because prices of things go up), then it's better to devote a little more to assets that keep up with inflation (stocks, gold, and real estate) rather than assets that do well during periods of deflation (bonds and cash).

Based on my gut-feel analysis of the world economy at the moment--during this period of "unusual uncertainty," as Bernanke described it--I believe that you should hold about 60% in stocks, 30% bonds or cash, and 10% gold.

Image: Tao Zhyn

The Great Gatsby

This blog post contains spoilers.

In an earlier blog post I spoke about how I have installed a free ebook application on my mobile phone. The program allows me to put text files from my computer onto my mobile phone. Since I can download free ebook text files from Project Gutenberg, I am able to now read plenty of books on my mobile phone for free. Project Gutenberg does not have text files for every single book. However, books published before a certain year (around 1940) are in the public domain and are therefore free. There really is no reason for anyone to buy a book because there are so many free books out there. The first book I read on this ebook reader is The Great Gatsby.

This novel is about a man named Gatsby who became wealthy through questionable means (organized crime) and then tries to attract a female named Daisy who is already married to a man named Tom Buchanan. Tom comes from a family that has always been rich whereas Gatsby is self-made. Gatsby attempts to attract Daisy fail and at the end Gatsby is killed. Hardly anyone attends his funeral and we learn that Gatsby really was a mysterious figure who misrepresented himself greatly.

I read this novel having heard the hype about how this was one of the greatest novels of human history. Many have called it the Great American Novel. In my opinion, The Great Gatsby was a bit of a disappointment because much of the book is quite boring. I do feel pity for Gatsby, the main character in this novel, and I do think that some of the themes in the novel do indeed play out in real life.

Gillard Pushes for Sustainable Immigration Policy

Some some weird reason, Blogger won't allow me to post URLs on my blog posts!

Australia's Prime Minister Julia Gillard has now called for an election only having been in the job for a few months. One of her main advertised policies is that Australia's population growth should be slowed so that it is sustainable.

The Australian government already pays around $5000 for citizens to produce babies. This was seen as necessary because of Australia's ageing population. An ageing population would result in a massive public fiscal imbalance as government expenditure on hospitals to treat the old soars while tax revenue to fund these programs fall because working-age young people are retiring. It's questionable whether the baby bonus has much impact on birth rates because many of those who are paid to have babies were going to have babies anyway. Increasing immigration could help with the ageing population, but its impact is limited because immigration brings in not only young people but also old people. If the immigration program were tweaked so that it favors younger people (e.g. the older you are, the more you have to pay to get in) then immigration can help significantly with the ageing population.

However, both Labor and Liberal want to pull back immigration citing lack of infrastructure and yet the Baby Bonus policy exists simultaneously? That makes no sense.

It is true that sending more people in will crowd the country. I can see more and more crowding on the roads and trains already. But this problem is easily fixed. If more people come, simply build more. Where will the money come from to build these roads? It will come from taxes. It need not come from income taxes or value-added tax (called the GST in Australia) but infrastructure can easily be funded by applying an infrastructure levy whenever land is sold in an area that has no infrastructure. Suppose building infrastructure (roads, train lines, lighting, sewarage, and so forth) costs $10,000 per square kilometer. To make a city bigger to fit more people, the state government can simply extend the urban growth boundary and auction the extra land to property developers or even to individuals. When the government sells the land, it adds a $10,000 per square kilometer infrastructure levy that is used to fund infrastructure.

Some people argue that this continuous release of land at the urban fringes won't solve the overcrowding problem because people who live in the outer suburbs still need to commute to the city. Many people in Melbourne argue this because Melbourne city is marked by one central business district (CBD) with suburbs sprawling all around it. Many argue that if immigrants come to Melbourne and go to the city to go to work, they will clog up roads and trains. But this need not be the case. When government extends the urban growth boundary at the fringes, it releases not only residential-zoned land but also land that is designated for industrial and commerical use. Businesses can then take advantage of lower rent in these areas and move. This will divert traffic so that a significant amount travels from the central business district rather than towards the central business district.