A library without books
One of my favorite pastimes is roaming through bookstores. I’m a book lover and enjoy browsing the shelves and leafing through whatever catches my eye. I like the intimacy of smaller book shops, particularly those with floor-to-ceiling bookstands, but also appreciate larger stores with plenty of titles.
If technology has its way, strolling through bookstore aisles may become a thing of the past. With the advent of electronic books (e-books) the days of ink-and-paper books are supposedly numbered. While our ancestors read from clay tablets, the next generation will apparently view texts and novels on a battery powered device called an e-reader.
Welcome to the age of digital information where a hand-held e-reader can literally store hundreds of books. The first e-reader on the market, the Amazon Kindle, arrived in Australia late last year. Its makers claim it will revolutionise the way we read in the same way the iPod changed the way we listen to music.
Like all technological breakthroughs, e-readers come with pros and cons. On the upside, they are lightweight and portable and can fit snugly into a small bag. School kids will be able to carry one e-reader instead of a backpack full of text books. E-readers also provide privacy - no one knows what you’re reading as there’s no tell tale book cover.
But on the other side of the coin, I can’t imagine curling up on the lounge with an e-reader. Nor will I be able to get the author to autograph my e-book. Unlike hardcover books, e-readers may break if dropped and they need power which may not always be available. Also, the look, feel and smell of a new book provide an important tactile experience which e-readers can’t replicate.
While the debate rages between e-reading evangelists and hardcover traditionalists, the jury is still out for me. I’m sure gadget lovers will readily embrace the e-reader but I’m yet to be convinced it will overtake paper books. At the end of the day, books are symbols and many of us like to display great works on shelves in our homes and offices.
Despite predictions to the contrary, DVDs have not led to the demise of movie theatres, the Internet has not wiped out shopping malls, home banking has not eliminated branches and I can’t envision e-readers replacing paper books. Many people will continue to read cover-to-cover rather than “disc-to-disc”. Personally, I’d much rather turn the page of a book than fine-tune the pixels on an e-reader.
Regards
Paul J Thomas
Podcast is available here 
Posted Monday, March 08, 2010 
5 Comments 
Make a comment
Money doesn’t fall from autumn trees
WELCOME to a new month and a new season. What a marvellous time of year - the days are getting shorter, the leaves are turning colour and the air is fresher. The arrival of autumn signals a change in our routines and activities. With shorter days and longer nights we’ll socialise less and hibernate more over the coming months.
As the temperature drops, it’s a great time to curl up indoors with a good book. I did just that recently with a copy of Dr Aric Sigman’s tome, The Spoilt Generation: Why restoring authority will make our children and society happier.
One of the most resonant moments in Dr Sigman’s book comes early in his introductory remarks. He argues we have a duty to bring up socially viable children saying “…child-rearing is not merely a question of personal style. We have an overriding responsibility not just to rear our children to our own satisfaction, but to the satisfaction of others as well”.
I have long believed there is a relationship between how we parent and how our kids turn out and it appears the good doctor does as well. Ask any school teacher (I have!) and they’ll tell you that, with rare exception, kids are a product of their home environment.
The crux of Dr Sigman’s thesis is that we need to return to old fashioned parenting. In the same vein, I’m an advocate for a return to old fashioned habits of thrift (savings). These habits should start at an early age so that children learn the value of money and understand that it doesn’t come from the Tooth Fairy.
You can open a savings account and encourage your children to save a percentage of their pocket money. Or you can get your kids to put money aside in a piggy bank. Either way, you are teaching them the importance of saving for the things they want and to shun impulse buying – the bane of our adult society!
As an incentive, you can offer to pay your kids “interest” on their money when they reach a pre-agreed savings goal. As to the amount of pocket money, there are no hard and fast rules. Some parents give their children pocket money in return for doing household chores while other kids simply receive a weekly allowance.
Of course, the most important lesson we can teach our kids is that money is not everything - it still can’t buy happiness. Perhaps that’s why the world is full of people who are materially rich but spiritually poor.
Regards
Paul J. Thomas
Podcast is available here
Posted Monday, March 01, 2010 1 Comments Make a comment
The savings crisis
Many Australians find it difficult to save. As a nation, we are among the worst savers in the developed world. Nearly forty per cent of working Australians do not have enough savings to last them more than one month if they lost their job.
Banks and other authorised deposit-taking institutions (ADIs) convert household savings into loans for other households wishing to finance the purchase of a home. Demand for home finance, however, exceeds the supply of deposits as Australians borrow more than they save.
To fund this imbalance, our banks and other lenders borrow money offshore to lend for domestic purposes. This creates a reliance on global capital markets and a resultant exposure to credit market price changes as occurred during the GFC.
Our household saving - the difference between household disposable income and household consumption - has declined over the last three decades. In fiscal 2003 it became negative and remains so. Due to easy access to consumer credit (eg, credit cards, home equity loans) households have seen less reason to save for emergencies.
Also, Australia is currently in her 19th year of uninterrupted economic expansion and households tend to save less in the good times and put more away when the outlook is less promising. Which is why the saving ratio is viewed as a barometer of the overall state of the economy.
But higher saving ratios are not of unlimited benefit as they come at the cost of lower consumption ratios. Too much saving translates directly into too little consumer demand. This is what occurred during the GFC when many households stopped spending, creating a paradox of thrift.
To an economist, saving is the decision to defer consumption and to store this deferred consumption in some form of asset. Savings are one of the most heavily taxed forms of assets under the current tax system and this discourages savings. Maybe the yet-to-be-released Henry Review will address this?
One of the concerns behind the introduction of compulsory superannuation in 1986 was the decline of the household saving rate in Australia. Superannuation has forced us to save for retirement but has not changed the “voluntary” saving ratio.
The end result is that we are generating insufficient savings to fund the investment needed to build our great nation. We have become dependent on foreign savings making us a debtor nation. A large part of our current account deficit comprises the interest on the money we borrow from abroad.
Australian households need to move from conspicuous consumption to inconspicuous saving. You can do your bit by tucking away some money each pay day for a rainy day. Next week I’ll give you some tips on helping your kids develop good savings habits.
Regards
Paul J. Thomas
Podcast is available here
Posted Monday, February 22, 2010 1 Comments Make a comment
Lend a helping hand
Credit unions evolved from a simple idea - that people could pool their money and make loans to each other. That was over 160 years ago. Today the credit union philosophy of people helping people has spread to 97 countries with 46,000 credit unions serving 186 million people worldwide.
Member owned financial co-operatives have improved the lives of millions of people and have the potential to serve millions more. Australian credit unions are bringing credit union solutions to communities in need and Gateway is lending a hand.
We want to play our part in the global fight to end poverty and are doing this in partnership with the Credit Union Foundation of Australia (CUFA). CUFA is the development agency for the Australian credit union movement and supports people in the Asia Pacific region establish credit unions.
One of CUFA’s aid programs is the restructuring of the microfinance system in Cambodia to give the working class access to high-quality financial services through local credit unions. The term microfinance encompasses the delivery of financial services to poor families and entrepreneurs and includes small loans, usually less than $200, in the form of microcredit.
Microfinance gives poor people access to credit to build their assets/incomes or establish a small, self-sustaining business. For example, a peasant farmer may borrow $50 to buy chickens so he can sell eggs. As the chickens multiply, he will have more eggs to sell. Soon he can sell the chicks and each expansion pulls him further from the devastation of poverty.
Another example is of a woman in a remote village in Uganda who borrowed $25 which she used to buy a cow. The proceeds from the milk it produced enabled her to pay school fees for each of her children.
The Cambodian financial system was wiped out during the era of the Killing Fields. Recent bank failures again ruined people’s trust in the financial sector and has limited the amount they are willing to deposit. To counter this, local credit unions - supported by CUFA - are improving their image and strengthening their operations leading to increased savings levels by members.
Nobel Peace Laureate, Muhammad Yunus, is the father of micro financing. If you want to learn more about the wonders of microfinance, pick up a copy of Yunus’ book, Banker to the Poor - it’s well worth a read.
Regards
Paul J. Thomas
Podcast is available here
Posted Monday, February 15, 2010 1 Comments Make a comment
The welfare debate
Let me proceed cautiously. I don’t want to step on any toes but I think there’s an elephant in the room. I know it’s not politically correct to raise taboo topics publicly but…here goes. Has the helping hand pendulum swung too far? Do government support programs really get people back on their feet?
Now before you beat me up for having the audacity to raise these questions, let’s look at this dispassionately. I truly believe a civilised society should support those who are less fortunate. We have a fundamental responsibility to provide a safety net for those who need assistance. The government has a moral obligation to help the neediest members of society.
However, an increasing number of Australians rely on government assistance and some believe that passive welfare is cruel. Over 42% of families receive more from the federal Government than they pay in income tax. It’s also argued that welfare saps the will to save.
Those who do not receive welfare are often criticised for being well off. Yet the “well off” pay the taxes that are re-directed by the government to pay the benefits to those in need. This paradox is satirically explained in a modernized version of Aesop’s classic tale of The Ant and The Grasshopper.
Personally, I have always subscribed to the Chinese proverb: Give a man a fish and he will eat for a day; teach a man to fish and he will eat for a lifetime. That’s why Gateway is supporting the self help efforts of the peasant farmers in Cambodia to break the cycle of poverty through micro-financing. The Cambodians do not want to be dependent on foreign aid but seek self-sufficiency.
Credit unions around the world help people get ahead and maintain their independence by encouraging old fashion habits of thrift. Without savings people can easily fall into the trap of using payday lenders and this can trigger a debt spiral. I believe that self-help is better than institutional help. I’ll have more to say about micro-financing next week.
Regards
Paul J. Thomas
Podcast is available here
Posted Monday, February 08, 2010 3 Comments Make a comment
The climate debate
When did you last conduct a science experiment? I’d like you to go home tonight and play scientist. Find a white coat, go into your kitchen, put some ice in a glass and then fill the glass to the brim with water. Watch what happens as the ice melts – nothing!
The water line in the glass does not change when the ice melts as it’s already displacing its own weight and the same holds true for floating polar ice packs. As the floating ice melts it becomes its weight of water, which is exactly the same volume as it displaces. Therefore, it’s impossible for melting Arctic ice packs to raise the sea level.
This rational explanation is not evident in some of the claims made about the consequences of anthropogenic global warming. It is this inaccuracy that prompted Professor Bjørn Lomborg to write his bestselling book: Cool It: The Skeptical Environmentalists Guide To Global Warming.
Lest there be any confusion, Lomborg categorically states that global warming is real and that we humans have undoubtedly contributed to rising temperatures. This, he says, is “beyond debate”. He challenges, however, whether the elaborate and expensive actions now being considered to stop global warming will be effective.
Lomborg argues that “extravagant CO2 cutting programs” will have little impact on the world’s temperature for hundreds of years. He views Al Gore and many prominent scientists as alarmists. Equally, Lomborg is viewed by many as a controversial figure whose claims are to be challenged. The details of attack and counter-attack are complex and I will continue to listen to both sides of the argument.
To state the blindingly obvious, I’m not a scientist and therefore it’s impossible for me to know who is right and who is wrong. The recent controversy surrounding the credibility of the UN’s Intergovernmental Panel on Climate Change (IPCC) adds to people’s uncertainty. This means that as a private citizen and the CEO of Gateway I will keep an open mind and not take extreme positions.
Of course, the debate surrounding climate change does have beneficial effects. Gore’s campaign has put global warming on the international agenda and is causing many individuals and organisations to change their ways.
At the end of the day I respect everyone’s right to have a view on this and other important issues. I’m with Bjørn Lomborg who believes we should do something about climate change and a lot more about other problems, such as hunger, which he regards as more important and urgent.
Regards
Paul J. Thomas
Podcast is available here
Posted Monday, February 01, 2010 2 Comments Make a comment
The population debate
In 1935 Prime Minister, Billy Hughes, admonished Australians to “populate or perish”. Seventy-five years later our population has risen to 22 million and is predicted to reach 35 million by 2050. Meanwhile, global population is set to hit 7 billion early in 2012 and 9.1 billion in 2050.
Every year mother earth welcomes over 80 million more babies and there is fierce debate about the pros and cons of this level of growth. As a general rule, environmental groups want little growth while economists argue for rapid growth. The population debate intersects with many others and is not a simple, one-dimensional issue.
In Australia, the former coalition government introduced a baby bonus to encourage parents to have THREE kids. As Peter Costello put it: “one for mum, one for dad and one for the country”. Australia is currently in the midst of a mini-baby boom. The ABS estimates Australia's population is bolstered by one birth every one minute and 44 seconds.
In contrast, the British based think-tank, Optimum Population Trust (OPT), is encouraging Britains to stop at TWO children. The OPT has warned of the dire consequences of human proliferation. On his appointment as a patron of the OPT, Sir David Attenborough said the growth in global population was “frightening”.
Meanwhile in China, the government introduced its ONE child policy in 1979. It is estimated that had China not introduced her policy limiting couples to one child, there would be 400 million more Chinese than there are today. The unintended consequence of this policy, however, is that China’s population is getting too old, too fast.
The real population explosion is occurring in third world countries. Population grows fastest in poorest countries as high fertility rates are strongly correlated with poverty. However, according to a recent report third world population growth does not contribute significantly to rising greenhouse gas emissions as poor countries have low emissions.