Jan

27

An update on the regulatory reform of the not-for-profit sector

Andreas Ortmann | 2 Comments

To recall: On 10 May 2011, following preparatory steps such as a Productivity Commission report on its status (see here), and a Consultation paper based on it (see here), the government announced its intention to reform the Not-for-Profit (NfP) sector in Australia (see here for a quick overview of that sector, one of the largest service sectors in Australia and one that has outstanding importance for the social fabric of the country). I have previously blogged on these and related developments (see here and here). There is no doubt in my mind that the Gillard government ought to be lauded for its initiative. It was overdue.

Putting its money where its mouth is, the government has budgeted more than $ 50 million over four years for a range of measures which prominently include the establishment of an Australian Charities and Not-for-Profits Commission (ACNC, see here). The government also established the ACNC Implementation Taskforce (see here) which is charged, during the current start-up year, to build the foundation of the ACNC (including making many of the key personnel decisions).

The ACNC Implementation Taskforce, headed by Susan Pascoe AM (see here) and assisted by David Locke (see here), who is on secondment from the Charity Commission of England and Wales, started its work soon after Shorten’s announcement and has initiated a process now well on its way: four by-invitation-only roundtables towards the end of last year, as well as two discussion papers in November (on the functions and operations of the ACNC, see here) and December (on governance arrangements, see here), will in early February be followed by an ACNC road-show through capital cities (see here for the schedule) before the actual set-up will be finalized in March through June of this year (see here).

There are interesting questions to be asked, also for economists, about the incentive-compatible design of this new organization, as well as the whole design and implementation process itself. It is an interesting question, for example, to determine which interests are to be taken into account. That of NfPs, and/or that of their peak bodies, and/or that of those working in NfPs, and/or that of the government, and/or that of consumers’ of NFP services, or that of the country at large? It is also an interesting question how to take them into account.

The “MudMap” to be found on the ACNC site (see here) illustrates a fraction of the myriad interests that have to be negotiated in the process. My first reaction to this map was, too many cooks have to spoil the broth.  Having followed the process over the last few months (and having participated in one of the roundtables), it seems that the process is well managed and reasonably transparent although it is not clear that to me that it will lead to the optimal outcome, or even a good one. Consumers, for example, seem awfully under-represented. And from what I have observed so far, way too many lawyers and lobbyists seem to get their say too often. It will be interesting to see whether the crew that will be on board in mid-year (when the ACNC is taking over from the Implementation Taskforce) is really independent of ATO and other parties with very vested interests that currently seem to have a prominent voice.

As mentioned, the government has issued two working papers (on the functions and operations of the ACNC and on governance arrangements), with consultation deadlines set for Feb 27 for the former and January 27 (yes, coming very soon indeed ;-) ) for the latter. By and far it seems fair to say that many of insights reflected in the discussion paper are informed by the experience of the Charity Commission of England and New Wales (no surprise here, given David Locke’s prominent role); I am on record having my doubts about this model (see my comment on the Productivity Commission report here). I continue to believe that a hybrid model of compliance – the kind of things that the ACNC Implementation Taskforce is considering implementing and on top of it certification for the few hundred nationally acting not-for-profits – is a better way to go. As detailed in my comment on the Productivity Commission report, there is certainly considerable evidence on the efficacy of some such model.

In the discussion papers that the ACNC Implementation Taskforce has issued, I have read many things that sound right. Yes, it’d be wonderful to have “validated data” (p. 7, discussion paper on Implementation Design) but how do we validate them when the data apparently will be self-reported? And, yes, I like to have an “open data” facility so that researchers can develop their own analytical material (p. 18, discussion paper on Implementation Design). As a matter of fact, that kind of data base would be an effective means for researchers and press and other interested parties to smoke out those that have an insufficient understanding of the fiduciary duty that comes with public monies. It will be interesting to see what exactly this data base will contain. Whatever it is; it will be undoubtedly be self-reported data which are notoriously problematic (see here).

Nevermind that it is currently unclear to what extent this reporting will indeed reduce red tape, and reporting required by other entities. It will take a lot of persistence and negotiation for this data collection to be allowed to substitute for other such efforts. Both the Implementation Taskforce, and its successor, have their work cut out for them.

It is encouraging that the ACNC Implementation Taskforce acknowledges that there is considerable potential for various forms of corruption (e.g., false acquittal of a government grant, or its expenditure on purposes it was not intended for), fraud, mission drift, and so on (see pp. 9 – 10 dp on Governance Arrangements). But again, here, too, the devil is in the detail and it will be interesting to see what effective means the ACNC will end up having and implementing.

The ACNC Implementation Taskforce provides a useful discussion of principles that ought to guide the implementation of appropriate governance mechanisms (pp. 15 – 29). It is heartening to see that it realizes that not-for-profits have multiple stakeholders of which many are unlikely to be properly represented and that therefore “responsible individuals must exercise at least the same degree of care, diligence and skill that a prudent individual would exercise in managing the affairs of others.” (p. 16, no. 87, see also no. 89). All that is fine and dandy, as is the lengthy discussion (and as are the consultation questions) regarding conflict of interest; nevermind the question what exactly constitutes material personal interests, I have to wonder though what the consequences of violations of some such requirement are. My experience in Australia (e.g., being the Treasurer of an owners’ corporation) is that there are lots of well-intentioned laws and regulations and guidelines but they can, more often than not, be violated with impunity because consequences are either not attached to start with, or not imposed, if indeed they exist.

Overall, I fear that we might end up with a lot of new wordage and reporting requirements that will have little bite when all is said and done.

I would not mind being wrong on this one.

 

Jan

22

More on reforming health insurance in Australia

Stephen King | 3 Comments

My earlier blog post on private health insurance was followed by a flurry of activity in the media. See here and here. This had nothing to do with my post but rather meant that the Private Health  Insurance Administration Council  had released its annual report showing both an increase in revenue for private health insurance companies and that those private insurers had paid for an increased number of procedures in public hospitals. Of course, private insurance still covers far more private proceedures. As noted in the Australian:

The number of public hospital cases covered by health insurance (494,819) increased by six per cent, whereas the number of private hospital cases (2,319,400) increased only 1.5 per cent.

The PHIAC report led to the usual debate about whether or not the current private health insurance rebate should be means tested. However, to answer that question it is important to begin by thinking about what private health insurance actually does. Read more

Jan

19

Blogs and Academic Research

Joshua Gans | 1 Comment

The other day, Paul Krugman wrote about the reduced relevance of formal academic publication given the nature of web distribution and discourse. It just so happens that today marks the completion of a personal story of mine that illustrates how blog discussion can lead to published academic research. However, it also demonstrates Krugman’s main point — that the publication process is way too slow relative to the flow of ideas in the blogosphere — as well as his secondary point — that peer review is still very important.

Let’s begin the story. It starts with this post by Tyler Cowen on 28th February 2007 about carbon offsets:

Let’s consider a power supplier with market power and zero marginal cost.  Capacity suffices for ten units but five units are sold at p = 10; selling more would lower profits.  Now, using carbon offsets, bribe the fifth buyer to stay out of the market, say by walking to work rather than flying his jetpack.  Even better, just shoot him.

The company has two options.  It can stick with selling four units and raise price.  Or it could drop price a bit and pick up a fifth buyer again.  Hard to say what will happen.  Alternatively, if buyers stand along a continuum, is there a general proof one way or the other?

Rather than bribing the fifth buyer to walk, invest the “carbon offsets” money in building a nice comfy sidewalk.  In principle all buyers could walk on this new path.

It is then easy to see how the power company might lower price and expand to six units or more.  Otherwise they might lose all their customers.

A key question is the cost structure of the alternative clean technology.  Non-scalable technologies, with little potential for expansion, are the least likely to backfire and least likely to lead to more dirty power.  Scalable technologies, such as the sidewalk, are most likely to backfire and make the world dirtier.  They require a bigger competitive response on the part of the dirty power supplier.  (At least in the short run this is true, in the longer run the scalable technology might eliminate dirty power altogether.)

To which my reaction was: what??? The argument that carbon offsets would lead to more equilibrium production of dirty energy just seemed wrong. But people are wrong on the Internet all of the time. So what really annoyed me was how Cowen ended the post:

This counterintuitive conclusion is one reason why we have economic models.

No, no it isn’t. We have models to have stated assumptions and logical conclusions from those assumptions and the post I had just read was far from that. And so I posted about the ‘wrongness’ of it all. I wrote it quickly but comments in the blog cleared it up but basically, if you have alternative energy capacity, the demand for the dirty energy provider would go down and so dirty energy output would necessarily fall.

But then, a couple of days later, The Economist‘s Free Exchange blog (author unknown) got into the act and started actually trying to draw supply and demand curves to rationalise the counter-intuitive claim. Sadly, the graphs aren’t there but the argument shift to Al Gore and his offsetting plus large electricity consumption. It annoyed me again but this time I didn’t just blog about it but sat down and tried to write down a model more carefully.

Well, it turned out that once you did that some of what was on the Free Exchange blog started to look right. So a couple of days later I elaborated. Basically, people who purchased offsets because they wanted to feel less guilty would end up consuming more electricity. But if they were offsetting and those markets did as promised, net emissions would still fall. So Al Gore could have his cake (a big energy sucking house) and eat it too (with lower net emissions than he might otherwise have). But The Economist wouldn’t give up (they doubled down) and so my rants attempts to provide rational discourse continued.

Now where did all that lead? Frustrated by the blog debate, I decided to write a proper academic paper. That took a little time. In the review process, the reviewers had great suggestions and the work expanded. To follow through on them I had a student, Vivienne Groves, help work on some extensions and she did such a great job she became a co-author on the paper. The paper was accepted and today was published in the Journal of Economics and Management Strategy; almost 5 years after Tyler Cowen’s initial post. And the conclusion: everyone in the blog debate was a little right but also wrong in the blanket conclusions (including myself). Here is the abstract:

Carbon offsets allow consumers to mitigate their guilt associated with their carbon footprint. On the one hand, when offsets are purchased in an industry unrelated to the consumption activity, offsets are complements to consumption and the introduction of an offset market causes consumption to rise. On the other hand, when offsets are purchased in a related industry, consumption and offsets are substitutes and consumption falls. In general, however, net emissions decline. We find two exceptions to this rule. First, when offsets are purchased in an unrelated market, if there is no latent demand for offsets in their absence, the introduction of offsets can potentially cause a rise in net emissions when producers of “dirty” consumption goods have market power. Second, when offsets are purchased to fund green energy, emissions can rise if “dirty” producers can engage in pre-emptive strategic commitments and the price of offsets is chosen endogenously.

The first part restates the blog debate outcome that offsets can cause electricity consumption to rise but the net emissions will decline. So if voluntary offset markets work as intended, they do good. But the second part demonstrates that if you work at it you can find cases where net emissions can rise. I had set out to prove that last conclusion was never possible but in the process of writing a model and doing normal academic stuff, I proved myself wrong.

So it took some time, and if you have read to the end of this lengthy post, even longer, but an initial blog post did lead to a deeper understanding of at least this phenomenon. What this demonstrates, however, is that blogging and the usual academic functions are not substitutes but complements.

Jan

16

Reforming health insurance in Australia

Stephen King | 10 Comments

One nice thing about not being Dean is that I am getting time to catch up on some reading. So, in the ‘better late than never’ category, Agenda had an interesting set of articles about Australian health insurance in a special edition last year. It is accessible here.  Read more

Jan

12

Weight and baggage arbitrage for airline passengers

Stephen King | 5 Comments

There has been some controversy  in the last couple of days about the potential for airlines to  price discriminate on the basis of passenger weight. Weight is a major factor in airline costs and some airlines already  set different prices depending on whether or not a passenger has check-in luggage. So what about a surcharge for heavier passengers? The issue is discussed here. However it is not clear that the benefits to the airlines would outweigh the costs, as noted in the interview.

So what about an alternative approach to weight redistribution, that benefits passengers (albeit not the airlines)?

Currently  most airlines set weight limits for passenger baggage. Some passengers  have bags well under the limit (but receive no discount) while others exceed the limit and are forced to pay for excess baggage. So there is a possibility for arbitrage. Low baggage weight passengers can do a deal with those who face excess baggage charges.

Some arbitrage between low and high baggage weight passengers occurs at present, for example when travelling in groups where baggage allowances are pooled. But is there an opportunity for more sophisticated baggage arbitrage?

Perhaps an entrepreneur could set up the following. For a small fee, those passengers with excess baggage could be paired with passengers who have underweight bags. The pair would check in together, getting the benefit of a combined total baggage allowance. The ‘over weight’ passenger would save money (the fee for the service would be less than the excess baggage charge). The ‘under weight’ passenger is better off as they receive a small payment. Coordination could be via a smartphone App.

Of course, the airlines would lose out of such pooling. And a quick check of airline rules shows that it would breach some airline’s rules.

For example on Ryanair:

Pooling or sharing individual baggage allowances is not allowed.

And Aer Lingus (under ‘checked baggage – baggage allowance’):

No pooling or sharing of baggage allowances is permitted, even within a party travelling on the same booking.

Of course, this just may be the Irish. For Air Malta:

Yes, we allow the pooling of baggage, provided that passengers :

  • have presented themselves together at check-in
  • are travelling on the same flight
  • are travelling to the same final destination

So baggage arbitrage may be alive and well – at least if you travel to Malta …

 

Jan

10

Should Rod have rung Ron?

Stephen King | 5 Comments

Senator Ron Boswell has a piece in the Australian about the ACCC-Metcash case. The article is here. If the paywall blocks you, a summary is here.

Senator Boswell seems to argue that the Metcash acquisition of Franklins is pro-competitive and somehow this is reflected both in:

  1. The use of a ‘balance of probabilities’ test rather than a ‘real chance’ test (I have commented on the problems with these approaches before); and
  2. The change from a  ’dominance’ to a ‘substantial lessening of competition’ test in the relevant part of our competition laws in the early 1990s.

I will confess that I do not follow the argument. But there is an interesting aside in the title and middle of the article:

But all ACCC chairman Rod Sims had to do was to speak to me and the small business minister in the Keating government, Chris Schacht. For the cost of a lunch, he would have learnt what federal parliament meant and wanted when Section 50 of the Trade Practices Act was amended from a dominance test to a substantial lessening of competition test.

No! The chairman of the ACCC should not discuss active merger cases with members of parliament or former members. Nor should he ask them what parliament meant when it passed certain amendments.

Discussing an active merger with a member of parliament would be against the foundation of the ACCC as an independent statutory authority. It would undermine the independence of the Commission and would raise the spectre of political interference – no matter how ‘well meaning’ the conversation.

And it is the job of the courts to interpret legislation according to well known legal principles. Courts will look at the intention of parliament (e.g. looking at the first reading speech), but this is a long way from a fireside chat between those who pass the law and those who implement the law.

Jan

1

Top Posts of 2011

Joshua Gans | 2 Comments

Each year I list the top posts from this blog. Here is 2007, 2008, 2009 and 2010.

  1. Quiggin vs Stutchbury (Joshua Gans)
  2. The most important economics paper this year (Joshua Gans)
  3. Undergraduate Education and the M Model (Stephen King)
  4. The Objective of the Carbon Tax (Stephen King)
  5. English Language Requirements for Immigration (Joshua Gans)
  6. The ERA: Getting less than what you pay for (Joshua Gans)
  7. The sad state of public universities in Australia (Stephen King)
  8. Milkonomics (Stephen King)
  9. Carbon tax and budget deficit (Stephen King)
  10. Teaching morality at business school (Sam Wylie)

Of course, raw count is not the best measure of popularity (as it can also mean high Google hit rates) but nonetheless, there it is. I should also mention these past posts that continued to rate highly (and would be in this top 10):

Dec

30

Latest in urinal related research

Joshua Gans | Leave a Comment

If this blog stands for one thing, it is to bring you all the latest in urinal-related research. Here are past examples.

Here is the abstract of a new paper by Jan Heufer entitled “The Washroom Problem.”

This article analyses a game where players sequentially choose either to become insiders and pick one of finitely many locations or to remain outsiders. They will only become insiders if a minimum distance to the next player can be assured; their secondary objective is to maximise the minimal distance to other players. This is illustrated by considering the strategic behaviour of men choosing from a set of urinals in a public lavatory. However, besides very similar situations (e.g. settling of residents in a newly developed area, the selection of food patches by foraging animals, choosing seats in waiting rooms or lines in a swimming pool), the game might also relevant to the problem of placing billboards attempting to catch the attention of passers-by or similar economic situations. In the non-cooperative equilibrium, all insiders behave as if they cooperated with each other and minimised the total number of insiders. It is shown that strategic behaviour leads to an equilibrium with substantial underutilization of available locations. Increasing the number of locations tends to decrease utilization. The removal of some locations which leads to gaps can not only increase relative utilization but even absolute maximum capacity.

Urinal designers please take note.

Dec

23

Solving the asylum seeking problem

Joshua Gans | 3 Comments

In light of the renewal of this issue, here is an article I wrote for Crikey on the subject back in 2010.

What a mess asylum seeker policy appears to be. I say, appears, because there has been so little clear articulation of what it is in the context of other options that existed. To proponents, it is all about looking “tough”. To opponents, it is all about a disproportionate response with high costs in terms of moral authority. It is just hard to know what to make of it all.

What I want to do here, and I am not sure how far I’ll get in a single post, is to try and understand the policy trade-offs and also the constraints on policy choices. But I will start by being up-front about my position on immigration. Immigration is undoubtedly a good thing —   for society and the economy. I think of the freedom of the movement of people to be as desirable, if not more so, than the free movement of goods and capital. It is the ultimate in respecting that people have different views and aspirations and that their lives may be more suited to one region or culture than another. My only caveat comes from the notion that short-term crises can cause mass migrations and that it may be better for everyone concerned to manage those incidents in a coordinated fashion (although I note that the case of Israel and migration after the fall of the Soviet Union demonstrates how it can be done).

The Prime Minister’s speech to the Lowy Institute was actually quite good in positioning the debate as she currently sees it. The issues with asylum seekers are as follows. First, Australia has immigration but it is not unfettered and there are areas where migrants can fill economic gaps. Second, when people are fleeing from political oppression, they should be able to jump the queue. Third, the problem is screening for those people. Fourth, that the demand for migration to Australia is fuelling crime against would be migrants — namely, people smuggling. Fifth, some people are racist but that there is an alternative anti-migrant argument based on congestion of public infrastructure.

I want to start by dismissing the last issue as a legitimate anti-migrant concern. Here is what the PM said:

“In many faster-growing parts of Australia — like western Sydney, south-east Queensland and the growth corridors of my own electorate in Melbourne’s west, Wyndham and Melton — people would laugh if you told them population growth was intended to improve living standards. People in these communities are on the front line of our population increase and they know that bigger isn’t necessarily better.”“

Note, however, that this is an anti-population growth argument and not an anti-immigration argument. Our birth rate is twice our net migration rate (which itself is about the same is our death rate). What is responsible for strain on resources is the fact that the government has not been keeping up with needed infrastructure investing. What is more, natural population growth does not add to the tax base as quickly as migration. So if you are worried about strain on public infrastructure, it is clear where you should direct government policy.

The asylum seeker issue is, of course, not related to the population issue at all. The PM agrees with Julian Burnside that “at the current rate of arrivals it would take about 20 years to fill the MCG with boat people.” Indeed, humanitarian migration is a small fraction of total immigration. The asylum seeker issue stems from the fact that we do not have unfettered migration. Instead, we have a quota and the issue is whether asylum seekers should move up in priority. To be sure, if we want to get rid of the asylum seeker problem, the easiest way is to get rid of the quota or to increase it. We surely have to ask ourselves why that is not a seriously discussed policy option. And those politicians need to recognise that not doing so only adds to the perception that they are pandering to interests who oppose immigration on racial grounds.

But let’s take as given the present constraint on immigration. Theevidence points squarely to the fact that those asylum seekers who choose to enter Australia outside the official process (that is, on boats) are doing so because they are fleeing political oppression. The PM thankfully acknowledged this. Now that should give us pause. We are trying to work out when an application for asylum seeker is legitimate or not. And by legitimate, we mean that it is not migration for economic improvement (not that there is anything wrong with that) but against political persecution. So surely, the fact that a person or family is willing to subject themselves to the cost and danger of an ocean boat trip to Australia is surely itself a credible signal that they are fleeing something serious rather than looking for some potential economic improvement. The evidence certainly supports that notion.

From a game theoretic perspective, this leads to an interesting notion: that the people smugglers are, in a sense, providing a service. The more exploitative they are, the better is the screen they are performing. It also automatically puts us in the position of wondering whether there could be a better legitimate screening device — and certainly one over the threshold of moral acceptability — than that being provided by people smugglers. I’ll come to that in a moment but first, let’s consider the impact of interventions that have been deployed or suggested.

First, the “turn the boats around” option. This one — even if it were feasible — is basically a policy of  you use legitimate channels or don’t bother. It shares that in common with the “sink the boats” option and its variant. This is a policy intending to shut down people smuggling and it certainly raises its cost. But we have to remember that people smuggling occurred precisely because the legitimate channels were not working for some set of asylum seekers. This doesn’t change that and unless it is 100% effective, it won’t even achieve the result of stopping people smuggling.

Second, the “move the boat people into the legitimate process” option. The Pacific Solution at a bit of this to it with a “punishment” phase of what amounted to incarceration. The new East Timor notion of a regional processing centre is the latest version hopefully without the punishment phase. The idea of this policy is to say to asylum seekers: you have a choice between (a) participating in the legitimate process or (b) dealing with people smuggling but ending up in the legitimate process anyhow. Of course, like the “turn the boats around”option, we have a group of people who have already found very sizable fault with the legitimate process — enough to risk everything on a leaky boat. So unless capturing the boats is 100% effective, this option raises costs but cannot be expected to shut down people smuggling when the demand for it is at its peak.

The problem with all of the present solutions is that they give people only one option — the official process — when the entire issue arises because that option was not acceptable. Moreover, by opting for the official process, there is no other means of signaling your legitimacy to be an asylum seeker. You are pooled into a lower cost process with many others who do not have the political claim to priority and as a consequence, the risks of errors are that much greater. When you are fleeing for your life, do you really want to have a single review option?

What we are looking for is a mechanism that can perform the wisdom of Solomon. Now I don’t mean that asylum seekers should be given the option of just sending their children to Australia (i.e. dividing the family) although that might be a credible signal. But surely we need to think of ways of separating out the claims that allows a greater pool of information and signals to be sent.

So here is my proposal: we need to outsource the review function to Australian government recognised aid or philanthropic agencies. And here is how we do it. The government sets a fee per asylum seeker for entry into Australia — I am going to suggest $20,000 for the sake of argument (but I could also imagine $50,000). Enough to justify any costs to the country that could conceivably arise but more as a means of presenting an opportunity to signal. Now that fee is not something that would be paid by asylum seekers as, by definition, they don’t have that money. Instead, it is a fee that would have to be paid by their sponsoring agency. The idea is that the agency would go out and raise funds with the view of finding asylum seekers and getting them to Australia. They would raise the funds from the community and people who would want to contribute to a fund to allow people to escape political impression. My guess is that that community is substantial enough for this to work. They would then screen and sponsor asylum seekers, make their case and pay the fee.

The idea here is to provide a diversity of options. There would still exist the official process and, indeed, the agencies would be encouraged to assess claims and if they are strong with verifiable information, they can use the official process and save the money. Otherwise, if they meet a set of minimum criterion — essentially, sworn statements of validity — they can pay the fee and move around the official process. The idea of using accredited agencies is that they mission and values could be monitored so that no economic motivated immigrants can use the process. This is also critical as they will be raising charitable contributions to fund all of this.

Basically, I am suggesting that we allow Australian charities and similar organisations to enter the people smuggling business. The numbers of asylum seekers are not so high that they can’t manage it and the fee provides  a means of generating a signal as well as a way of placating political tensions in Australia. We shut people smuggling down by creating a market alternative.

Dec

22

An update on the Arab Spring and its consequences

Paul Frijters | 7 Comments

About 8 months ago, I had a look at what was then happening in the Arab world and made predictions about what was going to happen next. Time to see what really happened and update the forecast.

A minor prediction I was making was that Libya would again succumb to the resource course, making democracy impossible there, an article taken over by the Congressional Quarterly in the US (December edition). So far I am looking good for that prediction, with individual cities maintaining their own prisons and militias, as well as open fights about the division of the oil spoils.

The main prediction I was making concerned Egypt where I predicted the regime would re-constitute itself, coopting deal makers in agricultural and slum areas. I predicted that the urban youth which was driving the protests would lose out.

This is indeed exactly what has now happened: the army has put the torture chambers on full throttle in order to intimidate the urban youth. The elections have clearly shown that the largely uneducated and agricultural population has no appetite for supporting intellectuals in cities, and has gone for what they know, which is the muslim brotherhood, more radical muslims, the army, or some regional politician. The muslim brotherhood, which over the years has become so infiltrated by the regime that it was amongst the first to condemn the original protests against Mubarak, has about 40% of the preliminary vote and the reform parties have merely 15%. The radical Islamists get 25% and more regional parties make up the rest. Given that the army has already decided to simply give itself some seats in parliament if it needs them, as well as several more months of systematic torture of any opposition before parliament is even convened, one is already seeing a grand bargain between the Muslim brotherhood and the regime: a further move towards religious austerity in exchange for no challenge to the economic parasitism of the army. Egypt will become a very dull place indeed.

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