Living Outside of the Asylum

If 100% Pure New Zealand has run its course, I'd like to suggest an alternative.

New Zealand: The Outside of the Asylum

We constantly rank at or near the top of international measures of transparency, lack of corruption, economic freedom, and personal freedoms. Every day my Twitter feed brings me new stories of how absurd the rest of the world is getting.* The US Department of Labor wants to ban farm kids from working on farms. The TSA destroys personal liberty and dignity in a vast theatrical demonstration that does less to stop terrorists than it does to enable TSA agents to mule drugs across the country. The American CFTC bans event derivatives as serving no useful purpose.

Meanwhile, in New Zealand, our Ministry of Labour worries about safety standards on quad bikes but nobody would dream of banning kids from working on their parents' farms. Our airports encourage travel, only imposing idiotic security measures when they're required as condition of flying back into the Asylum. And, iPredict provides an events derivatives market that brings us ever-closer to Arrow-Debreu worlds.**

We've been backsliding a bit since 2005 or so, and especially in Christchurch this past year, but we still retain a comparative advantage in not being utterly insane. A sane regulatory environment is what has Peter Thiel investing here. We're sanely considering disallowing software patents. Our anti-piracy legislation sanely demands that rights-holders compensate ISPs for some costs in delivering infringement notices. We sanely spend very little on national defence, knowing there's pretty much nothing we could do to deter somebody who could put up sufficient blue-water navy to get here.

Instead of having activists worried about the threat to our "100% Pure" image if a place that already markets itself on mining tourism opened another mine, we could have worries about our 100% Sane image whenever we deviated from sane policy.***

The customs inspection queue at every airport could have big signs welcoming new entrants: "Welcome to the Outside of the Asylum." It would be great.

And in the international departure lounges, we could have big signs warning people that, in the Asylum, whether their pastries will attract 20% VAT will depend on whether the pastries are supplied hot or supplied cold with ready access to a microwave. Or that, inside the Asylum, wardens may relieve you of your cash on flimsy pretext if you're stopped in a forfeiture corridor. Or that, inside the Asylum, all of your web traffic may be monitored by the wardens for the inmates' protection.

If you're reading this from inside of the Asylum, you have my sympathies. I'll head out to the beach with the kids this weekend to put up some decorations to make the Asylum a bit prettier.




* Recall Wonko the Sane:

One day, after coming across a set of detailed instructions on a set of toothpicks, John Watson, distressed and fearing for the world's sanity, built The Asylum to put it in and help it get better.

The Asylum can be described as a four-walled house turned inside out.

To elaborate: the ceiling turns outwards, the furniture and carpet rests on the coast, the door one would normally believe to lead into a house leads outwards to a lawn with benches and walking paths, an area John calls "Outside the Asylum", in which is mounted the instructions for the toothpicks to discourage going back in it.

** Just this morning, New Zealand's top political blogger started tweeting claims that both the opposition Labour leader's chief press secretary and his advisor quit. As the leader's performance hasn't been awe-inspiring, this could be early warning of a coup to come. Less than an hour later iPredict launched a contract on it and asked him to put his money where his mouth is. He has, and invites those who disagree to give him some of their money. As of 1:40 Friday afternoon, an hour after contract launch, we've had 121 trades and a price of $0.6755. I've no money in that market as I have zero information on which to trade. But I love that here, outside of the Asylum, it is dead simple for a legal market to open real money contracts demanding that pundits put their money where their mouths are. Just imagine how much more sane American talking-heads shows would be if there were real money markets where these guys could be held to account. I chalk it up to a lack of demand for sanity inside the Asylum.

*** Sane policy is neither right nor left, it just requires a commitment to acknowledging tradeoffs and setting policy consistent with desired ends. More and less redistributive systems are both eminently sane in pursuit of different goals. But there are more and less sane ways of getting there. Helping poor people by giving them money is sane. Helping poor people by giving home heating rebates to the elderly is insane, as is helping poor people by cutting the GST on fresh fruit. Do we really want to risk our 100% Sane image?

Doing it right

It's great to read a story where fan-sourced content is appreciated by the original work's author instead of stomped on. I'd seen the blog for the "Game of Thrones" cookbook after one of its bloggers visited here after I'd posted on food stores in Westeros. But I hadn't read the backstory of how they moved from blog to publication. The Wall Street Journal gives the story.

The book began as the brainchild of Chelsea Monroe-Cassel and Sariann Lehrer, two Boston twenty-something housemates who are “pretty obsessed” with the Martin books and the HBO series, Ms. Monroe-Cassel said.  Last March, the friends decided to blog about making food inspired by Mr. Martin’s books.  In May, they emailed Mr. Martin to let him know about their blog, and were stunned when he wrote back, saying he would mention the project to his publishers.

For his part, Mr. Martin was interested, because though readers over the years had suggested he write a companion cookbook to his series—detailed food descriptions run throughout the books—“I can’t cook,” Mr. Martin admitted in his forward to the cookbook.

With a penchant for taking creative projects to the extreme, Ms. Cassel-Monroe said she “organized a conspiracy” for Mr. Martin’s “A Dance with Dragons” book tour last summer, delivering baskets of pork pies, and oat and lemon cakes and organizing fellow fans to deliver similar baskets to Mr. Martin as he traveled the country.

And so they went from blogging to writing the official Game of Thrones cookbook.

There's also an unofficial Game of Thrones cookbook.

If you read TechDirt too much*, it's easy to get a bit depressed about rights-holders who seem more interested in stomping on their fans than in encouraging projects that are complementary to their product. It's great that George R.R. Martin gets it.

I'm looking forward to feasting when the book ships end-May. I wonder if David Friedman will review it.

* Today's edition of how-not-to-do-it: Hasbro, whose toys are now less likely to wind up in my shopping basket.

Blaming deregulation

Phillip Longman and Lina Khan at Washington Monthly blame airline deregulation for high cost, low frequency flights between less-travelled American cities. Some cities are losing major business headquarters because of poor flight logistics. They recommend a return to airline regulation with cross-subsidization of low-volume routes. I'd be awfully surprised if that fixed things.

As best I'm aware, Air New Zealand is under no mandate to provide cheap travel between smaller New Zealand ports of call. So as a quick test, I checked the price on Air New Zealand for travel from Christchurch (population 330k or so, South Island) to Napier (population 100k or so, North Island) for a month from now. They're quoting NZ$273 ($218 US) round trip with no connections. There might be cheaper flights; I didn't check any aggregators. A shorter (about two-thirds the distance) hop within the US, Pittsburgh to DCA, for the same dates, is US$374 (including $43.21 in taxes and fees) on Orbitz with a stop in Boston. In real terms, the shorter US flight costs more and is less convenient. If I want a next-day flight, the NZ round trip is NZ$642 (US $514); Orbitz has the PIT-DCA route at US$635.

If you change things to American cities that are more comparable in size, like a routing from Toledo, Ohio to Erie PA, the New Zealand advantage gets a fair bit stronger: the next-day flight between those two is $1000 US and has two stops. Maybe there's just something weird about the airport combinations I've picked; they were random draws based on rough city size.

Point-to-point domestic travel within New Zealand has lots of small planes going between lots of small places, as well as a few higher volume routes with bigger planes. And, in general, it's a joy: rock up to the airport 20 minutes before your flight and walk straight onto your plane after waving your phone at the machine at the gate. If you have checked baggage, add another 20-30 minutes to be safe. When the weather is clear, just watching the mountains out the window is almost worth the price of the airfare.

So, if deregulation is the problem, why is flying within New Zealand relatively cheap? It isn't going to be fuel costs: I'd expect that domestic air travel attracts carbon charges via our emissions trading system. And small-country maintenance and engineering costs have to be higher: engineering works have a big fixed cost component, though I think AirNZ has outsourced some of that work.

Further, whatever subadditivity and network problems might require network regulation in the US ought to apply doubly hard in New Zealand, where Australian airlines can cherry-pick whatever higher margin NZ domestic routes they like. Cabotage is forbidden in the US, but flying is less expensive here.

If I had to point a finger at anything in the States, I'd start with airline security. You get enough stories about TSA agents making 4 year old kids cry, or stealing money from 95 year old war veterans [or allowing that the money be stolen; who knows what happened], or molesting women, and people don't want to fly. Lengthy security-induced queues at airports add a fair bit of time to your total flight cost. So more people choose to drive. That sucks in industries geared up for bigger passenger volumes that now have to spread those fixed costs across a smaller number of fliers. Worse, airline security measures increased the fixed costs of flying at the same time as they reduced the number of travellers over which those costs could be spread. New Zealand lets small airports provide low cost services.

Want cheaper flights and better service within the US? Look at airport slotting fees, cabotage rules, and security arrangements before putting in price and route controls.

How Beer Created the World

From the "If it's on the Discovery Channel, it must be true" file.



They argue we moved to agriculture in order to get beer.

My biggest complaint? They forget that beer also gave us modern hypothesis testing: Student's t-distribution wasn't given its name because it's useful in undergraduate econometrics; it's the pseudonym that was used by William Sealy Gosset when he published his statistical results. Gosset was a brewer and chemist working for Guinness who needed to know how many trials he needed to run to be confident in his results. And so we have the t-distribution.

I don't put huge confidence in each and every claim, and a lot of the innovations that were pushed by brewing likely would have come anyway for other reasons; it's implausible that somebody wouldn't have figured out refrigeration even if Pilsner had never existed. But would we be so wrong to claim that people who hate beer must also hate civilisation itself?

HT: @MitchellHall

The Price of Milk, revisted

Salient, the student newspaper at the University of Victoria of Wellington,* tries to get to the bottom of popular complaints about the price of milk.** Skimming this late at night, I missed the bits about reptilian Masonic conspiracies and only caught the nonsensical economic claims - nonsensical, but not off the scale relative to typical journalistic standards. So I was doing my usual head-shaking "none of those claims really make any sense..." bit when I came to this part:

At this stage I still had more questions than answers, but only had one more name on my list: a controversial right-wing economist, Nick Crampon. He was noted for writing in support of the failed policies of the 1980s, and just this week had blogged against raising the minimum wage. Still, I presented my findings to him for comment.

“Ummm…” He said, looking confused and uncertain, “Ummm… none of those claims really make any sense…” He then proceeded to draw a number of graphs which I found hard to follow.

Mr Cheice was not impressed.

“Well, he would say that, he’s an economist, a discredited pseudo-scientist. He even once said in his blog that Roger Douglas had done some things right. Absurd. Everyone knows that the Reptilians do nothing for the common man, only for their Lodge-mates!”

That guy Nick sounds dodgy. I'd avoid him.

* Sex Robot University

** For less satirical results, see TVHE and AntiDismal

Ethical elasticity

If Otago medical ethicists think it's abhorrent that organ donors might be compensated, why is it ethical for the University of Otago Medical School to pay for the cremation of cadavers donated for research?

From the Department of Anatomy's guidelines:

Funeral service         

Because the donor's body has to be specially embalmed very soon after death, it is not possible to hold the usual funeral service with the body present.  However, a memorial service can be held without the body being present, if the donor or the relatives wish.  This is to be arranged at the estate's expense. 

Costs paid by the Department of Anatomy

The Department pays the expenses of our special methods of embalming, and for transporting the body from the place of death to the Department in Dunedin.  The Department also pays the cost of cremating the remains.  The donor's estate will be required to register the death in the usual way.

So, what's cremation worth? SimplyCremations charges $1,495 for body removal, cremation, and return of the ashes without memorial service. Otago can return the ashes to the family, but prefers to scatter them without service at the local cemetery; the service is roughly what the budget cremation service above provides.

Recall what the University of Otago's Professor John McCall said about ethics, cash, and organs:

Where commerce has had things to do with organ donation, terrible things happen. If you make it legal it’s still open to exploitation, and I think trading organs for money is fundamentally ethically untenable. The people who are most exploited by that tend to be the poor.

There are ethical considerations in the anatomy department as well:

The most resounding of such ethical concerns, according to Professor Jones, was the appropriateness of using “unclaimed” bodies as medical cadavers. As he says, “Those [unclaimed] bodies tended to be from the poor, the disadvantaged, the outcast, and generally the most vulnerable people of society. Altruistically bequeathed bodies seemed to me to be far superior, ethically.”


Although the University of Otago now relies solely on bequeathed bodies, Professor Jones aims to get the anatomical profession worldwide to think seriously about the repercussions of using unclaimed bodies. “[Use of unclaimed bodies] opens the door to very dubious, ethically slippery circumstances. 

...

Indeed, the interests of the body’s family are granted high regard in matters concerning body bequests – as I’ve already mentioned, they have the power to veto the whole donation process. Is it really fair to give the wishes of the living such weight over the wishes of the dead? Professor Jones thinks that, “…ethically, this is an area that’s full of tension. And it’s exactly the same when it comes to donation of organs… If the family says ‘no’, then they override [the intention of the donor]. The families’ wishes and feelings are placed above those of the donor, and that’s a highly debatable issue.”

Professor Jones insists though, that it’s important to realise that the gift of a body is not just a gift from the deceased, but also a gift from the deceased’s loved ones. Once again, this brings us back to the central motivation of altruism – an attitude which Professor Jones stresses is important throughout all aspects of medicine: “The issues that we encounter here are very similar to the issues that we encounter in clinical medicine. And that the basic ethical value of altruism really was, and should be, the main driving force.”

It's fortunate for Otago's anatomy department that they are able to get enough bodies for their purposes through altruistic donation, and that their ethicists don't view a $1,495 cremation subsidy as interfering with the altruistic decision by the deceased or the deceased's family.

Would that similar consideration to organ donors be deemed ethically acceptable.

Wedding Hacker

While I cannot award a door prize for the 300,000th visitor to Offsetting, I can thank the visitor's referrer.

At The Wedding Hacker, two of my former students, who go by the monikers Mr. and Mrs. Cake, have begun chronicling their adventures in wedding optimization. They point to my old post on an alternative to wedding invitation A and B lists - assign probabilities to each guest's attendance and send out invitations such that the expected number of attendees matches venue capacity. We projected 125 expected attendees from 225 invitations; we got 124 attendees with a late cancellation due to illness. So long as you're comfortable with a bit of risk, this is much more fun than assigning friends and family to A and B lists.

Mrs. Cake provided me an excellent supply-and-demand themed cake after my Economics and Current Policy Issues course back in 2008. You can follow her adventures in baking here.

And you kids out there, remember that romance can bloom in the economics classroom.