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?

Nanny ascendant

Kiwi healthists have been busy this past week.

Here's more from Doug Sellman on soft drink addiction (and other addictions):

People needed to find an activity pleasurable to want to repeat it. If they repeated it enough, it would become a habit, which could then become an addiction.

"As they're doing that there are genetic switches that change free will into a dehumanised state of drug craving and compulsion."

Christchurch-based researchers at the University of Otago developed a new list of 49 foods people should avoid and published their findings in the New Zealand Medical Journal earlier this year. The list is of the most addictive foods, Sellman said.

The foods were energy and calorie dense, high in fat and/or added sugars, prepared using a high fat cooking method such as frying or roasting, or low in essential nutrients.

They included muesli bars, ice cream, cakes, chocolate, doughnuts, jam, honey, pies and pastries. Energy drinks, cordial and fruit drinks also made the list. [EC: updated the link to one that works, emphasis added]

Sellman says those 49 foods are the most addictive. The list includes quiche, sausages, salami, and muesli. If I eat enough quiche, I could trigger genetic switches that will turn me into a dehumanised craver of quiche.* We really ought to remember how Sellman sets the bar on addiction whenever we read him about what has to be done about alcohol, tobacco, fatty foods, soft drinks, muesli, or pastries, or when he compares companies selling unhealthy food to drug dealers. Human agency disappears in his model pretty quickly.

Meanwhile, the anti-tobacco folks are pushing not just for plain packaging, discussed last week, but also for some seriously large excise tax increases. 3 News says the Ministry of Health is pushing for $100 per pack prices. And, helpfully, they've linked the OIA-released MoH advice to the Minister of Health.

The MoH document wasn't nearly as bad as I'd expected.** Instead, it looks like they've commissioned NZIER to do some work on what would actually be necessary to achieve the National-led coalition's goal of a tobacco-free New Zealand by 2025. Unsurprisingly, it'll take some pretty big policy changes: large tax increases, lots of anti-tobacco advertising, and potentially stronger alternative measures. I think at paragraph 6 they might be alluding to tobacco by prescription only when they say "At what point might it be preferable to consider alternative approaches, eg. a new regulatory regime that stringently controls tobacco as a highly toxic, hazardous substance and/or as an extremely addictive, harmful drug?"

At paragraph 54, MoH notes the potentially regressive nature of the excise increase but argues "although the tobacco tax is of itself regressive, increases in the tobacco tax are actually progressive." This might actually be true at the tax levels they're talking about. Marginal changes in tobacco excise are highly regressive; few people quit relative to the increase in tax paid by poor smokers who continue smoking. The O'Dea report said that even a 50% increase in tobacco prices would see 36,990 non-quitting Decile 1 households each spend an extra $928 per year while an estimated 4,110 quitting Decile 1 households would save $2,981; the poorest cohort then winds up spending a net extra $22 million in tobacco excise while decile 10 households spend a net extra $31 million. Excise hikes of the magnitudes being thrown around could conceivably wind up reducing total tobacco excise paid by low decile groups. But they would have other problems:

A leading academic says an extreme increase in the price of cigarettes could lead to black market dealing.

Speaking in response to a Ministry of Health discussion to raising the cost of a packet of cigarettes to $100 over the next eight years, Otago University health economics lecturer Des O'Dea said: "We all remember the days of prohibition in the United States and what that did to foster organised crime."

"While I don't think it would be anywhere near the scale of that, we could well see raids on retailers and a black market develop for cigarettes," he said.

I don't put a lot of weight on concerns that plain packaging legislation would lead to counterfeiting and smuggling; at least I'm not yet convinced of it. Is it really that hard currently to print fake labels for cigarette packets or to put anti-counterfeiting features into plain cigarette packs? But $100 packs of cigarettes have to yield a fair bit of home-grown tobacco outside of the excise regime and a fair bit of smuggling.***

Hopefully making it clear just what is needed to achieve the SmokeFree 2025 goal will have the government think again about the whole thing.


* I choose to avoid this risk, preferring the perilous whole milk and butter. I fear for Seamus though.

** I've read it twice, and I can't find a single reference to the "costs of smoking" number that MoH had been pushing a couple of years ago. Matthew Everett's the MoH contact person on the briefing document and is presumably the same Matthew Everett with whom I'd had fairly extensive discussion about the MoH's figure at the time. I'm glad to see that MoH doesn't seem to be pushing that figure any longer in its policy recommendations.

*** For both alcohol and tobacco, if anybody has ever seen estimates on the elasticity of informal supply through home production or smuggled goods with respect to excise changes, I'd love to see it. I worry that measured estimates of price elasticity of demand might overstate actual consumption decreases if there are reasonable shifts into illicit supply.

Tobacco policy experiment

New Zealand seems on course to mandate tobacco plain packaging legislation; we'll see how the Australian court challenge pans out.

There isn't any real-world evidence on the effects of cigarette plain packaging legislation, mostly because nobody's really done it yet. What we have are a bunch of surveys of smokers and non-smokers on how cigarette packaging makes them feel, whether they think different designs are more or less likely to encourage them to smoke, and the like. In other words, a bunch of hypothetical musings in low consequence environments.

If we're stuck having Tariana Turia's proposed legislation, let's do some good with it. Set it up as an experiment. Implement plain packaging in part of the country, but not elsewhere. Then see what happens. If it seems successful after a few years, implement it everywhere; if it doesn't, abandon it. Either way, publish all the results so we have a better handle on what works. So plain packaging in Christchurch but not in Dunedin, in Wellington but not in Rotorua. I'm sure there are plenty of folks who specialize in designing randomised control trials of this sort who'd be able to run things. We may need a third treatment group to avoid problems that can result when you know you're part of a treatment group as compared to the control, but other folks know more about these design issues than I do. We'd probably also need to compensate the tobacco companies for increased distribution costs over the duration of the trial - the excess of current tobacco excise revenues over demonstrable costs to the health system should provide plenty of money that could be used here.

If we apply plain packaging to the whole country at once, we have no way of knowing whether the policy does anything. A careful randomised control trial could tell us something useful.

I've reasonable "get off my lawn" opposition to the policy, but if we're going to be stuck with it, why not learn something at the same time?

Sex Robots from the Future

Academia in New Zealand's always had a bit of a public perception problem. Because credential inflation came very late to New Zealand, a large number of very talented people have been successful without having bothered to go to university. They're sceptical about whether universities add much value.

The New Zealand press yesterday gave extensive coverage to research from the University of Victoria at Wellington predicting that, by 2050, we'll have extensive robot-based sex tourism, and it'll be based in Amsterdam. Here's the original paper.

At first I'd thought the least plausible prognostication is that customers would be paying €10,000 for a robot brothel experience, but the fault was in the reporting rather than in the original article. The press reported €10,000 as the typical price paid by tourists: wholly implausible absent massive inflation or really pernicious turns in patent law. But the original article says it's the price at the "top" club for business travellers. It's not nuts to think the Dominique Strauss-Kahn or Max Mosley of the future would pay those kinds of prices. Otherwise, the price seemed more likely to be on par with the cost of buying a robot, not the cost of renting one.

They reckon dangerous STDs are going to be a big push for robot-sex. I'd expect cheap personal tricorders would let customers and workers sort out really quickly whether STDs are an issue. The only thing that would stop this would be masking agents deliberately taken to avoid STD detection, but it's also pretty plausible that there would be reasonably strong criminal penalties attached to using masking agents.   And, it would then just be an arms-race with the tricorders. Once we've worked out tricorders, we probably wind up with an STD segregation equilibrium in dating and sex markets. I can buy improved services as a demand-based reason for the shift; I'd be very surprised if it were STD worries.

I should probably leave it there.

SkyCity

I talked about the SkyCity - Convention Centre deal on The Panel on Monday. I come in around the 20 minute mark.

John Key's offered SkyCity a deal where they get permission to put in more gambling machines in exchange for SkyCity building a new convention centre for Auckland. Key indicated in the press that a government-funded one here could never meet its capital costs, so was looking for options that didn't cost the government anything.

On the plus side, it's unlikely this arrangement yields another Claudelands. SkyCity's on the hook for costs. They've reasonable incentive to keep things running properly: the Centre would complement their existing operations. The more conventioneers, the more potential customers at the nearby casino.

But it isn't true that the deal doesn't cost the government anything. If they were instead to hold an auction for the right to put a bunch of new pokie machines, people would bid for those rights. The value of the winning bid in that auction is the cost of the Convention Centre to the government. We would expect, though, that the amount paid in that kind of auction is less than the value of the concession to SkyCity; those rights, bundled with Convention Centre provision, are less likely to be eroded by toughened regulations on pokie machines from some future government than would be rights otherwise auctioned off. And, if I owned a pokie machine concession in a bar in South Auckland, I'd be awfully worried that the deal for SkyCity would come at the expense of an increased likelihood my pokie licences wouldn't be renewed sometime down the track; those are the folks most likely to bear the incidence of the concession if there's any holding to a sinking lid policy on overall pokie numbers. So it costs the government nothing in roughly the same way that the old French monarchs got money for free by selling state monopoly concessions. They're very likely getting a better deal from SkyCity than they'd get if they just put it up to auction, but that doesn't mean it's costless.

I'm no particular fan of "economic effects" numbers being used in selling the deal. The $90 million estimated "boost" to the economy is likely just estimated spending figures from conventioneers; spending isn't the same thing as benefits. And while the literature on the economic effects of convention centres is not as well developed as the literature on stadiums, I'd be pretty surprised if they were all that beneficial. Even the former head of the Tourism Auckland says convention centres typically lose money.

Bottom line: I do not believe the "broader benefits" case for building convention centres. Nothing stops hotels near a proposed centre from getting into sponsorship arrangements where they pay for listings in standard convention centre marketing materials to help fund the centre; I find it more likely that the benefits are too small to make it worthwhile than that public goods problems, easily resolved by assurance contract, stop things. But if we're going to have a new convention centre, this might be the least bad way of limiting fiscal risks. That's not a strong endorsement, because I don't particularly like the potential regulatory takings from the local pubs currently hosting pokies if the new machines are part of the sinking lid policy, and because there's a whiff of cronyism to the whole thing. But honestly, who else would be able to pull off the casino-convention centre combination in Auckland?

Update: See also Sam Richardson and Bill Kaye-Blake. Bill likes the deal less than I do; he worries about gambling being regressive taxation. I'd expect that it won't be as regressive as Bill thinks, mostly because of the likely closure of other machines in pubs and the consequent shifting of gambling clientele towards international casino visitors. Sam wonders about construction and other employment effects.

PBRF games

Martin Lally warned about contracting shenanigans meant to game New Zealand's academic research ranking exercise. Recall that while keeping "R" graded staff has no direct effect on a University's funding, the number of R staff falling into the denominator of the Average Quality Score will affect league tables; consequently, Universities faced no downside cost to ensuring that likely Rs are off the books on the census date.

The Tertiary Education Commission seems to have agreed with his critique.

People are keeping Rs off the books:

40 As part of the preparations for the 2012 Quality Evaluation, the TEC has contracted KPMG to undertake an audit of TEOs. The first stage of the audit process has indicated that there appears to be differences in Human Resource practices across TEOs. In particular, differences in the way in which TEOs are applying the staff eligibility criteria in relation to staff whose EPs are not likely to meet the standard for a funded Quality Category. 

41 The extent of these differences indicates that there is potential for these practices to affect the credibility of the published results of the 2012 Quality Evaluation, including the way in which TEOs are ranked (at both the overall organisational level, and by subject areas), and for the reporting of the relative quality of research by panel, subject area, and nominated academic unit generally.

42 In addition, the TEC has received information from TEOs which indicates that the overall number of PBRF-eligible staff whose EPs are unlikely to meet the standards for a funded Quality Category has declined significantly between 2006 and 2012.

Dave Guerin's excellent ED-insider [subscription, sorry; blog version here] notes some of the fun highlighted in the KPMG report: Otago deems a higher proportion of their staff as being PBRF-eligible than does Canterbury, but then manages to exclude them as being "under strict supervision".

TEC's preferred option is to drop Rs from the denominator for AQS calculation. This seems the most obvious tidy solution. They say universities would then have no incentive to game contracts. I wonder whether that's true. Where universities previously had strong incentive to keep Rs off the books, they'll now have some incentive to keep Cs off the books as every C necessarily brings down the average.

Incentives to game on Cs have to be weaker than gaming on Rs because C-ranked researchers still do bring in some incremental funding to the university.

We'd expect then that universities will crank through an optimization balancing the marginal increase in tuition income (foreign and domestic, with different expected elasticities) with a higher AQS against the marginal decrease in research income from dropping a C. We'd also expect that contractual shenanigans with more research-active staff are more expensive than those for less research-active staff, so total shenanigans ought to go down even in the absence of an income trade-off.

It's hard to imagine a fix that will be immune to gaming. The TEC-proposed one will improve things, but there will still be incentives to game.

Meanwhile, in Economics at Canterbury, we're likely to be punished for working harder to get our two teaching specialists research active; their becoming research active will now wind up hurting our AQS.  Our own fault for not responding to incentives as we should have and getting them officially off the books on census date.

USTR on NZ

The USTR has words of praise, and some minor critique, of New Zealand.* I read some of their critique also as praise.

Here's some praise:

Tariff rates in New Zealand are generally low as a result of several rounds of unilateral tariff cuts that began in the mid-1980s.  At 2.1 percent, New Zealand has one of the lowest average most favored nation (MFN) applied tariff rates among industrialized countries.  The average applied MFN tariff rate was 1.5 percent for agricultural products in 2009 and 2.2 percent for industrial goods.  In 2010, approximately 95 percent of all imports to New Zealand (by value) entered duty free.  Approximately 47.5 percent of New Zealand's MFN tariff lines are bound at zero duty rates, and 63.1 percent of lines are applied at zero.  The New Zealand government has stated that import tariffs will not be reviewed until 2013 and will remain at their current levels until at least 2015.

But they've a few critiques. They rightly note that our investment screening regime is a trade barrier to foreign investment in land; they're right. It's become politically arbitrary and needs to be fixed.

But I disagree rather strongly with two other assessments. They reckon it a bad thing that the draft patent reform bill would ban software patents; I don't. But I also don't expect that part of the bill to survive US pressure via TPP.

They also don't like that we let ISPs charge rights-holders, US or otherwise, NZ$25 for issuing an infringement notice. If each infringer really causes substantial damages, as rights-holders like to claim, the $25 shouldn't be an issue. But USTR says "The cost has deterred some rights holders from using the system."

USTR needs to think hard about optimal enforcement; it would be surprising if it were worthwhile to pursue enforcement action - which does impose real costs on both the ISP and the accused - where the damaged party doesn't reckon it worth $25. Heck, our small claims court charges $36.30 as its smallest possible fee for dispute resolution.

You need to pay the following fee to the Tribunal when you lodge your claim from 1 July 2011.
If the total amount sought under the claim is less than $1,000	$36.30
If the total amount sought under the claim is $1,000 or more but less than $5,000	$60.40
If the total amount sought under the claim is $5,000 or more	$120.80

If $25 deters US copyright giants from pursuing claims against alleged Kiwi infringers, it's amazing that anybody here is able to access our small claims system. Especially if infringements cost rights-holders $150k.

*HT: @PiratePartyNZ

Doing well by doing good

Kiwi enviropreneurs make the Property & Environment Research Center's spring newsletter. Here's Linda Platt on the market for possum fur:

The possums, marsupials unrelated to the American opossum, have no natural enemies in New Zealand. Even the trees are at their mercy as they munch them to death, while in their native Australia many trees have spines, prickles, and poisonous leaves that keep the possums on the ground. Serendipitously, several businesses are profiting from possum products and at the same time reducing the possum population.

The pelts have always been used in a range of garments for cooler climates, but more recently the fur has been combined with merino wool and silk to make an ultra-soft, lightweight material that has attracted the attention of top fashion outlets. Untouched World, a New Zealand company and the first fashion business to be recognized by the United Nations for sustainability, is selling sweaters, hats, gloves, and socks at their stores and online.

The supple skin of the possum also has been discovered by sports enthusiasts for both golf and rugby. Fila, one of the world’s largest sportswear manufacturing companies, is selling gloves made from possum skin and rave reviews have come from Singapore, Korea, and the United States, among others. As the demand goes up, the number of possums goes down; trappers are back in the forests because providing possum pelts can also provide a good living.

Exterminating possums is usually done with traps or poison. Although considered pests and a danger to the environment, many people, including potential customers, are uncomfortable with these methods. To solve that problem, the company Goodnature, founded by three industrial design graduates, has developed a humane and non-toxic method of killing possums. Their device delivers a fatal blow to the head by a CO² powered piston.

One of my first fun surprises on moving to New Zealand was finding all of the possum fur products in the tourist shops with great big stickers promoting the environmental benefits of buying possum fur. You can even get possum fur belly-button warmers.

The fur trade is unlikely to knock possums back to the very low populations DoC would like; use of 1080 poison in possum control remains fairly controversial. But it is nice to see folks doing well by doing good - in this case, killing possums.

Parental leave and benefits

Put yourself in the place of an employer faced with two excellent and similarly qualified candidates for a position. You'd be very happy with either. But one, a young women, comes with maternity leave risk. If she decides to have a child, you will bear costs of worsening productivity over the course of the pregnancy despite her best efforts, costs of finding a temp worker to cover her position while she is on maternity leave, and the uncertainty of whether she will indeed return when leave concludes. She may also wish to move to flexible time arrangements on return. The other, male, doesn't. You're running a small business where losing a skilled worker for a short period is a very real burden, even if somebody else is paying her salary while she's on the government's paid parental leave scheme. Whom do you choose?

Cactus Kate makes the case:

I will never apologise for being honest enough to say that I don't like employing women of child bearing age especially if they have just got married or are loved up with a boyfriend because you know the next step. Babies. It is bad enough for a small business losing a staffer for 12 (as it is in HK at 4/5th pay) or 14 weeks, try employment laws where you can't sack a woman while she is pregnant (that's nine months of secure employment) even if she is hopeless at her job or not turning up, try the woman who at 11 weeks and a few days of investment and patience waiting for her to return to work, then hands you their bloody resignation. Try co-workers having to pick up the slack while she is away as you can't afford a temp.

In many cases they cope fine which means on return to the workforce it's pretty clear the new mothers position can be made redundant anyhow. This is the reality of parental leave. It indicates pretty quickly to an employer just how crucial a woman is or isn't to an operation. In many ways it's a rehearsal for redundancy.

We can wish that employers would willingly take on these costs. And many who do find that they wind up with a very loyal and committed employee if they do. But it is a risk. And it's a risk that, at least in data from a very nicely designed field experiment in France, has employers shy away from employing women with high maternity risk. Lower employment isn't the only way that the policy's costs can be shifted; Jon Gruber finds that costs of mandated maternity benefits through US employer-provided health insurance tends to be borne through lower wages for women [HT: @KevinMilligan]. And it's a pretty plausible candidate explanation for the lesbian pay gap; my excellent honours student, Hayden Skilling, is investigating this as his honours project this year.

New Zealand currently requires employers to hold a woman's position open for a year if she takes maternity; the government provides paid leave scaled to the woman's salary (and subject to a relatively low cap) for 14 weeks. The Labour Party proposes extending this to 26 weeks; the bill has been drawn from the ballot. It is likely to pass first reading, but likely to be killed afterwards because of the budgetary implications.

Were it implemented, I'd expect that the policy will increase the amount of time that women spend on maternity leave. In Canada, Baker and Milligan found that a doubling of the compensated maternity leave entitlement significantly increased the amount of time women spent on maternity leave.* Employers will bear costs despite that the paid leave entitlement is covered by IRD: it will be harder for employers to cover leave internally and so more of them will have to find replacements willing to work on temporary contracts. A longer time outside of the workplace means skills have longer to erode. Women are also more likely to want to return on part-time or flex-time arrangements after longer periods outside of the workforce; Schott finds that the American Family and Medical Leave Act increased women's likelihood of returning to work part-time rather than full-time.** Finally, we may expect increased labour market participation among women anticipating maternity leave, but also increased employer reluctance to take on women of higher maternity risk except at lower wages. But, I don't have a great sense of the incremental cost above existing leave entitlements; what's true at the margin might not cash out as much in the aggregate.

If Labour's economics were just a bit stronger, they'd be trying to couple their policy with some kind of compensation mechanism for employers whose workers take maternity leave rather than embedding the lump of labour fallacy into the bill's explanatory note:

Extending paid parental leave from the current entitlement of 14 weeks to 26 weeks would support families and also create jobs across the economy as employers engage staff to replace those on paid parental leave. As the majority of paid parental leave is uplifted by women, it has the added benefit of creating jobs in areas of the economy where women work, while supporting families and the well-being of children.

Why not advocate for a maximum 35-hour work-week to encourage employers to hire more temp workers to cover the work not done?

* While the Canadian change increased breastfeeding rates, one of the NZ bill's other stated purposes, it had no effect on child health outcomes.

** While Schott finds increased workplace flexibility encourages post-natal female employment, we might reasonably worry that increased likelihood of moving to part-time or flex-time arrangements reduces an employer's willingness to invest in an employee's human capital or to take on the worker in the first place except at lower wages.

Note: updated a couple of times for clarity and to add links to a couple of helpful tweets from Kevin Milligan and Frances Woolley.

Update 2: @askessler recommends this IZA piece showing no long term benefits to kids from paid maternity leave extensions in Germany. 

For a more efficient front line

New Zealand's headed for a pretty austere budget; the government's looking for front-line efficiencies:

The Government's "general strategy" remained trying to move money on to front line services, but English signalled pressure would go on for savings there too.

"Where the front line is inefficient, of course, it will have to be sorted out," he said. 

"We're not offering any guarantees ... Just by way of example, if you can give the police mobile technology, then you could get more front line hours with the same number of police - so it's more policing, safer public and we cut costs."

If we're really looking for front-line police efficiency, allow police to stop worrying about marijuana and instead focus on violent crime. Reallocate resources currently devoted to big grow op busts and put them into areas where social costs are real and substantial.

The Law Commission reported that cannabis enforcement cost the police about $116 million in 2005/06; it would be surprising if current figures were lower. Back of the envelope, but if that were shifted over into violent crime, we might expect some pretty serious savings. Treasury estimated a 1% decrease in violent crime saves $25 million in social costs; if the elasticity of crime with respect to police expenditures follows American estimates, which I'd take as a lower bound given that they're further out on a likely concave production function, we'd reduce violent crime by about 11% and social costs of violent crime by about $250 million.

Even better, legalize marijuana but regulate it similarly to alcohol and tobacco with restrictions on age of purchase and on permissible sales venues. Set an excise tax to keep the selling price to consumers about where it is now if demand-reduction is government policy. It's not simple to figure out what that tax should be because it's not obvious what production efficiencies could be achieved in a legalized production environment. But back-of-the-envelope numbers suggest excise revenues a bit over $150m (with a very wide confidence interval; I'd be very surprised if it came in at less than $100 million or at more than $300 million). If production costs in a legal environment were $30-$50 per ounce, and if we assume distribution costs roughly on par with production costs, then a legal market would deliver product to consumers at about $100 per ounce; if weed currently sells at about $300 per ounce, then excise and GST* could total about $200 per ounce. A 2001 estimate put the black market in marijuana at around $190 million in 2001; if marijuana follows the CPI, that's about 830,000 ounces. At $200/oz in tax, that's about $165m.

Recall that drug use in Portugal has gone down, not up, since they abandoned prohibition.** In that case, tax revenues are less than I'm here ballparking.

* Normally we'd ignore the GST revenues collected as they'd just be a shift in spending from other GST-subject goods. But moving to a legal market would bring in net new GST revenues. I discussed some related issues here.

** They have not gone to full legalization; read the Cato summary.

Emissions and used cars

The National Business Review's print edition takes on the effects of the recent import restrictions on Japanese used cars.

I'm agnostic on job losses or the magnitude of any price hike consequent to the regulation change; I've done no work on it. I'd expect employment effects to be transitory rather than permanent: in a few years, the 2005 bar will become non-binding; even if it didn't, we'd get a lull in used car sales only until people get into the new and longer car replacement cycle, at which point it would level back up a bit.

I'd count the primary costs of the legislation as being the burden on consumers who are forced away from what would have been their optimal choice rather than employment effects. I doubt we'll see any environmental benefit from the regulatory change to offset this loss; we could even see a worsening in quality. As I wrote last year:

Green MP Gareth Hughes lauds the changes, saying it will help save lives by reducing emissions. I'm really not sure that's the case. It would be surprising if the price of used cars did not increase consequent to the change - knocking out a substantial proportion of the general supply flow does that. While the imports are a small fraction of the overall fleet, they're a large proportion of vehicles entering the fleet; prices are set on that margin. If prices go up, folks will hold onto their cars for longer rather than replacing them. Some will certainly shift into buying a 2005 or newer import, but others will hang onto their older car for longer. The net effect on particulate emissions is then at best ambiguous.

The NBR cites me (accurately, on emailed query, though they're the one who decided I'm an expert):

Canterbury University economist Eric Crampton, an expert on public policy who has also blogged on car imports, said it was basic economics that when supplies of something were restricted, the price would increase.

He too believes the government might suffer from the law of unintended consequences if this environmental policy meant drivers kept their dirtier cars for longer. Such unintended consequences were "rife in environmental policy," Dr Crampton said.

But, one of the copyeditors puts my name on a boldfaced quote that isn't mine; the body of the text attributes it to "Dog and Lemon Guide" editor Clive Matthew-Wilson, who says

"Ten per cent of New Zealand cars have no WOF or registration and making it harder for people to upgrade theri vehicles will lead to more unsafe cars and cars belching out pollution, which is the opposite to what the legislation was intended to achieve."

I don't particularly disagree, though I have no knowledge of compliance rates on WOF or on registration, and while I'd bet on that pollution goes up a bit with the rule change, I wouldn't say it's necessarily the case. It's just a likely consequence.

Gerry Brownlee cites Ministry of Transport data showing no correlation between old car scrap rates and vehicle imports as saying something useful about the likely effects of import restrictions. The same line was run by a commenter complaining of my prior analysis.

There are a few problems with the lines MoT fed to Brownlee.

First, I'm not sure that we've ever before put in a policy barring the import of vehicles that previously made up such a large proportion of the incoming used car cohort; whatever correlations between scrap rates and import rates may have held previously might not be reliable this far out of sample. The 2010 data shows we then imported a bit over 76,000 used cars manufactured 2004 or earlier and almost 92,000 new and used vehicles made since 2005. The 2011 stats aren't yet out, but if we just advance the calendar by two years on the 2010 data, we'd get 47,000 used imports manufactured 2004 or earlier and 120,000 made since 2005; about 28% of what we might have ballparked as an incoming cohort for this year are now barred entry.

Second, so long as some people are moving from single car to two-car households, we could easily get a decrease in the average fleet age weighted by driven kilometres even if there's no correlation with scrap rates; when you get a relatively newer car, your relatively older car goes into "second vehicle" use: almost-scrap. The scrap rates don't tell us much about this if we're not in steady state where every family wanting two cars has two cars.

Finally, the scrap rate is less instructive than changes in the curvature of the scrap-age profile. In 2010, used NZ vehicles hit peak scrap rates for model years 1986-1987; 18% of vehicles of those model years that were registered at the start of the year were no longer in the fleet at the end of the year. If everything's working properly, that peak scrap age should be moving forward in time a bit faster than calendar years advance if we're getting relatively richer. It'll be interesting to see what the 2012 data winds up showing.

Prior posts on the used car regs:

- Average fleet age increasing
- Proportion of vehicle imports that would be barred under the 2005 limit
- A lengthy discussion through the comments thread on this one with a fan of the regulations.

Overcome your Repugnance

John McCall is one of those anointed to decide whether things are ethical; the National Ethics Advisory Council, on which he sits, advises the Minister of Health on the ethical implications of things.

Here's what he told Critic, the University of Otago student newspaper, about organ transplants.

First, commenting on LifeSharers:

McCall strongly opposes the idea behind LifeSharers, describing it as “absolutely abhorrent. We don’t discriminate on what treatment is offered to people based on their beliefs or what they may or may not have been willing to do under different circumstances.”

But he'd be willing to discriminate against those donors who prefer that their organs go to organ donors. He finds organ markets even worse:

“I find the idea of organ markets abhorrent. 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.”

Here are some of the terrible, abhorrent things that happen when we trade organs for money or allow that priority access to organs be given to those willing to be organ donors. The first link takes you to Cato's study of Iran's system in which donors are compensated; the second tells you about recent Israeli successes in prioritizing willing donors for access to organs.

Do read the whole Critic piece. And the extensive prior thread here.

I wouldn't much care if he found LifeSharers repugnant if it were just his personal opinion; I find it repugnant that some folks are willing to accept donor organs but refuse to be donors themselves, but that's a value judgment. But it puzzles me a bit what set of ethics gets used to decide that his ethics should trump mine. His abhorrence gets to set policy. Lovely.

Repugnance is an awful basis for policy.

Wishing for the New Zealand tax code

It's easy to forget just how excellent the NZ tax system is relative to those in other countries. But we are the envy of the world. Two datapoints for this week:

Tim Harford wishes UK VAT reform would move to a system like New Zealand's, where everything attracts GST: we tax food. After listing the absurdities of the UK system, where Jaffa Cakes are tax advantaged over "chocolate digestives" and whether a sausage roll is taxed depends on whether it's been heated. Harford asks what should be done, then answers his own question:

The Mirrlees Review is an attempt to figure out what the UK tax system would look like in an ideal world, and I looked it up. The authors reckon that you could levy a uniform rate of VAT on almost everything, raise benefits, pensions and tax credits, increase the income tax threshold by £1,000, cut the basic rate of tax to 18 per cent and the higher rate to 38.5 per cent, and leave pretty much everyone better off – the government would have more revenue and citizens would be more likely to buy what they really wanted rather than what the tax system nudged them to buy.

Harford wants the VAT to apply to everything, not just to sausage rolls.

Other than the tax-free threshold, that sounds an awful lot like the New Zealand system, where GST applies comprehensively and where, in 2010, the National government reduced tax rates across the board while increasing the GST.

Item the second: Frances Woolley makes the case for taxing food in Canada. The only place where I'd quibble with Frances's analysis is here, and it's only a minor quibble. Frances writes:

When the case for taxing basic groceries is presented in these simple terms, the assumptions underlying the argument become apparent. The equation of choice with happiness rules out any paternalist arguments for exempting basic groceries from taxation. For example, at present soft drinks are subject to sales tax, but milk is not. A tax on milk would be expected to decrease milk consumption and increase soft drink consumption, all else being equal. Those who would argue for taxing basic groceries would respond in one of two ways: first, that we should respect people's choices whatever they are; second, so many of the basic goods exempted from sales tax at present are teeth rotting, IQ-lowering sugary junk anyways that the paternalist argument has little force.

All of this is true. But the current equilibrium also involves a government-enforced dairy cartel that forces up the price of milk relative to soft drinks. Abolish the dairy cartel while imposing GST equally across all food items and the price of milk would drop, not rise. Especially for a GST as low as Canada's, and a dairy cartel as noxious as Canada's.

Again, Frances wishes that Canada had a system that looked a lot more like New Zealand's.

It would be awfully nice if Labour and the Greens here stopped trying to score populist points by hacking on one of the world's best consumption taxes. Labour, in office, recognized the GST's advantages and refrained from wrecking it for a decade. Too much populist nonsense in Opposition might force their hand in a future government.

Do visit the GST tag for Seamus's excellent prior posts.

On the value of Wikipedia

Mark Twain tells the story of a New Zealand Professor coming to call at Yale. Whether it's true or manufactured - who knows.* But it could be true.

Yale etiquette, says Twain's correspondent, required that foreign visitors be flattered by laudatory comments about their country. But nobody at Yale knew anything about New Zealand other than that it was somewhere near Australia, perhaps connected by a bridge. The visit was very short notice, so the whole of Yale wound up spending the day trying to figure out where New Zealand was and some nice things to say about it.

According to the story, highlighted below, a reasonable part of a major academic institution shut itself down for a good part of the day trying to figure out anything about New Zealand - searching the libraries for anything relevant - while their wives kept the visitor busy and distracted.

Today, we can have a 5 minute flip through Wikipedia before the seminar speaker shows up.

Here's Twain's account of the story recounted him by another, HT: @LyndonHood.

"Last autumn I was at work one morning at home, when a card came up - the card of a stranger. Under the name was printed a line which showed that this visitor was Professor of Theological Engineering in Wellington University, New Zealand. I was troubled - troubled, I mean, by the shortness of the notice. College etiquette required that he be at once invited to dinner by some member of the Faculty - invited to dine on that day - not, put off till a subsequent day. I did not quite know what to do. College etiquette requires, in the case of a foreign guest, that the dinner-talk shall begin with complimentary references to his country, its great men, its services to civilization, its seats of learning, and things like that; and of course the host is responsible, and must either begin this talk himself or see that it is done by some one else. I was in great difficulty; and the more I searched my memory, the more my trouble grew. I found that I knew nothing about New Zealand. I thought I knew where it was, and that was all. I had an impression that it was close to Australia, or Asia, or somewhere, and that one went over to it on a bridge. This might turn out to be incorrect; and even if correct, it would not furnish matter enough for the purpose at the dinner, and I should expose my College to shame before my guest; he would see that I, a member of the Faculty of the first University in America, was wholly ignorant of his country, and he would go away and tell this, and laugh at it. The thought of it made my face burn.

[Nobody at Yale knew anything but that New Zealand was close to Australia...]

"...Lawson must give the dinner. The Faculty must be notified by telephone to prepare. We must all get to work diligently, and at the end of eight hours and a half we must come to dinner acquainted with New Zealand; at least well enough informed to appear without discredit before this native. To seem properly intelligent we should have to know about New Zealand's population, and politics, and form of government, and commerce, and taxes, and products, and ancient history, and modern history, and varieties of religion, and nature of the laws, and their codification, and amount of revenue, and whence drawn, and methods of collection, and percentage of loss, and character of climate, and - well, a lot of things like that; we must suck the maps and cyclopedias dry. And while we posted up in this way, the Faculty's wives must flock over, one after the other, in a studiedly casual way, and help my wife keep the New Zealander quiet, and not let him get out and come interfering with our studies. The scheme worked admirably; but it stopped business, stopped it entirely.

"It is in the official log-book of Yale, to be read and wondered at by future generations - the account of the Great Blank Day - the memorable Blank Day - the day wherein the wheels of culture were stopped, a Sunday silence prevailed all about, and the whole University stood still while the Faculty read-up and qualified itself to sit at meat, "without shame, in the presence of the Professor of Theological Engineering from New Zealand:

"When we assembled at the dinner we were miserably tired and worn - but we were posted. Yes, it is fair to claim that. In fact, erudition is a pale name for it. New Zealand was the only subject; and it was just beautiful to hear us ripple it out. And with such an air of unembarrassed ease, and unostentatious familiarity with detail, and trained and seasoned mastery of the subject-and oh, the grace and fluency of it!

"Well, finally somebody happened to notice that the guest was looking dazed, and wasn't saying anything. So they stirred him up, of course. Then that man came out with a good, honest, eloquent compliment that made the Faculty blush. He said be was not worthy to sit in the company of men like these; that he had been silent from admiration; that he had been silent from another cause also - silent from shame - silent from ignorance! 'For,' said he, 'I, who have lived eighteen years in New Zealand and have served five in a professorship, and ought to know much about that country, perceive, now, that I know almost nothing about it. I say it with shame, that I have learned fifty times, yes, a hundred times more about New Zealand in these two hours at this table than I ever knew before in all the eighteen years put together. I was silent because I could not help myself. What I knew about taxes, and policies, and laws, and revenue, and products, and history, and all that multitude of things, was but general, and ordinary, and vague-unscientific, in a word - and it would have been insanity to expose it here to the searching glare of your amazingly accurate and all-comprehensive knowledge of those matters, gentlemen. I beg you to let me sit silent - as becomes me. But do not change the subject; I can at least follow you, in this one; whereas if you change to one which shall call out the full strength of your mighty erudition, I shall be as one lost. If you know all this about a remote little inconsequent patch like New Zealand, ah, what wouldn't you know about any other Subject!'"

Twain's account of his trip to Christchurch also merits reading.


* At least part of the story seems wrong: The university at Wellington was called Victoria University College - a college of the University of New Zealand. I'm not sure that there ever was a Wellington University. And "Theological Engineering" seems dubious. And the book is known to have a couple of fictional tales included among the non-fiction. How do I know all this? Wikipedia. Except for the dubiousness of "Theological Engineering". [Update: Dave Guerin notes it was indeed called Wellington University.]

Antipodean Dreaming

New Zealand seems flavour of the month in the States. There's a new book out making the case that New Zealand's living the dream of an egalitarian society based on fairness; it's been getting a fair bit of press. I'm a third of the way through and will blog a proper review when done.*

Thomas Friedman visited the Antipodes this week; he files this report.  

I agree with Friedman that the relative absence of a strong religious right makes politics relatively more sane. Religious movements of the more politically active sort tend to be based around Pacific island immigrant communities and lean Labour; a strong secularist bent within the upper Labour echelons keeps things in line. And so Labour legalized prostitution and created gay marriage via civil unions.** Atheists outnumber any single Christian denomination in New Zealand; I'd be surprised to see any Labour or National leader making a point of being seen making any religious observances other than the annual Ratana Church pilgrimage, which to this migrant has always seemed more a recognition of the mana of the Ratana movement than a demonstration of faith.

But I only wish the U.S. Democrats were sufficiently sane that this line of Friedman's could be true:

In New Zealand and Australia, you could almost fit their entire political spectrum — from conservatives to liberals — inside the U.S. Democratic Party.

Here is a short list of current policy, broadly agreed upon in New Zealand politics (as best I can tell), that I cannot imagine fitting inside the U.S. Democratic Party. Just the things that come to me in thinking about it for fifteen minutes; I'm sure there are many many more.

• A relatively flat income tax system topping out at 33% (Labour would prefer 38 or 39).
• No capital gains tax (Labour now claims to favour one, but did not implement one in their last decade in power).
• A highish (15%) and very very clean VAT in the form of GST. Zero politically-motivated exemptions. Books are taxed. Kid's clothes are taxed. Even your city council property taxes include GST: council provides you a service, and that service attracts GST so as not to introduce other distortions in the choice between Council and private provision of services.
• Same thing in income taxes: they're generally very very clean. Most salary and wage earners don't have to file any taxes at all. It's just withheld at source. 
• Free trade in agriculture without subsidy. Imagine Obama, today, abolishing the entire edifice of U.S. agricultural protectionism. Labour did it in New Zealand in the 1980s and there's no going back.
• Neither National nor Labour have any interest in ramping up military spending.
• A crazy woman tried hijacking one of our planes a couple of years ago. The country said meh, as did the politicians. I am flying to Auckland later today. I will arrive at the airport a half hour before boarding. If the plane is large, I will walk through a metal detector; otherwise, I will walk directly to the gate. When I get to the gate, I will wave my phone at the sensor. And then I will walk on board. 
• New Zealand's abortion policy is de facto liberal but de jure restrictive. Nominally, women need a medical reason for having an abortion. That makes the social conservatives happy. Actually, depression caused by not wanting to have a baby is a medical reason for having an abortion. That makes women who want abortions happy. In America, identity politics would prevent this happy equilibrium. 
• Parliament opens with a prayer. I chalk this up to status quo bias. Knocking it out would slap the religious people around over something pretty trivial. Folks here just seem a lot more willing to give the cheap tokens of respect that keep everything running over smoothly.
• Kiwis largely traded away the right to sue for damages in exchange for a government accident insurance fund: ACC. ACC has loads of problems. But, in second best worlds, NZ's solution seems far better.  (National's potentially considering privatizing ACC but not wrecking tort.)

I'm also a bit skeptical about Friedman's claims that Antipodean sensibility comes down to compulsory voting systems. The story isn't crazy, and Justin Wolfers seems to endorse it. If you can be assured your base will turn out, then you don't need to do crazy stuff to play to them. But while Australia has compulsory voting, New Zealand doesn't. And I've seen no evidence that New Zealand election campaigns are nastier than Australian ones. 

Friedman continues:

To be sure, conservatives out here have all the low-tax, free-market, free-trade, less-government instincts of their American colleagues, but it is tempered by the fact that campaign donations and lobbying are much more restricted.

Ok. Labour*** governed as strong free traders under Helen Clark, giving New Zealand a bilateral free trade deal with China, something else that wouldn't exactly fit within the scope of permissible policy views within the Democratic Party. 

But I wonder in which direction causality runs on campaign donations.The NZ Electoral Commission recently released the numbers from the 2011 election; no party reached its spending cap. If the government here is less likely to award rents, then we expect less rent-seeking. 

I'll look forward to finishing the Hackett Fisher book.

* Tyler blogged on this ages ago. When it popped up there, I called the University bookstore. They said they could have the book to me end-March for twice the price that BookDepository quoted. So I got it mid-March from BookDepository. I had to get a book on New Zealand - not just any book, but a big scholarly tome from Oxford Press - shipped to me from the UK because it wasn't yet here at the University bookstore. Very much enjoying the book thus far.

** This is almost the perfect compromise legislation. If the religious folks get mad about the word marriage, call it civil union and give it all the same legal status. Except gays married under NZ's civil unions legislation have a hard time in adoption: it's apparently not easy to have the partner listed as adoptive second father (mother) of the other's child or of a child adopted by both. Otherwise, hooray for Labour.

*** Labor governs Australia (but likely soon won't); Labour has governed New Zealand and are favourites to govern again in 2014. I'm sure that Friedman drops the "u" from Labour by accident rather than implying that we've taken the option of Australian statehood.

Dangerous booms

Geoff Bertram warns that the NZ west coast mining boom could be dangerous. Because booms end.

There is some evidence for that areas with primarily extractive resource bases have lower growth rates; in the development literature, it's called the "resource curse": rents from mining are dissipated through rent-seeking corrupt governments, with little ongoing benefit for the population. And, there's some evidence for it in U.S. county level data too: Stratford Douglas finds that Appalachian counties with more coal fared worse than others in later growth.

But this is hardly an argument for barring resource development on the West Coast; we could as usefully tell Lotto winners to tear up their tickets because a lot of them wind up bankrupt. Rather, it says we need to ensure that collected royalties are used sensibly and that government infrastructure investments should recognize the potentially transitory nature of the boom.

Bertram also worries about effects on other industries via exchange rates - the "Dutch Disease". Again, this, I think, provides more argument for sensibly banking the royalties so it's easier to adjust when the boom ends.

It's also a bit odd that Bertram reckons mining on the Deniston Plateau would really hurt tourism. We were there the summer before last. There's a whole ton of tourism around the region's mining history. We visited a coal museum; we drove up the top of a small mountain to check out the old mining equipment. It was great. And my parents went to see the working mine; we abstained 'cause it wouldn't have worked out with the kids. The Buller region markets itself on that coal mining tourism. You might as well say that gambling really makes Las Vegas less attractive to tourists. Is an open cast mine in an area already marketed for mining tourism really that damaging for international tourism?

Science Status

One way of breaking out of the Great Stagnation: raise the social status of scientists such that more folks pick science over, say, law. Here's the Forbes piece on Cowen from last year:

Raising the social status of scientists

Cowen’s only concrete recommendation to improve the great stagnation is to “raise the social status of scientists”.  He says: “I don’t want a bunch of extra science prizes given out by the White House; what I want is that most people really care about science and view scientific achievement as a pinnacle of our best qualities as leaders of Western civilization.”

Such a raise in status is devoutly to be wished, particularly the rise in the status of scientists relative to overpaid executives in the financial sector. However such a rise in status is unlikely to have any immediate impact on innovation or growth.

Innovation depends not on how many scientific ideas are out there. It depends on how quickly the already abundant ideas are implemented in the marketplace.

New Zealand columnist Rosemary McLeod also points to the problem, although without any concrete solution:

By contrast to Deen, I doubt very much that any women pant after Stephen Wolfram, the balding and totally average-looking maths genius, now middle-aged, who wrote his first book on particle physics at the age of 14 and had a PhD at 20.

I mention this because somewhere in the great system of evolution there is a definite glitch that needs to be explained in a hurry if our species is to work out how to survive in this world we currently make such a mess of.

It is the likes of Wolfram we should be aiming our simpering selves at, surely, rather than an average Joe with a single, rather common ability that requires almost no IQ.

We should be wanting to breed - if sex still has any relation to reproduction - with blokes who are not only clever, but also rich.

We should thrill to words like "cosmology" and "quantum field theory", then, for the very good reason that we haven't a clue what they mean, but guess that they may come in handy one day.

A lot of should, but no way of getting there from here. Science, alas, isn't generally seen as all that alpha in the only metric that matters in the long run.

Rugby, on the other hand, does not lack for social approbation.

On Saturday, New Zealand learned that we had lost one of our greatest minds.  Sir Paul Callaghan, the 2011 New Zealander of the Year, held many accolades including being a Principal Companion of the New Zealand Order of Merit.  His list of credentials are as long as they are impressive.  However, despite this, his death and ultimate loss to New Zealand was relegated to the fourth most important news item on both One News and 3 News, something I thought was worth lamenting.

Only 11 days earlier, another Companion of the New Zealand Order of Merit member passed away.  His death lead both bulletins.  This of course was Jock Hobbs: former All Black and the man who has been bestowed the honor of saving New Zealand rugby and of securing the 2011 Rugby World Cup hosting rights.

On the day the Jock Hobbs died, both networks deemed the story as being more ‘important’ (i.e. higher up in the bulletin) than news of a major breach of privacy at ACC, the conflict in Syria, the Urewera 4 trial, Asia Air X ending its service to Christchurch, the Ports of Auckland strike and the Chris Cairns libel case.

Compare this to when Sir Paul Callaghan passed away, One News thought the return of a sporting event to Christchurch, the refit of a sports stadium and an incident involving a hot air balloon in which everyone was safe were more important. 3 News had the jailing of a Kiwi duped into smuggling cocaine in Argentina, the cost to rent a house in Auckland and President Obama’s statement about a killed teenager in Florida.

Re-read that list of stories again.  Is it not appalling?  Is it not disrespectful?  Could you go as far as asking if it’s fair, balanced or even reasonable?

It's lamentable, but perfectly understandable. Media plays to what the public wants in a competitive marketplace. And here they want rugby and mostly reckon scientists a bunch of tosser eggheads who should be forced to find real jobs. Not that it's particularly better anywhere else.

We'll know things have changed when scientists have groupies. I'm not betting on its ever happening. I remember stories about one socially obtuse grad student (a few years ahead of me in school, and who will remain nameless) who went around introducing himself to ladies saying "Hi! I just had this paper published! I wrote this!" He was, unsurprisingly, unsuccessful. But I'd expect an athlete of similarly poor social skills would have found more success by saying "Hi! Look at my MVP ring!"

Leaving the farm

Bill Kaye-Blake says there's not much that can be done about long-term trends towards rural depopulation. And he puts rural New Zealand especially on the wrong side of broader trends:

Technology isn’t going to be the saviour of rural New Zealand. We’ve been hearing for years that new communications technologies (will) allow us all to work from home, the cafe, and the beach. We do that to some extent. A few people do build business empires on the back of broadband. But we also spend lots of time in our offices, seeing and talking with our co-workers. One of the interesting economic geography arguments I’ve seen is that technology is making face-time more valuable. As a result, work that requires us to spend time with each other is becoming more highly paid, and work that can be made routine and parceled out in bits and bytes is becoming less valuable. New Zealand is on the wrong side of that trend, and rural areas even more so.

Let's take the agglomeration economic geography arguments as starting point. Tech is more a complement to big cities than they are a substitute for face to face interactions. Who gets the strongest benefit from this in a world that's mostly free-trading? Big global cities, not Auckland. Our small size makes us, over time, less competitive in sectors that compete with international big-city industries; our comparative advantage then pushes farther towards agricultural production.

This is already happening too: it's not crazy to see the "Dutch Disease" stuff as just being international markets telling us to put resources into the sector where we have a comparative advantage (dairy, ag production), abandon the ones where we don't, and build non-traded services around the sector where we have the comparative advantage. Our cities would then wind up doing more to provide domestic support services for the ag sector than building innovative non-agricultural products for international markets. And then it's a bit of a race between productivity increases in domestic agriculture pushing down needed labour and relative prices pushing towards intensified agricultural production yielding migration flows to the countryside.

Best counterargument: Peter Thiel is investing heavily in the NZ tech sector, seeing here perhaps a comparative advantage in sane regulatory approaches (albeit one that's eroding).

I still favour strongly increased immigration coupled with fixing urban land use policy to make our cities more internationally competitive. And who knows - maybe some of those migrants would then decide they'd prefer to live out in the countryside. It is ridiculously beautiful out there.

Sick of the Swiss

When Canada decided it needed some national nemesis other than the Americans (anti-Americanism having become ridiculously overdone at the CBC), we turned to our national comedy act, The Kids in the Hall. We've been at pretend war with the Swiss ever since.

When Cabinet decided New Zealand needed a national nemesis, they should have left it to the Topp Twins. Or, if they weren't available to hate on the Finns, Flight of the Conchords are almost as good.

Instead, we got this in the House from the Hon. Gerry Brownlee. (Vid HT: The Listener, who covers more of the controversy)

Brownlee goes just a bit over the top at 3:52.

But I did enjoy Federated Farmers's Twitter response to a quip about how they have Nokia and we have sheep:

@ChrisKeall 'More money selling a Nokia than a couple of sheep’? Nokia lost €954m in Q4 and sales were down 31%. C/W stats.govt.nz/browse_for_sta…
— Federated Farmers (@FedFarmers) March 26, 2012

Oh, Finland, it's so on.

Update: I'm so sick of the Swiss.

Network effects - blogging edition

The Economist says America's number one in EconBlogging. Why? They have a blogosphere, where Europe only has blogs. It's the links and the discussion that makes the whole thing worthwhile. They point to Bruegel's assessment:

As Ronny Patz noted in a recent post (hat tip to the European blogs aggregator bloggingportal), European blogs are still very much “unconnected”. That is, they use hyperlinks far less than their American counterparts or do it and in a way that doesn’t create two-way debate. In brief, Europe has bloggers, but no blogosphere: it lacks a living ecosystem to exchange and debate. Of most leading European blogs, only 1 in 5 were linked to other online content. This is a pretty striking number but one that is somewhat consistent with the use that Europeans make of blogs (ie. just another media but not an interactive one).

How did America make it work? The Economist's R.A.:

How did America's economics blogosphere develop the necessary density? Early buy-in by important economists mattered, but the growth of the community has been more driven, in my opinion, by an aggressive horde of strivers. Economists, journalists, and would-be pundits with less access to traditional outlets (newspapers, conferences, and journals) were attracted by the low barriers to entry of the web. This ready group of writers created sufficient "liquidity" of opinion to drive an effective conversation, the value of which has subsequently pulled in other respected voices.

New Zealand's getting better. Paul Walker and the TVHE team drew me in, and together we dragged in Seamus (occasionally), Bill Kaye-Blake, and now Sam Richardson. Let's hope we can pull a few other folks into the conversation.