Entrepreneurial migration to NZ

Our Prime Minister encourages rich people to move here; our immigration authorities make it easy too.

Kiwi tech entrepreneur Lance Wiggs provides some advice for potential migrants. His advice is targeted at Kiwis coming home but is more broadly applicable:

Coming back to New Zealand is often difficult after a heady career dealing, say, in billions of dollars. The economy and industry tiny here, our domestic industries are often sleepy versus their foreign peers, and many don't seem to understand offshore experiences.

So for those coming back after a senior career offshore, a word of advice: don't look for a job. Look instead to enter the really dynamic part of our economy by starting something new. As Prof. Paul Callaghan is fond of saying, we are very good in New Zealand at doing everything else.

Not for us the big dirty industries, nor the global consumer goods we all own, but instead the quiet conquering of global niches, such as online accounting or frequency control. There are plenty of people and tools to help, and New Zealand is a wonderfully easy place to start and run a business.

So if you are considering leaving, then make sure you come back bursting with ideas and energy to start something. And if you are considering a return, then now is the hour. New Zealand is doing reasonably well during this global recession, and it's time to get going and do something about addressing the markets in our enormous trade free zone.

Forbes today listed NZ as second overall among best countries for business. [Note: they seem to be using Heritage's rankings on trade freedom. I don't buy Heritage's rankings on trade freedom.]

We get top rankings in lack of red tape, investor protection, lack of corruption, and personal freedoms. The last one I find most important, but Forbes used a very broad brush in marking the personal freedom category. Most OECD countries wind up getting a rank of 1.

Personal liberties are a bundle of a whole lot of different things. For the bundle of freedoms about which I care most, NZ comes out on top. But I suppose that somebody who puts lots of weight on firearm ownership rights relative to not being subject to arbitrary exercise of police power could rank the US higher than NZ.

I also put reasonable weight on that, flying domestically in NZ, there's often not even a metal detector, never mind this sort of thing:

I continue to be amazed at how few American libertarians emigrate.

Meanwhile, in Canada

The same government that considered the mandatory long form census so strong an invasion of privacy that it was worth destroying the continuity of the census data series is requiring ISPs to maintain extensive logs on users and to hand them over to police without warrants; ISPs are banned from telling customers of any government snooping unless given explicit permission by the police.

Tony Clement, back in 2010:

“It is not appropriate to compel citizens to divulge how many bedrooms they have in their houses, or what time they leave for work in the morning,” Clement said. “The government’s approach is about finding a better balance between collecting necessary data and protecting the privacy rights of Canadians.”

Vic Toews, Public Safety Minister, last week:

Critics of a bill that would give law enforcement new powers to access Canadians' electronic communications are aligning themselves with child pornographers, Canada's public safety minister says.

"He can either stand with us or with the child pornographers," Vic Toews said of Liberal public safety critic Francis Scarpaleggia during question period on Monday, after Scarpaleggia asked about a bill expected to be tabled Tuesday.

Odd that it's more of an intrusion to have to tell the government how many bedrooms you have than to #TellVicEverything about what sites you might be visiting while in the bedroom. Australia is no better.

Meanwhile, some Canadian universities will start letting IP folks trawl through faculty emails to see if anybody's sharing gated journal articles. I expect most folks at Toronto and Western to flip quickly over to Gmail. This while the #AAASmtg has been exploring the notion that research has been biased towards materials faculty can access; this adds a hurdle to research efforts for folks at smaller schools with less extensive online journal holdings. It would be interesting to see what bias was induced into paper citations by JSTOR's moving wall.

New Zealand is getting worse too. But it's getting worse slower than other places. Shame that the National government hasn't figured out that one of our comparative advantages is in freedom, and in particular tech freedom; we ought not have bent over so quickly when the FBI came calling for Kim DotCom. American tech folks looking for exit options have noticed...

Overheard anecdote of dubious provenance

While the three year old clambered over an old privately owned tank at a classic car event a while back, I overheard the tank's owner telling another attendee about the minor paperwork hassles he faced in importing the tank.* The Defence folks had some objection to his importing the tank because, were he to go on a rampage with it, they had nothing that could stop it. The armour was too thick for .50 cal rounds to get through, and all the .50 cal rounds are stored up on the North Island anyway. So he had to sign a waiver saying he wouldn't go on a rampage or try to start a revolution.

I don't know whether the story was true;** I don't even know that it was really the tank's owner. But I love that I live in a place where it could be true. Instead of a place where the local sheriffs have tanks.

I also like that the privately-owned aircraft on display biannually at Warbirds over Wanaka could probably take out the government's Air Force if they decided that they needed to.***

Americans who claim pacifism but who live in a state that extracts large quantities of money from them to blow up people overseas or to send police tanks and bad actors after the suspected kingpin of a cockfighting ring (see link above) perhaps ought to reconsider the strength of their convictions or emigrate.

* Please don't ask me what kind of tank it was. It was green, had a big gun, had tracks, and definitely wasn't a personnel carrier. A door opened at the back where the kids climbed in to go play. I think there was a hatch on the top too.

** It can't be completely true as the army does have some anti-tank weapons. It just doesn't have any tanks.  We do have some armoured tractors. And this is as it should be. If you want to see a tank in New Zealand, go to a museum. Or, go and hire a private one and go for a drive.

*** I am definitely not denigrating the important work done by the Air Force in maritime safety and in Search & Rescue. New Zealand can't afford an Air Force that could protect us against any plausible external threat, so doesn't bother to try. We have equipment necessary for the jobs that need here to be done: search & rescue and maritime patrol. Important jobs both. But neither of which require ridiculously expensive modern fighter aircraft. The best response to a tournament game that you can't win is not to play.

ACT Redux

David Farrar is right: the ACT Party, as it has been, is dead.

ACT have always had two strong components to their brand. On economic issues they were strongly liberal, supporting massive tax cuts, no minimum wage, privatization of all SOEs etc. Those who served with Banks in the National Cabinet say Banks was not a huge supporter of the Richardson camp. He certainly is a fiscal conservative, and centre-right economically. But not someone who would privatize the hospitals.

The other component to the ACT brand has been a degree of social liberalism. This has been patchy rather than consistent, but overall most ACT MPs have been social liberals. John Banks would not describe himself as a social liberal.

Therefore my conclusion is that ACT, as we know it, is dead. There is talk of a name change for ACT, and that would be a sensible move, both because of the different brand John Banks has, but also because the ACT brand itself is pretty tarnished also.

Banks should move to position ACT as a conservative party, which reflects John Banks. Banks would be a good leader of a conservative party. The challenge of course is you also have a Conservative Party led by Colin Craig. And as I understand it, relations between Craig and Banks are not friendly – Craig took many votes off Banks for the Auckland Mayoralty.

A merger between whatever ACT gets re-named and the Conservatives would be a win-win, if they can work together. Craig has the money and the membership base. Banks has the seat in Parliament which means you do not need to make 5%. However just because it is logical does not mean it will happen. Colin Craig doesn’t strike me as someone who would settle for co-leader.

As for ACT itself, my suggestion is that those who identify as economic and social liberals need to have a get together next year and look at who is willing to commit to a new party, perhaps calling it the Liberal Party, and targeting the 2014 election. Many many especially urban younger New Zealanders are classical liberals (even if they have not heard the phrase) and support lower taxes, a smaller state etc but also don’t think Parliament should be greatly restricting what consenting adults can do.

I’m not about to quit the party I support, but I would be prepared to spend quite a bit of time assisting the formation of a new Liberal Party, and making sure lessons are learnt from the mistakes of the past.

Lindsay Mitchell agrees.

I wonder whether Banks' overtures to the Conservatives were designed to push out the remaining liberals. By various online discussion threads, that seems to have been the effect.

I think there's space for a cosmopolitan liberal party grounded more in evidence-based policy than in ideology - pushing liberal policies for which there's sound support - and focused on incremental gains. As a rough cut from the 2008 NZES, there are around 7-8% that would fall into the top quartile of economic liberalism and the top quartile of social liberalism. That's more than are found in the top quartile of economic liberalism and bottom quartile of social liberalism, but still suggests that a Party playing to a hard-core libertarian base would fail.

A party focused as strongly on social freedoms as economic freedoms would have a harder time getting the soft-touch treatment that National has given ACT as it could plausibly go into coalition with Labour. But if it could get over the 5% hurdle, which would involve a massive amount of work with a good chance of failing, it could have reasonable long-term influence relative to a limited set of goals. Advancing economic freedom in coalition with National while preventing some erosions of social liberty, and advancing social liberalism in coalition with Labour/Green while perhaps mitigating the worst of their economic policies, would be an admirable achievement. I'd hoped that this was where Brash would take ACT, back before I figured out what Banks was.

The core enthusiasm and grunt-work for any new Liberal party would have to come from the ranks of the ACT on Campus group and the better parts of their List. But they'll need a few more experienced hands; it's good to hear Farrar's willing to help them out.

Bit of fun: on one of the discussion threads, Peter Cresswell paints me as part of a Gramscean liberal march through the institutions; I suppose I tend to be a bit of a counterhegemonist at the margin. Can there be marginal counterhegemony? Heck, just promoting mainstream economics is sometimes counterhegemonistic [though heads may explode both right and left at the suggestion].

Psychic externalities

Specify that I receive large psychic benefits when prudes are compelled to purchase pornography - their discomfort brings me mirth. Specify further that lots of people share these preferences, but transactions costs prevent us from getting together to pay prudes to go and purchase pornography. In such cases, regulations mandating the purchase of pornography can be efficient.

At least that's the lesson I take from Chris Auld's description of a paper by Curry and Mongrain. The paper discusses blue laws, like those in Alabama, where prohibitions on the sale of vibrators may be efficient: the prurient make their purchases discreetly by mail-order and prudes are shielded from the existence of sex shops. If it's the transaction's visibility that is the main cause of prudish distress, then regulation ought target visibility rather than the transaction itself.

I'm happy to admit the possibility of efficient regulations of this sort in theory. But there is absolutely no reason to expect that real world morality regulation has any efficiency basis. Even evidence of majority support for the regulation is wholly insufficient: meddlesome preferences are much cheaper to indulge at the ballot box than they are in the market. To wit: a voter need only receive epsilon disutility from a prurient act to favour banning that act, while the ban can impose very large costs on those thereby constrained.

Logrolling sometimes helps us in this kind of case: if the median voter only weakly supports a measure that would impose heavy costs on a minority, the minority can pay the majority off through other policy concessions, so long as folks' minority/majority status isn't constant across all policy dimensions. Policy outcomes then move to reflect mean rather than median voter preference and are closer to efficiency. But where the minority bearing policy costs would also incur sanctions from the majority if identified as part of the minority group, those trades seem a lot less likely to obtain.

I'm reminded of Jennifer Roback's work showing how southern racists were able to achieve at the ballot box segregation outcomes they were unable to achieve in the market. To recap: racist southern whites wanted segregated streetcars. But it was too expensive for the streetcar companies to run segregated cars: the increased ticket revenues from white racists didn't compensate sufficiently for lost black custom and, especially, increased running costs. White racists effectively weren't willing to pay enough for tickets to segregated streetcars, so the market didn't provide them. But casting a racist ballot is individually costless. And so streetcar segregation was mandated through regulation.

When I see folks going to the ballot box to enforce their preferences over other peoples' activities, my general presumption is that transactions costs isn't what's keeping meddlers from seeking less coercive options. The ballot box is just cheaper when a majority has weakly meddlesome preferences, regardless of efficiency.

If I had to bet, the Alabama ban had less to do with the psychic disutility experienced by Alabamans on driving by a sex shop and more with helping to ensure a separating equilibrium in migration.

And, for the libertarians out there, purely free market systems aren't immune to meddlesome preferences either: they're just more likely to indulge the strong preferences of meddlesome minorities than they are to indulge the weak preferences of meddlesome majorities.

But if Curry and Mongrain are right, Auld points a way forward in liberalization:

The insight here helps to explain morality laws more generally. Laws against gambling, drugs, and prostitution often take the form of prohibiting various transactions or activities in public rather than outright prohibitions, and enforcement is often targeted at the open display of these behaviors. People commonly violate morality laws, but they also exhibit discretion in doing so, as the model predicts. And in times and places where puritan ethics are more prevalent, there are more and stronger laws against private behaviors which violate puritanical norms.

These insights also suggest ways in which reforms of morality laws might be politically feasible. First, laws which attempt to enforce discretion rather than prohibit use may be acceptable to people who experience psychic externalities from others’ use. Make vibrators legal, but prohibit billboards advertising vibrators. Make drugs legal, but only to be sold in plain packaging from government outlets. Generally, permit the behavior which causes the psychic externality, but to whatever extent possible make it illegal not to be discreet when engaging in that behavior.

A second way to reform policy in the long run is to attempt to change preferences. Puritan preferences are anti-social: The puritan benefits when others are harmed by laws reducing behaviors the puritan considers immoral. Everyone becomes better off when anti-social preferences become less prevalent, just as everyone is better off when more people have pro-social preferences. In papers such as Dixit (2008), pro-social norms endogenously evolve through education. In the long run, reducing anti-social norms, through education or through other mechanisms, may be the only feasible way of reforming morality laws.

Auld's likely right that marijuana legalization has a better chance of happening if coupled with bans on public display; purchases then take place by mail-order and consumption in private.

But imagine if New Zealand's homosexual law reform in the 80s had been advanced by reformers who thought their most likely chance of success lay in legalizing homosexuality, but only in private; public homosexual displays of affection would remain illegal. It's certainly plausible that homophobic opposition to legalization was more motivated by psychic disutility experienced by prudes on seeing public homosexual displays of affection than by the knowledge of what might go on behind closed doors. But legalization and openness helped build the environment in which civil unions became possible - those with mildly meddlesome preferences realized they had friends who were good people and who were homosexual. And opposition eroded. Requiring that acts earning prudish disapprobation remain closeted hinders the erosion of anti-social preferences. It still might be best policy where alternatives are truly blocked. But it sure ain't great.

Scoring freedoms

Legatum's latest prosperity index is out.

New Zealand ranked 4th overall, beaten by Norway, Denmark and Australia. Personal freedom here is ranked second only to Canada, but the Economic Freedom of the World report has us three places above Canada in economic freedom. Only Singapore and Hong Kong beat New Zealand in the last economic freedom index, but neither of them beat New Zealand in personal freedoms. And so New Zealand, by my ranking, is undominated.

The United States, on the other hand, was 10th in the last economic freedom ranking. Of those ranking higher than the US in economic freedom, Australia, New Zealand, and Canada also dominate on personal freedoms. Maybe Legatum's index isn't the best measure of personal freedom, but it does seem pretty obvious that there are exit options for Americans that do not require trading economic freedom for personal freedom; the US is operating inside the frontier.

Exit!

I occasionally needle American libertarians that, if they really don't want to be contributing a fifth of their paid taxes to blowing up people with whom they'd prefer to be friends, and if they really don't like being molested or ogled by the kind of people who select into jobs that allow them to molest or ogle a captive audience and who then sue you if you call it what it is, then their best option is to leave. The elasticity of policy to your vote is trivial; why not just move to somewhere that's more free?

Bill Watson points to some new work by Davies and Winer showing that the potential for exit constrains national policy. Once the Americans made it hard for Canadians to escape to the US, we got Trudeau's policies; once the Americans opened things up to skilled workers through H1B and TN visas, Chrétien had to worry about the brain drain. Here's Watson:

In Closing the 49th Parallel, a fascinating new paper in the academic journal Canadian Public Policy, the Canadian economists Stanley Winer of Carleton University and James Davies of the University of Western Ontario argue that the Americans’ decision to foreclose the possibility of an easy escape to the United States created a captive tax base for the Canadian politicians of the 1960s and 1970s and lowered the political cost to them from raising taxes and building up the Canadian welfare state. As the chart shows, there does seem to be a widening of the gap between Canadian and American non-military spending that hinges around 1965. In effect, though the American government didn’t create Pierre Elliiott Trudeau and his Just Society, its closing of the immigration door substantially enabled him.
...
The spending and tax gap that did open up between Canada and the United States in the 1960s and 1970s closed somewhat during the 1990s. In part this may simply be a case of Canada having come to its senses: Government spending briefly hit 50% of GDP in the early 1990s and just about everybody but the far left of the NDP understood that unless tectonic change somehow floated us away from North America, that simply couldn’t last.

But Winer and Davis point to NAFTA’s re-liberalization of migration, at least for professionals, as having also contributed to the subsequent decline in the relative size of government here. The reopening of the safety valve to the United States, even on a partial and limited basis, contributed to the brain drain that became such a hot political issue here at the end of the 20th century and helped persuade the Chrétien government it needed to first do away with income surtaxes and then reduce the top marginal rate of income tax and raise the income at which it kicked in.

It isn't inconceivable that American libertarians do more good for American policy by leaving than by voting...doing well by doing good.

Freedom's Angel Investor

Peter Thiel gets a nice feature write-up in Details:

Despite the innovations of the past quarter century, some of which have made him very, very wealthy, Thiel is unimpressed by how far we've come—technologically, politically, socially, financially, the works. The last successful American car company, he likes to note, was Jeep, founded in 1941. "And our cars aren't moving any faster," he says. The space-age future, as giddily envisioned in the fifties and sixties, has yet to arrive. Perhaps on the micro level—as in microprocessors—but not in the macro realm of big, audacious, and outlandish ideas where Thiel prefers to operate. He gets less satisfaction out of conventional investments in "cloud music" (Spotify) and Hollywood films (Thank You for Smoking) than he does in pursuing big ideas, which is why Thiel—along with an all-star cast of venture capitalists, including former PayPal cohorts Ken Howery and Luke Nosek, and Sean Parker, the Napster cofounder and onetime Facebook president—established the Founders Fund. Among its quixotic but potentially highly profitable investments are SpaceX, a space-transport company, and Halcyon Molecular, which aspires to use DNA sequencing to extend human life. Privately, however, Thiel is the primary backer for an idea that takes big, audacious, and outlandish to a whole other level. Two hundred miles west of the Golden Gate Bridge, past that hazy-blue horizon where the Pacific meets the sky, is where Thiel foresees his boldest venture of all. Forget start-up companies. The next frontier is start-up countries.

"Big ideas start as weird ideas." That's Patri Friedman, a former Google engineer, the grandson of the Nobel Prize-winning economist Milton Friedman, and, as of 2008, when Thiel seeded him with the same initial investment sum he'd given Mark Zuckerberg four years earlier, the world's most prominent micro-nation entrepreneur. Friedman, a short, kinetic 35-year-old with a wife and two children, maintains an energetic online presence that ranges from blogging about libertarian theory to tweeted dispatches such as "Explored BDSM in SF w/big group of friends tonight." Four years ago, a Clarium Capital employee came across a piece Friedman had written about an idea he called "seasteading." Friedman was soon pitching to Thiel, a staunch libertarian himself, the big, weird idea.

I'd love to spend a sabbatical year on a Seastead.
I'm extraordinarily pleased that my former Masters student and co-author Brad Taylor is working with Patri to make Seasteads happen.

Loyalty as corruption

An older piece, but worth noting.  

Mr. Jardin not only denounces his respected paternal grandfather, but by extension all the other "very nice people" of wartime France.

The book centers around Jean Jardin, who was chief of staff to Vichy Prime Minister Pierre Laval in 1942 and 1943. Dismissing what he deems a "whitewash" perpetrated by his own family and accepted by a nation afflicted with Vichy-era "blindness," Mr. Jardin insists that grand-père was a key collaborator. He claims that by virtue of his post, Jean had full foreknowledge of the notorious July 1942 roundup of 12,884 Jews, including 4,051 children, who were deported to Auschwitz and nearly all died there. Mr. Jardin is now accused of settling intergenerational clan scores in public, but his real sin appears to be his implication of still-upstanding French citizens in the Holocaust.

...

As Mr. Jardin sees it, a certain moral code, exemplified by his "loyal" grandfather, was crucial to the Vichy machine. "In the end it was not at all necessary to be a monster to participate in the worst. There was an anti-Semitism of the state. Men like my grandfather were prepared to do absolutely anything to preserve a little fragment of national sovereignty," Mr. Jardin observes. "They preferred that the French police came to arrest Jewish families rather than let the German police do it. It is disturbing. In any case in my family there has not been any [feeling of] guilt after the war. My grandfather had the feeling of having done good. It is incredible." [emphasis added]

The bolded part bothers me. I suppose you could build a Sen Paretian Liberal argument that it's better that the French policeman, who wouldn't enjoy the roundup, conduct it rather than allowing the sadist to do it if the sadist's jollies are a bad (which they are). But I still wouldn't buy it.

Liberals (in the NZ and European sense) cringe when loyalty is offered to the state.

"A few weeks ago I found myself around a table at the Elysée with [French President Nicolas] Sarkozy, at a lunch with three writers and a journalist and a historian," Mr. Jardin recounts. "The historian suddenly said to me: 'But you don't have a lot of proof against your grandfather; [Mr.] Sarkozy got up out of his chair, cut her off and said 'Madame, I have had a lot of chiefs of staff.' He gave her a lesson explaining that a chief of staff was nothing like a government departmental head. It was evident listening to [Mr.] Sarkozy that the prime minister's chief of staff could not but be intimately associated with the decision.

All the same, in Mr. Jardin's telling, the historian insisted that "'that did not constitute proof.'" Then, "[Mr.] Sarkozy's temperature rose and he said something incredible which came from his gut: 'Madame if I asked [French Interior Minister and Mr. Sarkozy's former chief of staff] Claude Guéant to organize a round-up of 13,000 Jews next week in Paris, whatever the circumstances, I know Claude would resign. His [Mr. Jardin's] grandfather did not resign.'

Conscientious non-voting revisited

I'd posted before on my reasons for abstaining from voting - I'm a conscientious non-voter. I'd not claimed priority in usage of the term, but I'd not known of any prior use. Turns out Joey King has used the term since at least 2004.

The arguments are different though. I'm a conscientious non-voter because of an odd contractarianism: if I vote, I agree with the rules of the game and consequently have given moral assent to the outcomes. And so I cannot vote without doing violence to myself. It's purely an inward-oriented argument. Voting is then closer to Sophie's Choice, but where your choosing one over the other only adds epsilon weight to which is chosen and non-voting only makes outcomes worse by epsilon. But if others who share my preferences also refuse to vote, I'm probably worse off.

Joey, in the link above, argues that mass conscientious non-voting could force social change. I'm less convinced of that argument - I'd rather expect that if all the libertarians failed to vote, democratic outcomes would be a bit worse as the location of the median voter would move maybe ten points closer to totalitarianism. And folks closer to the median won't abstain.