Wednesday, 1 February 2023

Cost of living absurdities

Peaches come from a can.

They were put there by a man.

In some factory in Greece.

When they made their little way

out to brighten a Kiwi’s day,

they got hit with a 34% punitive anti-dumping duty.

Prime Minister Hipkins made the cost of living the government’s number one priority. So I checked which anti-dumping duties are still in place.

Anti-dumping duties rarely make sense. The theory is that a foreign company will sell here, below cost, for long enough to drive Kiwi competitors out of business, and then jack up prices. 

It’s more than a bit bonkers. Consider coated steel from Korea – a kind of steel used in roofing. From 1 January this year, imports from one Korean company were hit with a renewed 12.6% punitive tariff, and two other Korean companies are subject to smaller tariffs. 

Under anti-dumping theory, they were selling steel here below cost to drive the Kiwis out of the market, so they could profit when those Kiwi competitors went under. But a quick Google search finds 998 suppliers of the stuff across 55 countries. The 997 other suppliers would be the ones to benefit. 


And, of course, if it really were being sold here below cost, anyone, including Kiwi steel producers, could put up a shed and store tonnes of it for later resale. 

Inflation is high and the government says we’re in a cost-of-living crisis, with groceries and building materials front and centre. But those Korean companies’ roofing steel, along with galvanised wire from Malaysia and China, are hit with anti-dumping duties. So you’re protected from affordable building products. Doesn’t it warm your heart? Tariffs are love. 

And consider the peaches. Everyone loves canned peaches. The 90s band The Presidents of the United States of America even wrote a song about them. I ripped it off to lead this post. 

In May last year, the Government reimposed antidumping duties on preserved peaches from Spain. In December, they started investigating Chinese peaches. And the peaches from Greece? 34% duty

Meanwhile, the Commerce Commission’s been investigating why groceries and building materials are so expensive. And the government is subsidising petrol while taxing peaches. 

So I’ll end with another bit of theft from the Presidents. 

Government lingered last in line for brains

And the one that it got was sorta rotten and insane.

Tuesday, 17 January 2023

Contrasting Banks

Recall that the Reserve Bank of New Zealand's Monetary Policy Committee does not allow those with an ongoing research interest in macro/monetary from serving as external members of the committee. They've considered it a conflict of interest.

The Bank of Canada has appointed Prof Nicolas Vincent as an external deputy governor. 

Vincent will begin his two-year term in March, filling the void left by former deputy governor Timothy Lane, who retired in September. The Bank of Canada launched a search for an outsider to bring a different perspective to the Governing Council in August 2022, as the central bank confronts one of the most challenging economic environments it has ever faced.

Vincent “is an accomplished scholar and teacher, with deep expertise in macro and microeconomic research in areas such as inflation and price dispersion, firm dynamics, inequality, house prices and household finance,” governor Tiff Macklem said in a press release. “I have no doubt that his broad knowledge of monetary economics combined with his keen interest in public policy will be invaluable in helping the Bank navigate the policy challenges ahead.”

In this new role, Vincent is expected to bring his own perspectives to the policy making process, providing a check on groupthink as he’ll have no direct ties to the institution. He will be responsible for helping with monetary policy and financial system stability decisions, and will join other deputy governors in communicating the Bank of Canada’s consensus-based policy decisions.

Vincent will balance this role with his job as a professor of economics at the HEC Montreal, serving as deputy governor on a part-time basis. This wouldn’t be his first time in a policy focused role, as he started his career at Department of Finance in 2000 before becoming an assistant professor at the HEC.

The Bank of Canada's press release also highlights the value of deep expertise in relevant research areas.

The Board of Directors of the Bank of Canada today announced the appointment of Nicolas Vincent as the Bank’s new external, non-executive Deputy Governor for a term of two years, effective March 13, 2023. Mr. Vincent’s appointment, which is the result of an open external search process, fills the vacancy created by the departure of Timothy Lane in September 2022.

“I am delighted that Nicolas Vincent is joining the Bank’s Governing Council and I am looking forward to working with him,” said Governor Tiff Macklem. “He is an accomplished scholar and teacher, with deep expertise in macro and microeconomic research in areas such as inflation and price dispersion, firm dynamics, inequality, house prices and household finance. I have no doubt that his broad knowledge of monetary economics combined with his keen interest in public policy will be invaluable in helping the Bank navigate the policy challenges ahead.”

The Bank changed the fourth Deputy Governor position to an external, non-executive Deputy Governor role to bring diverse perspectives into its consensus-based policy-making process and to ensure the Bank’s executive team has a streamlined and effective distribution of management responsibility. In this role, Mr. Vincent will be a member the Bank’s Governing Council, which is responsible for decisions with respect to monetary policy and financial system stability. Alongside other members of Governing Council, he will also be responsible for communicating with Canadians about the Bank’s consensus-based policy decisions as well as its ongoing assessment of the outlook for the economy and inflation. In keeping with the nature of this role, Mr. Vincent will work with the Bank of Canada in a part-time capacity and will maintain his affiliation with HEC Montréal.

Mr. Vincent is a professor of economics in the Department of Applied Economics at HEC Montréal and co-chair of the Business Cycles and Financial Markets research theme at CIRANO (Centre interuniversitaire de recherche en analyse des organisations). He has been a visiting faculty member and researcher at numerous institutions, including Columbia Business School, INSEAD, the Banque de France and the Kellogg School of Management.

Born in Trois-Rivières, Quebec, Mr. Vincent received a Bachelor of Commerce degree in applied economics from HEC Montréal, a master’s degree in economics from Queen’s University and a PhD in economics from Northwestern University.


Wednesday, 11 January 2023

Circular hydrocarbons

Want to make hydrocarbons part of the circular economy? Terraform Industries has a whitepaper

Basic deal: use solar to power kit that sucks CO2 out of the atmosphere. It'll also pull some water out of the atmosphere while it's at it. Turn the water into hydrogen and oxygen. Then make CH4 (or any desired hydrocarbon) with oxygen and some surplus water as waste product. 

They're aiming at an all-up carbon sequestration cost of USD$43/T. 

Tuesday, 10 January 2023

Afternoon roundup

Easing back into the office after a summer break and already the tabs have multiplied.

Today's worthies:

Saturday, 24 December 2022

Not the Outside of the Asylum

Time flies.

From the time I got here, until relatively recently, NZ really seemed to be Douglas Adams's Outside of the Asylum. The last sane place as the rest of the world goes mad. Or at least the place going mad more slowly than other places.

I think we've left the Outside of the Asylum and have taken up camp with another of Adams's tribes: the Golgafrinchans.

Remember the Golgafrinchans? They're the ones who convinced their planet's useless people that their planet was doomed, loaded them up on Arkship B, and sent them off on a collision course with Earth. Once here, they displaced the cavemen who'd been working away at providing the ultimate answer to the ultimate question of life, the universe and everything. 

After crash-landing, they did the thing that useless people do: have loads of committee meetings rather than get on with doing anything useful, like inventing fire or the wheel. 

Like so:

The Captain made a sort of conciliatory harrumphing noise. 

"I would like to call to order," he said pleasantly, "the five hundred and seventy-third meeting of the colonization committee of Fintlewoodlewix..." 

Ten seconds, thought Ford as he leapt to his feet again. 

"This is futile," he exclaimed, "five hundred and seventy-three committee meetings and you haven't even discovered fire yet " 

"If you would care," said the girl with the strident voice, "to examine the agenda sheet..." 

"Agenda rock," trilled the hairdresser happily. 

"Thank you, I've made that point," muttered Ford. 

"... you... will... see..." continued the girl firmly, "that we are having a report from the hairdressers' Fire Development Sub-Committee today." 

"Oh... ah - " said the hairdresser with a sheepish look which is recognized the whole Galaxy over as meaning "Er, will next Tuesday do?" 

"Alright," said Ford, rounding on him, "what have you done? What are you going to do? What are your thoughts on fire development?" 

"Well I don't know," said the hairdresser, "All they gave me was a couple of sticks..." 

"So what have you done with them?" 

Nervously, the hairdresser fished in his track suit top and handed over the fruits of his labour to Ford. 

Ford held them up for all to see. 

"Curling tongs," he said. 

The crowd applauded. 

"Never mind," said Ford, "Rome wasn't burnt in a day." 

The crowd hadn't the faintest idea what he was talking about, but they loved it nevertheless. They applauded. 

"Well, you're obviously being totally naive of course," said the girl, "When you've been in marketing as long as I have you'll know that before any new product can be developed it has to be properly researched. We've got to find out what people want from fire, how they relate to it, what sort of image it has for them." 

The crowd were tense. They were expecting something wonderful from Ford. 

"Stick it up your nose," he said. 

"Which is precisely the sort of thing we need to know," insisted the girl, "Do people want fire that can be applied nasally?" 

"Do you?" Ford asked the crowd. 

"Yes " shouted some. 

"No " shouted others happily. 

They didn't know, they just thought it was great. 

"And the wheel," said the Captain, "What about this wheel thingy? It sounds a terribly interesting project." 

"Ah," said the marketing girl, "Well, we're having a little difficulty there." 

"Difficulty?" exclaimed Ford, "Difficulty? What do you mean, difficulty? It's the single simplest machine in the entire Universe " 

The marketing girl soured him with a look. 

"Alright, Mr. Wiseguy," she said, "you're so clever, you tell us what colour it should have." 

The crowd went wild. One up to the home team, they thought. 

Ford shrugged his shoulders and sat down again. 

"Almighty Zarquon," he said, "have none of you done anything?" 

NZ's Energy News has been documenting our decline. Read this and tell me that Kiwis are not the true descendants of the Golgafrinchans. Remember that nobody (except me) likes landfills, and that we are looking at energy shortages. 

Environment Canterbury has declined to process the revised application for a proposed waste-to-energy plant in South Canterbury.

“This is due to insufficient information being supplied relating to the activity and its effects on the environment – in particular, the lack of a cultural impact assessment,” the regional council body says.

In November 2022, South Island Resource Recovery Limited lodged seven applications for reassessment, after its initial applications were returned in October.

ECan regional leader of consents delivery Hayleigh Brereton acknowledges the resubmitted application addresses many of the matters raised in the previous version regarding adverse effects of the discharges to air, stormwater and wastewater. But she says one critical issue has not been addressed.

“This is a very large proposal and the first of its kind in New Zealand, and would have some wide-reaching potential effects, including many unknown effects on mana whenua,” Brereton says.

“A site-specific Cultural Impact Assessment is required to be completed either by, or in close consultation with Te Rūnanga o Waihao. This remains an outstanding matter, and we, therefore, consider the application incomplete.”

The application has been returned under Section 88(3A) of the RMA. Waimate District Council has also returned the application.

ECan says if South Island Resource Recovery Limited wishes to proceed with an application, it must submit a new one in full.

“If it disagrees with our decision, it can lodge an official objection.”

We can't have a waste-to-energy plant because it didn't have a site-specific Cultural Impact Assessment. Declined by Environment Canterbury. After it provided all the paperwork necessary showing that it didn't cause problems for air or water - the traditional environmental concerns. 

Almighty Zarquon. We're doomed. 

Thursday, 22 December 2022

Economics of regulation and medical licensing

The economic theory of regulation, following Peltzman, highlights regulation as a bargain that's subject to cost pressures. Change the cost conditions enough and you'll change the equilibrium.

Regulation of medical services seems ripe for disruption.

Over at The Conversation, Johanna Thomas-Maude documents the problems facing foreign-trained medical professionals wanting to work in New Zealand. It's basically impossible. And that's by design. 

The system is set, deliberately, to frustrate entry, with chokepoint after chokepoint. The player at each chokepoint will blame all the other chokepoints for the problem. 

Want to train more doctors? Ah, we can't. Only two med schools and they only can train so many.

Want to open a new med school? Ah, we can't. The universities' cartel reminds us that there aren't enough supervised positions at the hospitals, so even if more graduates were trained, there wouldn't be places at the hospitals for them to get their final sign-off. We'd just be training doctors to go and practice abroad. And who wants to put taxpayer money into that?

Want to solve it with foreign-trained doctors? Can't do that either. Not enough supervised positions at the hospitals. And even if someone's demonstrated competence elsewhere, that's just not good enough for New Zealand. No. They have to prove it in a supervised role here too. But there aren't any supervised roles for them. 

Want to increase the number of supervised slots? Afraid we also can't do that. None of the doctors want to take on more supervisions, you see. They're all flat out because there aren't enough doctors. 

It has long been a horrible cartel - one of the ones protected against ComCom action by the Commerce Act exemption of statutory regimes, even if they are absolutely a cartel. 

But the conditions seem ripe for change. When doctors are leaving the profession or the country because working conditions are terrible because there aren't enough doctors, there's opportunity to fix the regulations so that competent doctors from elsewhere could practice more easily. 

Here's Johanna:

Potentially hundreds of other doctors already in New Zealand are also waiting to take the required local clinical skills exam (NZREX), which is only open to 30 people at a time. The exam has only been offered four times – instead of the usual nine – in the past three years, with only one currently scheduled for 2023.

A few hundred doctors may not sound like much, but patients are being turned away from GPs all over New Zealand. Up to half of practices are not accepting any new patients.

Just one GP can safely have around 1,400 patients on their books, although this number is currently up to 2,500 for many overworked GPs.

Dr Orna McGinn, Chair of the New Zealand Women in Medicine (NZWIM) Charitable Trust, recently surveyed almost a thousand doctors working in New Zealand. McGinn noted that doctors’ concerns around a medical workforce crisis have been dismissed and diminished.

Read her whole column; I'd chatted with Johanna a few months ago as she was getting going on this project. She's been interviewing foreign-trained doctors who want to practice here. Simplest seems to be to pass the exam here, then go and practice in the UK for three years, and then consider coming back. 

All of it feels like it's ripe for change. The doctors' survey suggests lack of colleagues is biting, and that'll eventually have to feed its' way up into the licensing cartel. 

If the Commerce Commission did decide to take up medical services for its next market study rather than some populist boondoggle demanded by the Minister in an election year, it could do an awful lot of good. 

To be rescued from the Wellness Regime

TVNZ's "Creamerie" series was excellent. In it, a virus has killed off all the men. The surviving women implement a dictatorship of wellness. 

I wonder if its writers spent too much time dealing with the New Zealand public service. 

Josie Pagani skewers some dripping work out of Treasury.

The Treasury has released a new report to accompany its Living Standards Framework.

The framework is a salad of abstract concepts like ‘’knowledge’’, ‘’voice’’ and ‘’subjective wellbeing’’ attractively arranged in columns and bubbles with no development of logical relationships between them. Nor any use of old-fashioned analytic tools such as whole sentences.

...

I expect policy advice to highlight the costs and benefits of alternatives, to strip bare tradeoffs, and present practical menus of options. I expect sophisticated evaluation of whether policies are achieving what they are meant to.

When advice instead hides choices behind wellbeing mush, no political constituency is ever built for underlying ideas. If no-one can disagree with ‘’wellbeing’’ then no-one can ever win an argument for it either.

The idea of ‘’wellbeing’’ as a political project has emerged from the takeover of our social institutions by an educated middle class that thinks it's being progressive. Instead it signals its elite status.

Treasury is meant to be the government's lead economic advisor. Parts of it seem unfit for purpose.