Monday, 19 November 2018

Trivialising vocabulary

A teacher provides a defence of not expecting kids to know the word trivial, and not using hard words like trivial on NCEA exams. 
And yet the incidence of an apparently innocuous word causing such consternation amongst exam candidates speaks to a number of interesting issues. The first is how quickly language changes, and how difficult it is to pick up these changes when they are intergenerational. The people setting the exam have no doubt been surprised that the word ‘trivial’ is not widely recognised by the young. So was I. I had no idea it had slipped out of common usage. But then I teach mathematics and have an interest in philosophy and trivial has an important meaning in both those fields. Even if I didn’t, I grew up in a world where the word was often used. I also grew up in the countryside and so as a child knew the difference between a cow, a heifer and a steer. None of these things speak to the general state of my vocabulary, just the context in which it was acquired.

Speaking to a history teacher following the exam, I was interested to hear that the problem with ‘trivial’ was not confined to struggling students, but affected candidates of all abilities. Top students were caught out because the examiners did not realise a word was no longer widely understood. Students were able to make guesses based on the usages they were familiar with, specifically trivia quizzes of various kinds. So some students assumed that trivial meant highly detailed and specific. And fair enough too – the questions in Trivial Pursuit are rarely trivial in the way implied by the quote in the exam. So it might be less a case that students don’t know what trivial means, and more a case that the meaning of the word trivial is changing.
I hadn't known that trivial had fallen out of common usage. If it has, it's been in the last decade. Google ngrams run through 2008. The decline in word usage since the 70s has looked fairly trivial.


A sympathetic and compassionate future policy would restrict all NCEA exams, including those for final-year students in history, to use only words that show up on the list of the 3000 most common words in the English language.

Scripts using words beyond the ones on that list should be downgraded. Not only does the use of bigger words make those of more limited vocabulary feel bad, but we should also expect that, when NCEA achieves everything it is destined to achieve, the graders themselves will only know 3000 words.

Getting down to the list of 3000 may take some time. But the Eleventh Edition NCEA Dictionary will finally have whipped the language into its final shape - the shape it's going to have when nobody speaks anything else. It will have cut the language down to the bone. There is great wastage in the verbs and adjectives, but there are hundreds of nouns that can be got rid of as well. If you want a stronger version of "good", what sense is there in having a whole string of vague useless words like "excellent" and "splendid" and all the rest of them?

Friday, 16 November 2018

More than trivial

Students sitting the NZQA Level 3 History causes and consequences paper on Wednesday were confronted with the word in a quote from Julius Caesar: "Events of importance are the result of trivial causes."

Students were asked to analyse the extent to which they agreed or disagreed with Caesar, with reference to the causes and consequences of a historical event.

...

Some of his peers thought trivial meant "significant", he said.

"Trivial isn't a word that you hear too frequently, especially not if you're in Year 13," he said.

A definition of the word should have been included in the exam, he said.

Chairman of the New Zealand History Teachers' Association, Graeme Ball, agreed.

He called the exam a "little bit of a snafu" on the part of NZQA, and said the language used in questions should be "accessible to all".

The exam was not testing comprehension, so it was "unfair" to make that part of the assessment, he said. 
New Zealand's schools are giving diplomas to illiterates. Knowing the word trivial should be trivial.

Try using it in a sentence. The failures in New Zealand's education system are more than trivial.

Thursday, 15 November 2018

Uplifting?

I'm not sure quite what I was expecting out of NZ First's Regional Growth Fund, but it wasn't this. From Richard Harman's Politik newsletter (well worth the subscription):
Regional Economic Development Minister Shane Jones has announced Provincial Growth Fund (PGF) support for a new 560-tonne travel lift for Oceania Marine Group. The new lift will better serve the growing demand for refit and building services of workboats and superyachts and will help fund civil works at South Shipyard – including new piers, hardstand reinforcement and other works. "The PGF will support this important investment with a loan of up to $4.8 million, and further discussions are taking place on terms and conditions” Shane Jones said.   
I'd thought the fund was for public infrastructure stuff that might enable regional growth, and maybe for helping out councils having to shell out for facilities for tourists who don't spend much in the area.

I don't get the justification for this one. Why is the government subsidising outfits fixing superyachts? Is there some failure in credit or capital markets that's specific to boats? Why aren't private investors seeing the opportunity and rushing to fund the project? Don't owners of superyachts pay fees for service that could cover the cost of the lift over time?

I hope that due diligence around this stuff is tight....

Bias toward action?

Kiwis so-inclined can petition their Parliament for legislative change. But they cannot petition Parliament to maintain the status quo.

Victoria University's Chris Eichbaum wants the government to ban private fireworks displays.
I kinda like fireworks, so I submitted a petition asking the government to maintain the current rules. I started from Chris's petition, added the word 'not' in a couple spots, listed some of the ways that fireworks are awesome, and submitted it.

A few days later, I got a very apologetic phone call from the Clerk's Office saying that it's only possible to petition Parliament to change a law, not to leave a law as it is. He was exceptionally helpful, listing all the things people could do if government did move to legislate in response to the petition - I already know them, but some folks don't, so that was nice.

And then I got the official email rejecting the petition.



High numbers in support of a petition signal something about the strength of support for the petition, but tell you nothing about the strength of opposition. I suppose it's nice that those opposing petitions don't need to rally the troops to counter-petition every darn thing, but when a government cites the number of letters from school-kids in support of a policy as reason for doing things....

Wednesday, 14 November 2018

Complicated Gains Tax

Newsroom reports on a talk by two members of the Tax Working Group that lays out the difficulties with any capital gains tax.

One part that's probably underappreciated: the extent to which everything in the tax system is built around the rules as they're currently structured, and how much would need to be rejigged if a CGT were put in place. 

One example:
The report itself highlights this complexity in the application of a capital gains tax to KiwiSaver and Portfolio Investment Entities (PIEs). Most KiwiSaver schemes take the form of multi-rate PIEs (MRPIEs). While there are a number of features in the MRPIE tax regime the group would not want to see disturbed by any new rules, a CGT would affect MRPIEs that invest in property, or Australasian shares. An individual would be subject to a tax on those asset types, so it follows that the MRPIEs should similarly be taxed.

However, these are open-ended funds into which investors come and go. That means a fund would have to allocate gains and losses to an individual investor by taking into account the change in value during the time that investor was actually involved in the fund. It would require detailed record-keeping, as well as various adjustments for gains and losses already recognised due to redemptions from the fund. And while that’s not simple, it’s even more complex in reality. This is because units are issued and redeemed on a daily basis, MRPIEs often invest in other MRPIEs, and a retail KiwiSaver scheme may invest in a wholesale PIE that in turn invests in a specialist PIE.
Having a CGT is complicated. Not having a CGT is complicated too because the tax system has to adapt to make sure that labour income doesn't pretend it's capital gain. The latter isn't perfect, but it's in place - the system's kinda built around the absence of a CGT and tries to account for it. That means that 'just' putting in a CGT means going back over everything that's been designed around the absence of one.

NB: I do not pretend to understand MRPIEs. But I'm not the one insisting on changes to a complex system that's evolved since the 80s reforms.

The Calculus of Carbon

I had to trim last week's NBR column to fit the page. Here's the original. Enjoy!
New Zealand’s climate change policy could stand to be just a little more vanilla.

When Cyclone Enawo hit Africa’s east coast in 2017, it wiped out about 16% of the world’s vanilla production. The cyclone came on the back of droughts that hurt the 2016 crop; there was no huge buffer to meet demand.

So, globally, vanilla users had to cut back their consumption by about a sixth – and in a hurry. Of course, unless you were directly involved in the vanilla industry, or were a baker using vanilla in weekend pancakes, you probably did not even notice.

There were no Ministers in Charge of Vanilla Change sending out a dozen press releases a week proving they were taking the problem seriously. There were no Vanilla Commissions or Taskforces. No Productivity Commission reports on the best ways for New Zealand to respond to its shared vanilla crisis. No MBIE advice on preferred ways of subsidising alternatives to vanilla in ice cream.

Bernard Hickey didn’t even show up to propose special taxes on “Vanilla-guzzling” concoctions from Wellington ice cream and gelato institution Kaffee Eis, with all taxes collected helping subsidise vanilla for the Girl Guides in hope of bringing back their soon-to-be-cancelled vanilla-flavoured biscuits.

Instead of all that ruckus, markets simply worked their regular vanilla-flavoured magic. Prices worked.

Economist Alex Tabarrok says prices are a signal wrapped in an incentive. The spiking price of vanilla signalled relative scarcity, along with an incentive for everyone to change their behaviour. Those most readily able to reduce their use of vanilla would be the first to adapt. Vanilla by-products started being pressed into service – spent vanilla flecks almost quadrupled in price, according to the Financial Times.

And those for whom vanilla was most critical, as they judged for themselves and demonstrated with their own money, simply lumped the price increase.

It is exceptionally difficult to come up with policy options that beat simply letting prices work.

Every alternative I have suggested around grand government vanilla strategies would have been worse. If the government was exceptionally lucky, it would have required firms here to do what they had already figured out would be best for them in their own particular circumstances. But in every other case, the government would have enforced unnecessarily costly adjustments. No Minister or Ministry can tell what the best substitutes are for different users, or which uses are most valuable to whom. That kind of knowledge can only emerge from the interplay of buyers and sellers in markets, and is otherwise invisible to Wellington desk-jockeys.

The New Zealand government has committed to reducing our greenhouse gas emissions. Fortunately, New Zealand has a functioning Emissions Trading Scheme (ETS). Every litre of petrol or diesel you purchase includes the cost of the New Zealand Units (NZU) purchased in the ETS to cover the fuel’s eventual carbon dioxide emissions. Electricity is in the ETS, so every kilowatt of power put into the system by coal, gas or geothermal generators requires those generators to purchase carbon credits. And the government has also committed to strengthening the ETS.

If there were no way of pricing carbon dioxide emissions, the government would be forced into a lot of rather second- or third-best alternatives. The government would have to guess how different industries, firms and consumers would behave in a world with carbon prices and then set regulations, taxes and subsidies to encourage those behaviours. It would be dreadfully inefficient compared to what prices can achieve through the direction of no one, but there would be some interventions that would still likely be worthwhile.

When we do have a functioning ETS, though, layering additional subsidies and regulations on top of the scheme, and particularly for those sectors already covered by the ETS, very easily risks New Zealand failing to do nearly as much as it could to reduce emissions.

The best that a government committed to reducing greenhouse gas emissions can do is to make sure the ETS is working as well as possible, then buy back and retire credits in the system. Those able to most easily reduce their own carbon emissions will be the first to sell; those for whom change is difficult will be last to sell – exactly how people responded to vanilla price increases. No Minister or Ministry has to guess who can most easily adapt.

Buying back credits within the ETS, rather than forcing particular sectors to change through regulation or bans, helps make sure New Zealand gets the greatest emission reductions per dollar’s worth of effort put to the cause.

Regulatory options, like mandatory fuel economy standards, or electric vehicle subsidies, risk doing harm because of the good forgone. An electric vehicle subsidy is unlikely to increase greenhouse gas emissions. But it would increase emissions compared to putting the same amount of money towards buying up and retiring credits in the ETS.

Different policies have very different costs per tonne of carbon dioxide mitigated. A government using regulatory alternatives has to pray it has modelled those costs correctly and found the carbon best-buys.

Work published in the fall issue of the Journal of Economic Perspectives summarises recent estimates of the static costs of policies mitigating greenhouse gas emissions. Corporate Average Fuel Economy standards in the United States cost between US$48 and $310 per ton of carbon dioxide mitigated. But NZU is selling on the spot market for around NZ$25. Imposing similar rules here would then be, at best, about a third as effective in reducing emissions than simply expending the same resources on buying and retiring NZU.
NBR graph
Kenneth Gillingham and James Stock. 2018. "The Cost of Reducing Greenhouse Gas Emissions" Journal of Economic Perspectives 32:4 (Fall).

The journal article does note that dynamic effects can vary: If there were no electric vehicle charging stations, a chicken-and-egg problem could prevent people from taking up electric vehicles if those make sense for them, so policy could help. And if a government as large as America’s starts subsidising buying huge volumes of solar panels, it could encourage technological innovation that reduces costs across the board.

But neither case seems particularly relevant: There are few major transport routes without charging stations now, and New Zealand demand for batteries or solar panels is not likely to be large enough to drive broader technological change. And while New Zealand could plausibly lead change through biotechnology advances in better low-emissions pastoral systems, if the grasses cutting greenhouse gas emissions were developed using genetic engineering, the government already bans their use.

It is also rather likely that successful dynamic investments of this sort are easier to identify in hindsight than with foresight. Buying back ETS credits yields more certain returns.

New Zealand’s climate change policy could stand to be a lot more vanilla. Simply making sure the market is working well, strengthening it where needed, and then buying back credits might sound boring. But vanilla really can be excellent. If you don’t believe me, try the Vanilla Bean at Kaffee Eis.
I particularly recommend adding coffee to the Vanilla Bean as an affogato.

Tuesday, 13 November 2018

A regulated market model

Over at Newsroom Pro ($), I make the case for basing legislation and regulation for cannabis markets on our existing rules for spirits.

The government has to have a referendum on cannabis by November 2020 and might want to have it earlier than that to not coincide with the general election. All the experts say that the referendum question should ask voters to endorse or reject a piece of developed legislation, with rejection meaning that the status quo stands. Writing legislation and regulation around some bespoke model for cannabis, to hit that deadline, would be a mess.

But it wouldn't be a mess if we had a good starting point. Existing rules around alcohol (spirits in particular - retail in specialist outlets rather than at the supermarket) handle a lot of problems that any regulatory framework for cannabis would have to solve too. How do you license retailers? How do you prevent minors from having access? How can we have both home production and commercial production? What should the rules be around advertising and marketing for commercial production? How much say should local councils have? How do consumers know what's in the product and what strength?

I'm not saying that the alcohol rules are perfect. But for any "But Whaddabout" question that comes up for cannabis, the starting point for an answer is looking at how we already deal with it for alcohol, see if the answer there for alcohol basically works for cannabis or whether it would need to be tweaked, then move on to the next one.

If we basically treated cannabis like spirits:
  • People could grow at home for non-commercial use, sharing with friends; if they discovered that they had an excellent green thumb, they could set up a business and be subject to the rules for commercial supply, including excise. Remember how 42 Below got its start? A lot of folks in the cannabis community seem to think that allowing commercial growing and sale would kill the grassroots as big players would run everything, but just look at the thriving craft beer community and the developing craft distillation community. They all coexist along with lots of folks who brew and distil at home. 
  • Products available for retail sale would have concentrations listed on the packaging. Alcohol has the strength and number of standard drinks. Excise would be based on product concentration.
  • Councils could set Local Cannabis Policies that varied from the National Default Policy if they wanted, along with cannabis-ban areas where they might not want people smoking.
  • Products couldn't look too attractive to kiddies - important for the edibles market. Same goes for advertising. There aren't really comparable alcohol edibles - there'd likely have to be additional packaging requirements to make it really clear that it's a cannabis-based product.
  • On-licenses would have host responsibility requirements. Hopefully the SmokeFree Environments Act wouldn't kill on-licences or restrict on-licences to edibles - supervised consumption like this could be harm-reducing. 
  • Retailers would be terrified of selling to kids because they'd face fines, licence suspensions, or complete loss of licence. 
  • People involved in the sector would be declaring their earnings to IRD and paying tax on those earnings; companies in the sector would be paying company tax; purchased product would carry GST; producers would be able to claim back the GST on their inputs. 
  • Cannabis-based products would be ineligible to be prizes in raffles. For some reason, alcohol is on the list of prohibited prizes. Cannabis would wind up there too if we just follow alcohol. Also, as aside, "vouchers or entitlements to commercial sexual services" are prohibited prizes under the same rules. Bans on alcohol as prizes for raffles at school fairs is a pain; I've not known the ban on raffling off brothel vouchers as being a binding constraint at school auctions. It would be rather fun to buy tickets for that raffle under other peoples' names though, just to make the prize drawing more fun. "Superintendent Chalmers wins the $500 voucher for Il Bordello!"
Update: worth checking out Russell Brown's summary of Friday's cannabis conference. I was there chatting with Labour's Greg O'Connor about his experiences in drug policing and his study tours to places that have steered away from prohibition. Here's Greg at a cannabis shop in Colorado