Monday, 20 October 2014

What's wrong with caveat emptor?

This was the kind of thing I was worried about when the new food safety bill came in:
Tourists flock to her [Biddie Fraser-Davies] 4.4-hectare farm 20 minutes north of Masterton to enjoy a unique, gate-to-plate culinary and farming experience. Each of her cheeses bears the name of the jersey cow whose milk was used to make it.
But earlier this month a letter from a ministry food safety official told her she had until November 1 to get a $3680 risk management audit, or be forced to close.
That sum amounts to about a ninth of her annual turnover from a business that produces less than a tonne of cheese a year and earns her about $33,000.
Her problems began with an appearance on TV's Country Calendar in 2009, after which government food safety inspectors visited. She said they found her hygiene and equipment were faultless, but still told her she would be closed down unless she developed an approved risk management plan and swallowed a big rise in her compliance costs.
The regime, as I understand it, scales rigour to risk so that lower risk products have fairly small compliance costs. But high fixed costs on things like cheese risks killing off small producers.

Recall that, in 2012, then-Minister Kate Wilkinson said:
The cheese that's produced from three cows or three thousand cows is still expected to be safe. ... We want the Biddies [cheese-maker Biddy Fraser-Davies] of this world to keep producing fantastic cheeses, but we also want that cheese to be safe.
Why shouldn't Biddie Fraser-Davies be able to put a big sign up outside her shop saying that her cheese is produced without an approved risk management plan and that caveat emptor applies? Who's the we in Wilkinson's statement? If it's the people buying the cheese, they should be able to judge for themselves. If it's people who don't buy the cheese, why do they get a say?

I can understand worries about industry-reputation effects if there's botulism or something in one small producer's batch. But are those effects likely to be substantial where things are sold with an explicit caveat emptor sticker?

UPDATE: I had wrongly assumed that Biddie was being chased under the new Food Act. The Food Act, passed in the last Parliament, was meant to stop some of this nonsense for small-scale operators. But Donald, in comments, usefully notes that she's being chased under the old Food Act as the new 2014 Food Act doesn't come into force for some time yet. And so there is no particular inconsistency between the former Minister's having said she wanted Biddie to be able to continue making cheese under the new Act, and that she's currently being chased. It's a bit odd that none of the officials quoted pointed to the forthcoming changes that might ease things up for those in her situation.

Friday, 17 October 2014

Wellington bleg: good high schools for music

The staggered move of Offsetting Behaviour to Wellington will soon be completed. I will be following Eric to the capital having taken a position at the School of Government at Victoria University, starting in the new year.

When Eric was about to make his move, he blegged on real estate in Wellington. I shall free load off the intelligence that he gathered then, but now I have a different request: What are the good high schools for children with a strong interest in classical (orchestral) music? Considerations here are whether they have music options as a classroom subject that group together people who already know how to read music and have the rudiments of theory, and whether they have school ensembles (not necessarily an orchestra) of a reasonable standard. We have a preference for co-ed over single-sex and state over private, but are looking at all options. All suggestions welcome.

Thursday, 16 October 2014

Inequality narrative-buster

It's been pretty clear that income inequality in New Zealand has been stagnant for at least the last decade or two. It rose in the late 80s and early 90s, but nothing much has happened since then.

And whenever I point it out on Twitter, against assertions from others that income inequality is worsening, I get replies that the problem isn't income inequality but wealth inequality. I hadn't seen great data on wealth inequality, so I couldn't much comment. But we have some data on wealth growth and median wealth growth now from Credit Suisse. Everyone should read the report. Here are the important bits for the New Zealand debates.

First, New Zealand is far wealthier now than it was in 2000. Per-adult wealth is up by over 300% (a 100% increase is a doubling, a 200% increase is a tripling, a 300% increase is a quadrupling) over the period, when we evaluate wealth at current exchange rates: a high dollar means we are wealthier, no matter how much some groups want to make us poorer by devaluing the dollar. When we use constant exchange rates instead, wealth has more than doubled (the yellowish line).

Per-adult measures, which I interpret as meaning an average, can be a problem though: what if all of that is because of massive gains at the top? We need medians. Medians are below.

This is the one using current exchange rates rather than constant ones, so growth is overstated relative to constant exchange rates. Note that here the base year is 100, so our being nearly at 500 means a near quintupling of median wealth. Now it would be lower were we using constant dollars, but we can compare the current dollar mean rise with the current dollar median rise. If gains were accruing at the top, we'd see larger increases in means than in medians. If they were accruing at the bottom, we'd see bigger gains in medians than in means. And it looks rather like larger gains in medians. 

This is then confirmed when we get out to Table 1, which lists New Zealand as a "Medium wealth inequality" country, along with Australia, Canada, Finland, France, Greece, Ireland, Italy, the Netherlands, Portugal, Singapore, Spain and the UK. I note that Denmark, Norway and Sweden rank as having higher wealth inequality than New Zealand.

The report then discusses trends in wealth shares of the top decile, by country, from 2000 through 2014. Their data doesn't go back to the 80s and 90s, unfortunately. But over this period, New Zealand ranks as one of the countries experiencing a significant reduction in wealth inequality over the period. Their measure is the share of national wealth held by the top 10%. In 2000, the top 10% owned 62.3% of the wealth in New Zealand. This placed New Zealand as 19th out of 46: the top 10% had a smaller share of national wealth than was seen in the median country in the survey (19th lowest). 

In 2007, the top decile owned 61.2% of the wealth; wealth inequality dropped slightly from 2000 to 2007. In that year, New Zealand had the 22nd lowest wealth inequality - about the median. In 2014, the top 10% owned only 57% of the wealth in New Zealand: a substantial fall. In 2014, we had the 12th lowest wealth inequality. 

So, according to the Credit Suisse report:
  • Wealth inequality in New Zealand is lower than in most other countries in their survey;
  • Wealth inequality in New Zealand has been falling from 2000 through 2014, with the biggest drop concentrated in the period from 2007 to 2014;
  • Low wealth inequality isn't necessarily a great thing: while Australia, Belgium, and the Netherlands had less wealth inequality than did New Zealand in 2014, so too did Spain, Greece and Italy. 
Please update your narratives accordingly. 

Wednesday, 15 October 2014


Last year, Gosplan* wouldn't let the Copthorne Hotel rebuild because they couldn't decide whether or not the Arts precinct designation they imposed on the area was consistent with the existence of hotels.

And now, somehow, there's a problem in hotel room availability.

Delays in getting hotels re-opened could leave Christchurch facing a bed shortage when the Cricket World Cup opens in the city in February.

... New Zealand Hotel Council regional chairman Bruce Garrett said February was the busiest month of the year for hotels, with occupancy typically running at around 90 per cent, so there was little capacity to absorb the additional demand for beds created by the Cricket World Cup.

The number of hotels operating in the city was fewer than expected by this point in the city's recovery and accommodation was going to be at a premium.

"There's a number of projects on the go that will add another few hundred rooms but they are not going to be ready on time," Garrett said.

Visitors coming to Christchurch in February would probably have to stay in backpackers or motels rather than hotels if they had not yet booked a bed for the night, or fly in just for the day.
The number of hotels operating in the city is fewer than expected by this point in the recovery. There could be a few reasons for that. Dithering over the site for a convention centre and blocking hotels from rebuilding because of grand precinct visions might be near the top of the list.

* Central Christchurch Development Agency.

Monday, 13 October 2014

On offence

Philip Matthews at the Christchurch Press asked me for comment on the offence caused by some of the decorated cars at Canterbury's ENSOC RoUndie 500, and by Otago students uploading intimate photos of other students; the comments appeared in Saturday's Press. I don't believe that article is yet online, but here's what I told him.

It's important to draw distinctions between things that are in poor taste and cause offence, and actions that cause more substantial harm. There is a world of difference between uploading intimate photographs of people without their consent, which I understand to have happened on an Otago Facebook page, and dressing up like the old World Wrestling Federation's Iron Sheik, carrying a cardboard guitar, and calling yourself the Tali-Band. The former case can create really long term damage for the person whose pictures were uploaded. But it's a bit of a long bow to say that the latter one was castigating Muslims in general: there's a terrorist organisation called the Taliban, and the idea of a "Tali-Band" is at least somewhat funny.
I haven't seen all of the cars, so maybe I'm missing something important, but one of the ways that people deal with scary and dreadful things like terrorist organisations or Ebola is through humour. The MH-370 car was almost certainly in the "too soon" category, but I worry that we are a bit too quick to take offence to things, and that too broad of measures to stop anything that might cause offence increases the range of things that are considered offensive. It's a shame more people have not watched The Aristocrats, or even South Park. Maybe next year ENSOC should encourage that their teams mock Canadians instead. With our beady little eyes and flapping heads, we don't take much offense at such things and are usually just happy to be noticed. It even didn't bother me when student evaluations complained of my Canadian accent; you can't please everybody."
Sometimes, Caplan's hypersensitivity training can be appropriate.

The recommendation that ENSOC mock the Canadians was less motivated by South Park and more by this:

The YouTube embed will inevitably deprecate; just Google "Sick of the Swiss".

Friday, 10 October 2014

For sale in Christchurch: one excellent house near the beach

Our house in Christchurch is now for sale. While it's up for auction 1 November, sufficiently interesting offers prior to that would be entertained.

Here's the story of our house. And it could be your house.

When we moved to Christchurch in 2003, we wanted an apartment in town or by the beach. Not being able to find either, we rented a house in Bryndwyr. We wanted to buy a house in 2004 when the one-year lease was coming due; we hoped to go month-to-month while searching. Alas, the owners moved back from Dubai and so had only a month to search. So we rented again, this time in St. Albans. We hit the property market in earnest in the spring of 2005 (August), hoping to find a great place by the beach. And we did, so we bought it.

Before buying, we asked a friend in the Geology department at Canterbury where we should be buying if we were worried about earthquakes and tsunamis and if we wanted to be near the beach. She drew a little horseshoe on the map for us encompassing the spot where our house in South Brighton is. Because it's on about a 2 meter rise from street-level, it's that much higher above the water table, protecting against liquifaction and making it that much safer in any kind of tsunami event. It's also across the street from South Brighton elementary, and consequently that much farther from the water in the Estuary: this also reduces the risk from any tsunami.

While we were focusing our search on that location, we'd have bought this house just about anywhere, had it been elsewhere. The wood panelling and old wooden floors, well, we fell in love.

From 2005 through 2014, we loved the place. We still love it. One of the upstairs bedrooms became a nursery for Ira in 2008. Then the second upstairs bedroom stopped being my office and became Eleanor's room in 2010. The downstairs bedroom then served jointly as home office in the winter, and guest bedroom when my parents visited in the summers. Dad and I put the extra insulation into the attic; Dad put the boards down over the joists in the attic making an excellent huge storage space. He also put the coils up on the roof of the garage to help heat the pool. He built the self-contained sandbox in the back yard too, with lid that keeps the cats out before folding up into benches for use.

The house is great for entertaining. The kids can run off into the living room while the adults stay back in the kitchen and dining room. We've hosted huge dinner parties there, and especially around U.S. Thanksgiving, Guy Fawkes' Day, and Christmas, for our friends in the Economics Department, visitors, and transplanted North Americans.

In the summers, we'd get home from work around 5:30, then run off to the beach with the kids - a five minute walk from the door - with one of us staying back to cook dinner. Post-dinner romps through the dunes were also great.

We were paranoid when we bought; I doubt anybody else in town in 2005 consulted a geologist before buying. We also had a thorough building inspection. The place is great. And, the work paid off when the 2010 and 2011 earthquakes hit. Our property saw no liquifaction and no real land damage. The piles shifted a bit, the decorative brick chimney needed to come down, and there was cracking to the paint, but the house was entirely liveable while we waited until May 2014 for our opt-out repairs to begin.

The house has great indoor-outdoor flow for entertaining. We had a dozen people scheduled to come over for a pre-Christmas event on 23 December, 2011, when the large aftershocks hit. We swept up the broken glass, moved the dining table outside along with the chairs, and turned it into an outdoor dinner, serving from inside, with the double french doors wide open on a perfect, but shaky, summer's afternoon.

The quake taught us a lot too about our local community. In short, it's superb. You won't find better. Our neighbours are all excellent. We miss them; you'll appreciate them.

All of our repair work was done by our opt-out contractor, Character Homes. You are not getting some shoddy "Who knows which contractor Fletcher's picked" job here. We chose a contractor who specialises in old wooden character homes because we love our house and couldn't bear to see it fixed poorly. We booked in with them shortly after the February 2011 earthquakes, back when we all had such optimistic dreams of speedy EQC assessment and repairs. Repair work started May 2014 and finished in September. And so it's fresh and new for you, but with repairs set before we knew we were going to move to Wellington: we've done it as though we were doing it for ourselves.

And rather than use the AMI/Southern Response payout for the minor cracking to the driveway to replace the driveway, we put it all into making sure that every weatherboard was sound and every wall and windowframe was painted. The prior owner built that driveway to double the existing specs, or at least that's what he told us when we bought, with double the re-bar and far thicker cement pads. I couldn't imagine that any replacement, on insurance, would be as good as what's there, so we made the house as close to perfect as we could instead.

There's one remaining insurance claim - the lining on the pool twisted in the quakes; we've yet to see a Southern Response assessor on it. The claim will transfer, but the pool is perfectly fine to use. The twisting means that the lining will deteriorate more quickly than it otherwise would, but we've had two great summers of swimming since the quakes. Our four year old swims like a fish because of it, as does our six year old.

Real estate sites are always a bit dry. It's hard to get a sense of how a house *works* from a set of pictures. When we were buying in Wellington, where we've moved because I've taken a new job, I had no end of frustration in trying to understand what a house was *like* from a set of pictures. How does one room flow into the next? So I took this video as walk-through. It's far longer than is reasonable for somebody who just wants a quick feel for the place, but if you're weighing up whether the open home is worth your time and the auction worth your bidding, you should watch it. Eleanor, our four year old, provides the tour. The repair work wasn't quite done when I took the video back in August: there's a pile of curtains on the kitchen island that are now back up on the windows, and there's blue tape marking the spots that Character Homes still needed to tidy up. But you'll get a feel for the place.

I wish we could have brought the house with us to Wellington. Our loss is your gain; I hope you'll love the house as much as we have.

Here's Eleanor to take you through. Enjoy.

Thursday, 9 October 2014

Morning roundup

Short notes on the worthies from the open tabs, each of which would merit a full post in an unconstrained world.
  • If this high court ruling holds, expect no new policies to cover full replacement. Justice Whata ruled that Vero must cover the full costs associated with reinstating a Christchurch building, even where some of those costs are due to things like requiring deeper piles than were necessary when the policy was set. I think the insurer is right that it should not be liable for costs that are consequent to changes in Council rules; alternatively, Councils could give free money to each and every person in town by requiring that, post-quake, every house be made of gold and have platinum spouting. I also do not think that Councils should be changing the building requirements for a reasonable interval between an insured event and the completion of earthquake repairs. If the building code isn't good enough, fix it ahead of the event so that insurance pricing can incorporate a better measure of expected repair costs or so owners can insure to a higher value to allow for the higher costs.
  • Remember "Shoot, shovel and shut up"? Property owners have incentive to take defensive action before a costly regulation is put in place, even if that means destroying valuable habitat. I wonder if that's what's happening in this story. A church is bulldozing two houses to put up a parking lot; the street is about to be designated as a "special character area" in the Unitary Plan. Could be that they'd have held onto the houses if they'd reckoned they'd face much much higher costs if they wanted to demolish sometime down the line. I wonder whether other areas about to come under such protections are seeing similar precautionary demolitions.
  • There'd be a billion screaming anti-tobacco activists if tobacco sponsorship of an arts festival resulted in the cancellation of some anti-smoking play. Government anti-tobacco health funding of the West Australian Opera has resulted in the cancellation of Carmen because there would have been on-stage smoking; I've seen outcry from Catallaxy and Crikey. Nothing much otherwise. 
  • Addiction is something most addicts grow out of. I love this quote: 
    So why do so many people still see addiction as hopeless? One reason is a phenomenon known as “the clinician’s error,” which could also be known as the “journalist’s error” because it is so frequently replicated in reporting on drugs. That is, journalists and rehabs tend to see the extremes: Given the expensive and often harsh nature of treatment, if you can quit on your own you probably will. And it will be hard for journalists or treatment providers to find you.
    Similarly, if your only knowledge of alcohol came from working in an ER on Saturday nights, you might start thinking that prohibition is a good idea. All you would see are overdoses, DTs, or car crash, rape or assault victims. You wouldn’t be aware of the patients whose alcohol use wasn’t causing problems. And so, although the overwhelming majority of alcohol users drink responsibly, your “clinical” picture of what the drug does would be distorted by the source of your sample of drinkers.

    Bryan Caplan has similar thoughts

  • Political ignorance remains a major source of political failure. How can we get things right where voters fundamentally fail to understand the basics on the composition of federal spending?