Wednesday, November 30, 2011

Plagiarism

Novelist Jeremy Duns is on the warpath against plagiarism in spy fiction, his area of expertise.

Here he shows that Lenore Hart's "The Raven's Bride" drew heavily from a 1956 novel.

Lenore Hart's website says she's a fellow of the Virginia Center for the Creative Arts at Sweetbriar College, teaches in the graduate writing program at Wilkes University, and is Visiting Writer at Old Dominion University.

Duns is pushing St. Martin's Press to check into things, and notes a few other "rampant plagiarists" that they've published. The book is still available.

Here and here we find Assassin of Secrets lifted from five books by Charles McCarry, as well as some Bond novels and Ludlum. The book seems no longer available and the author's fessed up.

If everything published now also comes in searchable electronic edition, and Google's digitizing the world's back catalogue, how long until somebody starts an automatic routine running everything through TurnItIn? 

I wonder though about efficiency. It's implausible that Hart's book substantially reduced demand for O'Neil's prior book. If anything, it's a fraud on the publisher by the author if the publisher contracted for a new rather than a derivative work, and perhaps a fraud on the reader if the reader enjoyed the book less for its having been derivative. But Dun talks about how he enjoyed Markham's "Assassin of Secrets" enough to have contributed a blurb for the book, before he noticed its heavy lifting from other books that he had previously read and enjoyed. If an expert gets new enjoyment from reading what feels like a new book, how different is this from remix artists creating new things from other songs? The same post has extensive discussion of other, more minor, literary appropriations that seemed acceptable.

Perhaps this kind of thing ought to be allowed on payment of licensing fees. Tyler wrote a few years back:
Plagiarism is least just when an idea is stolen before the creator can bring it to the public.  That said, some of these forms of plagiarism are efficient, if not always fair.  We can expect the "good executors" to steal from the "idea people"; not all of the latter can execute well, nor are they typically good at selling their ideas to the executors.
Optimal policy is not obvious.

Bits of heating

I love this idea, but wonder about its practicability.
Two researchers at the University of Virginia and four at Microsoft Research explored this possibility in a paper presented this year at the Usenix Workshop on Hot Topics in Cloud Computing. The paper looks at how the servers — though still operated by their companies — could be placed inside homes and used as a source of heat. The authors call the concept the “data furnace.”

They acknowledge that it is more likely that data furnaces, if adopted, would be placed first in basements of office and apartment buildings, not in individual homes. But as a “thought-provoking exercise,” the authors give homes the bulk of their attention.

If a home has a broadband Internet connection, it can serve as a micro data center. One, two or three cabinets filled with servers could be installed where the furnace sits and connected with the existing circulation fan and ductwork. Each cabinet could have slots for, say, 40 motherboards — each one counting as a server. In the coldest climate, about 110 motherboards could keep a home as toasty as a conventional furnace does.
I had thought that data centres required pretty strict climate control; achieving that over massively distributed systems would require more than a few techies who could be dispatched from the NOC in case of temperature fluctuation or other circuit faults. It would be a bit surprising if those costs didn't outweigh the cooling plant cost reduction; on the other hand, they have started moving data centres to the Arctic circle.

Tuesday, November 29, 2011

Blue law Bob Frank

Tyler Cowen posts an email from Robert Frank on Black Friday and shopping. One critical bit:
But the arms race that’s led to longer store hours poses a more serious problem for employees, many of whom had little choice but to truncate their holiday time with family and friends. I had a recent conversation about this issue with a friend in Ithaca who owns a wine store. Traditionally, New York State wine merchants were not allowed to do business on Sundays. But last year that restriction was repealed, and I asked my friend how the change had affected him. His overall sales were about the same, he told me. The change had thus been a clear negative from his perspective, since it meant that he and his wife were no longer able to spend Sundays together with their children. The upside was that customers who lacked the foresight to shop in advance for their Sunday wine needs could now be accommodated. If we’re willing to discount the cost of an inconvenience suffered by those who could easily have avoided it, the costs in this case seem clearly to outweigh the benefits.
Emphasis added.

The world of Sunday closing laws and limited shop hours didn't just impose minor inconvenience. They made two-earner families far more impracticable; Bruce Yandle found female labour force participation reduced support for blue laws. They also privileged small inefficient merchants over larger, lower cost retailers. And recall that a pretty big chunk of observed productivity gains from the 90s came from Wal-Mart.

I'm more than happy to count the disutility felt by shopkeepers and their employees when hours are longer. But putting a thumb on the scales by assuming away the inconvenience imposed on customers takes Frank outside of the economic framework for welfare analysis.

Monday, November 28, 2011

Party positions - I don't believe it edition

Political Compass placed NZ political parties on a two-dimensional left/right, authoritarian/libertarian chart. (HT: Bryce Edwards)

  1. The left-right economic axis seems about right. It's odd that Labour this year, running on a $15 minimum wage, capital gains tax, and a fairly dirigiste programme, ranked right of centre, but the relative positions seem roughly correct.

  2. The authoritarian-libertarian axis does not seem right. ACT, which mused about marijuana legalization, is ranked more authoritarian than Labour, which would have imposed pretty severe alcohol regulations. ACT is also ranked as more authoritarian than Maori, who seek to ban the sale of tobacco. Many of ACT's candidates were explicitly libertarian. Putting them as more authoritarian than Labour requires putting a fair bit of weight on their crime & punishment stance and mapping views on indigenous rights / individual rights onto a libertarian / authoritarian axis. The party positioning for ACT might be right for the post-election result, with John Banks as the only ACT MP. But not pre-election. Brash was the most libertarian candidate we've had in ages; it's a shame he didn't win in '05 (conditional on his having had an equivalent to Heather Simpson keeping the details in order).

  3. They're right that the Greens aren't tons more socially liberal than Labour. Yes, they take a relatively libertarian position on gay marriage / adoption, copyright, freedom of speech, and marijuana policy. But they also take a relatively authoritarian position on "nanny state" issues. I don't think the Greens, Maori, and ACT aren't as far apart on social liberalism as here made out; those three parties were regularly the ones who voted liberal on social issues in the last couple of Parliaments. 

  4. They correctly place no major party in the right/libertarian quadrant. Even ACT ought only have made it onto the zero line for 2011. This remains a bit puzzling as NZES data shows there are at least as many voters would count as social liberal / fiscal conservative as there are true conservatives. The classical liberals who have supported ACT will have to think hard about whether ACT remains the best vehicle; they know John Banks better than I do.

  5. I wonder where the dot for NZ First would have landed. North-centre?

  6. I wish they would release density maps of survey respondents by country. Sure, it's a self-selected sample. But I'd still be curious how many respondents from NZ wound up in the purple quadrant.

An ignorance teaser

The teaser for my upcoming public lecture was in last Thursday's Christchurch Press but unfortunately isn't available online. Here's the text. Hope to see Christchurch readers there tomorrow night!
The most surprising finding in Fairfax Media’s recent poll on voter preferences in the electoral referendum was that only a third of voters confessed inadequate knowledge to form a preference among the alternatives to MMP. If they were honest, both with themselves and with the pollster, rather more would have disclosed not only a near complete lack of knowledge of different electoral systems, but also a shocking level of ignorance even about the workings of our current system.

Political ignorance is neither unique to New Zealand nor a recent phenomenon. In a 1964 survey of Americans, only two years after NATO stood at the brink of nuclear war with the Soviet Union in the Cuban Missile Crisis, a mere 38% of Americans knew that the Soviet Union was not a member of NATO, the treaty organization formed to defend the West against the Soviets. The broad consensus of the international literature suggests voters know remarkably little about their own electoral systems, about their systems of government, about the policy positions espoused by different parties, about what the government spends money on, and about the likely effects of policy.

The causes of widespread voter ignorance are reasonably well known. Information is costly, and so people economise on it. Where the cost of an additional bit of information exceeds the benefit I expect to draw from learning it, I’ll do something else. We are all rationally ignorant about just about everything – we all could, if we wanted to, learn a lot more about everything from automobile mechanics to the history of the space programme. All it costs is time, but time is precious. And, for most people, the benefits of acquiring political information really aren’t worth the cost. We might learn enough to avoid looking silly in conversations with our friends, keeping in mind that they too are rationally ignorant.

What does this mean in New Zealand? The New Zealand Election Survey asks, at every election, a few questions establishing respondents’ basic grasp of the system. The 2011 results have yet to be released, but in 2008, results really weren’t very good.  A bare majority of respondents correctly identified the party vote as being more important than the electorate vote; a third thought they were equally important, and the rest didn’t know. About a fifth of respondents did not know that Labour was in government – they lacked even the basic knowledge necessary for supporting or opposing the incumbent.

Among those respondents indicating a preference for MMP over First Past the Post [FPP], about ten percent reckoned that a party earning forty percent of the popular vote should earn more than half of the seats in Parliament: a result more consistent with FPP. Among those supporting FPP, about forty percent said that a party earning fifteen percent of the popular vote should earn about fifteen percent of the seats: a result remarkably unlikely under FPP. A quarter of FPP supporters also favoured coalition over single-party government. It’s not wrong to favour either electoral system, but it is a bit odd to favour options that work against the outcomes you think important. It’s more than a little disappointing that, in the fifth MMP election, voters understood so little.

The academic literature has moved from establishing the basic facts of voter ignorance to debating its likely consequences: can voters make sufficiently competent decisions to ensure decent outcomes? There are a few ways this can happen. If voters who know very little cancel each other out on election day – effectively flipping coins when at the ballot box – the election then is decided by the choices of more informed voters and ignorance does little to affect outcomes. Alternatively, the kind of political knowledge embodied in answers to quiz questions may have little bearing on the choices voters need to make at the ballot box; I would fail any quiz on mechanical engineering, but that does not prevent me from making sound decisions when buying a car.

Unfortunately, there is reasonable evidence that political ignorance affects party and policy preferences, even after correcting for the kinds of demographic factors, such as education and income, that affect political knowledge. And, the effects are large. In analysis of the 2005 NZES, I found that those with less political knowledge were substantially more likely to disagree with the consensus of most economists on fairly basic economic matters.  The NZES asked respondents whether, to solve New Zealand’s Economic Problems, the government should control wages or prices by law. I have a hard time imagining a single economist who would agree that wage and price controls would solve any problem faced by New Zealand in 2005. But a third of survey respondents supported wage controls; a fifth supported generalized price controls. And lack of political knowledge was a stronger predictor of disagreement with basic tenets of economics than was a lack of education. Further, the more politically ignorant were more likely to support both spending increases and tax cuts – either of which alone can be a defensible preference, but which tend not to go well together.

We cannot do much to improve the general state of voter knowledge. The incentives for individual voters to become well informed are too weak and, for many voters, the costs are high. While many voters do take their democratic responsibilities seriously and work to cast an informed ballot, the evidence suggests a reasonably large proportion do not. What can we then do? The evidence suggests that non-voters have, on average, less political knowledge than voters; strenuous efforts to get out the vote then seem likely to reduce the average quality of the vote. Further, when considering the desirability of different electoral systems, we should put some weight on the relative cognitive demands placed on voters. A good system will make it easy for uninformed voters to support the incumbent if they like how things are going, or to replace the government otherwise. At the margin, this lends support to systems that elect single-party governments. 

Saturday, November 26, 2011

Feeling good, doing harm - aid edition

Brian Stewart reviews a new book by Samantha Nutt.
Every so often a new book arrives with the force of a much-needed whack over the head.
That's the jolting effect of Samantha Nutt's Damned Nations: Greed, Guns, Armies and Aid, which is causing a sensation within the increasingly troubled world of humanitarian aid.
Written by one of Canada's most influential humanitarian activists, it's the clearest examination I've read in quite a while of the economic incentives — and our own Western inadequacies — that fuel the seemingly intractable violence in so many war-torn countries, particularly in mineral-rich Africa.
A medical doctor and the co-founder of War Child Canada, Nutt is someone who speaks with remarkable moral authority, after spending more than 16 years struggling to help the most vulnerable targets, children and women, in the world's most dangerous conflict areas.
...
On a still larger scale, Nutt warns of a growing trend towards aid competition that harms far more than it helps as the sector becomes dominated by two extremes.
At one end of the spectrum is "a virtual fiefdom of large aid organizations," while at the other is "an abundance of novelty start-ups … led by students, celebrities, and other assorted individuals" with little relevant training or experience.
Meanwhile, "the space between them is rapidly evaporating."
Some of her criticism will sting many of those who acted with the best intentions.
For example, she cites the current trend towards "volunteer tourism," in which high school, church and college groups spend a few weeks building schools or orphanages in an impoverished locale, as a classic case of good intentions breeding bad results.
These groups, she says, "make a spectacle out of poverty and expose overseas communities — especially children — to exploitation and abuse."
What's more, "a revolving door of unskilled workers on the ground in two-week increments is more a burden than a benefit to any community."
Other targets are the giant fund-raising charities that spend huge sums to promote "child sponsorship" through images that portray people as pure victims, passive recipients of charity.
"These are the vestiges of neo-colonialism, cloaked in altruism…. precisely why these appeals are highly effective."
Unless you have specialist skills in demand in poor countries, you're likely deluding yourself if you think your tourist visit is doing any particular good. Which is fine if the work is better than nothing and if it no donation would otherwise obtain. But if Nutt's right that it's more burden than benefit, the delusion is harmful.

I'll have to add the book to the queue.

Friday, November 25, 2011

Election gags and efficient markets

New Zealand's election stock market has to suspend trading from midnight Saturday 'till polls close that evening. Why? The election gag law:
Between 12am and 7pm on Election Day, trading on all NZ political contracts will be suspended. This is to comply with s197 of the Electoral Act, which very roughly says that it is illegal for people to speak to each other on Election Day, and following advice from the Electoral Commission. Between those times:
  • Trading on all contracts under Election 2011 and Politics NZ will be suspended. It being perfectly legal to influence voters with not-quite current data, visitors to the site will be able to view the contracts but not trade them. Trading on contracts in other categories will continue.
  • The commenting on the forum will also be disabled in this period.
  • A banner will alert visitors to the fact that they are looking at data that is not current.
... Contracts not listed in NZ Politics and Elections 2011 will generally remain open, although we reserve the right to suspend trading on contracts in other categories which we discover pose a threat to democracy.

Any pre-suspension price manipulation will be backed out and traders responsible may find their iPredict accounts suspended until after Official Results Declared on 10 December.
Read that last paragraph again. Recall that manipulators typically increase market efficiency by providing liquidity and subsidizing other traders. But that doesn't work where the Electoral Commission bans trading at 12:00 Friday night. And so Matt's going to have to be up late figuring out which trades are attempts at jerking the prices around and then unwinding them rather than letting the distributed set of traders do it for him. The Electoral Commissioner's rule makes it more rather than less likely that somebody tries to use iPredict prices to affect folks' voting intentions.

I'm totally swamped. But here's a mission for somebody. Get the price series on some of the electoral contracts at iPredict. Run some correlations with NZX stocks that will continue trading on Saturday and whose price movements are likely correlated with election outcomes - try Contact, Chorus, Fletcher Building for starters. Ag stocks will also take a hit of Labour/Green are in as they'd then come under the ETS more quickly. If there's any reasonable correlation between those contracts and changes in the likelihood of a National victory, publish the method and results on Friday, with instructions on how anybody could pull up the Saturday prices and plug them into the algorithm. Then, on Saturday, just post the NZX prices of those contracts without mentioning the election. Ta-dah! You've just created a noisy proxy for the iPredict prices that's easily updated on election day without risking a spanking from the electoral commissioner.*

I wonder whether CentreBet will update prices during the day.

*Don't take legal advice from me; I'm likely wrong.

Partial privatisation

Auckland's Professor Tim Hazledine and I argued partial SOE privatisation on Radio New Zealand's Morning Report Wednesday morning, with minor unintentional contributions from a rather vocal Eleanor.


Tim and I are likely around 90% in agreement. We both think partial privatisation a bit of a nonsense; you get little of the potential efficiency benefits of full privatisation but add downside risk. I don't think it will wind up making a ton of difference; Tim puts more weight on the potential downside outcomes. I think we'd both agree that there's more potential downside risk than upside; he'd have the left tail fatter than I would. I think we both agreed that the "foreigners might buy shares" wasn't much of an issue.

Even if we're considering full privatisation, New Zealand's power companies would be reasonably far down on my list. You can make a defensible case that New Zealand's electricity system is one of the world's least screwed up; mucking about with it is risky. The likely equilibrium isn't a private system but rather a regulated cartel industry with more downside risk than upside. Seamus's worries aren't crazy. If I got to choose between DoC selling off half its estate at auction and full privatization of the energy companies, I'd pick the former.

Thursday, November 24, 2011

Election gag

Usually I get to be smug about stupid laws that New Zealand doesn't have. But not in this case. The Electoral Commission prohibits putting new third party election or referendum advertising material on websites on polling day. The definition of advertising material for third parties is pretty broad. Here's a piece from May on likely implications:
Chief Electoral Officer Robert Peden said material posted on social media websites, including Facebook and Twitter, was covered by the rules.
"People should be aware that if they tweeted on election day to influence how somebody votes they will be breaching the Act and the commission will take action," Mr Peden told NZPA.
"For a long time, the law has allowed for campaign-free election days, and my sense is that New Zealanders like it that way and so it's not really in people's interest to do things like tweet and breach the rules."
While people are allowed to leave websites with campaign material up on election day, they may not add further material or advertise the website.
The sites would be monitored on November 26, and that people caught breaking the rules could face a $20,000 fine, Mr Peden said.
"It's the sort of thing that we will hear about if someone's doing it. We'll receive complaints."
After Twitter query, @LewStoddart, @thomasbeagle and @lyndonhood all pointed me to this piece.
The Electoral Commission advises that no campaigning of any kind is allowed on election day. This covers any statement that is likely to influence a voter as to which candidate, party or referendum option they should or shouldn’t vote for, or which influences people to abstain from voting.
I don't know whether that means tweets encouraging voting are allowed while those discouraging it aren't allowed, or whether both are disallowed. Surely an MP or activist tweeting "Go Vote" to his followers is influencing voters. But they make a big deal about encouraging abstention or encouraging particular candidates while being quiet about statements encouraging the vote.

The Press even reports [HT: @JeetSheth] that you can't make general statements about likely weather effects on that day's turnout.
Do not mention the weather and the election in the same breath on Saturday, whatever you do. No weather anywhere in the country can be reported publicly and linked to voting from 9am to 7pm on election day, the Electoral Commission says. The commission says that, under the 1993 Electoral Act, "statements such as `weather looks a bit bleak, turnout quiet at this polling place' would be prohibited as such a statement could be construed as discouraging people from voting". Section 197 of the act "does not just prohibit statements likely to influence voters as to who to vote for or not vote for". The act also prohibits any statement advising or intended or likely to influence any elector to abstain from voting, the commission said. Any loose comment about sunny spells encouraging or discouraging voters could result in a fine of up to $20,000.
So a weatherman doing the usual "reporting from in the weather" story with a polling place as backdrop would get in trouble if he commented on whether those voters were enjoying the sun or bundled up for cold. And, I suppose, anybody else noting too loudly just how bad the weather is and what a great day it is to stay home and watch movies would get in trouble too.

What if I tweeted encouraging people to vote, but everyone knew I was only doing it ironically? Something like "Go Vote and help encourage the legitimacy of the state and the moral principle that 50.01% is the voice of God". How about using clever special characters to tweet the binomial formulation of the voter's probability of decisiveness and thereby discouraged mathematicians' turnout? How about tweets pointing to George Smith's tracts against voting coupled with text saying "Don't read this, he's wrong"?

Would a blog post very neutrally specifying the mathematics of decisiveness under MMP implicitly be encouraging abstention and consequently be banned?

Is it possible that it's legal to phone your friends and offer a ride to the polling place while noting the merits of your preferred candidate, but illegal to post the same offer to a Facebook group of the same friends?

So many questions. But I'm far too cowardly to test things on Saturday. Pretty much anything I say on Saturday could be interpreted as being intended to encourage abstention, because I've a long track record of encouraging abstention.

I think I'm going to have to declare Saturday to be a Twitter and blogging holiday.

Update: Here's The Herald.

Election roundup

The Mainland Press asked me to comment on the main parties' economic policies a couple of weeks back; my write-up's now out. It doesn't catch anything that came up in the week and a half between my writing the piece and its publication, but there hasn't been a whole lot that I'd have added in hindsight either. Enjoy! And thanks to @bebe33 for the pointer that it's now out.


iPredict has us on track for another National government - 93% likely at current prices. Roughly even odds ACT returns to Parliament. A contract paying out at a dollar if National takes a majority of votes is running at around $0.43, but the contract pays out on total votes cast, not on the final composition of Parliament. If we're likely to see 6.5 to 9 percent of the total vote going to parties that fail to enter Parliament, National trading on 48% of the total ballot means a straight National majority government barring substantial overhang.

As I understand electoral law, I'm not permitted to blog on things on election day if the blogging could affect the outcome of the vote, though things I post on Friday can stay up through Saturday. It is utterly infeasible for me to globally suspend comments on all posts via Blogger for Saturday only; please don't get me in trouble.

Worse, the stupid election law means no trading on iPredict from midnight Friday night through to 7PM Saturday. I really really really have to make sure I kill all my standing orders there late Friday night lest I be cleaned out when trading resumes Saturday.

Wednesday, November 23, 2011

Blaug

News came over the weekend that Mark Blaug died. Like most students who'd taken History of Economic Thought, though there are fewer now taking such courses than there ought to be, I met Mark through his text, Economic Theory in Retrospect.

It was a great treat having him visit Canterbury a few years ago; he came as an Erskine visitor and delivered our Condliffe Memorial Lecture. I enjoyed talking with him about Austrian and Public Choice models of socialism. Sue and I had dinner with Mark and Ruth Towse, along with my colleague Andrea Menclova and her husband, Vladimir, at the Korean place that then existed in Gloucester Arcade; Mark was ridiculously fun, enjoying the freedom of sitting (and rolling) on the floor.

John Fountain interviewed him while he was here; the audio's embedded below. Mark covers his childhood in wartime Europe; his mother bribed guards in a Spanish Fascist concentration camp with diamonds sewn into her underwear and they made their way to America.

If nothing else, listen to the segment starting at 23:50 where he talks about his appearance before the McCarthy Committee. As a tutor at Queen's College, he provided the faculty signature to a student petition to save the job of a labour economist who'd been fired for having pled the Fifth before the Committee; Mark was then advised by the College President to resign if he didn't want to be fired. Then called to appear before the Committee and well-ready to tell the Committee to "go fuck itself", he found the Committee uninterested in hearing his testimony. But he got a call that night from the Social Science Research Council who provided him a fellowship to head to England to write his PhD thesis; SSRC was quietly helping out folks who'd been victimized by the Committee.

The bit at 33:00 on the link between sex and research is also great fun, along with more than a few other gems.

Bennett

Joe Bennett continues his civil disobedience by remaining resident in his own home. And he yeanrs for a judge who does not exist:
"But," began the council chief executive, emerging from behind a colossal pay cheque.
"But nothing," bellowed the judge, his jowls turning purple, his voice like the all- shaking thunder.
"But nothing at all. Has every one of you forgotten the first principle of civilised freedom, as enshrined in the words of John Stuart Mill, words that should be emblazoned in scarlet letters a foot tall above the desk of man, woman or child who holds office? 'The only purpose for which power can be rightfully exercised over any member of a civilised community, against his will, is to prevent harm to others'.
"Go. I have tired of you. Return to the vast amount of important work that needs doing and leave Mr Bandit alone. Case dismissed."
As the council drooped out, the defendant leapt from the dock and flung his arms around the judge and kissed him. "Oh," he exclaimed. "To think that I have lived to see such a magnificent defence of freedom and individual responsibility from the judicial bench. Oh your Honour, you are the knees of the bee."
"You seem to have forgotten," said the judge, disentangling himself with some urgency from the defendant's embrace, "that I am entirely imaginary and most unlikely to exist in real life. The same cannot be said of your halitosis."
Ah, Joe. You're not part of the new enlightenment. The old, superseded enlightenment took a narrow view of harm to others, where harm had to be directly imposed on other people, and "other people" was far too exclusionary. The new enlightenment says it's a harm to others if those others can't help themselves from coming in to rescue you if you get into trouble, so force can be used to keep you from taking risks. And even "others" is problematic - how can we be sure that you today is the same person as you tomorrow? If not, then the state is justified in using force to prevent harms to your other selves: it knows better than you do how to implement a social welfare function with appropriate weights attached to the varieties of you than "you" do yourself. For that matter, does "you" even make sense given what we're finding in neuroscience about the different decision modules in the brain and their struggles for dominance?

I wish I were kidding.

Tuesday, November 22, 2011

Price of Peters

Folks on the iPredict discussion forums argue a bit about whether anybody's mucking about with prices on the Winston Peters contracts. I'd previously suggested prices on the Vote Share market might be a bit high, given the much higher cost of shorting contracts at $0.05 than going long. But some on the forum are now going the other way, arguing that evidence of Peters prices below 5 cents suggests big anti-Peters interests coming in to drive down the price as there's little potential return in it.

First, let's look at current polling. The first place I go for current polling summaries is KiwiPollGuy. Here's the latest:


The black line is a moving average of polls on New Zealand First, with black dots and lines representing individual poll results and their confidence intervals. The confidence interval of the moving average doesn't pass 4% and hasn't for a while. If iPredict prices are above 4 percent, either punters are predicting a late surge or somebody's a bit optimistic. iPredict has NZ First on 4.7%.

There's a ton of thickness on the ask side of the order book around the 5 cent mark. Where some on the forums take this as evidence of anti-Peters conspiracies, I take it rather as that a bunch of traders figuring out that some Peters fans keep making high volume trades trying to push the price up around the 5 cent mark and are leaving orders there waiting to take their money. At least that's why I've one of those ask orders in [full disclosure: I'm short both Peters contracts]. The deposit limits on iPredict are now fairly high. And if the fair price on Peters is really 3.5%, then selling contracts at 5 cents gets you a cent and a half on a 95 cent investment over a week - that's a pretty decent annualized return even if it's low compared to other potential iPredict contracts.

Traders also have Peters at 42% likely to return to Parliament. That's a bit lower than expected if his expected vote share is around the 4.75% mark, but on the high side if it's more likely to be 3.5% [and I'm consequently short and selling].

A fair bit of the grumpy vote that would have gone to Peters is likely to head over to the seemingly ridiculously well-funded new Conservative Party, which is also likely siphoning a bit of support from United Future [full disclosure: I'm buying the Conservatives at 1.6%, but would be selling at 2.5%]. I see at least as many Conservative billboards around as NZ First ones, which gives a first indication of support where the Conservatives aren't generally included in polling.

Bottom line: it's plausible to get manipulation stories resulting in NZ First prices being too high on the Vote Share market given how expensive it is to short low probability events. I can't see how it's possible to maintain manipulated low prices.
The maximum a user can deposit is $2,500.00 in a 6 month period. This is subject to a lifetime net contribution limit (defined as funds in minus funds out) of $10,000 in total.
Suppose an anti-Peters manipulator went all-in, planning well in advance to get a $10k nest egg all to be used in keeping Peters down. Each sell contract at $0.05 costs him $0.95 in frozen liquidity. So he can sell 10,526 contracts. How much would it cost to buy out his entire investment? $526. There are eight traders with total iPredict net worth north of $5k. Even if all of them had their entire net worth devoted to conspiring against Winston Peters, two new traders each depositing $1500 could pretty much clear them out. It's too expensive to maintain price manipulation either forcing down a low price contract or forcing up a high price contract.

The Google Worm

Forget the (potentially biased) small sample debate reaction thermometer - "the worm". Here's Google's alternative: total search traffic over the last year. The chart shows New Zealand search volumes for National (or the party Leader's name, or the Deputy Leader's name), Labour (or the Leader or Deputy), the Greens (or either Co-Leader), and ACT (or Brash or Banks). "Election" is included as a benchmark for overall election interest.

Let's zoom in on the last month: What do we see? Almost as much Google traffic on "National Party" as on "Election"; the Greens overtaking Labour in search traffic, though not by as much as in prior elections; and, ACT trailing, though not by as much as I'd expected.

The regional breakdowns are fun too, but not easily embedded. More grist for trading at iPredict. Or, at least it would be if they provided real-time traffic data.

Monday, November 21, 2011

A Justification for Partial Asset Sales

Like most economists, I think, I have been critical of National’s policy to sell off non-controlling stakes in some SOEs. The argument, which I would adhere to in most circumstances, is that either there is a justification for public ownership or there is not—partial sales that allows some private ownership but without injecting the discipline of a threat of take-over would achieve nothing.
In the case of the three state-owned electricity companies, however, there might be a case. The argument is as follows: Vertical integration between the wholesale and retail sides of the electricity market essentially nullifies the market power that in principle would exist in the wholesale market with only four major generators. The close-to-balanced positions that have emerged in New Zealand, with the major gentailers each having roughly the same market share on the demand side as the supply side of the wholesale market removes the incentive for suppliers to restrict supply to inflate the wholesale-market price.

At the same time, however, vertical integration makes the retail market less contestable. If competition between retailers is not as intense as we would like, it is difficult for a new entrant to come into the market, as it would be highly exposed being a buyer and not a seller on the wholesale market, particularly in periods when low rainfall or transmission constraints gave a seller some temporary monopoly power.

Now imagine, however, that a new entrant in the retail market could simultaneously buy shares in the company that was the dominant generator in the region the entrant wanted to sell in. This would be a risk management strategy that would enable it to price to the retail market based on normal wholesale prices, knowing that losses in the event of a high wholesale price would be offset by the return on its shareholdings. Now further imagine that there are strong political reasons why the government would want to retain a controlling stake in the main electricity gentailers. In this case, these two arguments together suggest that maybe sale of a non-controlling stake is the optimal policy.

I’m not sure what I think about this, but I can’t reject the argument out of hand.

Saturday, November 19, 2011

Post-Kyoto

Extending the date for various industries' entry into the New Zealand Emissions Trading System costs the public purse only to the extent that the government is required to buy carbon credits on the international market to make up for any failure to reach aggregate pollution reduction targets.

I've argued that there is only such cost if the government wishes for there to be such cost: Kyoto is not binding, and it's hard to point to other countries willing to impose very large fiscal costs on themselves to meet the targets by buying credits. Some are spending relatively small amounts of money. But nothing like the amounts that agriculture is held to be costing the country through delayed implementation.

And now we find that most folks are banking on there being no binding second stage post-Kyoto. Here's the Science Media Centre; here's a Nature commentary piece.

If there is no binding second stage, then there is no penalty for non-compliance in the first stage. Recall that the penalty for first stage non-compliance is tougher second-period targets. If the second period doesn't bind, then the first period doesn't bind. And we're, again, kinda nuts if we're going to spend measurable fractions of GDP buying international carbon credits to make up for a delayed accession of agriculture to the ETS.

I could be missing something, but here's what I'd expect this means:
  • New Zealand still should be doing its best to do its part to reduce global warming. I think this is better done by biotech research into low-methane pastoral systems that's then released under free licence to anybody who wants to use it, but it's more than plausible that keeping the ETS is second-best given its existence and given lots of folks' investments having been made on expectation of its continuation. And, in the longer term when everybody's moved to ETS or tax regimes, we'd want to be there too anyway.

  • New Zealand should not expect to be on the hook for big national costs if it winds up making more sense to delay any sector's accession to the system. Agriculture will fail to earn carbon credits for any reduction in emissions, but if implementation is delayed because they can't abate in the very short term, that's no real loss.

Friday, November 18, 2011

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.

Thursday, November 17, 2011

Look into the abyss

I've been doing a bit of trawling through the old New Zealand Election Surveys, partially in preparation for a talk I'm giving in a fortnight on voter ignorance, partially in preparing a paper with Bryan Caplan, Wayne Grove, and Ilya Somin on voter ability to correctly attribute political responsibility for outcomes.

One small bit of the darkness: respondents were asked a few quiz questions assessing how well they understand a few basics. Here's the set from 2008, including a new one on Treasury. Correct answers are in bold type.

QuestionTrueFalse"Don't Know"
The term of Parliament is four years19%78%3%
Enrolling as a voter in New Zealand is compulsory.65%30%5%
It is not necessary to be a New Zealand Citizen
to be eligible to vote in New Zealand
28%58%14%
Interest rates in New Zealand are set by the Treasury42%37%22%
New Zealand is a member of the World Trade Organization81%2%17%

Maybe this answers Matt Nolan's question about why the #OWS folks protested outside of the wrong agency. They may simply confused about who is responsible for what.

88% of respondents agreed it is a citizen's duty to vote.

The 63% who did not know who sets interest rates in New Zealand ought to read Brennan's argument that those choosing to vote have a duty to vote well.

Wednesday, November 16, 2011

Weitzman!

Martin Weitzman is presenting here at Canterbury, tomorrow afternoon, on the economics of climate change.

I'm really looking forward to his talk; I hope to see a lot of local Offsetting readers there too. RSVP now if you haven't already!

Weitzman argues that a fat downside tail in the distribution of potential outcomes make the case for strong action to combat global warming - it's insurance that's well worth the premium.

It's a pretty reasonable argument. And, I broadly accept it: it's worth spending a bit on insurance. My general problem with it is that there are all kinds of potential fat tailed risks with deep structural uncertainty. So I have the same problem with Weitzman's argument as I have with Posner's "Catastrophe": there are a non-trivial number of potential states of the world in which all human life is extinguished. It's not immediately clear how we ought to expend resources in insuring against all of the different risks.

At the margin, I'd strongly favour transferring money from general spending to these kinds of insurance expenditures. But how much can or should we spend in total? And how to allocate across risks? I wouldn't be averse to transferring some money from global warming abatement to asteroid abatement: if NASA or somebody else discovers an asteroid that's on track to hit us in a decade, it's remarkably unclear whether there's anything we can do about it. I don't think the decade-long end-game would be particularly fun. There's also the potential emergence of all kinds of different superbugs. The risk of bad global warming outcomes in the medium term is perhaps on par with the risk of emergent superbugs, and much higher than the risk of asteroid (although the costs of asteroid approach infinity). From there we move to less and less likely events - all the way down to Shoe Event Horizons and Grand Collapsing Hrung Disasters. We need some mechanism to help us allocate resources correctly between global warming and other plausible (and, on an insurance argument, even implausible) potential disasters. And if Cost-Benefit analysis fails us when facing issues of deep structural uncertainty, on what basis ought we make decisions?

I hope to get the chance to ask Weitzman at tomorrow's lecture. And I hope to see you there.

Tuesday, November 15, 2011

Keep Canadian supply management in play

Conflicting reports emerge on whether Stephen Harper is really prepared to open up the Canadian Dairy cartel. This is understandable: there will be really large political costs if Harper abandons supply management. Why? Every dairy farmer in Canada owns quota: a permit giving the farmer the right to milk a cow. Those quota permits cost real money. The price varies from province to province, as each province is allocated a different amount of quota. In October of this year, that price ranged from $25,000 in Quebec to $40,000 in British Columbia.

That quota value is really important to dairy farmers; it's the nest egg a whole lot of small farmers can pass on to the next in line. Abolishing the quota system means abolishing some farmers' retirement or inheritance plans. That's not the kind of thing folks accept without a fight. Think the Canadian Wheat Board has been contentious? That's just a single desk seller. If there are capitalized rents anywhere, they'll be in land values for farms especially suited to growing quota crops; that many farms opt out by growing non-board crops suggests the value of those rents is pretty limited. At best, the system provides transfers to small farmers who don't want to handle their own marketing arrangements and, perhaps, offsets some market power enjoyed by the ports, rail lines, and grain companies. Abolishing it wouldn't immediately destroy a substantial portion of any farmer's asset portfolio, but there's still a non-trivial subset of western grain farmers who really want to keep the system.

It's exceedingly unlikely that any Canadian politician can simply abolish the quota system. The benefits of the system are highly concentrated in the capitalized rents embodied in the trading prices of dairy quota. The holders of that quota will fight very hard to make sure that the system stays in place. The costs of quota management are dispersed among thirty-odd million Canadians who have to pay more for butter, ice cream, chocolate, cheese, and baby formula than they'd otherwise have to pay. Mancur Olson's Logic of Collective Action takes hold: if you think the CWB's ads trying to save the Board's single desk tug at heartstrings, wait 'till you see the ads featuring small dairy farmers facing the eradication of their retirement nest eggs.

Gordon Tullock suggested there isn't any real way out of a transitional gains trap. Here's how the trap works. The regulatory barrier confer excess profits on those holding the asset in fixed supply, like New York Taxicab medallions (now trading at $1 million) or Canadian dairy quota. The initial set of people who held the asset when asset prices jumped enjoyed a windfall gain, but most of those medallions, or quota permits, trade on the open market and are bought by people who can only earn a normal profit if the system stays in place. At that point, the system really benefits nobody - everyone earns only a normal rate of return on investment. But it's impossible to abolish because the political costs of imposing massive capital losses on permit or medallion holders is too high.

But I think there is a way out.

The cartel arrangement has to be inefficient - it destroys some value in the process of taking money from consumers and giving it to producers. Dairy farms are smaller and less efficient than they could be. Processors have to use less suitable milk substitutes. So long as there is some inefficiency associated with the system rather than there just being a transfer, it's possible in theory to abolish the system and transfer some of the consumers' gain back to producers to compensate them for their loss.

How would you do it in practice? Start by buying out the quota held by dairy farmers: abolish the quota system while paying farmers for the value taken. This will not be cheap. Where does the government come up with the money to pay the farmers? Institute a new and temporary tax on all dairy products. The supply management system, as best I understand it, winds up charging larger excess prices for industrial milk, where price inflation can be more hidden, than for fluid milk. Set the tax proportionate to the excess price that currently obtains in different parts of the system. That tax would pay off a bond issue used to fund the farmers' compensation. When the bonds are retired, the tax is retired.

The benefits of this accrue immediately. CD Howe proposes a great plan for a gradual elimination of the quota management system. But I'm not sure that's enough to get Canada into serious trade negotiations: I don't think New Zealand would look kindly on Canadian promises to abolish quota in a decade - just look at how seriously Canada's taken its promises under Kyoto. The immediate buy-out of quota farmers lets free trade in dairy start very quickly. The dairy tax would be TPP compliant as it would be assessed on all milk, whether domestic or imported. There'd be some technical hassles about appropriate tax treatment of milk embodied in products, but that can be worked out.

If I take off my economist hat and put on my libertarian hat, I'd go a bit further and say that quota compensation could be based on a fraction of quota value rather than on full quota value to save some money and in recognition that Canadian dairy farmers have been ripping off consumers for decades. But that's a trivial detail.

The same logic holds for poultry and eggs.

A tax and compensation regime can get Canada out of supply management very quickly while largely attenuating the political fallout. It would let Harper make some trade progress without slitting his throat in Quebec and Ontario. It can and should be done, and that right soon.

One cost of US dairy protectionism

One tangible cost of American dairy protectionism: baby formula prices.

In New Zealand, 900 grams of Heinz Infant 1 Gold Starter Formula costs $23.60 at Countdown. In $US terms, that's $20.68/kg. I often saw it for around the $18 mark on special when we were in that market.

In the US, the best comparison I can find is a 35 oz can of Enfamil at Safeway: $33. That's about a kilo. And, it's about the cheapest dry formula I can see on the Safeway site on a per ounce basis.

I can think of few other goods where the real New Zealand price is two thirds of the US price. Maybe the US formula has some kind of magic to it where it can make larger quantities of reconstituted drink, but I'd be a bit surprised.

Does American policy really wish to transfer money from poor mothers buying formula to relatively wealthy members of the dairy compacts?

Meanwhile, in Canada, The Real Canadian Superstore will sell you 730 grams of store brand formula for $15: $25.70 NZ per kilo. But I'm not sure that a sale flyer price of a store brand is a fair comparison.

Monday, November 14, 2011

One of these prices is wrong

Under MMP, Winston Peters re-enters Parliament if he wins an electorate or his party passes 5% of the party vote. But Peters isn't standing in an electorate and I can't see any NZ First candidate taking an electorate.

Trading at iPredict has New Zealand First's vote share at 5.25%.

But a contract paying $1 if Peters re-enters Parliament is only worth $0.3175.

Maybe you could tell a story about right tail skew such that he's unlikely to pass 5% but if he does, he gets 20% and so the prices work out, but I really wouldn't believe it. I think instead the vote share market is skewed. Somebody expecting Peters to get 3% instead of 5% gets a 2 cent return on a 95 cent investment (there are no naked shorts); somebody who wants NZ First to look like it's set to get 5% doesn't have to spend a lot to keep the price up there.

It's still a decent return over the next fortnight or so. I've consequently put in a 500 unit order selling NZ First vote share at 5 cents. When somebody spends $25 to push NZ First's vote share up above 5% again, it will tie up $475 of my capital for the next two weeks. If the contract expires at 3 cents, as I expect it to, I'll earn $10. W00t, as they say. But the only reason I'm willing to do it is that I've a fair bit of  free capital on iPredict and, more importantly, capacity to deposit more as the deposit limit isn't currently binding on me. The opportunity costs of money on iPredict can be pretty high as there are often profitable short-term price anomalies requiring free capital.

I'd hoped that relaxing the deposit limits on iPredict would knock back some of the weirdness on low-price continuous contracts; there were Peters price anomalies in 2008; I'd thought the less binding deposit restrictions this time would help out.

If you've free cash around and think a slightly higher than 2% return on a fortnight is worthwhile, and that NZ First is more likely to get 3% than 5%, do well while doing good by correcting price anomalies.

[Update: Checking prices again after hitting "Post", NZ First had already dropped to 4.5%. You guys are quick!]

Dairy protectionism and Pacific trade [Updated!!]

Canada's continued support for dairy supply management keeps it out of the Trans-Pacific Trade negotiations:
After months of angst and debate, Japan confirmed it’s ready to embrace a nascent Pacific free trade area.

Friday’s decision is a huge boost for the Trans-Pacific Partnership (TPP), which among other things will tackle lingering protectionism in agriculture.

It’s also bad news for Canada, which has been involved in virtually every major global effort to break down trade barriers in recent decades. Not this round.

Canada isn’t welcome at these talks because the Harper government won’t put Canada’s highly protected dairy and poultry sector on the table. The supply management system shields fewer than 20,000 farmers behind a massive tariff wall and forces millions of Canadian consumers to pay inflated prices for milk, cheese, eggs and chicken.

Japan, on the other hand, made the economic calculation that some pain for its rice and wheat farmers is worth the far greater gains that its export-oriented manufacturers can expect. And with the country’s economy stagnating, Japanese Prime Minister Yoshihiko Noda wisely sees trade as a way out.

...once the TPP deal is done, U.S. and Australian beef producers will have a massive advantage over Canada in the lucrative Japanese market. Ditto for pork, perhaps lumber as well.

It is a lose-lose for Canada. We all pay way too much for vital food items at the grocery store. And exporters who generate wealth for Canada are shut out of key markets.

The next time Prime Minister Stephen Harper vows to protect supply management, maybe a few more Canadians will understand they are the ones paying the price of his politically calculated pledge.
None of this is new; Canada was being shut out of the TPP back in April 2010 precisely because of their intransigence on dairy. Canada's dairy cartel is a perfect illustration of Gordon Tullock's Transitional Gains Trap. All the cartel rents are capitalised into the quota price Canadian dairy farmers have to pay, so they earn only normal returns after counting the cost of quota. But they lobby strenuously against anything that would impose capital losses. Solution? Buy them out. I wrote last year:
Either buy out the quota holders or start eroding quota value. Not only will you start seeming sensible in trade negotiations - damning tariff barriers elsewhere while defending supply management is an asinine bargaining position - but you'll also start getting much better ice cream. The cheapest store-brand ice cream here is on par with premium brands in Canada - seriously. 
Not making efficient moves makes Baby Pareto cry. Stop poking thorns into Baby Pareto's heart, Canada! Follow CD Howe's plan, and you get to remove a thorn from Baby Kaldor-Hicks's heart; follow mine, and you get to remove a thorn both from Baby Kaldor-Hicks's heart AND from Baby Pareto's heart. Happy baby giggles and good ice cream ensue.
I remain worried, as I was earlier this year, that American support for free trade in dairy may be more nominal than real. From this weekend's Press:
In a submission to the US Trade Representative last year, US dairy lobbyist the National Milk Producers Federation explained why these deals would be a problem.

"Our agreements with Chile, Singapore, Australia and Peru were very carefully calibrated to take into account the particular concerns and sensitivities of each of our trading partners in order to maximise US export opportunities," it said. "We strongly urge our negotiators to respect the good work that has already been done on existing US [free trade agreements] by leaving their market access provisions untouched."

In particular, New Zealand's dairy industry should on no account be granted open access to the US, it said. "Gross revenues received by US dairy farmers would plunge by a cumulative US$20b over the first 10 years of the FTA if US dairy restrictions on exports from New Zealand are fully phased out in the TPP."

The strength of US fear can be seen in the high tariffs applied to dairy imports. On skimmed milk powder, for example, the US has a quota on imports of 5261 tonnes from all countries. Imports in excess of that attract tariffs of 86.5c a kilogram. On wholemilk powder, the over-quota rate is $1.092/kg. On cheddar cheese, 8300 tonnes is permitted from New Zealand on tariffs of 10-16 per cent; anything more gets slapped with tariffs of $1.50/kg or more.

For New Zealand, nothing less than complete removal of those tariffs will do. Indeed, a TPP that perpetuated trade tariffs would be a failure.
That Canada is being further sidelined because of their dairy cartel makes me more optimistic that the Americans might be serious about free trade in dairy. Let's hope!

UPDATE:

Prime Minister Stephen Harper announced Sunday Canada will apply to join a new free trade agreement with the United States and the Asia-Pacific region, and suggested that Canada’s farm supply management systems could be on the table for negotiation.

Sunday, November 13, 2011

Email disclaimers: awesomeness edition

I love the confidentiality notice that Auckland University's Paul Myburgh attaches to the footer of his emails; I reproduce it in full below [he says it's not original to him; I can't find it online].
CONFIDENTIALITY NOTICE: No confidentiality notice here. No warnings about the terrible things that I wish would happen to you if you were to take advantage of my typing something inadvertently and sending it to you and then wishing I hadn’t, and then the cold, icy trickle of fear and shame down the back of my neck as I try to turn back time and suck the email out of the ether. No, none of that. No attempts to impose order on this fundamentally chaotic universe by using law (threats of sanctions, injunctions, or confidentiality notices) to fix the cracks in my own uselessness or your own naughtiness. And yet here we sit: me typing this nonsense and you, perhaps the bigger fool, reading it. Still. Here we are. You are a little like one of those people, me included, who sit in the cinema until the end of the credits just in case there is another scene at the end of the movie. Just a little something. Something to make sense of hanging on just a little longer. Like Beckett said: we wait here without the courage to end it or the strength to go on. So, that’s disturbing isn’t it? You thought this would be uplifting or funny or something, but instead it’s led right to the dark heart of Samuel Beckett’s bleakest moment. Well, let’s have Camus then. For him we are like Sisyphus rolling our rocks painfully uphill forever before they crash back down the hill for us to start all over again. But, just at the moment we reach the top of the hill, and as the weight of the rock is taken from us as it begins its jagged, chaotic descent to the bottom again, we have the joy of that moment of being free of our burdens and walking back down the hill, even though we know that all that awaits us is the rock at the bottom and the knowledge that we have to do this for all eternity. He thought that a life punctuated by those joyous moments really did make it all worthwhile. That’s the skill: finding those moments and relishing them, I suppose. Probably not reading this. Well, I must say how much I have enjoyed this unexpected time that we have spent together. It’s been lovely to talk to you again. Bye-bye.
It's far cooler than Canterbury's boilerplate.

Saturday, November 12, 2011

Playing the crowd

Stephen Franks sees clearly:
My revulsion is at seeing Phil Goff and other people I know to be patriotic and intelligent New Zealanders trapped into pretending that they believe in dopey policies (like vandalising our efficient GST with piecemeal exemptions) and dopey arguments (like claiming significance to lost dividend streams on SOE shares sold, without admitting that they may be less than the interest cost savings from borrowing avoided with the proceeds of sale).  David Cunliffe pretending that increasing the minimum wage and opposing restoration of a youth wage will have only a "marginal" effect on unemployment is as sick-making as watching Bill English having to pretend that John Key's dedication to the current superannuation policy is statesmanlike.
Labour (and National) are trapped into many policy and  debate positions that you and I may correctly believe to be stupid. But the Leaders are not talking to us. The major parties must now ruthlessly focus on their conversations with the swing voters in the middle. Only their votes matter. And not many of those voters know enough of public affairs to be worth talking to for long or in any depth about matters fiscal, or indeed any other complexity. Elections are won and lost on whether the causes espoused and the arguments used – as boiled down to the 10-15 words on each point that might get through the media filter to nationwide TV -  will make the Leader look like a nice non-scary, familiar and safe person to the 10-15% of voters who swing to vague sentiment. 
I was not surprised to read in a Herald report yesterday morning of the vox pop interview with a woman who will vote for John Key and thinks he leads the Labour Party.  Many of the swing voters would pay less attention to policy and politics than most New Zealanders would pay to World Wide (WWE) Wrestling. Both are now similarly staged.
...
My revulsion is from watching and listening to smart well-meaning men and women betraying their intelligence in demeaning debate, offering policies and justifications they know to be nonsense, or even worse, bad for their country, because of how they are forced to engage under the dynamics of elections in lazy democracies like ours. It is shared across the english speaking world.
The main exceptions: earnest idealists who ought to know better but don't (the Greens' Gareth Hughes) and those with so little chance of affecting outcomes that they can afford not to pander (ACT's Stephen Whittington, though I expect he'd not pander regardless of his position).

It may be worse than Franks thinks. In equilibrium where voters cannot tell what policy works but can sniff out liars, politics selects not for the panderer but for the demagogue who actually believes his own rot.

I hereby propose that, on election day, TV1 hold a Coronation Street Marathon with special new episodes and new scandalous character developments throughout the day. TV2 can do the same with Shortland Street. TV3 can air highlights from the Rugby World Cup. Meanwhile, we put on a V8 Supercar race someplace sufficiently distant from any polling place combined with nearby classes in spiritualism, healing, and crystals. And, crucially, that all of this be set and heavily advertised now so that political parties can adjust policies to suit the median of those who would still turn out to vote. It's apparently passé to support knowledge tests for voters. But why not raise the opportunity costs for those who would otherwise reduce the average quality of the ballot?

I don't advocate voting. But if you do decide to vote, you have a duty to not reduce the quality of the median vote.