Open secrets

One of the great things about living in Wellington is that you get to hear stories. You never know which of them are true, but at least they're fun.

I had one passed along to me today in response to my tribute to the Monarchy in our Insights newsletter.

I certainly cannot attribute or verify its authenticity. But even if it isn't true, at least it's a great story.*

The story runs as follows. I'll blockquote, but it's a paraphrase from an email sent me that I cannot verify. I've had permission from my correspondent to share it, but my correspondent has not verified it either. It could be pure fantasy. But it is fun.

During Lange's administration, Fiji had a coup. Lange thought New Zealand should send the troops up because democracy was under threat.

Many of Lange's colleagues thought that a particularly bad idea and suggested to Lange that deployment of the troops required the Head of State. They advised the Governor General to lay low for a while.

Unable to find the Governor General to sign the forms authorising the troop deployment, the New Zealand military stayed home. And, eventually, Lange was convinced that other measures might be more effective - and the Governor General re-emerged.

Not having a local and accessible Head of State has its merits.

Please enjoy sharing other fun, non-libelous, open secrets in the comments. And for fun open secrets of America's foreign policy history, read Tullock.



* As one of my former Canterbury colleagues once put it when I challenged the veracity of one of his very frequent, and often entertaining, and sometimes accurate tall tales.

Thursday roundup

The closing of the browser tabs brings these gems.

• Nikki Mandow at Newsroom has an excellent summary of just how bad the foreign buyer ban is.
• Sydney is no fit place for young people to live. 
• Fast food outlet density doesn't cause obesity.
• I am torn between my hatred of Easter trading bans and my abhorrence of everything involved in this article. 
• If you're using Stata to run lots of levels of fixed effects, this could be useful.
• A blockchain trade-tech solution for shipping the data along with a product and smoothing international trade. 

My column in this week's Insights newsletter will be out today instead of Friday because of Easter. It'll be up here after lunch today; find it there if you haven't already subscribed (the subscription link is waaay at the bottom of that page).

I there suggest that, just as we celebrate the Queen's birthday on a date that makes a convenient fixed long weekend, we should have the statutory celebration of Easter on a fixed date rather than letting it move around all the time and mess up school calendars. It's in our third spot in the newsletter, which is generally reserved for more lighthearted takes on things. This one's written up fun, but I would totally push the button to implement a policy that would simultaneously:

• Make Easter Sunday a statutory holiday on a fixed date (it currently isn't a stat);
• Fix the dates of Easter Friday and Easter Monday to the same fixed Easter Sunday date;
• Abolish the trading bans around Easter;
• Let people take their regular annual leave if they don't want to work on whatever day the Pope and Archbishop of Canterbury say is Easter or Good Friday this year, in the same way that we currently let people use annual leave if they follow the Eastern Orthodox calendar for Easter which diverges from the Roman one a lot of the time - and in the same way that we let hard core royalists take the day off on whatever day is the Queen's actual birthday if they don't think the stat holiday is quite good enough.

Interesting vaping times [updated]

I don't think anybody yet has a good handle on the consequences of yesterday's court decision on alternative nicotine delivery devices.

My reckons thus far, but with wide confidence intervals around them. I am not a lawyer. Do not rely on this as legal advice. I could be completely wrong. If you know about legal stuff, please tell me what I have gotten wrong. [and see one update at the end]

• I think the decision means that any nicotine delivery mechanism that is not like chewing is now not covered under the SmokeFree Environments Act;
• Any nicotine delivery mechanism that is like chewing may be covered, but the Court would entertain arguments that bans are contrary to the purposes of the Act if the mechanism is sufficiently less harmful than chewed tobacco - like snus;
• Retail sale of nicotine-containing e-liquids for vaping has been de facto legal because the government stopped enforcing the prior law, but de jure illegal. This has meant that a lot of specialist shops are selling the stuff and so have a few dairies, but that a lot of larger retailers that currently sell cigarettes have stayed out of the market. Why? Big companies fear reputational risk and liability for doing anything that isn't very clearly legal, and smaller players can be more nimble. Now you might think the decision opens this all up BUT:
• Nicotine-containing e-liquids weren't just restricted under SFAE where MoH thought they were covered as an "other oral use." Nicotine for inhalation is also a scheduled Pharmacy-only medicine. It's just that nobody's been enforcing that.
  
• I think that means:
• None of the restrictions under SFEA about where you can smoke apply to vaping. Property owners can choose to ban vaping if they want to, but they shouldn't feel constrained to ban it because of SFEA.
• Sale of nicotine-containing e-liquids may still be de jure banned except in pharmacies. Sale within pharmacies should now be completely legal because SFEA restrictions are gone and the only remaining ones come through scheduling in the Medicines Act. It's like any of the other pharmacy-only products that don't require prescription.
• Heat-not-burn is completely legal in the same way that toothpaste is legal.  
• If products like snus were deemed not covered by SFAE, they'd be completely legal in the same way that heat-not-burn products are completely legal - but sniffed tobacco would remain prescription-listed. 

I Am Not A Lawyer. But I haven't yet seen any proper lawyer-takes on this from folks familiar with this bit of law.

If MoH doesn't appeal the decision, everything gets interesting real fast. 

Heat not burn products will come quickly to market; vaping will remain in its current weird space unless MoH gets the regs up for vaping. 

Before the court decision, there were worries that adding heat-not-burn products to the regulator's remit would do too much to hinder speedy access to vaping products. 

That's flipped now if heat-not-burn is as regulated as toothpaste and vaping would formally be restricted to pharmacies (albeit more broadly available informally). Whether any of the larger suppliers would try selling through pharmacies in the interim is interesting. But we'd expect more pressure not just to get the vaping regs sorted out to avoid distorting things toward heat-not-burn, but also to get a similar structure around heat-not-burn. 

And I'd be a bit surprised if Otago didn't come out soon with some "The sky will fall if we don't move to ban these things or at least heavily restrict them" release.

Insert your favorite gif of an anxious person eating popcorn at the edge of the movie theater seat... this is all kinds of fun.

UPDATE: One correspondent who knows the area well but who is not a lawyer suggests that the Medicines Act only applies where the nicotine is for therapeutic or medicinal use. If that's the case, then supply of vaping e-liquids is legalised by the same court decision. 

The Economist's Cup

I had an awful lot of fun over at The Spinoff imagining having $212 million in public funding to support a world competition of economists - the Economist's Cup. And if you think there are great benefits to the country from putting that kind of money into the America's Cup, my proposal's even better.

A snippet:

I know you’re going to be sceptical about this but hear me out.

The 2021 Economist’s Cup should be held in Wellington. This annual event, which will first be held in three years, will bring some of the world’s best economists to Wellington to compete in being great at being an economist.

You might not think this is much of a spectator sport and that it might be a little too niche for the $212 million in public funding the event would require.

And you would be wrong.

If you have half as much fun reading it as I had writing it, you'll still have a lot of fun. 

 

Can they vape?

The District Court sided with Philip Morris.

Philip Morris started selling its heat-not-burn product in New Zealand last year. The Ministry of Health sued them for it, saying that it counted under the ban on oral tobacco products in the SmokeFree Environments Act. Philip Morris said that it shouldn't be counted as an oral tobacco product under SFEA, and the Court agreed.

I Am Not A Lawyer. And so I need a bit of advice in reading this ruling. It sounds to me like the official legal ban on vaping has disappeared too. If I recall correctly, the ban on selling vaping products depends on reading the nicotine in the e-liquids as a tobacco product (where derived from tobacco rather than synthesized), and on reading the inhalation of a vaped nicotine-containing e-liquid as being an oral use of tobacco under the SmokeFree Environments Act.

And here's what P J Butler wrote:

The Ejusdem Generis Rule
[30] This rule provides that where particular words describing a genus of things are followed by general words, the general words will be confined to things of the same class as the particular words. Thus, where the words "any tobacco product labelled or otherwise described as suitable for chewing" are followed by "or for any other oral use", the other oral use means a tobacco product used for chewing or an activity similar to chewing.

That sounds to me like ruling out vaping as counting as oral use as well. It is not similar to chewing.

Justice Butler continues:

The Purposes of the Act

[33] As detailed earlier they are as set out in s 3A and s 21. The evidence of Mr Rumsay was that no combustion occurs when 'Heets' is used under normal operating conditions, but "inhalable volatile compounds" are released. Dr Gilchrist's evidence was to the effect that it is the act of burning the tobacco that leads to the to the formation of the majority of harmful chemicals - (my emphasis). Dr Gilchrist quoted from a UK Royal College of Physicians report which contained the following passage:

The main culprit is smoke and, if nicotine could be delivered effectively and acceptably to smokers without smoke, most if not all of the harm of smoking could probably be avoided.

[34] Given this advice, it can be said that the use of 'Heets' while it may have associated risks in itself, is not as harmful or potentially harmful as ordinary cigarette use. This finding would fit squarely with the purposes stated in s 3A(1)(a) and 9(c) and s 21(b) of the Act. The defendant submits that "the outcome the Ministry is seeking with this prosecution is the opposite of what Parliament sought to achieve when passing the SFEA".

[35] I find that the 'Heets' product is not caught within the ambit of s 29(2) of the Act and the charge is dismissed accordingly.

I read this as meaning that all vaping and all heat-not-burn products are currently legal for sale and use in New Zealand. But I am not a lawyer. Am I reading this correctly?

Things that should be obvious

A short list:

• If a small oil-producing country ceases producing oil, it has no particular effect on the price of oil or oil consumption because the rate of extraction increases (very slightly) in other places that have more oil. It has no short-run effect on climate change. Maybe in the very long term, where want of New Zealand's supply affects prices, it could have an effect. But the main effect is to punish companies doing that work in New Zealand and their workers. If you want to reduce oil consumption or greenhouse gases, you need to reduce demand for it by increasing the price of it. 


• If you're the Regional Economic Development Minister and you want more flights to towns where the main carrier doesn't find service to be commercially viable, and if no other carriers pick up service to those towns, then you could put out an RFP for provision of service to those towns and let the carriers bid for it. It's still a bad idea, because it may then induce carriers to drop service in some towns in hope of subsidy. But it's a less bad idea than yelling at the company's CEO and demand that he run an unprofitable service to the detriment of the shareholders who aren't the NZ Government.* 
• Jones was pandering in this. He isn't an idiot. It would have been surprising if he hadn't known that he was demanding something he had no authority to demand and that it would be unwise for the CEO to actually do*. He was pandering to voters who are idiots (and induced one Labour MP to reveal type in the process). But there is a point where this kind of thing has a metastupidity bordering on evil. Pandering to idiots in ways that erode economic institutions is rather not good. Creating the impression that a decent chunk of the governing coalition has little respect for the rule of law is bad. This kind of talk is the stuff of tinpot dictatorships and Trump. 


• Legal markets for marijuana and ecstasy and the safer party pills, where products were subject to the Consumer Guarantees Act and where producers adulterating products would be punished, would stop Fentanyl-laced drugs at concerts and would be far more effective than ramping up punishments for producers of synthetic drugs. National pushing for increased penalties on this one is a travesty. They tried, with Peter Dunne, to set up a legal highs regime that could have reduced harm, then buckled under pressure. Now, for what seems like the sake of getting a trivial win by carving NZ First away from Labour on a vote Labour won't care about, they're further wrecking the prior regime rather than trying to fix anything. 

Blaise Drinkwater provides an excellent summary of the stupidity of National's bill upping penalties on synthetic cannabis. At least some National MPs will have figured this out. That they are supporting it anyway is not good.

Problems with the Psychoactive Substances (Increasing Penalty for Supply and Distribution) Amendment Bill

I'll just touch on a few, and, for length, won't walk through my entire reasoning unless there's demand.

Apologies for length.

— BK Drinkwater (@BKDrinkwater) March 21, 2018

1. TOTAL LACK OF NECESSITY (TIMING)
The Psychoactive Substances Act 2013 has a Ministry review of the legislation built in. At five years. You do the math.

— BK Drinkwater (@BKDrinkwater) March 21, 2018

2. POOR TARGETING
The chokepoint in the supply chain of novel psychoactive substances (including harmful ones) is not at the street dealer level. The synthesis of the active ingredients is much harder than that of methamphetamine. They're imported. Target imports.

— BK Drinkwater (@BKDrinkwater) March 21, 2018

3. SUBVERSION OF MODA (I)
Drugs posing a moderate risk of harm are meant to be put in the MODA Schedule 3 by Parliament. A bunch of conditions have to be meet first (MODA 4B). A dealing penalty of 8 years obliterates much of the distinction between unregistered psychoactives &…

— BK Drinkwater (@BKDrinkwater) March 21, 2018

…Class C drugs. This is a simple end-run around the provisions in law that require that a drug actually have a moderate harm profile, and that there be evidence of this, before we start locking people up for 8 years for selling it.

— BK Drinkwater (@BKDrinkwater) March 21, 2018

4. MISSING THE POINT
Dangerous psychoactives are sold on the black market mainly because the regulated market for less dangerous ones, provided for in the PSA, does not exist. The entire regulatory apparatus provided for the in the PSA is inactive, because no substance can…

— BK Drinkwater (@BKDrinkwater) March 21, 2018

…become an approved substance while evidence from animal model tests is disregarded by law. No responsible clinicians and officials near the Psychoactives Substances Authority can let new drugs near the legal market without that evidence. Repealing the ban would properly…

— BK Drinkwater (@BKDrinkwater) March 21, 2018

…activate the PSA, and at least give it a chance to work on replacing the wild-west black market of whatever importers can get their hands on with a regulated market of substances far further down the harm spectrum.

— BK Drinkwater (@BKDrinkwater) March 21, 2018

5. LACK OF COMPASSION
Neither the bill not its explanatory note mention deterrence or harm reduction. Conclusion: the bill is entirely vindictive. Six bonus years in prison increases the amount of misery in the world, and *this is the entire point.*

— BK Drinkwater (@BKDrinkwater) March 21, 2018

Just about every political party has disgusted me this week, and we still have two days left.


* Note that Damien Grant contests Geddis's [linked] contention that Directors doing this would be behaving illegally: where the company isn't insolvent, Directors pushing small unprofitable activities aren't likely in breach. I am not a lawyer. But egads the Minister shouldn't be talking like this. 

Bias towards zero in maternity perceptions

We're all running estimations all the time. If we've a modicum of truth-seeking and are trying to figure out how the world works, we're all estimating implicit bivariate and multivariate relationships between things all the time. A lot of them are going to be wrong if we're not doing it properly in Stata, but we get a basic working model of how the world works.

Whether you're running that regression implicitly or explicitly, things go wrong if you're omitting variables. Fremling and Lott called this Bias Towards Zero in Aggregate Perceptions.

Suppose that youth unemployment rates are a function of the business cycle, the youth minimum wage, and regulations on ease of dismissing workers that don't pan out - and interaction effects among those.

And suppose further that everyone who considers all of those variables will get the relationships right, on average. There's variance around a true mean. So among the set of people running the implicit regressions, you've got a reasonable picture of the world.

But if half the population doesn't know that they need to think about the youth minimum wage, then that's omitted variable bias. It'll screw up the coefficients on the other variables on which the variation from the omitted variables will load, and it will bias towards zero the aggregate perception of the true relationship between youth unemployment and the youth minimum wage.

I don't want to argue about youth minimum wages and youth unemployment - the relationship could be as weak as you like. But if there's a relationship and you leave it out, you get the problem.

There's been a ton of press coverage around poor outcomes in maternity care in New Zealand. The explanations that have shown up thus far are around the number of beds in maternity care centres and overall funding.

There's another potential variable that should be considered. I don't know how big the effect of that variable is, but I know that aggregate perceptions of it are going to be biased towards zero because nobody's talking about it.

In the 1990s, maternity care shifted from being GP-led to being midwife-led. Lots of GPs left the market because the payment wasn't high enough to keep them interested, but was high enough to interest midwives with less training. One paper at the NZAEs in 2008 presented some evidence that this affected neonatal deaths. The paper's a decade old now and likely needs strengthening, but suggests there's something there in need of investigating.

When we had our kids, we knew that some midwives had only weak training. So we made sure to book in real early to get a midwife with proper nursing training as well - and we went for a shared-care arrangement with an obstetrician at the same time. The people who most need the best trained midwives will not know that they need to move early to get one. And then we get some rather poor outcomes.

Maybe the coefficient on the variable "We changed from GP-led to midwife-led maternity care" is small, maybe it's big. But aggregate perceptions of the coefficient are going to be biased towards zero. It would be nice if it were part of the mix when folks are thinking about maternity outcomes.

The deregulated interregnum

E-cigarettes in New Zealand are in a really interesting spot right now.

Last year, the then National-government signaled that a new legal regime for vaping was on its way. At the time, importation of nicotine-containing vaping liquids for personal consumption was allowed, but retail sale within New Zealand was not. That wasn't to say it didn't happen, but you kinda had to be a Wellington hipster to know where to get the stuff.

I'm not sure that the de jure ban on retail sales was ever really enforced, but it was all on the down-low because retailers feared enforcement.

That's all changed. Here's what was on the counter at a local dairy just a couple weeks ago.

They're still operating in the shadow of regulation. They're restricting sales to those over the age of eighteen. 

But whatever regime winds up coming up will have a hard time being more liberal than the current de facto liberalisation. I don't know whether suppliers are currently holding back from advertising for fear of getting in trouble for it; allowing advertising would then be a step forward. Otherwise, the current de facto regime has sales at dairies and at specialty shops; some of the public health people would want to restrict access to pharmacies and only after a doctor's prescription. 

Peter Huber's work on regulation emphasised the difference in incentives facing agencies that seek to regulate against new risks, and those that seek to regulate existing risks. The FDA is a good example of the former. Because it would take stick for being too quick to approve an unsafe drug, and nobody would much protest if they killed a hundred thousand people by being too slow to approve a drug that was actually safe, the FDA will be too restrictive. There isn't an established constituency arguing for the release of the new drug because most of the would-be consumers of it don't know that they could be helped by it. He contrasted that with the EPA, which often goes after chemicals that are found to be more dangerous than previously thought. In those cases, there's a more careful balancing because the thing that's being regulated has a substantial group of users whose interests have to be considered - or they will raise heck about it. So there's then less likely to be excessively cautious regulation.

The upshot of all of that is that the longer this current de-facto legalisation runs, the more liberal will be the resulting regulation. Why? The more people who switch from smoked tobacco to vaping while the rules are easy, the more users who will be absolutely furious if the Otago public health people make them get a doctor's note for their next batch of nicotine e-liquid. Instead of a Select Committee process with the Otago restrictionists on the one side up against a few hipster vapers on the other, you'll have one with the Otago people up against thousands of rather more sympathetic community of users on the other.   

The vaping advocates wanting to hurry-up MoH on this stuff might think it through a bit more. 

We still don't know what will happen. If Parliament is determined to be stupid despite a huge existing set of users, like it did when it banned access to pseudoephedrine cold medications, it'll do it. But the longer the wait, the more likely we'll be to get something reasonable because the underlying balance shifts. 

Does a housing crisis have heritage value?

Ryman Healthcare wants to put up a retirement village in Karori, along with a pile of related services. They've bought the old Karori teachers' college.

It's a great site - easy land to build on, right on bus routes, an easy walk to Karori village and right next door to the Karori Swimming Pool.

But there's a problem. The old Karori teacher's college is apparently a great example of 1970 brutalist architecture, and New Zealand has a rather low threshold for applying heritage designations to buildings. Heritage New Zealand wants to impose a Category 1 listing on it.

Meanwhile, in Auckland, View West wants to tear down an old unreinforced soft concrete church in Epsom that is at risk of falling down onto passers-by and replace it with terraced housing - the kind of dense inner-suburb housing that Auckland is missing. Heritage New Zealand opposes that, noting "unacceptable adverse historic heritage effects."

I have a small proposal. Until the housing crisis ends, no new heritage designations. If a building or site is of sufficient value, Heritage New Zealand should solicit donations so that it might purchase the site. The good people at Architecture Centre might chip in to buy the Karori teacher's college as they seem rather fond of it. As owner of the building, Heritage New Zealand would then be able develop the site as it deems best.

For buildings with existing heritage designations, a Council refusal to grant consent to develop for housing should be treated as a Council offer to purchase the site at its rateable value. Submissions opposing the development should be treated as offers to contribute towards Council's purchase of the building. Submissions opposing development that do not include a pledged amount to contribute towards the site's purchase should have no standing. Council then can decide whether the weight of opposition, along with its own willingness to contribute towards buying the site, is sufficient to warrant purchase of the site.

Rational addiction and Naloxone

Suppose for a moment that addicts are rational and that we're really in a Becker-Murphy world.

What happens in that world if a new technology makes it safer to consume an addictive product?

If you're overdosing on opiods, Naloxone can save your life. The easier is access to Naloxone, the less likely addicts are to die if they have an overdose. Preventing death is good. 

If we're in a rational addiction framework, net effects on mortality will be lower than you might have thought though. The costs of taking up an addictive good go down, so more people will choose the addictive consumption path. The optimal quantity consumed on that path should be higher as well where the risks are somewhat abated. Addicts would have less need to build in safety margins against higher than expected potency, for example. 

Basically the A curve in the model shifts up. You then get an unstable low-consumption equilibrium at a lower amount of consumption than was previously the case, and a stable high-consumption equilibrium at a higher level than used to be the case. 

None of that says that improving access to Naloxone is a bad thing. It just says that, depending on all the relevant elasticities, you could easily see increases in consumption and increases in the number of consumers. Effects on overall mortality - hard to say. The number of overdoses will go up, but a higher fraction of overdoses will be countered by Naloxone.

What does the evidence say? Naloxone access laws vary state-by-state in the US, so we can figure it out. And Jennifer Doleac and Anita Mukherjee did. What did they find?

Policymakers have multiple levers available to fight opioid addiction, and broadening
Naloxone access aims to directly address the most dire risk of opioid overdose: death. Naloxone can save lives and provide a second chance for addicted individuals to seek treatment, but access to this lifesaving drug may unintentionally increase opioid abuse by providing a safety net that encourages riskier use. This paper shows that expanding Naloxone access increases opioid abuse and opioid-related crime, and does not reduce opioid-related mortality. In fact, in some areas, particularly the Midwest, expanding Naloxone access has increased opioid-related mortality. Opioid-related mortality also appears to have increased in the South and most of the Northeast as a result of expanding Naloxone access.

Our findings do not necessarily imply that we should stop making Naloxone available to
individuals suffering from opioid addiction, or those who are at risk of overdose. They do imply that the public health community should acknowledge and prepare for the behavioral effects we find here. Our results show that broad Naloxone access may be limited in its ability to reduce the epidemic’s death toll because not only does it not address the root causes of addiction, but it may exacerbate them. Looking forward, our results suggest that Naloxone’s effects may depend on the availability of local drug treatment: when treatment is available to people who need help overcoming their addiction, broad Naloxone access results in more beneficial effects. Increasing access to drug treatment, then, might be a necessary complement to Naloxone access in curbing the opioid overdose epidemic.

They frame their work in terms of moral hazard, and don't mention the Becker-Murphy model, but this is what we should expect out of a Becker-Murphy rational addiction model. The cost of consumption of an addictive good goes down, so consumption of it goes up. 

It may seem surprising that drug users respond to incentives in a sophisticated way. One may think that drug users are poor decision-makers or that addiction makes rational choices impossible. Addiction surely clouds judgement and makes policy in this area difficult, but there is substantial evidence that even drug users respond to incentives. A large body of empirical evidence documents that the consumption of addictive substances is sensitive to prices. For example, increasing taxes on alcohol reduces alcohol consumption (Cook and Durrance, 2013). Alcohol abuse also responds favorably to increasing the likelihood of punishment, as seen in evaluations of the 24/7 Sobriety program (Kilmer et al., 2013). Hansen, Miller and Weber (2017) show that marijuana consumption is price inelastic in the short run, but quickly becomes price elastic, with consumers reducing their consumption in the face of higher marijuana taxes. And finally, Moore and Schnepel (2017) show that a massive reduction in the heroin supply in Australia resulted in a long-term reduction in heroin consumption among those using heroin at the time, due to a spike in the price of the drug. These findings suggest that, at least on the margin, drug abuse may be sensitive to non-monetary costs such as the risk of death.

Rationality-based models. They may not be woke, but they work. Read the whole thing. Or, for Doleac's tweetstorm on the paper, check her feed here. 

Dirty pool

Thanks to Newshub, we now know that the government-owned insurer Southern Response had private investigators snooping around after earthquake insurance claimants.

There are potential non-horrible explanations for some of this kind of thing. I was surprised that there weren't violent incidents involving severely aggrieved insurance claimants who had been treated very badly by EQC. If an insurer had received threats, it would have not been remiss in passing those along to police - and hiring some additional help wouldn't seem amiss.

And if an insurer thought that a claimant were doing something dodgy with respect to a claim, it's good to try to knock out insurance fraud.

But this smells more like attempts to silence critics by a state-owned entity.

RNZ adds more detail.

I'll look forward to seeing what the State Services Commissioner finds out.

A sunset solution?

There's no way that Labour would implement this now, but it's something that the next third-term government should seriously consider.

Any incoming government has a big platform it wants to implement. Some of it will be well thought-through; some of it will be off the cuff dumb promises made in the heat of an election campaign.

And policy passed in haste as part of an incoming government's 100-day plan will never get the kind of rigorous treatment in an RIS process that it should. That would be true even if Treasury hadn't diverted all computer power over to trying to measure happiness, much like the Starship Heart of Gold's computer being fully occupied in trying to figure out how to synthesize tea while missiles from Magrathea approached at speed.

A potential solution? Sunset clauses. Something like this:

All legislation and regulation must be accompanied by an adequate Regulatory Impact Assessment. Where haste prevents the an adequate RIS from being produced, that legislation or regulation must include a sunset clause voiding the policy two years after its implementation and mandating a Post-Implementation Review to be completed within eighteen months of the the policy's initiation. That would be followed by an amendment bill to the original legislation. A successful PIR would have the amendment bill simply remove the original sunset clause. But a PIR finding deficiencies, or failure to produce a PIR, could lead either to more substantial amendment or termination - with the default in case of no legislative action being the policy's termination under the sunset clause. 

A mid-term government could be pretty confident in doing this because it will impose far greater constraint on any incoming government than it imposes on itself. Mid-term governments have plenty of time to consider their legislative proposals; incoming governments try to make a pile of big changes in a hurry.

And an incoming government abolishing a requirement for sunset clauses could reasonably be asked by voters why it thinks its policies wouldn't stand up to post-implementation review.

Submission time

It sounds like religious groups have been sending through a pile of submissions opposing David Seymour's end-of-life bill on assisted suicide.

Today's the last day for submissions. Hit the link here to put in yours. If you don't have your own, you could just copy mine in and say you agree. Or improve on it. Remix as seems fitting.

1. I am a New Zealand Permanent Resident who hopes to live in New Zealand until the end of his natural life.
2. Death is abhorrent, but some ways of dying are more abhorrent than others. This bill allows those facing truly miserable ways of dying to find a better way of ending their lives.
3. Failing to adopt this legislation will not abolish suicide. Whatever your moral views on suicide, people facing intolerable end-of-life conditions currently have suicide as a de facto option.
4. Current legislation forces those facing intolerable conditions to pursue suicide in worse ways. Because it is forbidden to provide assistance to someone considering suicide, a person knowing that an intolerable end awaits must either suffer that end, or commit suicide while still in sufficient bodily control to be able to effect that choice. 
5. Allowing assisted suicide allows those facing an intolerable end to defer suicide to a later date, when life has become - in their view - no longer worth living. This point may come well after the point at which suicide would be impossible without assistance. 
6. The legislation imposes no obligation on any physician to provide assistance. Any physician with moral objections to providing assistance can simply not provide that service, leaving it to others who are willing. 
7. The legislation places substantial restrictions on those wishing to pursue assisted suicide; the potential for abuse of the provision seems limited.
8. Those with moral or religious objections to suicide, and to assisting with suicide, will continue to have recourse under this legislation to not pursue suicide or to assist in suicide. Nothing in this legislation compels those opposed to assisted suicide to assist in the process. Those with moral or religious objections to assisted suicide should not have the right to impose their views on others. 
9. A continuation of the current ban on assisted suicide is morally abhorrent. My life is my own, and the choice to end it is mine.
10. In the absence of a provision for assisted suicide, should I face terminal illness with severe diminution in capabilities and/or intolerable pain, I would have to end my life on my own while I still were able to do so. I would have to do so secretly, to avoid imposing legal risk on my family who might otherwise be thought to have been complicit in my decision. It will be lonely, and terrible. To those Members of Parliament who think it immoral to allow me a better end-of-life choice, should I ever wind up in that situation, know that you will not be preventing a suicide but only ensuring a worse one. Is that really what your God would want?

On the recommendations part, I only said that Parliament should pass the legislation and should not impose further restrictions on access to this choice.

NZIER on the foreign buyer ban

Richard Harman's Politik newsletter points to NZIER's rather scathing submission on Labour's proposed ban on overseas buyers. NZIER's submission is here. There are some very good bits. 

We understand why this Bill has been introduced. We understand why Treasury has written a Regulatory Impact Statement (RIS) that contains very little evidence. We too would like it to be easier for first home buyers to get into their own home.

But none of these things detracts from the fact that, from an economic perspective, this Bill is a poorly-designed solution to a poorly-defined problem. As a result, NZIER opposes the Bill.

We recommend the Select Committee considers the scope for exemptions from the sweeping provisions of the Bill in terms of investment in certain regions or in certain types of residential development that would add to New Zealand’s housing supply and are less likely to be thought of as sensitive.

Given the lack of empirical evidence and poor data quality around overseas investment in existing houses or residential land, we recommend a timely and well-publicised monitoring and evaluation process to ensure the Bill does not have unintended consequences.

...

We have a great deal of sympathy for Treasury – it was effectively railroaded into delivering a RIS to implement a proposed legislative change with which it likely disagrees, and it would have been very difficult from a relationship perspective for Treasury to develop a RIS that explicitly advised against the new government’s proposal.

What’s the economic problem, exactly?

In a RIS, the problem definition should clearly identify the market or policy failure that needs to be addressed, what is causing the problem, and – ideally – how material the problem is. The problem definition is the foundation on which any RIS should be built, because it clearly explains why change is required at all.

The problem definition in Treasury’s OIA Bill RIS falls well short of best practice. In fact, it is almost non-existent. It contains almost no information or empirical content. It merely states that the new government has a stated policy commitment to “ban overseas speculators from buying existing houses” and the RIS is all about how to implement the political proposal.

This is effectively Treasury waving the white flag from a policy analysis perspective. It seems clear that Treasury were not asked to analyse whether the proposal makes any economic sense based on first principles.

An evidential void 

Obvious questions that have not been considered are:

• What empirical evidence is there that overseas speculators are pushing up house prices in New Zealand? Which countries’ speculators are having the greatest influence?
• In the absence of empirical evidence, recognising the limitations of existing LINZ data sets, how reliable is the anecdotal evidence on the role of overseas speculators in artificially inflating house prices?
• How significant is this inflationary effect, compared to other potential drivers of house price inflation, such as supply-side constraints and land availability?
• Why is home ownership ‘better’ for Kiwis than renting? (i.e. what is the welfare loss to Kiwis attributed to the current legislative framework?)
• What does the desired ‘future state’ look like, and how likely is the proposal to contribute to this state?

Without at least initial answers to these questions, it is very difficult to judge whether the proposal will make any material difference to home affordability for Kiwis at all. 

I like NZIER's heading questions too:

• "Will the OIO have the capacity to deal with 3,000% more screening applications?"
• "Is this really how we want to be regarded in trade negotiations?"
• Coming to New Zealand - we welcome skilled migrants (but only if you don't buy an existing house)

I'll also recommend Bryce Wilkinson's submission on behalf of the Initiative on it. And Matthew Cockram's submission.  And the Nelson Council and Queenstown Lakes Council submissions. 

Heck, you've even got telecom providers like 2 Degrees submitting on how the Bill will screw up getting telecom infrastructure in. Why? Because three of the big ones are classed as overseas persons and their infrastructure often winds up being situated on residential land. So it'll push back timelines on getting 5G through because they'd have to jump through OIO hoops. Stupid stupid stupid legislation. And it'll screw up power infrastructure in Wellington because the Wellington lines company is foreign-owned.

The legislation is terrible. Aren't there cheaper ways for Labour to pander to xenophobic nationalists? Free flags or something?

I wonder how bad legislation would have to be for Treasury to produce a more honest and thorough RIS. 

Hosking on sugar taxes

I'd chatted last week with Mike Hosking about sugar taxes. Hosking's followed it up this week in the Herald:

The New Zealand Initiative, who we have on the programme on an increasingly regular basis, might have done some of its best work yet.

Ironically, they do perhaps what the media should be doing more of. If you missed our interview on Friday, under the Official Information Act, they have got hold of papers that show the Ministry of Health has been (a) doing work on the sugar tax and its effectiveness and (b) looking at other work that's already been done.

This is the advice that goes to the Minister. And why this is important is the sugar tax debate, as most of us have suspected, has been hijacked by the zealots.

The research done is shonky and loaded. The research carried out by the ministry, who we can still presumably trust to be unbiased, is highly sceptical as to whether any tax would ever work.

This, hopefully, can once and for all put the subject to bed. It won't, of course, but at least next time the academics and the cloistered fanatics spring forth with another burst of tax PR, we have papers that show they are making it up.

Credit for the work in the OIA should go to MoH folks who did the work - both the original analysis and the tedious dredging through the files to find all of it.

All we did was request that it be made public.

I'm not sure why nobody else made that kind of OIA request. Perhaps when one-sided skepticism is in play and you've already cast the public health side as heroes, nobody's much interested in whether their story checks out.

Previously:

• Sugar taxes: NZIER's advice
• Sweet Release (all the MoH OIAed advice on sugar taxes)

For better costings

Parliament deserves better advice than it has been getting about the policies coming up under Labour's 100-day plan. There just isn't adequate time for the Ministries to produce reasonable regulatory impact assessments under those strictures. 

In this week's column over at Interest, I argue that where the Ministries haven't been able to produce a non-caveated RIS, the policy should undergo mandatory Post-Implementation Review. One reasonable way of doing that would be to sunset the legislation for six months after the due date for a mandatory PIR.

A snippet:

Imagine that you and your partner agreed that you would buy a house together after the wedding – and you both had your eyes on a particular property. After the celebrations, you hired a building inspector to check the place out.

Would it really be sufficient if the inspection report said only, “You promised that you would buy a house together after the wedding. This is indeed a house. You must purchase it.”?

I’d expect any of us would refuse to pay the builder’s invoice. But I also expect that we would give the builder more than five minutes to inspect the place.

I wish that this were about something as inconsequential (in the grand scheme of things) as one couple’s imaginary experience with a dodgy building inspector.

But some of the advice that Parliament has been receiving about the policies contained in Labour’s 100-day plan are every bit as inadequate as that builder’s report.

...

The bureaucracy is a servant of its political masters, and elections do matter. Newly elected governments have a mandate to implement their policy proposals. But in the absence of better official costing and evaluation of election policy platforms, Parliament often just does not have adequate information from the bureaus to assess whether policy promises still make sense after the election.

There is no simple solution, but we might consider one small improvement.

The Ministries will not always have time to provide an adequate assessment of the effects of policies. That can happen because of post-election pressures, but it can also happen because of unforeseen events between elections causing rapid political response.

When proposals have not had a chance to be more thoroughly evaluated, they should undergo more rigorous post-implementation review. A lot of Regulatory Impact Statements promise these reviews, but few seem ever to be undertaken. The reviews should be compulsory for policies undertaken under 100-day clocks.

When we buy houses, we make the purchase conditional on a good builder’s inspection. There often isn’t time to get a proper inspection report before making an offer, so we build in room to get it done properly after the offer has been made. And if the inspection report turns up cracked foundations, we have an out. Should we really expect less than that when it comes to policy changes affecting the whole country?

Sweet release

For the past several years, public health lobbyists have pretended that all opposition to sugar taxes is ideologically motivated or dishonest. They have argued that the only thing stopping the government from implementing their beneficent proposals has been the actions of nefarious interest groups.

And so it is interesting to read what the Ministry of Health's officials actually thought about sugar taxes.

I requested the Ministry's advice under OIA. They provided it. And it shows that the Ministry's officials raised the same concerns that we did, and that NZIER did, about sugar taxes. The Ministry's advice to Minister Coleman was consistent also with Treasury's warnings about sugar taxes - warnings that the public health people tried to discourage Health officials from considering (see document #34).

Overall, the Ministry worried that measured effects of sugar taxes on consumption were unreliable (but likely small) and that there was no evidence of health benefits from sugar taxes. I summarise the 37 released documents at the link above, and link through to each one. Draw your own conclusions.

Boyd Swinburn's oped in the Herald last week had a lot of problems. But the most insulting of them was his insistence that those opposing sugar taxes are "merchants of doubt". He didn't name any names, possibly because he knows about defamation law. But I was the one who OIAed the NZIER document that he's mad about, and I was the one who made sure that it received the attention it deserved.

And it turns out that my read of the evidence matched how folks in the Ministry of Health were reading things.

There were folks in the Ministry whose views were closer to Swinburn's, and it's awfully fun reading through the OIA to see the ones who are literate in economics trying to get ever more simplified versions of John Gibson's work in hopes that those without an economics background might understand what's going on.

I have no doubt that Swinburn, and his friends, are sincere in their beliefs. I do not believe that they are only pitching their theories because they are troughers wanting ever-greater public health grants. They are just honestly and sincerely wrong.

It could be fair for them to argue that NZIER, the Ministry of Health, Treasury and the Initiative are all wrong on sugar taxes. But when a diverse group reaches the same kind of conclusion on something, it is kinda stupid to argue that it's because of nefarious interests. It's sadly effective, but still pretty disappointing behaviour.

Please keep this episode in mind the next time that the public health crowd runs the ad hominem play when they disagree with me.

Floors, ceilings, and the youth minimum wage

The Dom Post's editorial earlier this week supported the re-abolition of lower youth minimum wages. 

Treasury warns that young people will miss out during such times if the lower rate is abolished. As jobs become scarcer, they will be squeezed out if employers can hire a more experienced older worker at the same hourly rate.

There is some evidence that this is true. Economist Eric Crampton, in a 2012 article, demonstrated that following the global recession of 2008, youth unemployment rates rose as high as 27 per cent, while the adult unemployment rate never exceeded 5.4 per cent.

The reason for the difference, Crampton wrote, was an earlier Labour government's decision to do away youth wage rates – an example of good intentions having negative unexpected consequences.

However, economic conditions are cyclical. Downturns are generally short-lived. Treasury seems to be asking successive cohorts of young people to carry the burden of significantly lower wages permanently to insure against future temporary downturns.

Economists also tell us that people will act in their best interests if they have incentives to do so. We could start by encouraging young people into the world of work by paying them a proper wage.

National's reinstatement of the lower youth minimum wage was pretty half-hearted. National voted down Sir Roger Douglas's member's bill that would have properly reinstated the lower youth minimum wage. The version National gave us instead is available only for the first hours of work by a younger worker, and it's a hassle to access.

We have to remember that the minimum wage isn't the mandatory wage. If labour market conditions are tighter, employers needing workers would have to pay more than the minimum if they wanted to attract staff: it isn't a permanent bearing of lower wages. And in slacker conditions, perhaps more employers would find it worth the hassle to try the youth minimum wage. At that point, having youths on a higher minimum wage would be binding and hurt employment.

Racist donuts?

I've been looking forward to Krispy Kreme opening in New Zealand since, well, since I moved here. 

But what the fresh hell is this?

Anti-foreigner rules at Krispy Kreme have left a bitter taste in one doughnut enthusiast's mouth - prompting a burning response from the Philippine Embassy.

A Hamilton man has been left hurt and angry after his Filipina girlfriend was not allowed to attend the grand opening of New Zealand's first Krispy Kreme outlet because she was not a Kiwi.

The multinational company admits the woman was likely turned away because of a "tired and over-zealous" security guard.

The company had a promotion for the first hundred customers and wanted to restrict that to Kiwis rather than American tourists - fair enough. And random-draw stupid security contractor - I doubt we should blame Krispy Kreme for that.

But how have we gotten to a spot where a dumb-ass security guard's baseline expectation around foreigners is "when in doubt, boot them out"?

Is this legacy of the Labour/Green/NZ First racist election campaigning around the evils of foreigners, or part of what drove the success of racist campaigning in the first place, or both?

I know politicians respond to incentives and when racism wins votes, they'll pander to it. Might as well blame the sharks for eating people. It's just in their nature. But it isn't right.