Wednesday, 19 June 2019

Google keeps making our lives better

Navigating post-earthquake Christchurch was tough. Every day brought a new set of road closures to route around. And they weren't always easy to predict in advance. If enough roads were closed on the south side of town, I'd want to take the longer northern loop to get from New Brighton to the University - but I wouldn't know that until I hit the closures.

So I'd then asked some friends at Google whether this couldn't be automated (and posted on the basic idea here). Traffic flow data already held could be used to infer road closures. If everyone who'd been recommended to follow Dyer's Road down to Ferry Road took a turn on Linwood instead, and nobody was on that small stretch of Dyer's Road, it would be a safe guess that it was closed. Why not flag it as likely closed, route around it, then update when it noticed traffic flowing again?

It wound up being more complicated than I'd have thought, and SCIRT was doing its best anyway to try to get road closure data up in real time in format that could be read automatically. But it still wasn't great.

CityLab reports that it's coming: Google is adding a disaster-navigation tool to Google Maps. Crowdsourced user responses will provide suspected closures in addition to the confirmed road closures.

I hope Wellington does not get its expected earthquake any time soon. If it does, this will make life a little bit more manageable. There will be so many unpredictable road closures due to slips. If you're home and have little gas in the tank, it will be hard to tell whether you can even get to the petrol station. This will help.

If the New Zealand government had put out an RFP for this kind of functionality, it doubt anyone would be offering to provide it for cheap. Instead, Google's giving it to us for free.

I hope that, come the quake, Bernard Hickey remains true to his principles and boycotts this excellent free service.

It's so nuts that New Zealand's looking to move out of step with the OECD on international tax and impose punitive rates on Google. Imagine if Google ever shrugged.

Tuesday, 18 June 2019

For want of a CURF

Some things are just hard to know without decent public use microdata.

There's been a lot of furore about ACT's flat tax proposal, with many on the left outraged that a libertarian party would support lower taxes.

Many have also pointed out that a 17.5% flat tax would represent a tax hike - not just for those currently on the 10.5% lowest tax rate, but also for those who are at a low enough point in the 30% tax band that the inframarginal increase in taxes on the first $14,000 of earnings would outweigh the reduction in taxes on earnings above $48,000.

No quibbles on that part - it's just maths.

But I am a bit more curious about household distributions. How many of those who would see that inframarginal increase in taxes are in households where the other earner would see a real tax cut accompanied by a drop in their tax rate? I remember Pacheco and Maloney's work showing that many minimum wage earners are in higher earning households, so the minimum wage is poorly targeted. I expect there could be similar effects here.

To know that we'd need a two-way earnings table. The columns would show the earnings of the primary household earner, split into different bands. The rows would show the earnings of the secondary household earner, split also into different bands. Each cell would provide the count of households where the primary earner earned the column amount, and the secondary earner earned the row amount.

For households with two earners on lower wages, the flat tax would be a tax increase. For some of those, it would only be an inframarginal tax increase. For others, it could represent a tax increase at the margin (anyone earning less than $14,000 per year).

For households with one higher earner and one lower earner, I'd expect most would see a tax reduction with effects at the margin, but I don't know the numbers.

And households with two higher-earners would definitely see a tax cut.

I guess the substantive point is that a lot of the folks being currently touted as seeing a tax hike under ACT's proposal would be in households where the net effect would be the opposite, and where the tax hike part would be inframarginal while the tax reduction part would have effects at the margin. We don't expect big labour supply effects on primary earners from tax cuts, and we do expect more supply responsiveness from second earners - but if the effect on second earners is more likely to be inframarginal, then that's a bit different.

And the more substantive point is that it's just dumb that it's hard to know what the numbers actually are. In the US, I'd just download the ACS PUMS and tally it. Here, because Stats' back-end systems are archaic, the only tables we have are the ones somebody thought to code in ages ago. You can't dynamically generate them.

Stats does have Confidentialised Unit Record Files, but you have to go through an application procedure to get them. And, once you have them, you can only use them for that one specific thing that you asked to use them for, then delete them. If you want to check something out just out of idle curiosity - like this tax question - well, you can't. Even if you have the CURF from a prior request that you're still working on, you have to get permission to use it to ask this specific question.

And the most recent CURF that might answer the question would be the one from the 2013 Census; they don't CURF the HES.

I have a query in with Stats in case this table already exists somewhere on a disused server in the bottom of a locked filing cabinet stuck in a disused lavatory with a sign on the door saying 'Beware of the Leopard', as that's always a possibility. But this kind of stuff shouldn't take hassling Stats staff (they are exceptionally helpful, and it wouldn't surprise me at all if somebody there is already building the table) or doing a whip-round of other economists to see whether they know whether this kind of data exists. You should just be able to download the darned Census CURF and check it - or have back-end systems that can support the kind of data access that IPUMS provides.

UPDATE: Stats' helpful advisor informs that that cross-tab does not exist and would take either a custom data request, or a research project through the IDI.

UPDATE2: Customised data requests charge out at $155/hour. If Stats' back-end systems weren't rubbish, or if they decided to free the Census CURF, any of us could just do it on our own.


Jonathan Haidt will be speaking in Auckland on 1 August. I've seen him present before; he's excellent. 
In 2012, US psychologist Jonathan Haidt rose to fame with the publication of his book The Righteous Mind: Why Good People are Divided on Politics and Religion. In its review, The New York Times called Haidt’s book “a landmark contribution to humanity’s understanding of itself.” It has since gained widespread praise from commentators left, right and centre (see here).

Both Foreign Policy and Prospect Magazine have listed Haidt on their respective rankings of the world’s Top 100 public intellectuals.

Haidt has since published extensively on threats to academic freedom and the polarisation of political debate on campus. His latest book (with Greg Lukianoff) is titled, The Coddling of the American Mind: How Good Intentions and Bad Ideas Are Setting Up a Generation for Failure.

The New Zealand Initiative is proud to support Jonathan Haidt’s first visit to New Zealand.

This will be a rare opportunity to meet one of the world’s most original thinkers in New Zealand. Haidt’s work in moral psychology has deep implications for many of our global and domestic political debates.
Tickets are available here. There will also be a much smaller Wellington event with Initiative members.

Monday, 17 June 2019

A sugar intervention that actually looks promising

Usually I'm pointing to daft stuff on the sugar file. 

But my jaw dropped when I read this one. An intervention that sounded sensible, that's been piloted, that looks effective, and is quite possibly cost-effective too.

Here's RNZ:
But dental decay in even the most deprived communities could be prevented by the simple method of brushing teeth once a day at school, and a Northland study had proved it, and the government should take heed, Dr Stallworthy said.

In 2015, DHB dentist Ellen Clark set up a highly controlled tooth-brushing trial in Northland schools for her Master's thesis in Public Health, through the University of Otago.

A teacher aide was paid to supervise tooth-brushing sessions, once a day for 170 children at Kaitaia Intermediate School.

Several other schools were selected as controls, all of them in areas of high deprivation, where children were given a toothbrush and fluoride toothpaste, but had no supervised brushing sessions at school.

More than two-thirds of the children were Māori.

Ms Clark said she had hoped to improve the children's oral health - but the results were far better than she dared to hope.

"The children who were brushing (at school) had a mean number of 11.7 tooth surfaces that improved - that is, they remineralised or (the decay) reversed. In comparison, the kids who were not brushing had 8.6 tooth surfaces that deteriorated over the year which was quite profound, I wasn't expecting that - I thought you'd have to follow these kids over several years before you saw such significant results."

Tooth-brushing programmes in schools in Denmark and the UK had been showing similar results, Ms Clark said.

One of the better known ones, the Scottish Child Smile project had saved the government an estimated $NZ9.1 million in just two years.

The low-tech intervention could do the same for New Zealand, at a relatively low cost, Ms Clark said.

Supervision was critical, but the cost of a teacher aide, for an hour a day per school, was tiny compared to the potential savings in teeth and dollars.

No equipment was needed apart from brushes and toothpaste - the children in the Kaitaia study spat into paper towels, and rinsed their brushes at the water fountain.

The beauty of the study was that it removed the usual inequalities in oral health, caused by poverty, and the results had prompted interest from overseas, and from other DHB's around New Zealand, Ms Clark said.

She was now working on a detailed cost-benefit analysis, in the hope the government might consider rolling the programme out through Northland.

And though the study is over, Kaitaia Intermediate has kept up the toothbrushing - and continued to report good results, Ms Clark said.
And here's the Masters Thesis.

It's a shame that it seems needed, but here we are.

In related news, a friend emails me a public health anecdote from the mid-2000s. According to the anecdote, an academic did some joint research with MoH into rheumatic fever and found that shared toothbrushes were part of the problem, as were shared beds - the recommendation then was to hand toothbrushes out at GP offices to prevent that transmission vector. Toothbrushes are cheap.

According to the anecdote, MoH buried that part of the research in case it reflected badly on ethnic groups more likely to share toothbrushes. The collaborator never worked with MoH again due to frustration over the barring of the findings' being used.

If anyone knows more about this one, drop me a line.

Friday, 14 June 2019

Afternoon roundup

The afternoon's worthies on the closing of a week's worth of browser tabs:

What else could he say?

Well, turns out I was at Makhlouf's farewell party, in a way.

I'd been initially invited to the thing via a Treasury 'Save the Date', then uninvited for obvious reasons after I pointed out, again, the depth of deterioration at Treasury under Makhlouf's watch. The quality of policy advice has dropped substantially, as reported in Treasury's annual reports; the stakeholder surveys show declining confidence, and I think it's due to Secretary Makhlouf's administration having focused on faddishness over rigour and the deterioration of economic competence in the organisation.

When RNZ's Madison Reidy ran a whip-round of economists, she couldn't find anyone who disagreed with me on the deterioration at Treasury.

Here's Finance Minister Robertson, reported in Politik at last night's farewell event. 
Robertson also praised Makhlouf for making Treasury a more diverse place and addressed recent criticism from the NZ Initiative economist, Eric Crampton, that Treasury was putting too much emphasis on diversity and was not hiring enough highly qualified economists.

“ My message to Eric Crampton, the NZ Initiative and the Taxpayers' Union Is that the Treasury should have economists.but it should also have people from other walks of life who aspire to be part of an organisation that delivers to New Zealanders better-living standards," he said.
Peter Hughes was also reported to be fulsome in praise of Makhlouf. Of course he would be. The State Services Commission completely screwed up in having Gabs reappointed in 2016.

If Robertson and Hughes want to ignore the failures at Treasury, well, it's their administration that will suffer - and the rest of us. A Finance Minister needs quality advice, and he will not get it.

I hope that this is just a "well, what else could he say at the man's funeral" thing. But he didn't need to endorse Treasury's awful hiring practices.

Update: I'm more annoyed about this the more I dwell on it. The next CE has to know he has the Minister's backing in fixing the problems at Treasury. I thought Robertson understood the task ahead. At every point, I've been critical of Treasury but optimistic about Robertson's having some desire to fix things. I am updating substantially on this. Will he even be able to get the kind of candidate he needs if he's signalling that he thinks Treasury's composition is a-ok?

Thursday, 13 June 2019

What counts as 'Moderate' reliability for Cochrane?

Glenn Boyle prompted me to hit the Cochrane Review's findings around SSB price interventions a bit more closely.

If this counts as moderately reliable evidence, well, draw your own conclusions about the weight to put on the stuff they count as low or very low reliability.

Here are the three studies they evaluated.

  1. Cornelsen 2017. They looked at a 10 pence price hike on SSBs across a chain of UK restaurants. 9% reduction in SSB items sold per customer. While there was a 22% increase in per-customer sales of fruit juice on the main menu, there was a 10% drop in fruit juice sales on the kids' menu, a 7% drop in sales of diet cola, and a 6% drop in sales of bottled water. They did not run it as a diff-in-diff, just looked at pre/post. Tap water isn't measured; could have been generalised shift towards tap water. And there's weird stuff - the change in consumption in levied SSBs is reported as significant with a p-value of 0.004, but the 95% CI runs from a -15.21 drop to a 3.15 increase. Typo? Who knows. It's public health. No discussion of whether there just might have been a coincidental generalised shift to tap-water given the drops in sales of diet colas that didn't get the price hike. Nothing on whether there was substitution into desserts. And it's all at Jaime Oliver restaurants; their shifting towards bankruptcy over time plus his generalised increasing awfulness may have affected customer cohort too. If his big menu reorganisation and self-imposed sugar tax was accompanied by a giant "I'm so great look what I did" publicity campaign, as it almost certainly was because it's Jamie Oliver we're talking about here, well, you might think that the clientele might have shifted away from the people who like soda to the kind of people who like folks that yell at people who like soda. No accounting for any of that. 
  2. Blake 2018. A price intervention in a single convenience store reduced sales at that single convenience store. It was the convenience store in a hospital, so maybe it was a bit harder for folks to pick other stores. But come on. 
  3. Breeze 2018. Leisure centres in Sheffield increased SSB prices by 20 pence and saw a 31% reduction in sales per customer, with some increase in sales of diet soda. No clue how many people brought in their own soda in their gym bags. Oh, but the intervention also included staff training and publicity and stuff that might have had additional effect on their own around salience of health and price.

But when sugary drinks are made more expensive, or sugar-free alternatives made cheaper, sales fall, the researchers found.

"The evidence is unequivocal... you put up the price, consumption goes down," NZ Dental Association spokesperson Rob Beaglehole told The AM Show on Thursday.

"You get rid of junk food from schools, consumption goes down. Better sugar labelling is again another way of reducing sugary drink consumption. There's lots of different ways that we can act."
I'll never disagree that demand curves slope down. But the elasticity matters. And this latest Cochrane Review ... well, if that's the basis for recommending generalised hikes in SSB prices via soda taxes...

Sweet restrictions

The Science Media Centre asked me for comment on the latest Cochrane Review on interventions around sugar.

Reading through the thing, I was struck by the weakness of evidence around a lot of the kinds of things folks here like to demand that the government do.

Cochrane rates the certainty of evidence on a scale that runs: very low, low, moderate, high.

The interventions with the strongest evidence base around environmental interventions aimed at reducing consumption of sugar-sweetened beverages were rated "moderate". Nothing rated high. Interventions rated as having "moderate" evidence included:
  • Improved access to low-calorie beverages in the home environment
    • studies in this group would provide free home delivery of bottled water or diet drinks to people often in places with unreliable access to clean drinking water, and found reductions in soda consumption as consequence. 
  • Multi-component community campaigns focused on SSBs
    • Results here drew from one study. 
  • Government food benefit programs with incentives for buying fruit and vegetables and restrictions on the purchase of SSB
    • Here, studies looked at interventions restrictions on purchasing SSBs using the equivalent of New Zealand's WINZ payment card. The studies found reduced sugar consumption. New Zealand already bans a lot of classes of purchase on the payment card, including alcohol and tobacco. It wouldn't be infeasible to do it here, but there would be a lot more SKUs that would have to be loaded up properly into the card - it could prove difficult in practice. Checkout clerks are already well trained around identifying alcohol and tobacco purchases; knowing which beverages would be banned and which would not would require the back-end systems being programmed correctly. I expect it wouldn't be a simple thing.
  • In-store promotion of low-calorie beverages in supermarkets
    • Evidence here all drew from Foster 2014. That was a randomised trial looking at in-store promotion of healthier items: lower-fat milk, ready-to-eat cereal, frozen meals, in-aisle beverages (Diet Pepsi and Aquafina water), and checkout cooler beverages (zero calorie beverages and water). Effects were often statistically significant, but I'm not sure that a store selling 24 more gallons of skim milk and 53 more gallons of 1% per week are really all that big a deal. 
  • Price increases on SSB
    • Three studies found that places chosen for soda price interventions, like a leisure centre or a particular corner store, saw reduced sales of those price-boosted items. But it seems kinda likely that folks would just be purchasing their soda at shops next door that weren't part of an experiment involving higher soda prices. You oughtn't generalise from it. No surprise that Beaglehole does generalise from it though
  • Small prizes for the selection of healthier beverages in school cafeterias
    • Evidence ranged in strength from moderate to low. In the Hendy 2011 study (rated moderate; the others were low), there was a three-meal-per-week reduction in the number of meals with unhealthy beverages selected in an intervention in primary schools where kids' meals were monitored and they got token rewards from parent volunteers chosen as monitors. If your school has that many available parent volunteers, I guess it's not that high cost to implement - though you might imagine other things parent volunteers in schools might more usefully help with. 
  • Traffic light labelling
    • Evidence here was rated moderate in reducing consumption of red-labelled beverages. 
Everything else had evidence rated as low or very low confidence. 

Here's what I told the Science Media Centre about it; Newshub picked up a bit of this commentary but didn't contrast the price bit I'd noted with how Beaglehole approached it.
The Cochrane Review provides an important synthesis of the evidence regarding non-tax interventions aimed at reducing consumption of sugar-sweetened beverages [SSBs].

The review found that many often-recommended measures have little evidentiary base, with certainty of evidence rated as very low. Interventions in this category included measures like healthier vending machines in workplaces and schools, restrictions on the number of stores selling SSBs, urban planning restrictions on new fast-food outlets, and menu-board calorie labelling. No studies were found that might provide basis for restrictions on advertising.

Some measures showed promise, with a moderate certainty of evidence established across numerous studies.

Improved access to low-calorie beverages in the home environment reduced SSB consumption, but many included studies focused on places without reliable access to clean drinking water. Regular home delivery of free non-SSB drinks across broad swathes of the population seems unlikely to pass any reasonable cost-benefit assessment, and especially in places where piped water is of reasonable quality.

Restrictions placed on purchases funded through food benefit programmes reduced SSB consumption, and could be implemented in New Zealand by adding SSBs to the list of prohibited purchases on Work and Income Payment Cards. But the administrative costs may not be trivial, and the imposition on low-income households who enjoy soda occasionally should not be ignored.

Small prizes for selecting healthier beverages in primary school cafeterias showed some promise.

While price increases in individual targeted stores showed reduced sales of SSBs in those particular venues, the surveyed studies in that area do not look at overall consumption; people could easily have shifted to purchasing from outlets where prices had not been hiked.

And while the review authors tentatively suggested a somewhat broader set of interventions may prove effective, they also warned that their confidence in the likely effects is low to moderate. Rather than providing evidence for policy change, we should view the report as suggesting measures potentially worth trialling within an appropriate experimental framework designed to improve the evidence base.

Where the evidence base presented for any substantial effect of interventions is moderate at best, even without being evaluated as part of a broader cost-benefit assessment that weighs implementation costs and costs to consumers, we should be highly sceptical of any calls for strong intervention based on this report. It should rather temper our enthusiasm for large-scale measures likely to impose substantial cost for rather less certain benefit. Pilot studies and trials of some of the more promising interventions may be warranted.

Barbershop thoughts

I'd be surprised if something like this didn't already exist, but if it doesn't, it'd be a great feature for Spotify (or another of the streaming services).

I was sitting in the barber's chair yesterday when something that sounded a lot like Spotify's 80s New Wave collection came on. It was rather good. It was almost what Spotify's Daily Mixes might recommend for me some days. I was mildly proud of myself for finally remembering, two songs later, that the one that had been bugging me was by Echo and the Bunnymen.

Imagine a barbershop with some staff with musical preferences and customers who also have musical preferences. If clients with scheduled appointments have their Spotify handles loaded into the shoppe's roster, there'd have to be a way for Spotify to run an adaptive playlist that takes some least-distance measure across all the liked songs by the people currently in the room, filtered through some basic parameters the shoppe might set. The shoppe might wish to rule out songs with explicit lyrics, for example - or it might not. Or it might have an upbeat or relaxed or whatever vibe that it tries to go for - and the algorithm could then pull appropriate tunes from the customers' playlists.

It should have applications beyond barbershops though. House parties without a DJ could just let Spotify configure things after the host says who's there. Heading out on a road trip with friends? It would pull from the favourite tunes of those in the car without anybody having to muck about.

And having the feature would increase the value of network effects in the player with the feature - if your friends are using it and you want your tunes to start showing up when you're at your friend's house, you'll want to be on the same player.

I'd be surprised if one of the streaming services weren't already doing something like this though.

Wednesday, 12 June 2019

Due diligence and the Irish Central Bank

Barriers to exit are barriers to entry. If you're going to hire someone to a permanent position, you have to do a lot of due diligence. When I was on faculty at Canterbury, recruitment processes were very thorough as we appointed faculty to permanent positions - the norm in America is appointment to a limited-term position after which a faculty member may progress to tenure. So we tried to be careful. Mistakes could last for a very long time.

This morning, Radio New Zealand reported that the Irish Central Bank would not withdraw its offer of appointment to Secretary Makhlouf unless there were findings of "very very grave misconduct" in the current investigation.

That is a substantial barrier to exit. Firing governors of central banks should be hard if central banks are to be independent.

But where there are heavy barriers to exit, you need a lot of due diligence at the front end.

When Radio New Zealand's Madison Reidy asked economists around town whether I'm out on a limb in what I've been saying about Treasury, she couldn't find anyone who disagreed with me.

So I wonder just what kind of due diligence Ireland's version of SSC has undertaken. Did they ask any economists in New Zealand about how Treasury's fared over the past few years?

Monday, 10 June 2019

Hide the Decline

Back in April, Madison Reidy interviewed Treasury Secretary Gabriel Makhlouf about the 2017 Treasury Stakeholder survey. That interview didn't air until this morning; it's here

I'll do my best to transcribe the relevant bit here.
Makhlouf: Sometimes we haven't done a good enough job at engaging with stakeholders so they understand what we're doing and why we're doing it. I'd like to think that if we did that survey today, we'd get a better set of results.

Reidy: Shouldn't you be doing these measures again this year? You do it every two years.

Makhlouf: Oh we've done, umm, I don't know if we are going to do it again this year.

Reidy: Is that because you had such a poor performance last time that you're not going to measure it this time around?

Makhlouf: No it's because we're actually implementing a whole bunch of changes which we want once we've got to a particular point in our change program that we'll then want to assess how that's impacting so it's just a question of timing as to when we do it.

Reidy: It's all good and well to say to me that you know you think you've changed and that the perception of what the Treasury does and is is now better but wouldn't you want that in hard numbers?

Makhlouf: No no no I will do, I just said, I think it's just a question of time of when we do that.
I wonder whether that survey is yet underway. I was a respondent in prior years' iterations, and that would have been about this time of year. I expect RNZ will be following up to see whether the 2019 survey has yet been started.

The worries aren't Just Eric. I'm just the only one willing to have my name on it. Reidy followed up, as is eminently sensible.
Other top economists RNZ Business spoke to - who did not want to be named - shared the concern and frustration over Treasury's apparent weakened performance.
Independent think tanks are important.

Update: Reidy clarifies a bit further on Twitter, in response to criticism that she shouldn't have been talking to me because neoliberals, and that everyone else required anonymity.
The *all* seems significant.

Saturday, 8 June 2019

The long term rot

Over at The Spinoff, I go through the problems at Treasury I've been chronicling here for some time. Most of this will be familiar to loyal readers, but I do put a couple of new bits in.

The Spinoff truncated a couple of bits for length ... I did go on for a while. The shorter form version is here; we have the full one over at our site.  
If the Canterbury earthquakes taught us anything, it’s that the immediate response to a disaster is a very different thing from the rebuilding that has to follow.

Disaster response is about triage, the good-enough, and avoiding substantial further harm. The rebuild is different. It takes a fair bit of thought about what the place should look like, and a long-term strategy to get there. In the best case, the long-term vision has always been in place and all that needs to be done is working out how to get there from the current mess. But it can be a lot harder if there were a lot of longer-standing issues prior to the disaster that also need to be resolved.

The State Services Commission’s investigation of Treasury Secretary Gabriel Makhlouf’s conduct and statements during last week’s unauthorised access to budget documents is disaster response. But this disaster was not the Christchurch earthquake, and the IT department is the least of Treasury’s issues. Last week’s mess is the culmination of years of mismanagement at Treasury that saw the substantial erosion of Treasury’s competence. Treasury’s core role as the government’s lead economic advisor has been put at risk.

Treasury needs a recovery, and a rebuild. The job facing any incoming Chief Executive will be exceptionally challenging.
I expect Minister Robertson will be watching the appointment closely; it's just too expensive for a Finance Minister to have an unreliable Treasury. 

Read the whole thing at the link above. It's good to see that the piece is making the rounds as it should. 

Wednesday, 5 June 2019

Protecting the Privileged

Over at Newsroom ($), I wonder why we extend employment protections designed with vulnerable workers in mind to Chief Executives - and just what the heck does somebody have to do to be fired as a public sector Chief Executive.
It used to be the case that the question of firing of public sector chiefs never even came up. Senior civil servants would themselves tender their resignations for catastrophic failures, and Ministers could accept or reject those resignations as appropriate.

But when a resignation is not offered for performance this far off the norm, and the appointee continues in the position, something is manifestly wrong - either employment law as it relates to senior executives, or the government’s willingness to put up with exceptionally poor performance.

Treasury has not had a good week.

... But the Minister cannot fire the Chief Executive, even if he wanted to. Chief Executives in the New Zealand Public Sector are appointed by the State Services Commission and can be removed only by the State Services Commissioner.

Section 39 of the State Sector Act 1988 states that the Commissioner of the State Services Commission may remove the Chief Executive of a department or departmental agency from office, with the agreement of the Governor-General in Council (in other words, Cabinet), for just cause or excuse.

This past week would seem to constitute just cause or excuse on a simple, normal English reading of the term.

But few things in employment law are ever simple. Employment law and case law around it has developed to ensure workers’ due process rights. Whatever your view on appropriate process protections for dismissal of junior staff, highly paid Chief Executives need to be able to be dismissed quickly, easily and without payoffs.

It seems absurd to view senior executives in the private or public sector as being in a vulnerable position in relation to their employer and needing the same protections as less privileged workers. But that is where the law seems to sit. A 2017 Members’ Bill from National’s Brett Hudson would have made it somewhat easier to dismiss senior employees, but was voted down by the Coalition Government.

And it may be prolonging Treasury’s misery.

...If Minister Robertson were to indicate extreme displeasure with the Secretary, or to categorically state he had been misled by the Secretary, he could be viewed as prejudicing the outcome of a due process investigation. If he does not, National will continue to attack him as complicit with Treasury in last week’s allegations about National’s so-called hacking.

The State Services Commission may wish for a tidy and quick investigation, but advertising timelines at the outset could also be considered prejudicial where he may need to demonstrate, for employment law purposes, that he has investigated the issues thoroughly and with an open mind. But without an announced timeline, we might fear that the State Services Commission is simply kicking the can until Makhlouf is safely ensconced in Ireland.

All this extends the stench of Wellington unaccountability. Just how bad does a public sector Chief Executive’s performance have to be before accountability kicks in? And what does it say about employment law in New Zealand when it comes to the most privileged?
Update: there's now an ungated version up at the Initiative's website.

Sunday, 2 June 2019

Around the budget traps

Budget lock-up on Thursday was fun. I didn't get to ask Minister Robertson whether he still had confidence in his Treasury Secretary, but it probably would have been rude to ask. 

A few bits from me on it over at the Spinoff, our Insights Newsletter, and over in the Stuff newspapers - I think it ran in both the Dom and the Press on Friday. They reversed the headline, but s'all good.

The end of my Dom piece:
Treasury often undertakes this kind of programme evaluation work, or at least assists in overseeing it. But Treasury's core economic and analytical capabilities have been seriously eroded under its secretary, Gabriel Makhlouf.

Treasury was awarded $5m a year over the next four years to "deliver core functions and the wellbeing approach". Rebuilding Treasury to be able to deliver the evaluation capabilities necessary for achieving Robertson's vision may be a bigger job than that.

It would have perhaps been the wrong day to ask the minister of finance whether he has any confidence in Treasury's capability to deliver. I have doubts.

Programme evaluation has always been the poor cousin to programme announcements. When voters too easily infer a government's depth of caring by the quantity of its spending, rather than the outcomes that spending achieves, that outcome is not surprising.

I hope the wellbeing approach yet proves to be something more than that. It may otherwise be difficult to distinguish from business as usual.

Wednesday, 29 May 2019

Oh Treasury ... again

There is speculation Budget documents may have been "hacked" by someone simply guessing the website addresses of documents prepared by Treasury but which were not yet supposed to be visible on its website.

Treasury has been approached for comment on whether that is what may have occurred, or whether the alleged hack might have been more sophisticated.
Puller-Strecker's interviewed experts think Treasury screw-up the most likely explanation, with pages being indexed that shouldn't have been indexed.

Whether this was due to somebody putting up placeholder content using near-live budget documents in a test environment that was less test than they'd thought, or a screw-up in the CMS where embargoed content was cached by Silverstripe in ways accessible to crawlers* - the current plausible explanations are Treasury screw-up.

The screw-up would fall under the Director of Operations' remit. But the Director of Operations is only a few weeks into the job, having replaced Fiona Ross, who left in April to lead the Ministry of Justice's Family Violence And Sexual Violence unit. You may remember Fiona from Danyl McLaughlin's reporting on DEVUCA worlds

It's still possible this was a leak from elsewhere. But if this winds up being confirmed as Treasury screw-up, it would be difficult to blame a DDO who's only been in the job a couple of weeks. 

And I agree with Hamish Rutherford's piece here: if Treasury really thought that market-sensitive information had been hacked, the budget would already have been released early to avoid giving any hacker a time advantage. Plus, were someone keen on really hacking Treasury, I'm not sure that the budget would be the most interesting stuff to go after. Tendering, commercial contracts, debt issuance - there's a lot of stuff that they'd have in the back-end that would be rather more interesting than a soon-to-be-released budget unlikely to have much market consequence. 

* I understand this to be a known issue in Silverstripe in some government implementations, but I could not possibly explain it.

[Update - link fixed along with spelling of Pullar-Strecker -- Doh!]

Saturday, 25 May 2019

Process cost

I wonder how much this termination and associated litigation cost a Nova Scotia firm, and how much it would be likely to cost here in New Zealand. From the National Post:
N.S. arbitrator says employer was right to fire man for masturbating in bathroom — but only because it mortified co-workers

The employee and Unifor, his union, tried various unsuccessful arguments in the man's defence, including that he had a disability of sex addiction.

A company is justified in firing a unionized employee for masturbating in a bathroom stall at work, a labour arbitrator in Nova Scotia has ruled.

The arbitrator concluded that the employer, an aerospace firm operating hangars at the Halifax airport, had just cause to terminate the employee because his colleagues could hear what he was doing, and it caused “embarrassment and distress” in the workplace. The employee had also been warned about his behaviour two years earlier.

The employee and Unifor, his union, tried various unsuccessful arguments in their grievance, including that he had a disability of sex addiction. They also argued he had not been properly warned because managers were too embarrassed to directly tell him what the complaints were about and instead spoke in euphemisms about “unusual noises.”

For privacy reasons the employee is not named in the ruling, which came down last week and is publicly posted in an online legal database.

It appears to be the first Canadian labour case on the subject. “Neither (the company) nor the union’s representative had been able to find any case dealing with masturbation in the workplace,” the ruling says.

Arbitrator Gus Richardson was asked to decide whether the act of loudly masturbating in a stall justified discipline and termination, and whether a bathroom stall is a sufficiently private place.
You'd think that doing that in the washroom at work, repeatedly and loudly, and after warning, would be grounds for summary dismissal.

The case is funny, but the whole process had to have cost the firm a bundle in legal representation and hassles.

Let's stick with the funny though:

“I do not accept the grievor’s testimony that he made no sounds while performing this activity,” Richardson wrote. “Obviously if that were true no one would have known that he was doing it. But people did know. They could only have known about it because they could hear it.”

Two technicians had approached their union shop steward with complaints, but the steward “didn’t want to entertain this issue.” Instead the technicians went to management, who met with the employee but avoided directly mentioning the issue. A manager told the employee there were complaints about noises in the bathroom, such as “breathing heavily, making erratic movements and moaning,” and said management was concerned for the employee’s well-being. They told him that if he had a serious medical issue, he should alert human resources.


But two years after that meeting, complaints about the employee’s behaviour reached a boiling point again, with one employee complaining to human resources that the masturbation had become “more frequent and brazen.” The company conducted an investigation, and the employee was eventually fired.

Richardson considered evidence that the employee has a disability in the form of a sex addiction that should mitigate the punishment. He accepted evidence from a therapist on sex addiction despite protests from the company that the therapist’s education was from an online university that was not accredited by any national psychological association.
“In short, even if there was a condition that could be called a ‘sex addiction’ — and I was not persuaded on the evidence that there was — and even if that was what the grievor suffered from — and again I was not persuaded that was the case — there was nothing to establish that it was disabling in any way,” he concluded.

“I am accordingly persuaded that the employer had just cause not only to discipline the grievor, but to terminate his employment. The grievance is dismissed.”
Emphasis added. You'd hope in cases like this that the employer's costs could be awarded against the union.

In any case, the arbitrator's decision seems entirely correct. I would hope that a similar case in New Zealand wouldn't even make it this far, but if it did, I hope the ruling would be similar.

Friday, 24 May 2019

Herald on sugar

Kudos to Boyd Swinburn and the usual anti-sugar folks for getting this wonderful piece of advocacy published in the Herald as journalism rather than advertorial or op-ed. I'm cancelling my subscription to the Herald and asking for a refund of the balance of my annual subscription fee, but that's a bit beside the point. Swinburn et al have done a great job here with cheer-leading reporter Luke Kirkness.

Here we go.
"I've finished pulling teeth today, my right hand's actually sore I pulled out so many."

Those are the harrowing words of New Zealand dentist Dr Rob Beaglehole who is urging the Government to take action and tax sugary drinks.

The problem is so extreme more than $20 million is spent each year anaesthetising Kiwi children so they can undergo tooth removals as a consequence of consuming sugary drinks.

And today, a petition has been launched in an effort to convince the Government to introduce a tax on sugary drinks.

But the current Labour-led Government and Health Minister Dr David Clark have no plans for such a tax.
Excellent heroic-dentist versus uncaring-government framing.
"The Government needs to modify the environment that we're living in," Beaglehole, the New Zealand Dental Association (NZDA) spokesman, said.

"We've had enough of Coca-Cola, McDonald's and other junk food companies selling this sickness to our kids.

"They keep getting away with it ... we need to make the healthy choice the easy choice."

Beaglehole told the Herald last night the NZDA backed the petition but the Government should go further than just implementing a tax.
University of Auckland academic Dr Gerhard Sundborn, on behalf of The New Zealand Beverage Guidance Panel, is behind the latest petition.

Calls for a sugary drinks tax aren't new he said. One with 10,000 signatures was presented in August 2017 but largely ignored by politicians.

"It was extraordinary that this earlier call to tax sugary drinks ... was snubbed by the then Minister of Health, and by both major parties," he said.
Getting the journalist to fail to follow up with the Ministry, or to check in on whether the Ministry has done prior work on sugar taxes - again, excellent work. Those interested can read NZIER's comprehensive review of the prior five years' published literature on the topic - commissioned by the Ministry of Health. But the journalist isn't interested. At least Newshub's reporting covered that part. Like, you might think that a journalist would wonder why the Ministry has been sceptical.
"NZDA has estimated that we spend more than $20 million every year to anaesthetise children so they can undergo multiple tooth extractions as a consequence of consuming sugary drinks.

"We must find more ways to address these issues."

The Panel, made up of researchers from a range of fields including public health, medicine and marketing, suggests a targeted tax on sugar should be top-priority to tackle the country's interconnected issues with obesity, type 2 diabetes and rotten teeth.
Really? The dentists have been able to sort out what proportion of extractions are due to sugary drinks and what proportion comes down to other stuff and what comes down to a combination of factors including never brushing one's teeth? This is amazing. I'd love to see that research and see how they established it. The journalist wasn't interested, but I am.

I know I'm blockquoting the whole article here, but I don't feel too bad about it. Here's the press release from the New Zealand Beverage Guidance Panel, and much of the article is a paraphrase of it.

Who is the Guidance Council anyway? This Stuff article (no paywall, better journalism) from 2017 says it was set up by FIZZ - an anti-soda advocacy group. This isn't some neutral bunch of nutritionists - it is an anti-soda advocacy group. This brief says they were modelled on the US Beverage Guidance Panel, "The intention of the panel was to develop guidance to government and community groups to limit the intake of sugary drinks." So: Panel established to fight soda consumption argues for sugar tax.

Let's move on.
The Health Minister agrees but in a statement to the Herald he said the Government had no plans for a sugar tax, as he had "consistently said".

"We need to reduce sugar levels in our processed food and drink, and develop a better food labelling system," Clark said.

"I have met several times with the food industry and set out the clear expectation that business and the Government will work together on this issue."

In September, the Herald reported Prime Minister Jacinda Ardern was told a sugar tax would generate millions in revenue and save lives.

Ardern was briefed on a potential tax by the Ministry of Health's chief science adviser Dr John Potter at her request.

Potter said a tax of 20 per cent had been shown to work but should be based on volume or sugar content, not value of the product.

"Reduction of consumption via a tax will probably be greatest among the households with the lowest disposable income. In New Zealand, Māori and Pacific will benefit strongly," he said.
Potter did send that memo: 16 February 2018.

It was two-pages of unreferenced bullet points.

It made no mention of the comprehensive NZIER report on the effects of sugar taxes, which Potter had received on 15 August 2017 and which was publicly released, finally, after much prodding from me, on 31 January 2018: two weeks before Potter's memo.

The NZIER report was covered in the Herald on 2 February, by Newsroom on 7 February, and even in the Toronto Globe and Mail on 12 February. If Potter missed it in August, you would think that the Ministry of Health's Chief Science Advisor just might have noticed extensive media coverage of an important report in his brief during the fortnight before he provided his memo. It surely would also have come up in discussions within the Ministry between April and February.

Potter's failure to mention it, and providing advice concluding the opposite of the Ministry's comprehensive commissioned report, could reasonably be characterised as Potter, the Chief Science Advisor in Health, having misled the Prime Minister.

See, if you expect reporters to either know their beat or to ask people who do know the area, you'll be a bit disappointed in the Herald article by now. It would not have been hard to get NZIER's Peter Wilson on the phone.

And you'd be wondering just why you're paying $200/year as a subscription fee, and whether they'll refund the balance of the subscription like you've requested.

I'll stop there. The piece goes on, and does have a quote from the beverage industry saying that the beverage industry doesn't like sugar taxes. And it concludes with a link to Sundborn's petition - despite (I'd thought!) standard drill at Herald being that they don't outlink.

I'll reconsider the subscription cancellation if they fix this mess.


Thursday, 23 May 2019

Data termination

Awww, nutbunnies.

In April, Paula Penfold and Eugene Bingham reported that 2500 women had had their requests for abortion turned down over the last decade.

Me, and a few others, immediately started imagining some rather interesting research that could be done if those records could be linked up in IDI. So I started making enquiries. It's not a study I'd ever do as part of the day-job, but if a few queries from me could help the academics who would actually do the studies and tell me interesting things about the world I didn't know before - well, I was happy to poke around to see whether that data could be linked up in IDI.

It can't be. Or, at least, not easily. Consulting physicians provide up to the government reporting on approvals and rejections, case-by-case, but with an anonymous ID number attached to each case where only the consulting physician has the key. The government can request more detail, and the physician can then check back in the physician's notes. But the government itself doesn't have the keys for linking the records to the de-identified records held in IDI - like by health ID number. It just can't be done without getting physicians to agree to sharing more of their notes up the system - and that's a far bigger battle.

It's a darned shame though. Linked up in IDI, here's the kinds of things that friends back in academia could have looked at:

  • Outcomes (across a wide range of indicators) for women who proceed with termination compared with: 
    • statistically comparable women who never requested termination;
    • statistically comparable women who requested termination, were approved for termination, but then changed their minds (a birth happened soon enough after the request was approved);
    • statistically comparable women whose request for termination was declined.
  • Outcomes (across a wide range of indicators) for children whose mothers never sought termination compared with:
    • children of statistically comparable women who requested termination, were approved, but changed their minds;
    • children of statistically comparable women whose requests for termination were denied;
    • the children of statistically comparable women who did not give birth after being approved for termination (you can't tell whether the termination proceeded or whether a miscarriage otherwise obtained) but who did give birth at a later date.
  • Lifetime parity among women among women whose requests were approved compared to those whose requests were not - how much of this is a decision about the timing of children rather than the number.
I'm sure you can think of a lot more research that looks to be near-impossible. 

Many thanks to the patient communications advisor at the Ministry of Justice who walked me through how the system operates. I think she had to do a fair bit of running around to sort it all out. So big plaudits for public sector helpfulness on this one. No mucking around treating things as OIA requests and then long turnarounds on questions of clarification, just helpful replies. Very happy on that front. A++++ recommendation. 

Wednesday, 22 May 2019

Parliament and Twitter Hate

I stay the hell away from twitter fights about which MP draws the most attacks on Twitter and where lines are on what's allowable or not for very public figures who themselves often give pretty hard. Threats of violence seem absolutely wrong; otherwise, I'm not going to be drawn into the argument.

But it seems it would be trivially easy, for somebody who knows what they're doing in Twitter's API, to scrape out all the tweets referring to each MP, and build a timeline of affect. Like, overall volume of tweets referring to an MP, relative mood of those tweets, and how that changes over time.

You'd expect that senior politicians and more vocal politicians draw more attention, both good and bad, and that politicians that are more active on Twitter also draw more attention. All of that should be able to be controlled for. And then you'd be able to check for the effect of things like changing portfolios, movement into and out of cabinet, movement into and out of opposition and all that.

Anyway - a fun project for someone with time and who knows how to play with Twitter's API. I bet the Herald's data journalists could do it in no time at all and put up some ranking that could be interesting.

Update: Thomas Lumley's had a first cut at things:
He later notes that the negative words in reply to me seem to be people sharing my outrage at the outrage-of-the-day, while negative replies to Ms Ghahraman are rather worse. It's an interesting first cut. I also really wonder how much negative engagement is driven by bots as compared to real people. David Hood points out that prior to the last campaign period things just looked less polarising. Did NZ change, or is someone messing with us?

Friday, 17 May 2019

Treasury on the Heartwork event

I'd noted in April that my query of Treasury on the Heartwork event became an OIA request. I have an answer now. I'll copy the letter below, as it also includes the question.

On following up with David by phone, the $35 fee listed on the Eventbrite page was something charged by Heartwork rather than by Treasury, and Treasury staff were not charged for attending. I wanted to check that I'd not gone mad in remembering a $35 Eventbrite ticket fee.

Treasury does host a lot of different events; I've attended a lot of fantastic talks there from external speakers. I've never paid for one of those, but none of the talks I've attended provided take-home materials for attendees. I wonder whether there have been prior instances where an external provider charged an attendance fee for external attendees at a Treasury-venue event. I doubt that Heartwork made much on hosting the event - plausible that it ran at cost on their card decks. Curious on the general principle here.


Thursday, 16 May 2019

State-owned investment vehicles

If I understand the current concerns around Huawei correctly, it isn't so much that there's worry that their current kit is set up for spying, but that it would be too easy for the Chinese government to direct it, down the line, to surreptitiously do naughty things via updates. Everything's a bit opaque in China; the government has ownership stakes all over the place, and ample regulatory/directive ability. Everything in China operates under the shadow of the state. That shadow matters. 

The New Zealand state carries its own smaller shadow. When you're in the Wellington circuit, you start hearing just crazy stories about what regulated entities do, not because they're compelled to do it, but because they think it will curry favour with the government's or regulator's flavour-of-the-month political preferences and make adverse regulatory outcomes less likely. Who knows whether the activity that happens under that shadow of regulation actually affects the regulator's behaviour in any case. But weird stuff happens in that shadow. And you'll just have to take my word for it. 

Anyway, it makes me nervous when state-owned investment entities like the SuperFund and ACC, and Kiwisaver funds that operate under the shadow, start putting weight behind any current government's policy pushes - whether it's the Christchurch Call or anything else.

And I start wondering whether publicly listed companies should be thinking about ways of defending other investors by preventing sovereign wealth funds and public pension funds from picking up too great a total ownership stake. It wouldn't be a cheap call to make - those things manage huge amounts of investment. But if sovereign wealth funds become increasingly activist investors with strong non-return-related preferences, and with an implicit potential regulatory threat behind them where they're aligned with their government-owner's current political preferences - Huawei is nearer than you might like.

Tuesday, 14 May 2019

Morning roundup

This morning's worthies on the closing of the browser tabs:

Wednesday, 8 May 2019

Blindness, hairy palms, and varicoceles

I have a bit of fun with some recent reporting on fitness and eligibility for the Chinese People's Liberation Army over at our Insights Newsletter.
Spanking another dodgy stat

It’s too easy for bad statistics to influence policy. About a decade ago, BERL added up every dollar spent by heavier drinkers, counted some other costs twice, and claimed that alcohol use cost New Zealand $4.8 billion per year.

The number still floats around when someone wants to justify the next round of restrictions on drinking. So I pay a bit of attention to dodgy-looking statistics.

The Los Angeles Times last week reported on Chinese youth boot camps encouraging boys to shape up into ‘alpha males’ rather than emulate ‘boy band’ idols. It all seemed a bit humdrum. But a supporting statistic in the piece was eye-catching.

According to the Times, the People’s Liberation Army Daily newspaper complained that “20% of recruits were not fit enough to pass the fitness test for admission because they were overweight, watched too many cellphone videos, drank too much or masturbated too often.”

I couldn’t let a statistic like that just pass by.

What proportion of recruits failed the fitness test for each of those reasons? And how could the PLA possibly know about that last one?

While China has compulsory registration for military service, Wikipedia says volunteers staff their army. So the statistic likely wasn’t generated by opportunistic ticks of a box on a recruitment form (or worse!) to avoid the draft. Getting out of the army can’t be that easy, Klinger!

So I wondered again, how could they know? – and, with horror, realised that a government spying on everyone’s movement and their web history could probably make a pretty good guess. Ceiling Xi is watching you.

I tracked the statistic to an August 2017 article on the Chinese Ministry of Defence’s website – which Google Translate helped me read.

I couldn’t find the 20% statistic. But of those unfit for service, 17% were ruled out on a blood or urine test, 46% by an eye exam, 20% due to obesity, 8% due to varicoceles, and 13% for heart conditions or high blood pressure.

And then, without any justification, the military website blamed mobile phones for eye problems, and that for the varicoceles. While embarrassment prevented me from calling up our GP, neither WebMD nor the Mayo Clinic website listed that as a risk factor for or cause of varicoceles.

Dodgy statistics can be bad for policy. Hopefully, this one winds up providing more amusement than harm.
I had to do a lot of Googling around using kinda dodgy search terms for this one. Are varicoceles really caused by that? What other euphemisms can I find for that that can help avoid the content filters on newsletters? Do people still know what I mean if I refer to that simply as Portnoy's primary hobby?*

Fortunately, I haven't yet started seeing the kinds of ads you might expect from that search history.

* Darmok and Jalad at Tanagra. Sokath, his eyes opened! This problem seems to be getting worse with the fragmentation of culture - which has generally otherwise been to the good, but does mean that attempts at metaphor and euphemism inevitably become in-jokes for those who know the reference. Like Ceiling Xi. I'd originally had "and Portnoy's Complaint for the varicoceles" in the penultimate paragraph; that was dialled back when I was reminded that I was already requiring people to remember who Klinger is, what Ceiling Xi might be, and that they'd probably (like me) have to Google to find out what a varicocele is (it's a varicose vein in the relevant area - who'd have guessed?).

Monday, 6 May 2019

Parent Visas

New Zealand stopped processing parent visas under the prior government. 

The background story you hear on it around town, which may or may not be the truth, is that there was concern that Chinese migrants who'd here received permanent residence would bring their elderly parents over to live in the Auckland Grammar zone and raise their kids, while heading back home to China to earn far more than they ever could earn here. End result: more pressure on the Grammar zone, no income tax revenue, and schooling costs. And, sometimes, PRs who'd abscond on their promised bond to support their parents and leave their parents here alone to struggle.

By that account, a few bad cases spoiled things for everybody else. I have absolutely no clue whether that story ever happened, or the frequency of it if it did, but I heard it enough times that it seems rather likely to have been part of the political reason for halting things.

Thomas Coughlan reports that more than 5000 parents are now in that queue.
Deputy Leader Winston Peters also said that the decision was that of the Minister of Immigration, but added remarks that implied he was unlikely to back the rule being reinstated.

“With the greatest respect, if I go to the United States I can’t bring Uncle Tom Coughlan and all,” Peters said, referring to this reporter's name. 
But that isn't quite right. American permanent residents who have naturalised (received citizenship) can petition for a grant of permanent residence for their parents.

And that might provide a solution to the impasse here. If I'm right about the background policy worry, allowing New Zealand citizens to petition for their parents' visas would knock out anyone who hadn't progressed from permanent residence to citizenship. I've not bothered with it yet but should likely get around to it. A permanent resident is eligible for citizenship if they've been living as a new Zealand resident for at least the last 5 years, and if they have spent at least 240 days in New Zealand in each of the past 5 years, and at least 1350 days across the 5 years. And you must intend on continuing to live in New Zealand.

That would rule out anyone who's established a nominal base here but who isn't really committed to the place. And it would likely finally have me tip over the line to finally sort out my own citizenship.

Friday, 3 May 2019

Platforms and incentives

Politico's Jack Shafer doesn't really like the New Zealand press's agreement to avoid reporting on racist tirades that the Christchurch murderer may wish to provide.

Shafer views the ban as infantilising - as deeming readers being vulnerable and susceptible to the murderer's views and in need of protection.

I come at it from a rather different angle. I see no need to protect anybody from hearing obnoxious views. But in a world where people are willing to incur very high personal cost, and impose massive cost on others along the way, in pursuit of infamy and the dissemination of their views, committing horrible acts should not provide that reward.

The point of the ban, in that view, isn't to protect people from hearing evil. It's to protect us against evil people who would happily repeat this kind of action if it gave them their few days' fame in the witness box to promulgate their own manifestos.

Think of it as analogous to a Son of Sam law where fame and attention, rather than cash royalties, is the currency. New Zealand news outlets working together to minimise those rewards for evil acts seems appropriate.

Thursday, 2 May 2019

Short Ireland?

Outgoing Treasury Secretary Gabs Makhlouf will be picking up the reins at the Irish central bank.

Chris Hutching called me for comment about it; after a wide-ranging chat, I'd sent through a potentially quotable-quote that wasn't picked up in the final piece (above-linked). I'll share it here instead.
“Secretary Makhlouf is best known for advancing Treasury’s “wellbeing” approach to economic analysis. There is some merit to that approach: economic analysis always should take a very broad approach in considering costs and benefits. But successful implementation of the approach requires a depth of competence in economic analysis. That depth has eroded substantially during Makhlouf’s tenure. Treasury shed competent senior economists and hired junior analysts who often had little or no training in economics. Makhlouf’s real legacy is not the wellbeing agenda; it is rather a severely weakened Treasury.”
Hutching cites the Treasury card game - I'd given it more as example of the woolier side of wellbeing at Treasury, and where things risk heading with the erosion of economic competence there. I'd referred to the plethora of wellbeing indicators in the wellbeing framework as potentially providing too many analyst degrees of freedom; I don't know how many feelings are in the card game.

We're what, six weeks or so away from the next Treasury CE needing to be in place? Nobody seems to know anything about the next appointee; I understand it is not normal for this not to be known by now.

I take it as a good sign though. The most simplest explanation is that the appointment process has been delayed or reconsidered relatively late in the game. And I expect that to be more likely to have happened for good reasons than for bad reasons. Treasury needs a very strong appointment.

It's an interesting appointment for Ireland though. Secretary Makhlouf has an undergraduate degree in Economics and a Masters in Industrial Relations. A strong background in monetary economics may matter less at Central Banks that are under the ECB; Ireland has had some history suggesting prudential bank regulation may there be of greater importance. And Treasury here has done more thinking about that than you might expect.

Markets and meth

Damian Christie expects worries that allowing pharmacy sales of pseudoephedrine would see an increase in meth supply, or at least a resumption of home cooking.

I'll work through my logic here; y'all can tell me what I've messed up.

Prior to the ban on pseudoephedrine,* folks would go from pharmacy to pharmacy buying up enough cold medicine to start cooking, then they'd use that to make meth. Under that system, pre-2009, meth sold for about $700 per gram. That price would reflect the cost of materials, the hassle of collecting them, the time involved in cooking, compensation for the expertise involved in cooking, the costs of sourcing a site for cooking, and a hefty risk premium for being involved in an illegal market.

Since the ban, the market has shifted to importation of finished product. That finished product sells at less than $500 per gram.

I think that some of the disagreement here comes from how we're viewing costs and prices.

If you think that the underlying 'real' cost of home-cooking meth is just the cost of getting pseudoephedrine (buying it, time spent walking from pharmacy to pharmacy), the cost of additional chemicals, and maybe a bit of compensation for the cook's time, then it's easy to imagine being able to undercut the $500/gram price. So allowing pharmacies to start selling the stuff again then sounds risky.

But if that were the case, why wasn't there massive entry into p manufacturing prior to 2009? If there were decent returns to be had at a $500/gram price point, the profits at $700/gram would have been substantially higher. Why wasn't the price of meth, back in 2009, bid down to $500/gram or less if there were still substantial profits there to be made?

To me, evidence of 2008 prices well in excess of current prices suggests strongly there would be no substantial resumption of cooking meth from pseudoephedrine if we again legalised the decent cold medication. The current supply chain is able to deliver meth to consumers at a much lower price point than the previous supply arrangement. That suggests the costs involved in the current supply chain are far lower than the costs under the prior regime.

Potential objections, and I think there are some potentially good ones:
  1. If that's all true, why didn't they adopt the current supply chain earlier? 
  2. There could have been a generalised reduction in risk premiums in meth that has hit all potential ways of running a meth supply chain. 
  3. Prices also reflect industry organisation. Ex ante prices depended on local cartel behaviour enforced by local gangs. Current structure may differ from that. So the 2008 prices were propped up by the prevention of entry enforced by the gangs. 
  4. Something else I haven't thought of.

The first one I owe to Paul Walker on Twitter. There are a few potential reasons why the 2008 meth supply chain hadn't shifted to the current supply chain. Local gangs may have lacked international supply contacts, and may have worked to keep out potential entry by international players. There could have been fairly substantial fixed costs in establishing those supply chains that none of the 2008 players were willing or able to front. Perhaps someone who knows more about the local industry can help fill in the blanks here.

The second one - imagine that the police just kinda gave up on meth. They stopped reporting on progress on meth back in 2015, when it was looking pretty obvious that the drugs had won the drug war. If they gave up, then it would be cheaper to cook meth from pseudoephedrine now than it was in 2008, so that product could be delivered at a lower price point. Alternatively, if there have been tech developments in small-batch cooking that have radically lowered the cost of production in that sector since 2008, then 2008 prices may not be the best guide. If that's happened, and someone can point me to evidence on it, that'd be helpful. In either of those cases, you could see a re-emergence of a local industry making meth out of cold medicine.

Finally, industry organisation. Imagine that, pre-2008, we had a monopoly gang running meth supply. Imagine it controlled everything and restricted supply to keep prices up. The early prices then reflected monopoly profits rather than just real production costs and real risk premiums. But for that to affect the relative cost of importing meth versus cooking it from pharmacy medicines, the switch in the supply chain would also have had to have broken the cartel/monopoly. In that case, current prices are competitive; prior prices were inflated by monopoly/cartel profits; and, relative prices between the two points don't tell us about the relative costs of the two production methods. If we still had a monopoly importer/distributor that just flipped supply chains, the lower price would reflect monopoly profit maximisation under a lower cost structure. It feels like you need the current model to be far more competitive than the prior model to reckon out of this that cooking meth from cold medicine might have any cost advantage. And that just seems odd when the prior model had lots of small scale folks buying cold medicine and the current one has more sophisticated import methods.

It just doesn't seem plausible that small-batch cooking is in any way cost-competitive with the meth that's currently imported. There are mechanisms that can get you there, but they just seem far less likely than the rather simpler model: it's just gotten a heck of a lot easier to import methamphetamine out of Asia that's reportedly of better purity.

Bottom line: my odds-on expectation is that a resumption of pharmacy sales of pseudoephedrine-based cold medicine would not see any substantial re-emergence of that way of making meth. There might be a few cases here and there of folks giving it a go for their own supply or a bit of social supply, but they'd have a tough time competing with current imports - unless something happened to make importing meth a lot harder.

* Yes I know that it's still available by prescription. But that's a ban in all but name. If the worst of a cold takes 48 hours to pass and it takes 48 hours to get a doctor's appointment to get a prescription, you just can't get decent cold medication when you get a cold. You have to have a doctor willing to provide a prescription in case you get a cold later, and a pharmacist willing to fill the prescription, and the hassle of setting a doctor's appointment, and the cost of a doctor's appointment.

Wednesday, 1 May 2019

W=MP is a harsh mistress

I love today's SMBC

Read it over at SMBC to get the alt-text, and to push the red button. 

This should be on every labour economics syllabus. 

Corollary: masochists are more likely to take up hobbies like chess, where your own relative position in the world is very quickly made clear by an unambiguous points ranking. 


I do not miss having to worry about PBRF evidence portfolios.

The 2018 results are now up.

I hadn't realised how small Canterbury's econ group now was relative to the econ contingents at the other universities - at 10 FTE, they're now the smallest economics group in the country. Note that the measure doesn't count R ranked staff as those staff would not draw PBRF funding; I doubt including Rs would change that since there are only 10 in econ at Canty.

It's a good group - only Waikato seems to have a stronger research ranking, per capita, on an eyeball metric. So kudos!

Update: that eyeball metric is wrong. Waikato is top with 85% A or B-ranked. Otago's next with 73% so-ranked. Canterbury's very slightly behind on 70%. Everyone else is miles behind that.

I keep remembering an economics department of about 16-18 people from 2007. I miss that place.

Tuesday, 30 April 2019

The Price of Meth

Back in 2011, New Zealand's drug warriors claimed a success in their war on methamphetamine. The price of meth had risen. 
The report shows the price of P has been steadily moving upwards since 2006, and remains high. The latest survey data shows the mean price of a gram of P is $768, up from $723 at the same time in 2010.

"However, this is not the time for sitting on our laurels. While the price of P has risen dramatically in Christchurch, we are seeing fluctuations around the country. While we are seeing progress, it's more important than ever for authorities to continue to be vigilant."

The nature of seizures at New Zealand's borders is continuing to change. Seizure levels of precursor chemicals, like ephedrine and pseudoephedrine, are down 44 per cent compared to the same time last year. In contrast, seizures of methamphetamine are rising. In the first nine of months of 2011, 23 kilograms of methamphetamine were seized at the border - nearly 95 per cent of the total seized during 2010.
At the time, I wondered how much of that increase was CPI and the GST increase. Sure, you don't pay GST on meth directly, but neither do meth dealers get to claim back the GST on any of their legally purchased inputs.

Whatever the case then, the Herald today reports that meth costs $500 per gram in Auckland and $600 per gram in Christchurch.

Maybe it would be even more prevalent if we again had easy access to pseudoephedrine over the counter, but it seems unlikely. It seems rather that drug dealers have figured out better ways of getting meth into the country.

If making meth out of pseudoephedrine got us to a price point per gram of about $700 in 2008, before the ban, it seems unlikely that anybody's going to go back to that way of making meth if their current supply methods get to a price point of $500-$600 per gram.

Can we please un-ban pseudoephedrine for over-the-counter purchase? The continued ban is just stupid.

Doesn't the government claim to have some wellbeing-based agenda? If that's about more than playing card games at Treasury and adopting trendy vocabulary, this seems an obvious cost-effective way of improving wellbeing. One line of regulation flipping pseudoephedrine out of Class B2 and back into its prior pharmacy-medicine status. Costs the government nothing and makes everyone with a cold a bit better off.

Update: A source in Christchurch who would know tells me that the quoted price in Christchurch is "way wrong Haha" - on the high side. Christchurch prices are lower than the Herald there quotes - though it notes those were the prices at the time of the survey. The earlier numbers come from a more comprehensive drug price survey; the Herald doesn't say where the researcher drew the more current price figures from.