Tracy Martin's Porn Filter

My column over at Newsroom this week ($) (ungated) went through some of the likely problems if the government goes ahead with Tracy Martin's mad scheme for a national pornography filter.

A couple of years ago, I wrote a short report making the case that New Zealand is the world’s last sane place. Or, at least, if it’s going mad, it’s going mad more slowly than the rest of the world. Perhaps I was too hasty. Internal Affairs Minister Tracy Martin this week told Newshub about the government’s plans for protecting children from online pornography. Newshub reported that the government is looking to the United Kingdom as example, and that nothing is yet ruled out. Some things should be ruled out. Let’s have a look at what has been going on in the United Kingdom, and why it is a bad idea to follow their example.

The Great Firewall of Britain

The UK has a long history of internet filtering. In the 2000s, the government encouraged ISPs to block access to websites blacklisted by the Internet Watch Foundation as potentially including child pornography – not unlike New Zealand’s Digital Child Exploitation Filtering System.

The implementation of the filter did come with a few problems. In one famous 2008 case, clients of ISPs using the filter were barred from editing any page on Wikipedia because the Wikipedia page for a Scorpions album included an image of that album’s cover; the decision was reversed a few days later. New Zealand’s Child Exploitation Filtering System has not had similar problems.

From 2013, the Great Firewall of Britain became rather more stringent. David Cameron’s government sought to protect people from pornography by changing the defaults. Previously, those who wished to prevent anyone in their home from accessing pornography would need to turn on filtering, whether by subscribing to an ISP providing a filtered experience, or by purchasing a service like NetNanny.

Under Cameron’s changes, the default switched. Everyone’s internet access would be filtered to prevent access to pornography. Those who wished an unfiltered experience would need to inform their Internet Service Provider that they wished to have access to pornography.

But, perfectly predictably, the filter went a bit wider than pornography, and included websites relating to alcohol, smoking, suicide, anorexia and more. One reader of my blog, Offsetting Behaviour, reported that about half of the blogs linked by fellow Kiwi blogger Lindsay Mitchell were classified as adult content and were blocked – none of those sites could reasonably be considered objectionable. He could not opt-out as opting out required having a UK credit card with a UK postcode as proof of age.

In 2014, the UK Council for Child Internet Safety began implementing a whitelist to deal with overblocking. Overblocking occurs when the web filters erroneously identify a website as pornographic. Overblocked sites included suicide prevention websites, drug advice, sexual education and sexual health sites and more.

The UK is looking to tighten things further, with a requirement that pornography websites verify the ages of those visiting their sites; noncompliant sites would be blocked by the Great Firewall. How would sites check visitor ages? Wired reports that credit cards, passports, or drivers’ licence details could suffice. But there are a lot of dodgy websites out there providing access to free but copyright-infringing pornography, coupled with a risk of a malware infection for your computer. It seems a bad idea to force people using those sites to provide material that could easily be used in identity theft.

If New Zealand government wishes to follow the UK down this rabbit hole, the government will have more than a few problems it will need to solve.

It will need to develop a comprehensive list of sites deemed pornographic and consequently requiring age checks, as well as processes for whitelisting sites mistakenly listed as pornographic. What would the appeal provisions be for sites wrongly listed? Many foreign-based sites simply won’t care if Kiwis no longer have access to their pages and will not undertake any kind of costly whitelisting process.

It will need to develop a trustworthy mechanism for age verification. This is not a simple problem. If the government requires foreign websites to collect personally identifiable details on Kiwis, what obligations would those sites face under New Zealand’s privacy regime? How could we tell whether those obligations are being met? What recourse might a Kiwi have in case of breach? And, if the foreign site was compromised and Kiwis’ passports or drivers’ licence details used in age verification were then used in identity theft, where would liability lie? The latest messes over at the Ministry of Culture, where passport details of hundreds of kids applying for a programme were compromised in a data breach, might give the government pause.

And if the government wishes to leverage its existing RealMe online identity system for age verification, might we worry about whether the government is keeping track of everyone’s viewing habits? If Winston Peters was unhappy about his superannuation details being leaked, we can imagine what Shane Jones might think about the dangers inherent in this proposal.

During 2016’s Parliamentary Select Committee hearings on Uber, Parliament proved itself to be completely ignorant of the basic details of the technology at play. Any Select Committee hearings on the proposed pornography filter promise to be at least as entertaining. I look forward to hearing whether the Select Committee knows whether the letters V, P, and N might have any relevance to their proceedings.

But all of it risks New Zealand’s coveted status as the world’s last sane place.

For some reason, Newsroom pulled the line about Jones's internet browsing history. I've here provided the unfiltered version.

Drinking Freedom

I plug Ben Powell and Bob Lawson's latest book in my column in this week's Insights newsletter:

Drinking freedom
The very best part of grad school was the drinking. Well, not so much the drinking. Too often, the beer was stuff that would make an Export Gold taste like Export Gold had taste. It was the arguing about economics, over beer, until close to sunrise, with other people who cared deeply about ideas. That was heaven – despite the bad beer.

Professor Ben Powell was a year behind me in grad school at George Mason University, and a fantastic drinking companion. But Ben was, and is, a lot smarter than I am. He persuaded people to cover the costs of an interesting book project with the creator of the Economic Freedom of the World indices, Professor Robert Lawson.

The project’s genius is obvious in the book’s title: Socialism Sucks: Two Economists Drink Their Way Through the Unfree World (2019).

Ben and Bob went on a tour of some of the world’s less-free places in search of a decent beer. As they put it, “We wrote this book because too many people seem to be dangerously ignorant of what socialism is, how it functions, and its historical track record. We also wanted to get drunk in Cuba, and this was a great way to write off our expenses.”

The tour starts in Sweden, mostly to explain the country is definitely not socialist. It has a lot of redistribution, but the government mostly leaves the rest of the economy alone. From there, they head over to Venezuela – or at least a few feet over the border. Then on to Cuba’s subsistence socialism, China’s fake socialism, a peek across the Chinese border into North Korea’s dark socialism, the hungover socialism of Russia and Ukraine, Georgia’s new capitalism, and back to the USA for drinks at the Democratic Socialists of America’s annual convention.

Just like those late-night sessions in grad school, the drinking mostly isn’t the point – despite the title. It’s the ideas. The book takes us to parts of the world you might not otherwise visit to teach us history lessons that are quite relevant today. We’re right to lament how many Kiwis haven’t the faintest clue about the Holocaust, but how many Kiwis know that Mao’s Great Leap Forward starved 45 million people to death?

If you like reading P.J. O’Rourke, you’ll want to pick up a copy. It’s ridiculously fun, especially when paired with a bad beer for authenticity.

Socialism Sucks: Two Economists Drink Their Way Through the Unfree World is available at Amazon. 

Book's a strong recommend. Great fun.

I can't believe we're still talking about the dumb BERL number

Sunday night, TV3 started in on what looks to be a series on the evils of alcohol. 

The Ministry of Health says harm from alcohol is now costing New Zealand more than $7 billion every year. In fact, every Kiwi pays $1635 a year fixing up the problems from alcohol.

Investigations Reporter Michael Morrah visited the frontlines with Auckland Police in the first part of his 'Because it Matters' series.

The Ministry of Health might have been one of the co-commissioners of the BERL report, but it's not a Ministry of Health figure.

Last year, BERL updated their 2009 figure on the social costs of alcohol. I critiqued it over at Newsroom (ungated); while BERL then did not reply to my requests for the workings underlying the figure, it looked like an inflation and population update of their 2009 figure.

The number got a lot of press again a couple of weeks ago; Alcohol Action NZ was running their annual temperance meetings, and so everyone was lining up to cite the big number. This time, BERL confirmed for me that the figure is an update of the 2009 one - but rather than an inflation/population update, it's an update taking the social cost of alcohol as a constant fraction of GDP. So it's inflated by nominal GDP growth over the period.

I went through it all again in the Dom Post.

The past fortnight brought a lot of headline stories about the social cost of alcohol. Felix Desmarais' article for The Dominion Post warned that alcohol costs $5 billion. The New Zealand Herald's headline warned of a "$70b social cost", citing Alcohol Action New Zealand's rolling up 10 years' worth of alleged costs.

If you thought those numbers referred primarily to the costs of alcohol-related crime, or to alcohol-related health care costs, you shall be forgiven. Social cost figures should refer to some cost borne by people other than drinkers themselves – external costs, as economists tend to put it. But Berl's number really is not that.

The Dom switched BERL to Berl; I'm pretty sure it's an acronym requiring capitalisation. Oh well.

I was pretty surprised to see the BERL number resurrected last year. The number didn't go well for them in '09.

And since memories seem short these days:

• Me on BERL's assertion that differences between us on the matter stemmed from differences in world view;
• Seamus on the same issue

Skegg

A rather one-sided piece over at the ODT points me to a new short book from the Otago Public Health shop. 

Let's take these in turn.

The ODT piece has Bruce Munro gush over Otago public health's David Skegg and Skegg's latest book, published by Bridget Williams (of course). The basic thrust of the piece is that noble public health academics have been trying for policies that they know will reduce all the harms from alcohol, and smoking, and sugar, and that only the nefarious actions of shadowy interests group stand in the way. Munro hits all the usual tropes - the purported $7.8b social costs of alcohol, the power of the liquor companies, Katherine Rich, Dirty Politics, and me.

Yet, despite health researchers calling for a tax on sugary drinks to slow the epidemic, New Zealand governments, left and right, have been reluctant to go there.

"In Britain, even the Tory Government has introduced a sugar tax. But, again, our Minister of Health has repeatedly said there are no plans to do that in New Zealand," Sir David says with exasperation.

Lobbying against a sugar tax has been the Food and Grocery Council, and the New Zealand Initiative.

The New Zealand Initiative is a think tank that boasts of its reach and influence.

"It was a year in which the Initiative once again left its mark on New Zealand's political debates and public policy," the Initiative's latest annual report states.

Its chief economist, Dr Eric Crampton, is a former academic known for his attacks on public health initiatives, Sir David says.

According to the Initiative website, Dr Crampton wrote or spoke about a sugar tax half a dozen times during 2018.

But, says Sir David, "when Dr Crampton writes an opinion piece arguing that sugar taxes would be `offensive' and ineffective, he does not mention that his organisation is partly funded by Coca-Cola Amatil and the supermarket chains".

I wish that I could take the credit here for killing a bad policy, but I really can't. The main work actually has come from, well, those I cite as the very next paragraphs down in the piece Skegg's mentioning.

Here's the bit he didn't mention:

But don't just take my word for it.

The Ministry of Health commissioned the NZIER (New Zealand Institute of Economic Research) to review the literature on sugar taxes around the world.

NZIER found little effect of sugar taxes on consumption, and no evidence of health benefits.

And documents released to the New Zealand Initiative by the Ministry of Health showed that the ministry had reached a very similar conclusion about sugar taxes, advising the minister that there is "insufficient evidence that a sugar tax would be effective in reducing obesity".

The ministry also warned that the quality of evidence presented in favour of sugar taxes "is a major concern".

All of that means that, even if sugar taxes were easy to implement (and they are far from easy to implement), there would still be no good reason to do it.

It is time that public health activists simply admitted that they got this one wrong and left us alone.

See, it isn't just shadowy interests that don't like sugar taxes. It's also the OIAed documents from MoH and the NZIER's report commissioned by MoH. And both of those supported by Marsden-funded work by Waikato University's Professor John Gibson showing that estimates of the effects of sugar taxes on consumption are grossly overstated.

The piece ran in the ODT's weekend magazine. I sent my reply to the ODT just after lunch on Monday. They finally ran my reply today - one week after receiving it. I expect I'd have been making a Press Council complaint if they hadn't.

Unfortunately, the ODT stripped out all of the links to the underlying work in their online version. And they, of course, will not put a link to my rebuttal at the bottom of Munro's piece. Because Otago will Otago.

Here's the full text, with the links.

The dangers of superhero thinking
Superhero movies have had something of a comeback over the past decade, seeming to be one of the surest ways of generating a decent box-office take. But tropes of noble heroes and venal villains are not the best way of understanding the world. And they do us a specific disservice when they cross over into newspaper reporting.

This weekend, Bruce Munro wrote a fantastic story of sugar tax heroes and villains in the Otago Daily Times’ magazine. The heroes are the crusading public health research activists, who have only noble intentions and know that sugar taxes will do all manner of good. The shadowy villains on the other side – paid lobbyists – thwart the crusaders’ vision of a healthier country.

If only things were that simple.

My opposition to sugar taxes had me cast among the villains in Munro’s article. Otago University’s David Skegg noted that I have been rather vocal about sugar taxes recently, and implied that my opposition has pecuniary motivation: I am Chief Economist with The New Zealand Initiative, a think tank whose member-funders consist of many of the country’s top companies, including Coca-Cola and the supermarkets. Our members are listed on our website and are hardly secret.

But neither Munro nor Skegg bother to mention any of the substantial concerns raised across the columns and interviews they cite as damning me. If they had bothered to read those columns, they might have noticed that the tallying of heroes and villains is more complicated than they like to pretend.

In January 2018, the Ministry of Health released to me, after an Official Information Act request, a report it had commissioned from the New Zealand Institute for Economic Research (NZIER). The Ministry had asked NZIER to review the past five years of published literature on sugar taxes and to gauge their effectiveness. Having received the report in August 2017, the Ministry then sat on it – an election was underway, and the Ministry needed a Minister to receive the report before releasing it publicly.

The NZIER report – which was, again, funded and commissioned by the Ministry of Health – reached the same conclusion as previous work by the Initiative. NZIER concluded that methodologically rigorous studies on sugar taxes “report reductions in intake that are likely too small to generate health benefits”, and that any benefit of those reductions could easily be swamped by consumers shifting to other sources of sugar or calories.

NZIER also weighed heavily research underway at Waikato University by Professor John Gibson, my former Canterbury University colleague. His work on sugar taxes, supported by the Royal Society’s Marsden Fund, shows that many estimates of consumer responsiveness to sugar taxes are simply incorrect. Gibson gave a superb presentation on this work when he was awarded a well-deserved Distinguished Fellowship with the New Zealand Association of Economists in 2017.

Further Ministry of Health documents provided under the OIA included a presentation by the Ministry of Health titled “Sugar Tax: Why we still don’t have one”. There, the Ministry noted: “There is no evidence that sugar taxes reduce obesity or obesity-related illness.” While the presentation did not note any industry pressure influencing the Ministry’s position, it did point to “[p]ressure in NZ from health academics” and the media.

Overall, the NZIER report and the set of papers released under OIA showed a different picture to Munro’s tallying of heroes and villains. Where Skegg suggests only shadowy interest groups oppose Otago public health’s crusade for sugar taxes, we find instead a Ministry of Health sceptical of the merits of sugar taxes, and a Ministry-commissioned report that lends substantial weight to that scepticism.

I have summarised the NZIER report and the Ministry documents in columns and interviews over the past year. When the Ministry of Health’s then-Chief Science Advisor, Dr John Potter, provided the Prime Minister with two pages of bullet points in support of sugar taxes, and forgot to mention that the Ministry had only two weeks earlier released the NZIER report reaching the opposite conclusion, I noted that as well. It seemed a rather underhand attempt to mislead the Prime Minister.

Universities are meant to be places where ideas can be contested in the pursuit of truth. When public health academics convince themselves that only the shadowy workings of lobbyists can explain why their ideas have not been implemented, and ignore any piece of evidence that does not fit their worldview, it becomes difficult for them to pursue truth.

Superhero tropes where valiant public health crusaders battle evil vested interests may sell movie tickets and newspapers. But they do not help us to understand, let alone fix, real world problems.

Dr Eric Crampton is Chief Economist with the New Zealand Initiative. The Initiative is funded by the subscriptions of its members, who are listed on the Initiative’s website. The breadth of its membership protects its independence.

Okay. And now over to the BWB book.

Here's Skegg:

So it looks like the Munro piece is mostly just pulling from the BWB book. He's citing the same piece over at the Dom that he mentions in the Munro piece, and again ignores the very next paragraph citing NZIER's work and the Ministry of Health, keeping his heroes and villains framing. 

Otago is an embarrassment. And Bridget Williams Books needs to improve its refereeing. I refereed Julie Fry and Peter Wilson's book on immigration for them, and went through things in rather some depth. I guess that they handed this one to an Otago Person for refereeing instead, but who knows. 

Mind Fixers

The Spinoff has a superb piece by Danyl McLauchlan reviewing Anne Harrington's Mind Fixers. Thomas Szasz makes an appearance. A snippet:

In January of 1973 the psychologist David Rosenhan published an article in Science, one of the world’s most influential academic journals, titled ‘On Being Sane in Insane Places’. He’d conducted an experiment in which eight people (including himself) presented to twelve different psychiatric hospitals across the US, complaining of audible hallucinations: the words they claimed to hear were specifically chosen because they didn’t correspond to anything in the published literature linking them to psychotic symptoms. They were all diagnosed with either schizophrenia or ‘manic depressive psychosis’ and committed. Upon admission they started behaving normally and taking notes about the environment, in such an overt manner that their fellow patients accused them of being professors or journalists checking up on the hospital. At no point did any medical staff suspect they were not mentally ill. Eventually they were all discharged with a diagnosis of ‘schizophrenia in remission.’

Rosenham’s article ended with a story about a well regarded teaching and research hospital that had heard of his study and challenged him to send pseudo-patients to them, confident that they could detect such imposters. Over a period of several weeks they identified 41 individuals whom they diagnosed as sane but pretending to be mad. Rosenham had not actually recruited anyone for this study: these were genuine patients, 41 false negatives. Another critic of psychiatry, Thomas Szasz, made the point that none of this looked remotely like medicine. What psychiatrists seemed to do was identify people who behaved in unusual, socially unorthodox ways and declare that they were ‘sick’, and therefore in need of confinement and treatment, which they applied whether the patient wanted to be treated or not. Psychiatrists seemed to be violating the basic civil rights of their patients on an astonishingly vast scale.

I hadn't known about that study. Danyl concludes:

Two of the final quotes in the book come from high ranking members of the psychiatric priesthood, summing up the current state of the science. This first is Thomas Insel, a former director of the US National Institute of Mental Health for 13 years, who wrote:

“I spent 13 years at NIMH really pushing on the neuroscience and genetics of mental disorders, and when I look back on that I realize that while I succeeded at getting lots of really cool papers published by cool scientists at fairly large costs – I think $20 billion – I don’t think we moved the needle in reducing suicide, reducing hospitalizations or improving recovery for the tens of millions of people who have mental illness.”

And in 2016 the psychiatrist Shekhar Saxena, director of the World Health Organisation’s mental health unit, remarked that if he was diagnosed with schizophrenia he’d prefer to live in Addis Ababa in Ethiopia, or Colombo in Sri Lanka, where he could live as a productive if eccentric member of the community, as opposed to New York or London, where he’d be stigmatised and relegated to the margins of society.

And there are some well-deserved slaps along the way for journos who are a bit too credulous when they head out on attack against Pharmac. Read the whole thing. 

Cricket and Collaboration

Matt Lowe's job market paper coming out of MIT looks excellent. And I love that he markets it with a tweetstream.

🚨 Revised JMP on intergroup contact 🚨

Some (me) wondered whether this day would ever come. To celebrate I'd like to tell a story about cricket, caste, and different types of intergroup contact. Are you sitting comfortably?https://t.co/VwMC3ulRj3

1/N pic.twitter.com/GELj6yRjgM

— Matt Lowe (@hmmlowe) August 15, 2019

Sri Lanka has finally finished their first innings in the test against New Zealand, so you've time to give the paper a read:

Types of Contact: A Field Experiment on Collaborative and Adversarial Caste Integration

Matt Lowe

Abstract

I estimate the effects of two types of intergroup contact: collaborative and adversarial. I randomly as-signed Indian men from different castes to participate in cricket leagues or to serve as a control group. League players faced variation in collaborative contact, through random assignment to homogeneous-caste or mixed-caste teams, and adversarial contact, through random assignment of opponents. Collaborative contact increases cross-caste friendships and efficiency in trade, and reduces own-caste favoritism. In contrast, adversarial contact generally reduces cross-caste interaction and efficiency.League participation reduces intergroup differences, suggesting that the positive aspects of intergroup contact in the leagues more than offset the negative aspects in this setting.

What a fun design, and great excuse to get to watch a lot of cricket:

From a sample of 1,261 men, I randomized 800 to play in eight month-long cricket leagues, and assigned the others to a control group.  Of those assigned to play, I assigned 35% to homogeneous-caste teams, and the others to mixed-caste teams.  This randomization gave the first type of cross-caste contact: collaborative – those on the same team shared the common goal of winning matches. Once teams formed, I chose opponents randomly to create the second type of cross-caste contact: adversarial– those on opposing teams had opposing goals. I measured intergroup behavioral outcomes one to three weeks after each league ended.

Roskam on RBNZ's Shock and Awe

John Roskam over at the Australian Financial Review:

While Lowe hasn’t ruled out “extreme unconventional policy measures” at least he hasn’t yet embraced them as his counterpart across the Tasman Sea appears to have. Last week the Reserve Bank of New Zealand cut interest rates by 50 basis points to a record low of 1.0 per cent in a move described as “Shock and awe Kiwi style”. The decision prompted the production of a research paper from New Zealand’s leading think thank, the New Zealand Initiative, entitled The Unreserved Bank of New Zealand – Why unorthodox monetary policy needs boundaries. While there are differences between the responsibilities of the two countries’ central banks, nearly everything the paper says about the Reserve Bank of New Zealand applies to Australia. It should be compulsory reading, not just for every member of Parliament, but also for all nine members of the Reserve Bank Board.

A key argument of the paper is that such policy could result in the Reserve Bank of New Zealand undertaking essentially political functions.

“Under quantitative easing, the RBNZ could become an alternative to Inland Revenue [ATO] and the Treasury as it would provide (indirect) funding to the government by purchasing government bonds. If it went beyond that and started purchasing corporate assets, it could also morph into something resembling a sovereign wealth fund. If it chose to fund projects of a certain nature (say bonds with an infrastructure background or related to specific policy areas), it would again be more akin to Treasury.”

Lowe’s remark that in the face of persistently weak economic and wages growth, “We [the RBA] would need to look at all monetary options, fiscal options and structural options”, has passed with barely a murmur. Maybe it’s because in Australia we think that producing helicopter money or implementing quantitative easing is what other countries do.

Some sense from Emily

More oddities from the Coroners' Office brings a response from Emily Writes over at The Spinoff - and from 400 doctors!

Yet pathologist Dr Simon Stables and Coroner Debra Bell could not ascertain Sapphire’s direct cause of death. Somehow, as we have seen before with coroners, this has been translated into a blanket message for mothers. This time it’s not to have alcohol if you’re breastfeeding. This is an easy comment to make – as popular as “don’t let your child walk to school” or “don’t ever co-sleep”.

This time, however, a groundswell of medical professionals have hit back. More than 400 doctors have so far signed an open letter to the coroner expressing their concerns at the judgement and questioning whether the amount of alcohol in Sapphire’s system could have been ingested through breastmilk alone. The letter, which The Spinoff has seen, was written by Dr Heather Johnston in collaboration with other doctors around the country. Dr Johnston said she was astonished by the Coroner’s judgements.

“General consensus is that a breastfeeding mother consuming alcohol in moderation is unlikely to put her baby at risk. A mother who has a drink or two, and would still be under the New Zealand blood alcohol limit to drive (50mg alcohol/ 100ml) would have a breastmilk alcohol level of 50mg/ 100mL (or 0.05% alcohol by volume) – which is the same as a glass of orange or apple juice, a ripe banana, and less than a glass of kombucha or some types of bread rolls,” she told The Spinoff in an email.

“There is no evidence that a baby being fed breastmilk with this kind of alcohol concentration is at risk of harm. If a woman is safe to drive, she is safe to feed her baby breastmilk.”

I think that this is the first time I've ever seen an open letter, from doctors, warning that someone had overstated alcohol's harms. Had to figure it'd be a coroner who'd do it though.

Recall that Coroners are asked to list anything that might prevent similar deaths in future, regardless of costs and benefits or whether the measure is either reasonable or practicable.

To paraphrase Jack Nicholson from an old movie, if you want to imagine being a coroner, in writing these reports, you can start by imagining a doctor, and then take away reasonableness and accountability. There's good reason that coroner recommendations are not policy.

Previously:

• Coroner Recommends
• Coroner Recommends Revisited

Burton on Stats

Tony Burton's back on deck with another column over at The Spinoff, this time on the problems at StatsNZ.

You'll probably enjoy reading the whole thing.

Here's an extended snip

In itself the review is great. The public service response, not so much. Government statistician and Stats NZ chief executive Liz MacPherson has stepped down, but she was merely unlucky enough to be the boss when the most public of many, many Stats NZ initiatives was mishandled. In my view she has sacrificed herself for the greater complacency of the state services commissioner.

The Stats NZ website camouflages its failure behind a forest of initialisms: the New Zealand Progress Indicators (NZPI); Indicators Aotearoa New Zealand (IANZ); the slow and clumsy introduction of the Integrated Data Infrastructure (IDI); SoFIE. And so on.

The last was nearly a decade ago and gives a flavour of the common or garden Stats NZ debacles that you rarely hear about outside the small community of expert data analysts. SoFIE, the Survey of Family, Income and Employment, was run between 2002 and 2010. It was a longitudinal survey that followed the same people over time and is the only way to properly understand issues like social mobility and retirement income where we need to know what happens in families over many years.

Ministers of all parties have been enthusiastic about these studies and the initial funding for SoFIE was for eight years. Unless you intend to build roads, hospitals and the like, that is as secure as funding gets in government.

Yet in 2011 SoFIE’s funding was not renewed. A comparison with SoFIE’s Australian cousin HILDA makes it easy to understand why. While fewer than 50 studies in total use SoFIE, more than 100 used HILDA in 2018 alone. Remember, this is the data that helps us understand long term poverty, whether education really gives New Zealanders a “fair go”, what matters in the long run for staying healthy, and whether we are saving enough for retirement.

This gap between Australia and New Zealand is a gap in understanding what matters most to New Zealanders. The SoFIE equivalent of under-recruiting census staff was making life difficult for the analysts who turn data into information that makes a difference in people’s lives.

Trinh Le of economic research agency MOTU, one of the superhumanly persistent people who did manage to use SoFIE, believes it was superior to HILDA in some ways, particularly its more inclusive sampling and at times more in-depth coverage.

However in 2010 Stats NZ brought in charges for using SoFIE – $95 for a half-day per terminal in the data lab, and $115 an hour for checkers to check the output. “Research usually takes years, so this added enormous cost. So many projects had to be cancelled due to this,” Le says. One Marsden Fund project had to switch to using HILDA because the data lab costs were unaffordable, she says.

StatsNZ seeking cost-recovery isn't completely nuts, but you might worry about it for work that's already had to pass a public interest hurdle for permission to access the data in the first place. The real comparison with HILDA isn't the charges, but the reason for them. Stats makes it very very hard to do work on microdata unless you're happy to do it in the data lab. You aren't required to be in a datalab to use HILDA. They don't have to do cost recovery because they've used a model that's lower cost.

Stats has long seemed to see itself as the guardian and storehouse of data. In 2017, the Government Statistician suggested I 'watch this space' for better access to confidentialised microdata. It's more than two years later; I wonder whether it'll ever happen.

Preparing for the monetary rocky horror

Over at Newsroom (ungated), I discuss the importance of RBNZ being very clear about its intentions should it find itself in a position to pursue unorthodox monetary policy.

As Doctor Frankenfurter prepared to step up the reactor power input three more points and bring life to the Rocky Horror in the classic Rocky Horror Picture Show, he welcomed the assembled “unconventional conventionists” who would witness his triumph.

Unconventional monetary policy is a bit like Doctor Frankenfurter’s giant defibrillator experiment with the Rocky Horror. It could work, if the circumstances call for it. Preparing for those circumstances can make a lot of sense. But it probably should not be tried except as a last resort. And it seems a bit odd to assemble everyone for a throwing open of all the switches, including fiscal policy, when the projected output gap is positive over the medium-term forecast range.

...

But it would be rather nice were the Bank to provide a bit more guidance about just what it might do should the world become a bit more unconventional. In his interview with Bernard Hickey, Governor Adrian Orr noted the Bank’s advantage in being able to deploy capital a lot more quickly than traditional fiscal policy.

When restricted to the more conventional of unconventional policies, like ‘helicopter money’ payments to everyone in the country, that is certainly an advantage. When it comes to asset purchases, it would be nice to have a better idea of the sorts of things the Bank might contemplate.

The current remit for the Monetary Policy Committee begins with a preamble noting the Government’s Economic Objective of improving wellbeing and living standards and of moving towards a low carbon economy with a diversified export base.

During conventional times, where medium-term price stability contributes to any reasonable goal the Government might have, that preamble has little effect.

But if the Bank were deciding among assets to purchase, or investments to make, to get fresh cash into the economy through unconventional means, it might be tempted to read a bit more into that preamble and direct its asset-purchasing behaviour accordingly. This would be a substantial and potentially costly error, distorting investment and, worse, politicising an independent central bank. Where the Bank’s consultation document suggests Ministerial consent for RBNZ asset purchases other than government debt, concern about loss of political independence is not assuaged. 

Tell us what's in and out
It is, I hope, unreasonable to think that the Bank might be so-tempted. But where the Bank is taking a more expansionary reading of its remit around climate change, for example, and where the Bank has been a bit happier of late to surprise markets, a few statements noting just what is ruled out in unconventional policy would be welcome.

Preparing for unconventional monetary policy can make sense, even if it is far from the Bank’s current expected path. But we are nowhere near the point at which throwing open the switches on fiscal policy is desirable.

Doing so during these more conventional times should have the Bank instead move to counteract the effects – at least if the output gap were expected to further widen. And clear signals that the Bank has no intentions of waking certain rocky horrors would put a few minds at ease.

We also subsequently released a research note on the topic, joint with Prof Robert MacCulloch at Auckland Uni.

The Newsroom version contains Rocky Horror Picture Show content; the research note doesn't.

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Mixing up the heroes and villains - UPDATED

** Note update at the end of the post; original post follows unamended. **

Sometimes, it feels like media is in a bizarro world, where the good guys are the bad guys and vice versa. 

Over at Newsroom, the influence of developers in local politics is a worry:

More importantly, according to Simon Chapple, the director of Victoria University’s Institute for Governance and Policy Studies, the claim that property developers are just amplifying the voices of people they agree with doesn’t stack up. “You can rule out ideology, because they’re donating to everyone.”

Chapple isn’t overly worried about shady deals being negotiated in smoke-filled backrooms of the Wellington Club. Instead he believes that, “The money isn’t buying a specific decision. It’s building a relationship - one where your interests are mutually coinciding.”

When Chapple first heard the numbers, he laughed and launched into an anecdote. “It was 2004. The place next door was an old industrial site, and it was bought up by Craig Stewart [a major Wellington developer]. He decided to bowl over the building and build 20 townhouses.” Chapple reached out to the local community to try fight it. “I remember, my neighbour worked for the Council. And when I told her Stewart’s name, she lit up. ‘Oh, what a nice man! He brings us bottles of wine every Christmas’.” Chapple’s point is that donations and gifts serve the same purpose: to build sympathy and support from people with power.

How is it that the ones trying to block new housing get cast as heroes while the developers trying to build new houses are the villains?

Just imagine how bad it would have been if, in 2004, developers had been able to convince even more local body politicians that building houses is kinda okay.

UPDATE:

Simon Chapple provides some context on that particular case, telling me that the site was contaminated with PCBs but that it took High Court action before the site was tested, due to cozy relations between the developer and council. At High Court, they presented an affidavit from a former employee of the factory that PCB drums had been left upside down to drain in the clay. The action then forced site remediation.

So in this particular case, there was no blocking of a development - there was instead a forcing of what should have been done in the first place, and what might have been done without action had the former employee come forward prior to anything going to court. It's hard to see Chapple as any kind of villain in this account. I wish the story had provided context that the fight was not to prevent there from being townhouses, but to remedy a toxic waste problem - but I should have checked up on that before posting.

Meanwhile: Sir Peter Jackson is funding Andy Foster's mayoral campaign; Andy opposes the Shelly Bay development.

Of Cinderella, vaping, and decent regulatory frameworks

Over in my Dominion Post column, I take a Peter Huber twist on vaping regulation. One of the things I love about my column over there is that they keep all the out-links. So when I note work by Huber, I can link it. 

Eighties glam-metal band Cinderella taught us we don't know what we've got until it's gone. But it can be harder to know what you could have had if you never had it at all.

We can thus be thankful the regulatory framework for vaping and reduced-harm tobacco alternatives is coming only after a lot of Kiwis have been able to stop smoking thanks to vaping. But those vapers will need to step up to ensure they do not lose what they now have.

Regulatory expert Peter Huber distinguishes between two types of regulatory agencies. Some are charged with regulating existing risks. Others act more as gatekeepers, assessing whether new and potentially risky products should be allowed to enter the market at all. Onerous regulations mean few can benefit from, or be harmed by, the regulated product. Appropriate regulation strikes a balance between benefits and costs.

Huber says agencies regulating existing risks do a better balancing act because established consumers of regulated products push back against excessive regulation.

But "gatekeeper" agencies can easily be too precautionary. Regulate too heavily against a new pharmaceutical product, and most prospective beneficiaries will never know what they have missed. Regulate too lightly, and there will be front-page headlines if anything goes wrong, and the officials who signed the approval may find themselves in trouble with the press, the public, and the minister.
...
So vaping went from banned to legal rather quickly – and without a clear regulatory framework.

After the ruling, vaping community pressure for the speedy establishment of a regulatory framework was risky. A regulatory framework established before the vaping community more fully established itself could too easily be too strict.

I am made to understand that I also should have linked Cinderella, as Kiwis were spared that bit of 80s music. Some argued I should have linked Joni Mitchell instead, but I just can't stand Big Yellow Taxi. Yech.

But how many divisions might the Ombudsman have?

Ben Thomas explains how MMP coalition politics provides more ways for a government to avoid the Official Information Act. If conversations between Ministers in Cabinet were actually conversations between the spokespersons of the two different parties about the areas of their party responsibility, even if they write it all up on official Ministerial letterhead, then they can pretend that it's not subject to the OIA.

The whole article is excellent; do have a read. If you wanted a model op-ed for English writing assignments, this is a good one. Ignore the bolded teaser at the start that a Spinoff editor would have added; the structure's perfect.

When I was griping on Twitter about how the Official Information Act can't enforce itself and that governments can and will get away with this buffoonery so long as the public will allow it, Joe Ascroft pointed out that the Ombudsman can actually do a bit more than we're used to seeing from that office:

pic.twitter.com/VVLPHRgVcW

— Joe Ascroft 🇭🇰 (@JoeAscroft1) August 6, 2019

Does anyone know if the Ombudsman's office has ever actually done anything like this?

Quote of the day: Draghi edition

ECB governor Mario Draghi raised concerns over the appointment of the new Central Bank governor, Gabriel Makhlouf, directly with the Minister for Finance Paschal Donohoe, the Sunday Independent reports. The paper says the concerns centre on the fact Makhlouf has no experience working in a central bank and is not an economist.

From the Irish Times. 

And is not an economist.

Isn't it nice that there are central banks out there who think that expertise in monetary and macroeconomics is important in Central Banks? By contrast...

Afternoon roundup, and around the traps

The worthies on the closing of the browser tabs.

• Nice comparison of vacant housing to transitional unemployment, in an American context. Filing this one away here for the next time somebody notices a few empty houses and decides that policy should do something about it. It comes up too often. 
• Susan Edmunds over at Stuff looks at household income distributions; the piece includes a short bit from me on AHC- and BHC- incomes. 
• Universities need to lift their darned game. 
• AUT not only caved at the last minute to pressure from the Chinese Embassy to pull the rooms booked for a memorial event for the Tienanmen Massacre, they also (and I just cannot stress enough how stupid this is) failed to redact the name of the lecturer who had booked the rooms when the documents were released under OIA. I hope that lecturer does not have family living under the Communist dictatorship. Utter muppetry. Newsroom's since blanked out the name but what the hell. 
• International students at Auckland University from China cannot be expected to feel safe there unless the University takes a stronger stand in support of their international students - and especially when the Chinese embassy is lauding the pro-Communist student who shoved the student who was supporting the protesters in Hong Kong. 
• I dunno what the answer is here. Stronger emphasis on freedom of speech in international student orientation events and policies expelling students who become violent in debate with other students could be part of it. But universities are massively dependent on foreign students, disproportionately from China. Capped domestic tuition fees have the universities seek money where they can - from full-fees paying foreign students. The government has to cap tuition fee increases because students don't really pay them - the government does. The first year's free, the rest is funded by loans that are marked down by about 45% the second they're issued. Every tuition fee increase increases the government's liability through the student loan portfolio. So you get this self-reinforcing mess that the government cannot afford to cover the education costs for the volume of students it wants to go through the universities and is unwilling to have students pay their own way a bit more, so pushes the universities to get international students to cover the bill. That builds in vulnerabilities when stuff like this happens. 
• If you wanted to build a house out of straw bales and eco-friendly materials, good luck getting it signed off and consented. "Oh, the market fails to provide eco-friendly alternatives!" Yeah, well, if the government won't sign off on the standards, then you get messes. 
• Elsevier is expensive; the UC libraries no longer subscribe to them. So the excellent Ted Bergstrom is organising volunteers to put together running tables of contents of those journals with links through to faculty website copies of the final edited versions of their own papers. Superb.
• I don't get why the Reserve Bank wants to ban anyone who knows monetary and macroeconomics from serving on the monetary policy committee, but that looks to be what they're doing. It's hard to come up with good explanations. The piece at Interest has some minor comment from me.
• Running field experiments? Watch out for this: the presence of the foreigner as experimenter changes behaviour.
• Google might yet build itself a city development in Toronto. It looks pretty neat. 
• I also give a couple warnings about a 'virtual shopping' study finding that people in a fake supermarket are responsive to sugar taxes. In the real world, people stock up when things are on special, and buy less when it isn't, so short-term price responsiveness isn't the same thing as long term consumption changes. 
• A mammoth listening task: Jordan Hoffman ranks 180 Rush songs. The ranking is very defensible, though I'd have moved Dreamline and Time Stand Still up the list a bit and pushed Working Man down the list. Almost all of the songs are on Spotify; here's a playlist, from lowest to highest ranked. And Hoffman is absolutely correct in his top pick (again: 1 here is the lowest-ranked. You work your way up). UPDATE: It looks like the embedded playlist can only run the lowest-ranked 100; click through to the web player to get the full list.
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Sad

Emily Brookes' piece on the tragic Carla Neems case lets Nathan Wallis wander all over the place, including here:

Wallis stressed that no blame should be placed on Neems' parents for her death - "the last thing they need is a bloody coroner's report saying it was kind of their fault" -   and said they were victims of a society "that doesn't value children very much and is all run by the Business Round Table."

"We've created an economic situation where it's impossible to buy a house in New Zealand without having two parents go to work," he said. "Then how on earth are we expected to have someone there to walk (kids) to school every morning and pick them up every afternoon? It's an impossible situation for people."

I didn't know Roger Kerr well; he was the Business Roundtable. I met him once or twice, and had email correspondence a half-dozen times. He taught me to write my first OIA request, back when I was an academic.

But I do know that one of his last submissions, if not his last submission, before he died in October of 2011 was to the Productivity Commission's inquiry on housing costs, in August 2011. He would have been near the end of his battle with melanoma.

He there stressed the importance of getting the regulatory settings right so that more housing could be built, because housing affordability matters.

The emphasis on fixing housing has continued with the New Zealand Initiative, successor organisation to both the former Institute and the former Roundtable.

A clearer-thinking Wallis might have wished that the Business Roundtable's warnings on zoning and urban planning impediments to housing affordability, way back in 2011, had been paid some heed.

It's a pretty sad article all 'round.

Real insurance. Not that pretend stuff.

I keep wishing for an insurance product that doesn't exist.

Every year, pay an annual premium. If an earthquake hits Wellington during that year of sufficient Mercalli magnitude, you get cash payment immediately. You have automatic right to renew the policy for the subsequent year; the insurer has to provide a year's heads-up that it will no longer be providing the policy at the current policy price. That latter bit's to avoid the case where you've bought the policy every year, then the insurer stops issuing insurance when an earthquake not quite big enough to trigger the policy is a foreshock for a bigger quake to come.

It's a simple policy. The annual contract price would be the annual risk of an earthquake, which GNS here assesses at 0.83% per year (for the type of quake against which I'd like to insure), plus a margin for the insurer.

And it wouldn't result in cases like this, where decades-old defects in a house that were unknown to the owners are reason to not pay out an earthquake claim.

We do not yet live in Arrow-Debreu worlds.