Ratings warning

I've done a fair bit of NZ cheerleading. Sadly, I have to warn of a potential downgrade of New Zealand immigration from a "buy" to a "hold".

Jason Sorens has moved, at reasonable personal cost, to New Hampshire, in pursuit of the free life and in support of the Free State project.

I also understand why libertarians who are promoting the cause in their own careers would see a career change and a move to New Hampshire as a step back. But most of what I have done as an academic does not promote liberty directly, and I have come to question seriously the “trickle-down” model of social change widely adopted by libertarian organizations. The idea, following Hayek’s essay, “Socialism and the Intellectuals,” is that creating new academic research showing the benefits of liberty will filter down through journalists and other “secondhand dealers in ideas” to the general public, eventually resulting in a freer society. But academic economics has long leaned free-market, and journalists don’t seem to understand the key insights of that discipline. If anything, the general public’s views are worsening in key respects. People under 30 are more likely to favor socialism than capitalism. The enterprise of educating the public via secondhand dealers in ideas seems doomed on a national scale, but it could work on a small scale.

Eric Crampton says libertarians should move to New Zealand. If only we were all lucky enough to have employers willing to sponsor our emigration there! They won’t just let you move without a job, after all. In my view, New Zealand and Switzerland are the only places in the world with a long-term better prospect for liberty than the United States, and I understand why some libertarians might move to those places. But they aren’t realistic options for most of us.

I fully agree with Eric that libertarians need to put their money (and bodies) where their mouths are. If they view liberty as important, either as a means to the ends that one enjoys personally or as a moral imperative for society, then it should be valuable enough to move for. Is enjoying significantly greater liberty worth a smaller car, a smaller house, a less fancy phone, slightly slower Internet, no cable TV, Chinese rather than Swedish or American furniture, making dinners at home rather than going out, or all of the above? If you think that gross injustice exists, don’t you have a duty to do something that plausibly could stop it? American society falls far short in protecting the rights and dignity of all its members. We have a real opportunity to change that situation in one place, and we are changing it.

Alas, things here have gone downhill a bit since 2011. I haven't started appending #Emigrate hashtags to NZ news tweets because it sure isn't obvious where one could go. But the reasons for coming here aren't as strong as they were.

On lots of margins, New Zealand remains excellent. Most of what I'd written on the merits of moving to New Zealand continues to apply. On a fair few margins, we remain the Outside of the Asylum. Other great stuff: New Zealand has moved from a prohibition regime for new party drugs towards a regulatory regime allowing the sale to adults of products that pass a safety check. Alas, we've not followed Washington State and Colorado.

Factors affecting today's ratings warning? Most substantially, the GCSB / TICS legislation. At the same time as pressure is growing within the United States to make their internet spy agency, the NSA, a little less spooky, New Zealand's giving new powers to its spy agency, the GCSB.

Where we'd had a market opportunity to be the "Outside the Asylum" destination for American tech entrepreneurs looking to establish cloud services in which customers could have some expectation of privacy, we instead seem to be determined to be every bit as bad as America. I'd worried about this back in May; Ian Apperley's since tried putting some numbers on the cost. Susan Chalmers from InternetNZ has similar worries. I haven't fisked Apperly's figures, which seem predicated on a reasonably optimistic view of the New Zealand counterfactual. I'm not even sure we really can quantify things: there was some possibility that we could have drawn in substantial American tech investment, but I couldn't possibly tell you what that probability was. But imagine you had a lotto ticket that only paid out if you got all 7 numbers right. Five of the numbers have just come up in your favour. Do you tear up the ticket before finding out what the last two numbers are? Entries on Slashdot and Boing Boing about how we're turning GCSB into a low-rent client of the NSA are a great way of ripping up that lotto ticket.

And think that New Zealand would be above the petty thuggery that the UK today imposed on Glenn Greenwald's partner? We can hope so, but there were a couple of worrying stories last year about hassles for people thought to be Kim DotCom's friends.

There are also a few longer standing issues that have contributed to today's ratings warning.

• New Zealand's version of civil asset forfeiture kicks back seized funds to drug enforcement. We're certainly not as bad as the US on this one, and there's strong likelihood that the policy gets fixed before really bad stuff happens. But downside risks are substantial. 
• Our revised censorship legislation is fully "Inside the Asylum" stuff. See here and here. Justice Minister Judith Collins says it's all about the kiddie porn, but the definition of "objectionable materials" includes marijuana growing guides and a bunch of pornographic materials involving homosexuality that were deemed objectionable in the 70s and continue to be banned. A pile of comic books are banned. An online vendor, Fishpond, copped $4,200 in fines for distributing a couple of movies that are widely available in the United States. Our whole film classification regime is nuts. You have to pay $1000 to get a ruling from the film classification office on whether a movie meets the NZ guidelines. This kills legal distribution of long-tail films here. At the same time, failing to get a film classified can risk your getting years in jail if the Censor's Office then deems it objectionable. 
• The Christchurch earthquake was February 2011. Since then, the rebuild has been substantially hindered by regime and regulatory uncertainty caused by the government - both local and national, and the various acronyms now running the place. More worrying, very substantial problems both in the earthquake insurance scheme and in the regulatory regime around unsafe buildings have yet to be resolved for future earthquakes. This contributes to a ratings downgrade because, if you move to a part of New Zealand likely to be hit by substantial quakes while you're here, there are pretty substantial, foreseeable, preventable things that are going to happen despite their being substantial, foreseeable, and preventable:
• Buildings with unreinforced masonry will fall down and kill people. Deaths from earthquakes are pretty much unavoidable. But the combination in New Zealand of a zero-faulty liability regime for unsafe buildings combined with a regulatory regime giving building owners decades to get them up to scratch mean that, in the event of a quake, many people will die whose deaths could have been avoided at relatively low cost. And even if you've brought your property up to spec, you can still have problems if the absence of either liability or regulation encourages your neighbour to fail to take due caution. 
• You will have been compelled to pay for Earthquake Commission insurance with your private property insurance. The ability of EQC and private insurers to fob responsibility off on one another, combined with EQC's demonstrated incompetence in dealing with the volume of claims inherent in any large event, combined with the reinsurers' and government's need to constrain the total cost of claims regardless of whatever they promised to provide you in the insurance contracts you signed, mean you can't avoid having things drawn out for years and still wind up with less than your due. If you think that a government-run insurance company will not have every incentive to pretend that new damage is really a pre-existing condition, well, you haven't been paying attention to Christchurch.
• With no change to underlying riskiness, the government may decide after an earthquake event that the risk of rockfall facing your house in the event of additional earthquakes is too great for you to bear, even if you think the risk is eminently bearable and even if it would be cheaper to put in place earthworks or fencing to mitigate that risk. Or they could just faff about for two and a half years without telling you whether you're allowed to live in your house.

If the GCSB and TICS legislation pass without substantial amendment, I'm moving New Zealand from a "buy" to a "hold". If worries about surveillance state issues weigh heavily in your utility function, and you're considering emigration from America because of it, parts of Europe are in much better shape than we are. Most importantly for those who consider the NSA mess to be a reason for leaving the US, it now looks like, whatever America does on surveillance, New Zealand will basically follow along. Maybe with fewer resources, maybe a bit less enthusiastically. But if you think that surveillance in America will get worse before it gets better, you should expect New Zealand to follow in lock-step.

But on plenty of margins we remain much more free than the United States. Our airports remain exceptionally sane: I can show up at the airport 20 minute before a domestic flight and, so long as I'm not checking luggage, just walk on up to the gate and board. Home brewing and distillation are legal. Prostitution is legal. Same-sex civil unions have been legal for years and the first full same-sex marriages were celebrated today.

And, even with the new GCSB legislation, I doubt we'll be worse on surveillance than America. We'll just all have to be far more diligent about secure computing.

Middle Earth trade politics

I think that Jason Sorens has the stylized facts wrong here:

Seen on an International Political Economy quiz:
The world of Middle-Earth has become largely peaceful, and international trade is growing. The Shire, Gondor, and Mordor are three countries in Middle-Earth. The Shire is abundant in land and scarce in labor and capital; Gondor is abundant in labor and capital and scarce in land; Mordor is abundant in labor and scarce in land and capital. Some of the products these countries trade include Longbottom leaf (produced intensively with land), mithril chain-mail armor (produced intensively with labor and capital), and raw iron ore (produced intensively with labor).

In the period leading up to the events described in the Lord of the Rings, Mordor was clearly capital-intensive. Gondor eschewed physical capital, favouring magic and tradition over technology and research.

Subsequent to the war of Gondorean aggression against the peaceful Orocuens of Mordor, egged on by the Wizards' Council who sought to prevent the coming Industrial Revolution in Mordor which would have forever reduced the relative power of magic, the Elves implemented policies in Mordor that Pol Pot would have supported: destroying any remnant technology and exterminating those with an education, while the Ithilians and Gondoreans tried to salvage some of the technology for their own use. So, post-war, Gondor was relatively abundant in capital (stolen from Mordor). And maybe Mordor was relatively abundant in labour, but only by virtue of its land having previously been turned to salt-pan pre-war by a failed irrigation scheme and its capital having been destroyed more thoroughly than its labour.

Worse, you can't make Mithril chain mail unless you get the Balrog out of Moria. Other sources say that Moria-induced lack of raw material was just a cover for the technology's having been lost - magic is in long term decline.

If you're insufficiently familiar with the true history of Middle Earth and the war of Gondorean aggression, read The Last Ringbearer (pdf), which anticipated a lot of the arguments made by David Brin back in 2002: LOTR was history as written by the victors who demonized their enemies as having been less than human. I wonder whether Brin had read the (1999) Russian version of The Last Ringbearer.

@ModeledBehavior asked if he should read Lord of the Rings. Of course he should. So that he can read The Last Ringbearer.

The Coalition for Fun

What do I need to do to be a founding member of Sorens's Coalition for Fun?

Formerly a discipline devoted to research on sanitation and epidemiology, public health is now more or less an explicitly ideological field devoted to ginning up panic over freely chosen, private behaviors and to cheerleading for paternalist government action to prohibit or discourage them. Take any fun activity enjoyed by those who are not urbanized, (generally) white, middle-aged, highly educated professionals – smoking, shooting, drinking, eating tasty food, calling a friend in the car, generally exercising “personal freedoms” – “public health advocates” are agin’ it. (Of course, you don’t see them agitating against marathon running or rock climbing or bungee-jumping or long-distance hiking or extramarital sex. Fun, risky things that urbanized, highly educated professionals like.)

...

The politics behind today’s public-healthery are sinister. They are driven by loathing of the poor, the overweight, people who shop at Wal-Mart and eat at fast-food joints, people with a Southern accent (who probably own guns and might even smoke) – the list goes on. Otherwise, why aren’t progressive-dominated governments trying to ban colorful local diners and casual-dining chains the way they are fast-food chains – even though the former often have higher-calorie food and don’t even report calorie counts to their customers? Of course, it’s the white middle classes who frequent quaint diners and TGI Friday’s.

So – I raise a glass of whisky and a cigar to the hope of a backlash against “public health,” a new Coalition for Fun.

Jason Sorens at Pileus nails it. I'll be guest blogging over at Pileus later this month; it looks like I'll be in very good company.

I've a piece in today's New Zealand Medical Journal taking another swipe at the healthists. The page proofs are at the end of the post for folks without a subscription.

Let’s begin with CHB’s [Peter Crampton, Hoek and Beaglehole] case against efficient markets. They argue that because models of perfect markets require a set of conditions not found in the real world, extensive and comprehensive government intervention in individual health choices is necessary. You could just as reasonably argue that because Earth has an atmosphere, we needn’t worry about falling off of cliffs: theories of gravitational acceleration of 9.8 metres per second squared are derived for a vacuum and so do not here apply.

The conditions under which markets can be shown to maximise efficiency—the benchmark case against which market failure is measured—are sufficient rather than necessary. We can be at an optimum even if the conditions fail.3 Under those idealised conditions, it is impossible to make any person better off without simultaneously making someone else worse off.

Where the idealised conditions fail, we have some guidance about policies that may improve outcomes, but do not necessarily do so. The market failure is necessary but not sufficient for policy to meliorate outcomes. Proving a particular failure does not give us carte blanche to implement any intervention we like; rather, it tells us where an intervention might be targeted. And it also tells us when intervention isn’t warranted.

As case in point, consider the potential for market failure caused by imperfect information about calorie counts. If consumers are mistaken about true calorie counts, they might eat more or less than they would under conditions of full information. Perhaps. Let’s leave aside for the moment the ease with which any consumer could investigate calorie counts at most fast food restaurants simply by checking their websites— if he actually cared. But experiments making calorie counts really salient at point of fast food purchase show no effect on purchases.4
The rather mixed evidence on the effects of information provision suggests to me that there was no real information market failure. If your reaction to the evidence is “well, let’s try a different intervention then and claim a different market failure as justification”, you’re no longer making the case based on market failure; you’re just being paternalistic. Public health activists have been abusing market failure theory to give a sciency flavour to what is actually just paternalism.5

I get really irritated at the claim that, if we have any kind of market failure, we can throw standard economics out the window. The claim's made a lot in the alcohol social cost literature - from the early Single et al papers through to Collins and Lapsley. If we take a straight neoclassical line, the failure tells us the type of interventions that might be warranted. If you still don't like the outcome after the correction's been made, that's too bad. If we take a more Austrian line, it's the presence of these failures that opens up market opportunities for entrepreneurs to come in and transform deadweight losses into profits.

I don't know whether the "any failure justifies any intervention" line comes from a deliberately opportunistic reading of principles-level texts or if we've screwed up as a profession in teaching principles of micro.

Cursed Rhetoric Page Proofs