Monday 30 November 2009

Evening roundup

Less than helpful

From the computer network folks on campus:
Over the weekend we experienced difficulties with our Staff 2 volume. We have recovered the files from Thursday's backup.

We are still attempting to recover data that was not backed up on Friday. If you are missing any files, please contact the ICT Service Desk with the exact file names and where they were located in your My Documents (P:Drive).

We will be working with our vendors to conduct a mini-review, and to determine measures so that this will not happen again.

We apologise to all staff who were affected over the weekend.
Exact file names? Yikes.

Cross-pricing problems

The old saw has it that Gilette started the "give 'em the razor, but make 'em pay for the blades" pricing strategy. It's an effective price discrimination strategy: low value customers will keep using the old blades for a long time, high value customers get to identify themselves by refreshing their blades more quickly.

Same thing happens in computer game consoles. The Sony Playstation 3 is very cheap; Sony recoups it in the games. High intensity gamers pay more by buying lots of games and subscriptions; low intensity gamers just buy a couple. If the console were sold at a single price, the lower tier gamers would drop out of the market.

The pricing strategy only really works, though, if somebody else doesn't have a strong demand for the product that doesn't require buying the blades, or the games. We find now that the American military is buying thousands of PS3s to build into clusters that operate as supercomputers. Now, we'd expect that if it were a commercial outfit doing this, Sony would simply refuse to fulfill the order. Supermarkets list "not for trade" on their loss-leaders and have maximum purchase quantities. But is the DoD a buyer they can't refuse? Or is the publicity of having their platform being one of the DoD's supercomputers worth the losses on the units? I wonder what Sony thinks of this.

HT: BoingBoing

"Me" got bigger

Robin Hanson and Bryan Caplan are blogging one of the most fun arguments they've had, or at least one of the ones I enjoyed most at lunch as a grad student.

Suppose you're scanned, atom by atom, and a replica of you is made. Hanson then says '"me" got bigger'. The replica shares all of your memories and purposes; it seems pretty reasonable to view it as an extension of you. I'm with Hanson up to this point.

Hanson then claims to be indifferent between whether he or his replica is shot following replication. Either way "me" gets smaller. So Robin would have no problems in stepping into a Star Trek teleporter: the teleporter destroys the current instance of 'him' but creates an identical new instance elsewhere who materializes remembering having stepped into the teleporter. I'm with McCoy: there's no way I'd step into the teleporter. Shuttlecraft only, unless the alternative is that the only instance of 'me' otherwise would be destroyed (yes, I'd teleport away from the planet that was imploding if the shuttle couldn't get there in time). And then Hanson would needle by asking why you're ever willing to go to sleep.

Robin and Bryan are currently arguing this with respect to cryonics. Robin's happy to go for cryonics even if it only gives the chance of having a simulated upload of his brain run on a computer sometime down the line; Bryan doesn't think that's good enough. I'd take the upload over nothing, but would still prefer waking up thawed. And Robin would of course demolish that line of argument: whatever is woken up a century or two from now will only be 'you' to the extent that the neurons are in the right positions with the right charges, so there's no particular reason to prefer that the physical instance of your current brain is woken up or some replica of it or a neural net scan that's running as an upload on a computer. In all cases, something would wake up with a memory of having been 'you'.

If you're a materialist, it's hard to avoid Hanson's conclusion. But I still want to give a higher priority to the current instance of 'me' than to any potential extensions. I remain a "me-utilitarian", where higher weights are placed on instances of 'me' closer to the current instance.

Going too far

I'm not the biggest fan of cyclists. When I go out on the bike, I try pretty hard to hug the curb and stay out of cars' way. Petrol taxes pay for the roads and cyclists are free riders; hugging the curb is my way of thanking the cars for their contribution when I'm free-riding.

But this is ridiculous.
Charles Alexander Diez, the former North Carolina firefighter who shot cyclist Alan Simons in the head, has been sentenced to four months in jail.

In an Asheville courtroom last week, Diez pled guilty to shooting Simons during a July 26 roadside confrontation. Said to be upset that Simons was riding his bike with his 3-year-old child, Diez fired his .38 caliber pistol as Simons walked away after the two exchanged words. The bullet struck Simons' bike helmet, narrowly missing his skull.
As much as cyclists irritate me, declaring open season on them seems a bit excessive.

Friday 27 November 2009

Watson on White

William Watson highlights William R. White's critiques of modern central banking:
The argument he provides is explicitly Austrian, which will commend it to many readers of this page. He quotes Hayek in two places and relies heavily on the fundamental proposition of Austrian economics that: “It is not self evident that policies are desirable when they are effective only at the expense of creating even bigger problems in the future.”

That’s a jab at Greenspanian monetary policy, which White sees as having imparted an inflationary bias to U.S. monetary policy and sown the seeds of future disaster even as it fought against recessionary tendencies in 1987, 1998 and 2001. If the Fed rushes in with buckets of liquidity every time a financial market experiences stress, the market learns that stress is not such a fearful thing. As a result, monetary policy becomes less effective. As White writes: “The degree of monetary easing required to kick start the United States economy seems to have been rising through successive downturns as the ‘headwinds’ of debt have become stronger.” Much of the debt in question was spawned by monetary policy itself: Credit begets collateral, which begets further credit, an evolution the Fed has fostered over the last 25 years.

We may have had unusual stability in the real economy in the Greenspan-era but, White argues, we had growing “instrument instability.” Consider balancing a ping-pong ball on a ping-pong racquet. To keep the ball stable, you move the racquet. If there are shocks to either ball or racquet, you have to move the racquet more and more to keep the ball where it is. The ball never moves much but eventually the required racquet movements are too big, the system collapses and you drop the ball. White argues that’s what’s happened to monetary policy.
Watson never links to the paper, but it's almost certainly this one.

Upshot: interest rates in the boom should be higher than would be dictated by inflation targeting alone, banks should watch against "unusually rapid credit and monetary growth rates, unusually low interest rates, unusually high asset prices, unusual spending patters (say very low household saving or unusually high investment levels)" to try to resist procyclicality in the financial system.

I wonder how or whether this could be operationalised. I'd want something other than "pick a central banker with the right utility function and let him be independent" and more like our current policy targets agreement. Not sure that it can be done in a way that wouldn't wind up being worse than simple inflation targeting: it's awfully hard to distinguish a monetary asset bubble in, say, housing prices from structural problems like the combination of IRD being too lenient on LAQCs and tight zoning/RMA restrictions on new housing supply.

More Whitman on paternalism and slippery slopes

Another nice installment is out.
As the secondhand smoke and obesity examples [just presented] suggest, rent-seekers with an interest in distorting and simplifying information come in at least two varieties. The first variety is old-style paternalists who believe they know best and do not necessarily care about the underlying preferences of the targets. Traditional temperance and health advocates fall within this category. They sacrifice the preferences of the targets to their own moralistic goals. The second variety is people who stand to benefit economically from the promotion or cessation of some activity. Examples include mutual fund companies that provide savings instruments, weight-loss clinics and programs, and manufacturers of smoking-cessation drugs. Public officials and agencies with an interest in preserving and expanding their domains also fall within this category, as do some individuals in their role as consumers and workers (e.g., non-smoking bar customers who would prefer to have more establishments cater to their tastes).

Thursday 26 November 2009

Mike Moore at Reddit

Boing Boing says that Mike Moore (yes, the good one) will be taking questions over at Reddit.

Submit your questions here.

Ok, now I'm starting to update

Today's Hadley Center news:
  • Declan McClullagh says programmers are now starting to go over Hadley's code and are particularly unimpressed.
  • Ron Bailey at Reason points to William Briggs' critique of the statistics. I'm most surprised that they seemed to be using smoothed data but not adjusting their confidence intervals appropriately: in econometrics, this is called the generated regressor problem. Yikes.
  • George Monbiot continues to be dismayed about Hadley's lack of professionalism and their utter incompetence in dealing with the current crisis.
  • Colby Cosh weighs in.
  • Gene Expression links to more responses from folks who've tried making FOIA requests of Hadley and computer programmers looking at the code
  • Arnold Kling also makes the link between macro and climate science

Wednesday 25 November 2009


Doug Sellman, in today's Press [added: not online, but almost identical to the one in last month's New Zealand Herald], notes:
  • Individual responsibility is a "tired old mantra"
  • There are at least 700,000 heavy drinkers in New Zealand [population around 4 million]
  • Per capita alcohol consumption up 9 percent over the last decade [but somehow "heavy drinking" has remained constant"]
  • He's pushing alcohol down the road already traveled by tobacco:
    Change is coming. France has already brought alcohol in line with tobacco in terms of marketing and advertising, banning broadcast alcohol advertising as well as sponsorship of all sporting and cultural events.

    The University of Otago is leading the way in New Zealand; taking the enormous step forward in banning all alcohol promotion from all its premises and functions.

    A small town or city or even a large New Zealand city might well do the same...
  • Alcohol promoters and vendors are "drug pushers".
In Sellman's world, alcohol promoters are drug pushers and Roger Kerr is one of their allies helping them in obfuscating their way out of taking responsibility for their products. Wonder what colour the sky is over there.

He also really doesn't like the Woodstock Bourbon and Cola ads, recently lauded by the New Zealand Marketing Magazine's "Stop Press" blog. Says Sellman
The ad also seems to be encouraging middle-aged women to get their teenage clothes back on and flirt with their son's best mates.
I presume some would defend these adverts as responsible business practice and contributing to a healthy society.
It sounds like Sellman's ...issues... go beyond alcohol.

I don't go for the ready-mixed drinks, but the ads are very good.

Hadley update

I've still not seen much that's caused me to substantially update my priors:
  • Greenhouse gases should, in theory, increase temperatures
  • Solar output also affects temperatures but that's downplayed because it detracts from the "it's all our fault" message
  • The "consensus" is overly politicized: strong funding incentives to push public messages beyond what the science can support
  • I have a hard time believing that it makes more sense to impose costs on ourselves now than to wait a couple decades to see how the science develops and whether technological fixes can emerge, potentially using prizes to incentivize things.
  • Future people will be richer than us, so imposing costs on ourselves to benefit future generations is highly regressive. It is better to impose a cost on future generations when the present discounted value of that cost is less than the present costs of avoiding imposing that cost (disagreeing with Cowen here on discounting's applicability across generations).
  • The very most we should be doing is imposing a small carbon tax that can be ramped up quickly should things look more desperate later on.

Ambrosini notes a fair number of folks whose reactions to the Hadley hack have been similar to mine. Maybe I've just been relatively nonplussed because I never had particularly high expectations of the scientific consensus. The folks who viewed the climate scientists as some kind of messiahs will be disappointed. Take George Monbiot (HT: Volokh)
It's no use pretending this isn't a major blow. The emails extracted by a hacker from the climatic research unit at the University of East Anglia could scarcely be more damaging. I am now convinced that they are genuine, and I'm dismayed and deeply shaken by them.

Yes, the messages were obtained illegally. Yes, all of us say things in emails that would be excruciating if made public. Yes, some of the comments have been taken out of context. But there are some messages that require no spin to make them look bad. There appears to be evidence here of attempts to prevent scientific data from being released, and even to destroy material that was subject to a freedom of information request.

Worse still, some of the emails suggest efforts to prevent the publication of work by climate sceptics, or to keep it out of a report by the Intergovernmental Panel on Climate Change. I believe that the head of the unit, Phil Jones, should now resign. Some of the data discussed in the emails should be re-analysed.
Monbiot goes on to note that only a small fraction of evidence has been discredited by the hack.

Megan McCardle gets this one right:
I'd say that the charge that climate skeptics "are not published in peer reviewed journals" just lost most of its power as an argument against the skeptics.
Biggest surprise so far for me: still absolutely nothing about it on the Hadley Center's website, almost a week later. They note that they're running from the emergency server, which apparently doesn't back up very often: the temperature data now available is half a year out of date (truncates at March). I wonder how much damage the hack did to their servers and what was lost.

Tuesday 24 November 2009

Constructed and emergent order

Cory Doctorow at BoingBoing points to a lovely piece on the emergent "desireways" of Detroit.
Using photos and satellite images, the Sweet Juniper blog documents the "pathways of desire" in Detroit -- the streets and sidewalks that Detroiters carved out of the snow indicating where they'd like to go, rather than where the city expects them to go. I read somewhere (I think it was Peter Ackroyd's incredible London: A Biography) that after the Great Fire, Christopher Wren tried to lay out the city in a regular grid, but that Londoners continued to walk along where the old winding streets had been, using the old, unburned stone church-spires to navigate them, walking through the construction sites, forcing the streets back to their old places.
The post at Sweet Juniper is worth reading in full.
Desire lines are considered by many landscape architects to be proof of a flaw in the design of a physical space, or more gently, a sign that concrete cannot always impose its will on the human mind. But what about a physical space that no longer resembles its intended design, a city where tens of thousands of homes have been abandoned, burned, and buried in their own basements? While actual roads and sidewalks crumble with each season of freezing and thawing, Detroiters have taken it upon themselves to create new paths, in their own small way working to create a city that better suits their needs.

Light binge drinkers

According to Barry Jackson (Radio NZ interview), if you've consumed 5 standard drinks in one day anytime in the last month (4 for women), you're a light binge drinker. If you've done it once in the last two weeks, you're a moderate binge drinker.

The pint of Emerson's JP I had the other night was 3.3 standard drinks. Combine that with a pint of anything else, and you've just had a binge drinking session.

He lauds the American system where drunk in public is a criminal offense and where having an alcohol conviction can mean you're forbidden from practicing in any of some 40 different professions requiring registration.

I wonder how long 'till he starts pushing for legislation against "drunk at home" as well...

Andrew Norton provides a more sensible take on liberalism versus paternalism.

HT: Luke Malpass

Advice, for what it's worth

Not the bunch most usually asked to give this kind of advice. Would be interesting if Roissy were to score it.

First rule of social policy advocacy

The first rule of social policy advocacy is to get yourself a really Big Number. The bigger and badder your problem appears, the better. Whether it makes any sense is beside the point.

This explains why some poverty groups still cling to the deliberate deception of before-tax poverty rates. Any poverty rate that ignores the role of taxes and transfers in redistributing income, as before-tax calculations do, only tells half the story. But advocates use it rather than the after-tax figure because it makes poverty look bigger.

The same statistical obfuscation appears to be going on in housing policy.
From Peter Shawn Taylor's article on problems in the advocacy stats for social housing in Canada. Turns out that the vast majority of folks falling into the advocacy stats are households spending more than 30% of their income on housing. I guess I also have a housing affordability problem too! Somebody subsidize me!

Monday 23 November 2009

Quip of the day

Icebreaker notices Sarah Palin wears their garb for her Newsweek cover.
Palin is notorious for her support for oil drilling and posing with a rifle over a dead moose. Icebreaker is a New Zealand company specialising in eco-friendly clothing. The two are an incongruous fit.

But Icebreaker managing director Jeremy Moon said the top had worked wonders for Palin, who recently released her memoir, Going Rogue.

"The fact that Sarah Palin looks hot and intelligent on the cover of Newsweek is testament to the transformative power of New Zealand merino against the skin," he said.
Wow. Wonder if Moon had to run that one by their brand manager.

Cass Sunstein's Solidarity in Consumption suggests there can be brand niches of this sort. Hmm.

Police and drink drive limits revisited

I'd earlier noted that police in New Zealand are basically exempt from drink driving legislation: the courts note that they'd lose their jobs if convicted, view the punishment as exceeding the severity of the offense, and so discharge them without conviction.

So some police officers are able to take advantage of the stringency of their employer's attitude toward drink driving convictions to get leniency from the courts.

Radio New Zealand today reports on how a police legal advisor phoned Air New Zealand about a flight attendant's drink driving charge. The police did not inform the court that they were trying to get her fired, so she received the normal penalty and, in addition, was fired.

Classy stuff. I'll be cheering on the EPMU's complaints with the Police Complaints Authority and the Privacy Commissioner.

It could be worse. At least here they don't shoot unarmed civilians.

Letter in today's Press

My reaction to the Press's weekend editorial ran as lead on today's letters page.

Your editorial of 21 November quoted alcohol-related harm as costing New Zealand some $5 billion per year. As Matt Burgess and I rather painstakingly showed in June of this year, BERL's tabulation of $4.8 billion hinged critically on several assumptions that fall somewhat outside the normal bounds of economic analysis. Most importantly, the figure tallies all costs that drinkers impose on themselves while assuming those drinkers receive zero gross benefit from their consumption. When we applied more standard economic method, we found that the net external cost of harmful alcohol use -- the costs drinkers impose upon others -- roughly matches the total alcohol excise tax take. The $5 billion figure is not a sound measure of any reasonable notion of social cost. Australia's figure, produced using similar method, is equally unsound. I urge you to use more caution in the use of such statistics. After all, shonky-figure-related harm costs the country more than $5 fiffillion per month.


Dr. Eric Crampton
Department of Economics
University of Canterbury

Hanson on HadCRUT [updated]

Hanson's reaction to the computer hacking release of a bunch of emails from the climate researchers is the same as mine:
Joel Achenbach comments:
This is not a scandal so much as a window on real scientists working on a politicized issue. … “Gravity isn’t a useful theory because Newton was a nice person.” I agree. But isn’t it also true that Newtons antipathy towards Hooke and his use of his position in control of the Royal Society, ensured that the concept of an achromatic lens for a telescope … had to wait until after [Newton's] death.
Yup, this behavior has long been typical when academics form competing groups, whether the public hears about such groups or not. If you knew how academia worked, this news would not surprise you nor change your opinions on global warming. I’ve never done this stuff, and I’d like to think I wouldn’t, but that is cheap talk since I haven’t had the opportunity. This works as a “scandal” only because of academia’s overly idealistic public image.

It is a shame that academia works this way, and an academia where this stuff didn’t happen would probably be more accurate. But even our flawed academic consensus is usually more accurate than its contrarians, and it is hard to find reliable cheap indicators saying when contrarians are more likely to be right.
On the plus side, it's good that public skepticism will be raised a bit. On the other, I'd worry that folks will only use such skepticism against academic results that conflict with their priors and be too dismissive of correct consensus that leans against them.

Update: I'm not trying to downplay too much the stuff that's in the emails. It looks like the consensus on warming was weaker than was publicly portrayed. It may be the case that data was massaged excessively, but that would be a conclusion that could only really be drawn after somebody familiar with the field had a check through things. You could probably find similar emails among macro econ researchers saying things like "well, nothing made sense until I ran the data through an HP filter to clean it".

Update 2: Tyler Cowen's take is similar to Robin's as well.

Doctors and the public on health

The Sydney Morning Herald reports on a study comparing doctors' and tradesmen's knowledge of nutrition and exercise. The full study is here, from Australian Family Physician, a publication of the Royal Australian College of General Practitioners. Table 1, below, has the results.

Six of twenty questions were answered incorrectly by a majority of doctors, compared to eight of twenty for the tradesmen.

The authors don't run a t-test for differences in mean group responses. Across the set of all questions, we can reject equality with a p-value of 0.017 on a two-tailed test: doctors scored better than the public, with an average "percent incorrect" score about 10 points lower than the public (median difference 6 points). Doctors' mean % incorrect fell below the public's 95% confidence interval nine times out of twenty and was never above that confidence interval.

Another problem: the authors note that "many of these statements remain controversial", with the authors picking "true" or "false" based on their best read of the evidence. But surely they'd then need to assign a confidence interval to their own estimates of whether the statement is indeed true or false. If the state of the literature is that about 70% is consistent with the statement being true, and so the authors label the statement as true, it wouldn't be shocking to find 30% of doctors disagreeing with the statement and being labelled "incorrect". But where the relevant measure is the difference between the public and doctors, this shouldn't cause too many problems. A final problem: both groups were surveyed while going into some seminars on health. We might expect that the doctors going to these kinds of seminars might be drawn from the lower tail, but the tradesmen from the upper tail, of distributions of prior knowledge for their relevant groups.

All that said, though, not a great showing for the doctors. Normally these kinds of surveys (Caplan, Althaus) will build a measure of the "enlightened public": how members of the public would have responded had they had demographic characteristics equivalent to the expert group but not the expert training. That would likely be impossible in this case as there's almost certainly no region of educational overlap across the two groups: you need at least a few members of the tradesmen group who have about the same number of years of formal education as members of the doctors group. Doing that usually closes the gap, at least somewhat, between the "enlightened public" and the experts. But the gap here isn't all that large.

I'd suggest that the folks at Alcohol Action NZ note the "Fruit juice is about as fattening as beer" factoid, but that might encourage the creation of Fruit Juice Action NZ. Hit the link before you laugh, and note especially the story linked at the end.

HT: Peter Martin's picks

Sunday 22 November 2009

Science is alive and well in Canterbury

  1. Hypothesis
    1. That the beehive-looking thing on the lawn isn't actually a beehive.
  2. Apparatus
    1. Beehive-looking thing.
    2. Lawnmower.
  3. Method
    1. Apply lawnmower to beehive-looking thing.
  4. Results
    1. Bees!
  5. Conclusions
    1. Bees don't like to be mown.
    2. Despite my advanced years, I am still faster than 90 per cent of bees.
    3. Ten per cent of a hive of bees is still quite a lot of bees.
    4. Even as an adult, bee-stings are surprisingly painful.

From David Haywood

Saturday 21 November 2009

Pop quiz

Quiz time. If Americans and Canadians were both asked, on a scale ranging from "strongly agree" to "strongly disagree", their response to "[Your country]
should follow its own interests, even if this leads to conflict with other nations", which country would you expect to prove more unilateralist: the friendly and conciliatory Canucks, or the Americans?
Unilateralist Position Question: : Canada should follow its own interests, even if this leads to conflict with other nations? (5 year change in brackets)

Strongly agree 16.5% (-5.3%)
Agree 45.5% (+6.2%)
Neither agree nor disagree 20.5% (+2.5%)
Disagree 13.6% (-1.7%)
Strongly disagree 2.5% (-1.0%)
Can't choose 1.5% (-0.5%)

The US should follow its own interests, even if this leads to conflict with other nations? (5 year change in brackets)

Strongly agree 21.2% (+2.7%)
Agree 31.6% (+0.1%)
Neither agree nor disagree 21.7% (+1.5%)
Disagree 15.8% (-4.5%)
Strongly disagree 6.3% (-1.1%)
Can't choose 3.5% (+1.4%)
So about 62% of Canadians agree or strongly agree while only 53% of Americans do. Interesting. Full "Nanos - UB North American Monitor Report" results here. They argue the numbers here reflect Canadian opposition to joining in with the US in the Iraq war; me, I blame the Molson ads.

Canadian Dairy

Terrence Corcoran reports that Stockwell Day remains set on scuppering the WTO negotiations if Canada's ridiculous supply management system is put under threat. Effects of supply management in Canada?
Canada is a dairy industry production backwater. Over the last 10 years, the value of Canadian exports of dairy products has dropped by 30% to $255-million. Last year, Canada had a dairy product trade deficit of $422-million.

Supply management keeps Canada out of the world market for dairy products, although some plants do export to the United States and elsewhere under a bizarre program that in fact does nothing but protect consumers from low-cost made-in-Canada cheese and ice cream. It’s called the Imports for Re-Export Program (IREP).

Two IREP examples: There’s a Baskin-Robbins ice cream plant in Peterborough, Ont., that imports cheap American milk and cream at U.S. prices, turns the cheap milk into ice cream, and then exports the cheaper ice cream to the United States. But that cheaper ice cream cannot be sold in Canada. For Canadians, Baskin-Robbins has a separate production run that uses overpriced, supply-managed milk and it then sells overpriced Canadian ice cream. No wonder Canadian ice cream sales are falling.

At a Parmalat cheese plant near Belleville, Ont., American milk is used to make Black Diamond cheese for export to the United States. But the Black Diamond cheese made for Canadian consumers must use more expensive Canadian milk.

Even with the IREP import-export scheme, Canada’s cheese and dairy product manufacturing sector is going nowhere. A whole sector of the economy is stalled, unable to grow and expand nationally or internationally.

For most things, if you want to get a ballpark comparison from NZ to Canada, New Zealand is about order of magnitude smaller. Not on dairy though. 2007 dairy exports for New Zealand: $6.3 billion (about $4.5 billion Cdn). On that one, we're more than an order of magnitude bigger than Canada, or two orders of magnitude bigger than you'd expect given everything else about the two countries.

The Canadian ice cream manufacturing stories remind me of the stories of the bad old days in New Zealand, when a Kiwi entrepreneur realized he could make a lot of money by having a Japanese company disassemble the televisions coming off the end of the line, ship them to New Zealand, reassemble them here, and undercut the price of domestically produced TVs despite charging multiples of the world price: importing television parts was allowed, but not televisions. Writes Alan Gibbs in 1990:
Naturally, I and other manufacturers didn't rush out and tell you that. No fear.

We told you how indispensable we were to the New Zealand economy. In addition to enlisting the Manufacturers' Federation in our service, one of my businesses had a whole floor of people in a building on The Terrace who did nothing but tell politicians, bureaucrats and anyone else who would listen how valuable we were.

I am afraid, however, that the truth is that most of those businesses relied on heavy protection, they were a disaster for the economy, and ultimately when we had to shut them down, they were a disaster for us also.

A typical example was the television assembly industry.

We would go to Japan and explain to wide-eyed Japanese that our government wanted us to assemble their TV sets in New Zealand.

They could hardly believe their ears.

They said no one assembles Japanese TV sets. "Do you have cheaper labour?" they asked. "Make your own tubes? Transistors? Anything?"

"No," we said, "we just have to make them in New Zealand, and because there are only a few of us permitted to do this, we make good money doing it."

After much time and explanation and shaking of heads, the Japanese finally agreed to sell us the bits to assemble their sets in New Zealand.

However, they explained this was very costly.

They were making tens of thousands of sets a day and we only wanted parts for a few thousand each year.

At great cost they contracted outside people to come in, sort out all the pieces we needed and put them in boxes.

They got engineers to write out all the instructions in English for reassembly, and shipped them on their way.

Naturally, someone had to pay for this, and on average they charged us, as a special favour, 110 percent of the price of the finished goods - all boxed ready to go to the retailer - for the parts.

We then opened a factory, imported much machinery, paid the highest wages in the neighbourhood, employed the most intelligent engineers to decipher the instructions, used a great deal of electricity, and finally produced a TV set with negative New Zealand content at twice the imported price.

Thanks to Roger Douglas and David Caygill, that nonsense has gone in the TV industry and many others.

As a result, TV sets and many other goods have halved in price.

I think the saddest party in this story is not really the consumer who got ripped off but the people in that industry who worked their guts out but, due to no fault of their own, made no contribution to the society in which they worked in exchange for the goods and services they consumed.

They may as well have been digging holes and filling them in.

They were, in fact, on welfare and the welfare cost was much higher to society than the dole.
Gibbs there was in a debate on tariffs sponsored by Federated Farmers of New Zealand. The free traders won in New Zealand. Will Canadian dairy farmers ever stop being welfare bludgers? It's hard to imagine their ever even sponsoring an open debate on the topic.

Friday 20 November 2009

Afternoon alcohol roundup

Things to ponder before heading to the staff club, where Epic Pale Ale is now on tap...

  • Drinking alcohol every day cuts the risk of heart disease in men by more than a third, a major study suggests. Nice result, seems to control for the "sick abstainers" problem in comparing moderate drinkers with non-drinkers.
    For those drinking little - less than a shot of vodka a day for instance - the risk was reduced by 35%. And for those who drank anything from three shots to more than 11 shots each day, the risk worked out an average of 50% less.
    The same benefits were not seen in women, who suffer fewer heart problems than men to start with. Researchers speculated this difference could be down to the fact that women process alcohol differently, and that female hormones protect against the disease in younger age groups.
    The type of alcohol drunk did not seem to make a difference, but protection was greater for those drinking moderate to high amounts of varied drinks.
  • The National Institute on Alcohol Abuse and Alcoholism has revised its thinking on alcoholism:
    70% of those [with an alcohol disorder] quit drinking or cut back to safe consumption patterns without treatment after four years or less. Only 1% of those surveyed fit the stereotypical image of someone with severe, recurring alcohol addiction who has hit the skids."
    Entirely consistent with the research showing that everyone, especially youths, overestimates the risks of becoming an alcoholic.

  • On the downside, the FDA threatens to ban cocktails mixing alcohol with energy drinks. So the kiddies might have to resort to buying separately their Red Bull and vodka and mixing it themselves rather than buying it pre-mixed.

Hanson on Slavery

Robin Hanson lists three cases in which he could support slavery:
  • Tyler Cowen tells me very poor parents in Haiti today sometimes sell their kids into slavery, expecting such kids to at least be fed. Its sad some people are that poor, but given that they are, this seems a good option to have.
  • To make punishing criminals cheaper, instead of prison I could support auctioning off the right to use criminals as slaves for so many years.
  • I’d accept private law contracts, if entered into with sufficient solemnity, specifying slavery as a penalty under particular circumstances.
I'd demur on the second: I worry about the incentives facing the government to create more criminals when they have a pecuniary interest in doing so. David Friedman makes the same point in Law's Order:
All of these examples [Friedman's from the chapter, not Hanson's] demonstrate a common problem - the effect of efficient punishment on the incentives of enforcers, public (civil forfeiture and BATF entrapment] or private. The same institutions that, seen from the perspective of a philosopher-king model of law enforcement, produce an unambiguous improvement by lowering the cost of enforcing the criminal law have the potential, seen from a perspective of rational self-interest, to set off a costly rent-seeking struggle, a war of each against all, with each side trying to use legal institutions to expropriate others and avoid being expropriated.

The dangers of opera

So, is it that folks who prefer death to dishonour are more likely to attend opera in the first place, that opera encourages folks to think suicide a reasonable option in case of dishonour, or some kind of augmentative thing where the former kind of folks have their initial preferences built-upon by opera?

Clearly the healthists need to keep a close eye on opera. Caplan's Amore Infernale ought to be banned immediately, before it can ever be staged. We could commission a study on the social costs of opera, declaring some level of opera consumption irrational by definition and then measuring the proportion of opera watched by such harmful opera fans. There could be mandatory counselling sessions for folks attending the whole Ring Cycle.

From Death Studies, 2002:
The influence of music-based subcultures on suicidality has been the subject of much debate but little scholarly research. While previous work has documented that suicide is a remarkably frequent cause of death in opera, it has not explored the related consequences on opera's audience. In particular, the possible influence of the opera subculture on suicide acceptability has been largely unexplored. Suicide in the case of life without honor, the "Madame Butterfly Effect," is a theme in opera. Persons who are drawn into and/or influenced by the opera subculture of honor are hypothesized to be more accepting of suicide in the case of dishonor to one's family. Data are from the national general social surveys (N = 845). A multivariate logistic regression analysis finds that opera fans are 2.37 times more accepting of suicide because of dishonor than nonfans. Only two variables, religiosity and education, are more closely related to suicide acceptability than opera fanship. These are the first empirical results on the subject of opera and suicide acceptability.

Thursday 19 November 2009

What Nolan said

On Labour's new policy to abandon central bank independence should they be elected before they reconsider this new bit of nonsense, I'll just second what Matt Nolan's been saying over at TVHE.

As I have a hard time imagining that Labour will be electable anytime in the next two terms, and as I have a (slightly less) hard time imagining that this policy will stick, I'm less worried than Matt is. It would kinda be like my announcing on the blog that, were I to win the multi-billion-dollar lotto, I'd mount lasers on keas and attack the Beehive with my furious parrot Air Force, possibly leading them on a restored Spitfire or somesuch. Yeah, maybe I could fund that if I were to win the lotto. But odds are stronger that saner heads (Susan) would persuade me otherwise long before that lotto win comes round.

And it's not like the RBNZ was particularly independent under the last Labour government anyway. The medium term kept seeming longer and longer....

For Cresswell's benefit: if you're going to have a reserve bank, you do much better with inflation targeting than most other goals. I still am fond of free banking models though: true bank independence means depoliticizing the money supply.
Update: By way of clarification: The RBNZ, under Brash's watch, was about as well run as a reserve bank ever can be. Inflation targeting has its problems, but the alternatives under any realistic central banking system tend to be worse. We can do a lot worse than what we've got. I'd still push the button for a free banking system. But given that we've got a central bank, inflation targeting can be a pretty good way to go.

A few things Alcohol Action NZ won't tell you about alcohol

Doug Sellman's article from last week's Press, noted last week, is still bugging me. A few things Alcohol Action NZ won't tell you about alcohol:
  • Sellman lists alcohol alongside scary things like asbestos as a known carcinogen (in the Press article). But here are some other known carcinogens that could have been listed alongside alcohol instead and would have been perhaps a bit less scary: ciclosporin (used to prevent organ rejection after transplant), estrogen-based oral contraceptives and menopausal therapy, risky sex (Hepatitis B & C, HPV, HIV), the sun, mineral oils, salted fish, wood dust, painting, boot and shoe manufacture and repair.

  • He cites Corrao et al as saying "Alcohol cardio-protection has been talked up". You might think this means there's no protective effect. But that's not what Corrao says. Corrao shows rather that there are strong protective effects from alcohol consumption; it's just that they're slightly smaller in a subset of higher quality studies than in the full set of studies. So, where a full sample of studies finds the risk-minimizing consumption of alcohol at 25 grams per day (2.5 standard drinks), the protection washing out at 90 grams per day (9 standard drinks) and harmful coronary effects kicking in at 113 grams per day, the "selected studies" find protection is maximized at 20 grams per day, protective effects lost at 72 grams per day, and harmful coronary effects kicking in at 89 grams per day. What a shocking "talking up" of cardio-protection! Harmful effects kick in at 9 drinks per day rather than at 11! You should aim to drink 2 rather than 2.5 standard drinks per day if you want to minimize your risk of heart disease! Shocking! It looks like you have to trade off increased cancer risk against reduced risk of heart disease over most folks' relevant ranges of alcohol consumption.

  • Notes high proportions of arrests and crimes that are "related" to alcohol. But what I've never seen numbers on is what proportion those "alcohol related" crimes would have taken place in the absence of alcohol. You could just as easily say that 100% of crimes are "Oxygen related", 50% are mullet-related and 25% involve the wearing of t-shirts that say "No Fear". Ok, without the oxygen, none of those oxygen-related crimes would have taken place. But would a policy getting rid of No Fear t-shirts really prevent crime? Mightn't criminals switch to even riskier shirts? This is actually a reasonably serious point. If you ramp up the price of alcohol, how many criminals switch to P before going out to do nasty stuff? One of the country's more prominent criminologists suggests in informal chats that he reckons about 60% of these "alcohol-related" crimes would have taken place anyway even if alcohol disappeared; the actual crime-costs of alcohol are then about 60% lower than typically reported as alcohol in those cases is more like wearing a No Fear t-shirt: just something criminals like to do while offending but wouldn't stop them from offending in its absence.

  • And, Alcohol Action NZ leaves out, of course, all the academic literature on things like drinkers earning more money and the strong anecdotal evidence (collected by my casual observation) that drinkers are simply better people, on average, than teetotalers and healthists.

Moral panics of days past: D&D edition

One of the serious disadvantages of growing up in a very rural area was a paucity of D&D players. So, somewhere around age 10 or 11, when I went up to Winnipeg to spend a week at my second cousin's place and attend the University of Manitoba's MiniUniversity for kids, I brought my Original Dungeons and Dragons set with me (the old Red Box). Finally! Some potential players! My cousin's father freaked out when he saw it and banned it from the house.

Cory Doctorow points to a potential reason why: a documentary by the Canadian Broadcasting Corporation that meets every expectation I have of CBC quality. Apparently, Doctorow is one of the kids pictured playing if you watch the second follow-up part! Note that Peter Mannsbridge once had hair.

I wonder whether it's possible to quantify just how much stupider the CBC has made Canada over time.

Wednesday 18 November 2009

Returns to Office

From the most recent APSR; they've given full ungated access to this one!

Andrew Eggers and Jens Hainmueller: MPs for Sale? Returns to Office in Postwar British Politics
Many recent studies show that firms profit from connections to influential politicians, but less is known about how much politicians financially benefit from wielding political influence. We estimate the returns to serving in Parliament, using original data on the estates of recently deceased British politicians. Applying both matching and a regression discontinuity design to compare Members of Parliament (MPs) with parliamentary candidates who narrowly lost, we find that serving in office almost doubled the wealth of Conservative MPs, but had no discernible financial benefits for Labour MPs. Conservative MPs profited from office largely through lucrative outside employment they acquired as a result of their political positions; we show that gaining a seat in Parliament more than tripled the probability that a Conservative politician would later serve as a director of a publicly traded firm—–enough to account for a sizable portion of the wealth differential.We suggest that Labour MPs did not profit from office largely because trade unions collectively exerted sufficient control over the party and its MPs to prevent members from selling their services to other clients.[my emphasis]
Very nice paper. More specifically on why the effect is seen in Conservative rather than Labour MPs:
We argue that the larger benefit enjoyed by Conservative MPs was due in part to differences in the way the parties were financed and organized. In the period in which these MPs were elected, the Labour Party was funded and dominated by a handful of trade unions that used their influence to secure the exclusive loyalty of a large proportion of Labour MPs. The Conservative Party, in contrast, gathered its financial support from diffuse contributors and had no dominant constituency, leaving MPs relatively free to forge relationships with numerous outside firms that competed for their legislative services. MPs from both parties thus explicitly provided services to outside interests, but the trade unions shaped Labour Party institutions such that they could acquire those services without bidding for the services of individual MPs.
Of course, this means in equilibrium that the Conservatives are able to attract much higher quality candidates than is Labour as their effective pay rate is higher.


We're not hiring this year, but if we were, and if I were on the committee, and if I saw a vita that were the Econ equivalent of the one below, I would move heaven and earth to get the applicant an interview at the AEAs.I'd put high odds that one or two folks round the traps would see this kind of vita as being a reason to rule a candidate out. It would be highly interesting if some job market candidate next year were to do a randomized trial on whether this kind of vita or the generic sort landed more AEA interviews. Highly interesting 'cause the costs don't fall on me and I'd want to know the results. If there weren't so many veto players in hiring processes, the strategy would induce a nice separating equilibrium.

As a side note, I can imagine how I'd come up with scores on strength, dex, con, intelligence: get measures of strength, dexterity, stamina and IQ, get some population averages, then map them to the 3d6 distribution. I have no clue how wisdom could be measured in the real world; charisma would similarly be tough.

I don't buy the guy' scores if he's using a standard early edition set of D&D rules. 3d6 gives an average of 10.5 and sd is 3. So he's claiming to be >4sd above average - IQ 162.5 - in a part of the distribution you can't get by standard rolls. Of course, I'd expect any PhD-bearing candidate in Econ to score at least a 19 INT; I'd also expect to see some GRE scores to back that up. My GRE scores gave me a D&D INT score that rounds to 21, if 1998 GREs are still a reliable predictor. The rest of my scores would be much much worse.

Could be fun over Christmas...the D&D Vita. Publications and such as Inventory...

Devious Health Canada

It looks like somebody from the Prime Minister's Office in Canada is going to have to have a quiet chat with the healthists over at Health Canada. Terrence Corcoran reports that Health Canada gave the Prime Minister a nice little candy-coated landmine.

In last year's election campaign, Harper promised to crack down on flavoured tobacco products which he characterized as being marketed to children. The campaign promise was to knock out bubble gum flavoured tobacco. The legislation crafted by Health Canada wound up banning the majority of imported cigarettes, including Marlborough and Camels, most of which use some flavouring agents which are on the list of 5,000 now banned ingredients.
While this may look like another case of unintended consequences run amok, it more likely is part of deliberate scheming by Health Canada officials and others who are consciously using fruit-flavoured smokes to create a global tobacco trade bomb against the U.S. and tobacco industries in Europe, South America and Asia.

There is certainly evidence that Health Canada officials misled Parliament on the trade implications of the flavoured tobacco ban.

On Sept. 30, Diane Labelle, Health Canada’s general counsel, legal services unit, appeared before the Senate social affairs committee to review the bill. Several committee members — including Senators Michel Rivard and Hugh Segal — became concerned about the implications of the flavoured tobacco law on Canada’s World Trade Organization commitments. Committee chair Art Eggleton asked: “Is this [bill] compliant with various trade agreements and international obligations that we have on trade?”

Senator Rivard repeated the question: “The WTO assured you that we were in compliance?”

Ms. Labelle: “Yes.”

But when Canadian officials appeared earlier this month before the WTO’s Technical Barriers to Trade Committee in Geneva, they came prepared with briefing notes on what to say when WTO members raised questions “On Canada not notifying Bill C-32 at WTO.” The briefing notes, obtained by Financial Post, suggest a weaselly Canadian response: “We thank you for raising this concern and are talking note of the systemic issues that have been raised.”

In other words, it is not true, as the Senate committee was told, that the WTO had been advised in advance of Bill C-32 and had determined the new child tobacco measure to be compliant with trade law.

Were the Tories snookered by Health Canada officials? It looks like it. It also looks like the Prime Minister’s original campaign gambit, to protect children from flavoured tobacco, was a ruse. Whether Mr. Harper knew that he was getting into is another matter. The zeal with which his staff pushed the issue suggests they were eager to score political points but less keen on understanding what Health Canada was up to.
New Zealand ought to watch out for the sure-to-come ASH/SFC campaign against flavoured tobacco, backed by folks from Otago's Wellington School of Medicine Department of Public Health. And we ought not let the Ministry of Health be the ones providing advice as to the consistency of any such recommendations with our WTO obligations; they have a habit of commissioning shonky analysis.

Recall also that the WHO offers assistance for countries wanting to get around tricky WTO obligations....

Tuesday 17 November 2009


Three and a half years later, the Government of Canada and the Province of Ontario continue to abdicate their responsibility to protect property rights in Caledonia. It's one thing to declare yourself as having a monopoly on the use of force and to punish anyone who disagrees; it's quite another to both ban folks from purchasing their own protection against criminal gangs and simultaneously refuse to provide any kind of protection at all against that gang, for more than three years.
Native protesters claiming ownership over land being developed into a subdivision, known as the Douglas Creek Estates, occupied the site in February, 2006. The following April, OPP officers raided the site and ejected the protestors only to be driven back when several hundred natives from the nearby Six Nations reserve arrived.

The natives then erected barricades, which police have since respected, with the couple's home cut off from the rest of the community.

Life in their isolation has meant having to present a "passport" to natives when leaving or returning to their house, having their car searched by masked men at barricades, being refused access to their property, having no mail or garbage removal and enduring noise, fires, bright lights and their house being ransacked and defaced with vulgar and racist graffiti.

They have been threatened and intimidated and, all the while, police refused to intervene, the couple alleges.

Further acts of lawlessness will be highlighted in the case, such as newspaper and television reporters being beaten and equipment stolen or broken, a van being pushed off a bridge onto a roadway, and court orders and injunctions being ignored.

"This has created a lawless oasis in which the plaintiffs exist without police protection and in constant fear of harm," said Mr. Evans.
From the National Post. See also Christine Blatchford's piece at the Globe and Mail. She notes that when Mr. Brown, the homeowner, got uppity about having to present a passport at the illegal blockade on his street, he's the one who was thrown in jail for the night.


Two nice NBER papers out today. First, Giovanni Peri finds that immigration in the US doesn't crowd out natives' employment; rather, increases in total factor productivity from increased immigration work to raise income per worker.

Next, David Card, Christian Dustmann and Ian Preston find that folks in Europe oppose immigration less because of worries about pecuniary effects on wages and more because of what he calls "compositional amenities" - people, especially the low-educated, value the characteristics of their coworkers, schools, and neighbours, and just dislike foreigners on those margins. So more of the dislike of immigration loads onto questions like "Do you agree or disagree that it is better for a country if everyone shares the same customs and traditions?" than ones like "Do you agree or disagree that immigrants harm the economic prospects of the poor?"
Our empirical results confirm that both concerns are important, though compositional concerns are significantly more important in understanding the variation in attitudes toward immigration policy. For example, 70% of the gap between the most- and least educated respondents in the ESS on the issue of whether immigration should be increased or reduced is attributable to differences in the intensity of concern over compositional amenities, while differences in economic concerns account for 10-15%. Differences in compositional concerns also explain most of the differences in attitudes between older and younger respondents. The age gap is a particular puzzle for models of immigration preferences that ignore compositional amenities, because many older people are retired, and face a much lower threat of labor market competition than young people.

Morning roundup

Beyond Security Theatre

Schneier on "Beyond Security Theater"
Refuse to Be Terrorized

By not overreacting, by not responding to movie-plot threats, and by not becoming defensive, we demonstrate the resilience of our society, in our laws, our culture, our freedoms. There is a difference between indomitability and arrogant "bring 'em on" rhetoric. There's a difference between accepting the inherent risk that comes with a free and open society, and hyping the threats.

We should treat terrorists like common criminals and give them all the benefits of true and open justice -- not merely because it demonstrates our indomitability, but because it makes us all safer. Once a society starts circumventing its own laws, the risks to its future stability are much greater than terrorism.

Supporting real security even though it's invisible, and demonstrating indomitability even though fear is more politically expedient, requires real courage. Demagoguery is easy. What we need is leaders willing both to do what's right and to speak the truth.
Today, we can project indomitability by rolling back all the fear-based post-9/11 security measures. Our leaders have lost credibility; getting it back requires a decrease in hyperbole. Ditch the invasive mass surveillance systems and new police state-like powers. Return airport security to pre-9/11 levels. Remove swagger from our foreign policies. Show the world that our legal system is up to the challenge of terrorism. Stop telling people to report all suspicious activity; it does little but make us suspicious of each other, increasing both fear and helplessness.

Monday 16 November 2009

Nonsense upon stilts

NORML asked for a short piece on the New Zealand Drug Harm Index. The prepub is available below; the full version is in the Spring 2009 issue of NORML News.

Nonsense Upon Stilts
What do folks think of Scribd embedded documents like this? Better than pasting the text? It does save me the hassle of FTPing documents to the University.

Caught in the stone age

Wired's new September piece on Netflix business strategy is leaving me, well, somewhat shellshocked. Of course I couldn't have expected that the US would stand still since we left there. But wow.

A lot of US debates on traffic shaping suddenly make sense.

Things I didn't know:
  • Tons of media devices, from XBox to TVs, have a Netflix card now built in that let the devices stream movies

  • Netflix uses data from customer DVD rental queues to prioritize movies to purchase for online streaming. It's basically Moneyball applied to movies: Netflix goes for the ones that did poorly in theatre, so streaming rights will be cheaper, but where Netflix expects high customer demand.

  • $9 per month gets you unlimited streaming of 17,000 movies. If you don't already have a Netflix enabled device, their set-top player costs $80.
I'd figured that relatively few folks would be downloading movies: the hassles of downloading and then getting them onto the TV seemed sufficiently large that all the traffic shaping stuff seemed absurd on the face of it. But if it's built into your TV!

Closest NZ equivalent: the newly released TiVO box. You can either pay $200 upfront and then $30 per month on a 24-month contract, or pay $920 upfront. That gets you a TiVO box that'll let you stream old movies at $5 a pop or new(ish) releases for $7 each. If you're a Telecom subscriber, it at least doesn't count against your 20GB monthly data allowance ($60/mth) or your 40GB limit ($80/mth). All of that's in $NZ, so multiply by $0.74 to get the current $US equivalent.

Tyler Cowen warned me that New Zealand would teach me the importance of fixed costs. Fixed cost here would have to be the streaming rights for New Zealand; otherwise, we could just jump onto the Netflix service, albeit at a much higher price to account for capacity issues on the pipes series of leaky tubes that service NZ from overseas.

I'm going to go weep off in the corner for a while.


Is it possible to wow the public without tossing your hair around? Yes and no. Fred Astaire never let you see him sweat, but he sweetened his deceptively casual virtuosity with just enough charm to make it irresistible. Tatum, by contrast, was more like Jascha Heifetz, a titan of the violin who brought off his stupendous feats of technical wizardry without ever cracking a smile or looking anything other than blasé—and though Heifetz was immensely famous, he was always more respected than loved.

The great violin teacher Carl Flesch got to the bottom of this paradox when he observed that "people would forgive Heifetz his technical infallibility only if he made them forget it by putting his entire personality behind it." The operative word here is forgive. To the small-d democrat, virtuosity is an insult, a tactless reminder of human inequality that can only be forgiven when the artist makes clear through visible effort how high a price he has paid for his great gifts. Art Tatum, like Heifetz, was too proud to make that concession. He did all his sweating offstage. That's why his exquisitely refined pianism will never be truly popular: No matter how much beer he drank, you could never mistake him for one of the guys.
Terry Teachout on Arthur Tatum.

Dutton says that we admire displays of skill and virtuosity:
  1. Human interest in high-skill activities -- particularly those with a public face, such as athletic or artistic performances -- derives at least in part from their ancient status as Darwinian fitness signals.

  2. High-skill performances are normally subjects of freely given admiration; in fact, achieving the pleasure of admiration is a reason audiences will pay to see high-skill exhibitions.

  3. As signals, high-skill performances are subject to keen critical assessment and evaluation -- the fastest or highest in athletics, the clearest, most eloquent, deepest, or most moving in the case of the arts.
Teachout gives Diana Moon-Glompers or an Ayn Rand villain as his "small-d democrat". The small-d may be committed to no genetic basis for differences, but I'm not sure that that commits him to resenting all displays of skill; they'd just be more likely to put it up to training-only.

I did take the recommendation to buy some Tatum though ... awesome....

Sunday 15 November 2009

The new tobacco

Further evidence that the anti-alcohol folks want to bring alcohol down the same track of "de-norm, tax, stigmatize, ban" as tobacco comes from a piece in Thursday's Press by Doug Sellman:
The same landscape changes that have occurred with tobacco can now begin to occur with heavy drinking. Yes, we can have our alcohol and drink it too as part of the "good life". But this will happen only if the alcohol industry is brought under better control and a much more controlled drinking environment than we have at present....
Careful, that slope is slippery.

Sellman points to his advocacy website, Digging through the website, we find that they're funded by the John Dobson Memorial Foundation, a registered charity in New Zealand. I wonder whether I could have a pro-alcohol lobby group be registered as a charity for taxation purposes in New Zealand. Sellman is clearly soliciting funds for the charity to help in his anti-alcohol lobbying activities.
As you'll see in the information sheet the campaign is being administered through the John Dobson Memorial Foundation, a charitable trust, registered under the Charities Act 2005. You can either send a cheque made out to Liquor Control to PO Box 433, Christchurch 8140, or alternatively make a donation through internet banking to Liquor Control, 38-9009-0359942-00.
Dig deep comrade!
So it looks like donors to his organization get a tax deduction.

In the US, political advocacy groups are given a rather different tax treatment than other kinds of charities, and charities have to be very careful not to stray too far into lobbying work lest they fall into a different part of the tax code. Guess things are different here.


Further evidence that corn-based ethanol production in the US is economically irrational:
Gasohol has received considerable governmentalfinancial support because it is alleged to have important ecological and economic advantages. It is, for instance, supposed to reduce our extraction of nonrenewable energy, to have a cost advantage over gasoline, and to reduce pollution. This essay presents evidence that the amount of nonrenewable energy used in producing the corn ethanol is less than the amount of energy it provides as a fuel, that its price competitiveness with gasoline is doubtful, and that its environmental benefits are far from proven. In brief, current U.S. policies encouraging ethanol production to produce gasohol do not seem economically rational.
In Table 2, he shows that the energy in a gallon of ethanol is about 70% of the gross energy inputs required to produce the gallon of ethanol. Of course, if the gross energy inputs are in a less usable state than the resulting product, a less than 100% ratio isn't necessarily a bad thing. But in this case, it's a bad thing.

Pryor concludes:
Although current U.S. policies subsidies of corn-based gasohol are economically irrational, changing them raises some obvious difficulties, given the present system of governmental supports. Although it is simple to eliminate subsidies for building new ethanol plants, they would probably have to be phased out slowly to be politically palatable so that current producers who made their investment decisions on the basis of the current subsidy system have time to adapt. The current system of subsidies for ethanol should also be restructured on a sliding scale so that if any subsidies are given, they would fall as corn prices rose. Striking a fair balancing between the interests of taxpayers of agricultural and ethanol subsidies and of farm producers and ethanol producers must be left for others to discuss. The most difficult task is, of course, gaining political support for any policy shift, and, in the near future, the probability of seeing a reduction in governmental support for ethanol production seems dim. The only ray of optimism is that the current impasse will focus more attention on ethanol production based on other raw materials, which, it is hoped, might prove more economically sound.

Saturday 14 November 2009

Markets in nothing: where's my kitfo?

Gallop reports New Zealand is third-ranked in the world potential net migration indices. Global survey nets for each country how many folks say they'd like to leave, how many folks would like to move there, and takes the net as a fraction of overall population. We could see a 170% increase in population, by these figures. And we have plenty of room for a doubling of population so long as they don't all want to be in Auckland.

Sixth from the bottom of the list: Ethiopia, where half the population wants to leave.

And I cannot find a single Ethiopean restaurant anywhere in New Zealand. Closest one: Melbourne.

Friday 13 November 2009

Diet to avoid the draft?

The Army Times reports many American youths wouldn't be eligible for service in the Army due to obesity.

Does this mean that a dangerously underweight individual could avoid the risk of being drafted simply by following Dr. Nick's easy diet advice?
Dr. Nick: Hi everybody!
Homer+Bart: Hi Doctor Nick!
Nick: Now there are many options available for dangerously underweighted individuals like yourself. I recommend a slow steady gorging process combined with assal horizontology.
Homer: [pensive] Of course.
Nick: [points to a chart] You'll want to focus on the neglected food groups such as the whipped group, the congealed group and the chocotastic!
Homer: What can I do to speed the whole thing up, Doctor?
Nick: creative. Instead of making sandwiches with bread, use poptarts. Instead of chewing gum, chew bacon, heh...
Bart: You could brush your teeth with milkshakes!
Dr. Nick: Hey, did you go to Hollywood Upstairs Medical College too? And remember, if you're not sure about something, rub it against a piece of paper. If the paper turns clear, it's your window to weight gain. Bye bye, everybody!

Thursday 12 November 2009

Interest on student loans

David Farrar reports that the Vice Chancellors Commission has called for interest to be charged on student loans.

Of course, it is eminently sensible that students should have to pay interest on their loans.

Farrar goes on to note the silly fees maxima policy: we're constrained against raising tuition fees by more than (I think) 5% in any year. I agree that the policy should be removed and tuition should be allowed to vary in line with the market.

But I can understand why the government would want a fee maxima given that they won't get rid of zero interest loans. If fees go up, students take out larger loans at zero percent and the government's ledger looks worse. Prior to zero-interest loans, the policy made no sense at all. But I can understand the second-best case for it now from the government's perspective.

Domestic fee maxima combined with capped enrollment numbers (we get no additional per-student funding beyond X students) means that our College loses money on the marginal student.

Most likely result, I'd reckon, is that we start by imposing progression standards to knock out some low performers. If the marginal student remains a loss-making student, we then move to limitation of domestic entry. We'd also push harder for international students whose fees are not capped and for grad students who attract PBRF funding, though in a zero-sum game with all other universities as the PBRF budget is fixed. I'd expect that every school in the country is facing the same calculus. We might also see some shake-ups in degree structures to make them more palatable for international students. Interesting times. All of this is, of course, only my idle speculation, standard disclaimer, etc.

Farrar reckons that the government could increase the fee cap without making the courageous decision to charge interest on its loans. I'd bet that Treasury has costed this out for the government, and I'd bet that the Government is a bit worried about the effect this would have on the amount it doles out in student loans.

Insider trading and currency markets

I'd never before heard this hypothesis (I'm not a finance guy), but it makes a lot of sense. Banks have tons of information on their clients' trades; they can aggregate this up to get a sense of where things are heading.
This paper provides evidence that hedge funds are a critical source of private fundamental information in currency markets. We analyze the most disaggregated database of currency transactions to date, with ten different categories of market participants including six categories of end users. Our analysis of the information content of individual trades indicates that only one category of end user has information, specifically hedge funds. Orders placed by institutional investors, broker-dealers, central banks and government agencies, large corporations, and middle-market corporations provide little information about upcoming returns. Orders of banks in every size category carry information, consistent with now-standard theory that banks gather information from observing customer trades. Theory does not indicate whether banks should be better informed than their customers. Our results suggest that banks are better informed than their individual customers, possibly because they aggregate information from many customers.
Osler and Vandrovych, via Wayne Marr's Twitter feed.

From the paper's conclusion:
We find that stop-loss orders from all four bank groups have a statistically significant price impact that is statistically indistinguishable from the impact of leveraged investors’ stoploss orders at horizons below 12 hours. Thus our results are consistent with the hypothesis that members of the dealing community learn exchange-rate relevant information from observing customers order flow (Evans and Lyons 2002). At longer horizons, however, dealers trades appear to carry information while the leveraged-investor trades do not. This suggests that dealers, by observing the trades of many customers, are ultimately better informed than their customers taken individually.
Update: Don Boudreaux has useful thoughts on insider trading.

Markets in everything: so many monkeys

Monkey-Picked Tea sounds more palatable than monkey-chewed coffee (and of course far more palatable than that other kind of monkey coffee).

Monkey business: A middle school in North Carolina lets the students purchase points for their tests.

Wednesday 11 November 2009

Evening roundup

  • Brad Taylor provides data on death rates associated with use of different drugs and the frequency that such deaths are reported. Big surprise: methadone has more deaths per user than does heroin. Most overreported relative to deaths? Cannabis: 0.07 deaths per 10,000 users; 92 press reports. Most underreported? Methadone: 94.5 deaths per 10,000 users; 10 press reports.

  • Ben Barton says there's no correlation, or perhaps a slight positive correlation, between research quality and teaching quality, at least in law schools.

  • Too many students are going to college.
    Bryan Caplan: There are two ways to read this question. One is: "Who gets a good financial and/or personal return from college?" My answer: people in the top 25 percent of academic ability who also have the work ethic to actually finish college. The other way to read this is: "For whom is college attendance socially beneficial?" My answer: no more than 5 percent of high-school graduates, because college is mostly what economists call a "signaling game." Most college courses teach few useful job skills; their main function is to signal to employers that students are smart, hard-working, and conformist. The upshot: Going to college is a lot like standing up at a concert to see better. Selfishly speaking, it works, but from a social point of view, we shouldn't encourage it.

There goes Friday

ICT tells us that staff email and file servers are all down on Friday for a major firmware upgrade: 7 am through 11 pm. So my usual lags in getting to emails will be lengthened somewhat.

And a win for individual responsibility

Luke Malpass points me to a very nice ruling out of Australia. The High Court there ruled that, if you get drunk and then crash your vehicle, it's your fault and not the bar's. Said the Court:
The Proprietor and the Licensee must succeed for each of three independent reasons. First, even if there was a duty of care, and even if it was breached, it has not been shown that the breach caused the death. Secondly, even if there was a duty of care, it was not breached. Thirdly, there was no duty of care.
In other words, they can't show it was the drinking that caused the crash, they can't show that the bar failed in its duty of care if it had one (the customer refused multiple attempts by the bartender to dissuade him from driving), and the bar didn't have a duty of care to shield him from the consequences of his drinking anyway:
outside exceptional cases, which this case is not, persons in the position of the Proprietor and the Licensee, while bound by important statutory duties in relation to the service of alcohol and the conduct of the premises in which it is served, owe no general duty of care at common law to customers which requires them to monitor and minimise the service of alcohol or to protect customers from the consequences of the alcohol they choose to consume. That conclusion is correct because the opposite view would create enormous difficulties, apart from those discussed above[57], relating to customer autonomy and coherence with legal norms.
Very sensible. One of the cited difficulties:
Then there are issues connected with individual autonomy and responsibility. Virtually all adults know that progressive drinking increasingly impairs one's judgment and capacity to care for oneself[59]. Assessment of impairment is much easier for the drinker than it is for the outsider[60]. It is not against the law to drink, and to some degree it is thought in most societies – certainly our society – that on balance and subject to legislative controls public drinking, at least for those with a taste for that pastime, is beneficial. As Holmes J, writing amidst the evils of the Prohibition era, said: "Wine has been thought good for man from the time of the Apostles until recent years."[61] Almost all societies reveal a propensity to resort to alcohol or some other disinhibiting substance for purposes of relaxation. Now some drinkers are afflicted by the disease of alcoholism, some have other health problems which alcohol caused or exacerbates, and some behave badly after drinking. But it is a matter of personal decision and individual responsibility how each particular drinker deals with these difficulties and dangers. Balancing the pleasures of drinking with the importance of minimising the harm that may flow to a drinker is also a matter of personal decision and individual responsibility. It is a matter more fairly to be placed on the drinker than the seller of drink. To encourage interference by publicans, nervous about liability, with the individual freedom of drinkers to choose how much to drink and at what pace is to take a very large step. It is a step for legislatures, not courts, and it is a step which legislatures have taken only after mature consideration. It would be paradoxical if members of the public who "may deliberately wish to become intoxicated and to lose the inhibitions and self-awareness of sobriety"[62], and for that reason are attracted to attend hotels and restaurants, were to have that desire thwarted because the tort of negligence encouraged an interfering paternalism on the part of those who run the hotels and restaurants. [emphasis mine]
Of course, the usual healthists are outraged.
Public health experts said the decision was "immensely worrying" and could undermine responsible service of alcohol.


A letter I sent today to ACC after I received a letter informing me that I'm now considered self-employed in Manufacturing (not elsewhere classified) and that, while my earnings in such employment were, as yet, insufficient to trigger premia payments, they dearly wanted clarification on my employment details. Such clarification provided below. Enjoy!

Dear Ms. Barrott,
With reference to your letter of 5 November, referencing my new ACC Self-employment number of XXXXXXX, a few details are in error or at least need clarification.
A couple of years ago I made this mistake of writing a few short pieces for the local newspaper and accepting about $200 as total payment for it.  I then had to file an IR3 form and found the resulting hassle sufficiently large that I asked The Press to stop paying me for anything I might produce for them.  It would be because of this ridiculous short bout of "self-employment" that I've fallen into your files.
I'm a normal salary and wage earner at the University of Canterbury -- a senior lecturer in economics.  While I don't completely rule out accepting for pay short writing or consultancy contracts in future, there is absolutely no way I will ever do it again unless the earnings from doing so are sufficient to make it worth all the paperwork hassle; as I now know that I'm likely to have to fill in ACC forms as well as IR3 forms should I do extra work for pay again, I'm now less likely than previously to take on such work.
So, what "business" I had would not be well classified as "Manufacturing (not elsewhere classified)"; I wrote a few book reviews and an op-ed or two in my spare time for the Christchurch Press. 

I would dearly appreciate it if I could be exempt from being an ACC customer for any such freelance work - it is a service I do not want. It isn't just that the premia are very high relative to the risks I incur; it's also the hassle of even having to contemplate the paperwork that could be involved. And, as any such earnings are minor and supplementary to my main income, any losses of such earnings are not events against which I would wish to insure, even at actuarily fair rates.

By my rough estimate, my family already pays about $3300 in ACC premia through the earnings levy, petrol levies (we drive well in excess of the average, being recent migrants touring the country), and car registration fees. This slightly exceeds the amount we pay for our house, life, health and car insurance; our employers also pay ACC premia on our behalf which, as we are both workers in fairly safe office jobs, cost more than would an actuarily fair policy as ACC cross-subsidises risky jobs by insufficiently adjusting premia for actual employment risk. We're sufficiently burdened by our contributions to a scheme which we did not ask to join, are not allowed to leave, but for which we are compelled to pay.

Please strike me from your self-employment ledger for the time being. And please advise me as to the amount of freelance earnings that would trigger my being compelled to purchase additional unwanted services from your scheme in order that I can take due care in choosing such work, either ensuring that I earn just under that amount or sufficiently in excess of the threshold that the paperwork would be worth the hassle.


Dr. Eric Crampton

And computer viruses suddenly become more terrifying

An inspection for his defense revealed the laptop was severely infected. It was programmed to visit as many as 40 child porn sites per minute – an inhuman feat. While Fiola and his wife were out to dinner one night, someone logged on to the computer and porn flowed in for an hour and a half.

Prosecutors performed another test and confirmed the defense findings. The charge was dropped – 11 months after it was filed.

The Fiolas say they have health problems from the stress of the case. They say they've talked to dozens of lawyers but can't get one to sue the state, because of a cap on the amount they can recover.

"It ruined my life, my wife's life and my family's life," he says.

The Massachusetts attorney general's office, which charged Fiola, declined interview requests.
From Huffington, HT: Radley Balko.

Bruce Schneier notes that antivirus programs have been getting less effective over time.