Monday 31 October 2016

Food regs: Reader Mailbag edition

I've noted the problems in the food regs for Biddy's cheese. But it's come up now for early childhood centres which fear huge compliance costs for preparing lunches for the kiddies.

Today's inbox brings a helpful note from Donald Ellis, who has more than passing familiarity with local council regulatory issues. And, he's now blogging! Here's his post on food reg compliance costs and early childhood centres. The lede:
$4,000 each year for permission to serve kids food at a pre-school? So the Early ChildhoodCouncil says.

This is plausible and the inevitable consequence of the implementation of the Food Act 2014. But to understand how we got to this ludicrous situation you have to go back at least 35 years.

A bottom line:
The Food Act 1981 allowed local businesses to opt out of Health Act regulation by registering a Food Safety Plan (same as what is now compulsory). Virtually no-one took advantage of this provision for the simple reason that independent assessors charged $1,500+ to audit a business compared to the $100-$300 cost of registering with the local council. In the course of 35 years no-one could find any good reason for changing the way they already did business and making themselves poorer. Of course the way they did things was not "best practice". So rather than admit that that the idea of everyone being HACCP-compliant was not a cost-effective approach MPI and its predecessors got the government to pass legislation making it compulsory. And the councils are delighted because they go from a (technically) hands-off role to an active role with significant approval powers (more power, more money).

I remain hopeful that councils will hold the cost to small businesses of administering the new regime at the same level as they do now. To that end MPI have published an excellent template that food service businesses (cafes, restaurants, pre-schools) can use to set up their system. From what I have seen these types of businesses should be able to set up their system in a few hours. But that largely depends on the whim of their council. Any dispute under the Health Act had to be fought out in the District Court. Now the power shifts completely to the council. And what we have also seen in the cases cited by the Early Childhood Council is that, if the council chooses not to be in the approval/auditing business, then small local businesses are thrown to the commercial auditing companies at whatever price they choose to quote.

Friday 28 October 2016

Everything bad ever is the fault of neoliberalism or orthodox economics or both

I respect Mike Joy's work looking at river quality. But man he makes a hash of things when he strays from what he knows about. His oped in today's Dom Post ... it's hard to know even where to start. It is an embarrassment to the institution that employs him.

The piece's central thesis is simply wrong. He claims that orthodox economics ignores externalities. Anyone who has taken a principles-level course has encountered externalities. It is in every principles-level textbook I have ever seen. It's sometimes covered badly, but to the extent it's covered badly, it's to leave the students with the impression that any external cost justifies government action rather than focusing down on policy relevant externalities (Pareto-relevant technological externalities that affect choices at the margin rather than having inframarginal effect).

Policy can and often does screw things up. Mike goes on at length about the negative externality imposed by intensive dairying and how that's the fault of orthodox economics.
The orthodox economics of intensive dairying discounts these externalities because they are met by the public, economically and environmentally, not by farmers.
That's not the fault of orthodox economics. Bog-standard orthodox economics says to use something like the nutrient management regime in place for the Taupo catchment to address negative externalities. It doesn't say "dump all the crap in the river because somebody else's problem." That's like the classic kind of case that a Principles or Intermediate lecturer might use to illustrate an externality problem and then have the students think about potential solutions.

This is David Suzuki level illiteracy. Did Mike learn his econ from David Suzuki? Is there nobody at Massey whose principles lectures he might consider attending? There are some decent economists at Massey. Maybe he should go ask one for a Principles text.

There's a pile of other mess in the piece. He cites the Club of Rome's Limits to Growth as follows:
"Sustainable economic growth", a principal objective of orthodox economics, is an oxymoron according to a real science conjecture that growth within any closed system – including population and economic growth within Earth's closed biosphere – is ultimately unsustainable.   The Limits to Growth report published in 1972 by the Club of Rome tested this conjecture through computer simulations of a future Earth under various assumptions.   Its "business-as-usual" simulation predicts catastrophic "overshoot and collapse" of the global economy, natural environment, and human population from about 2020 onwards.   Disconcertingly this projection has accurately tracked 40 years of subsequent statistical data.   Accordingly it must be heeded as real science.  
That's interesting. I have a copy of the Second Edition of the Limits to Growth (1974). Here are some of the real science predictions they made. This is totally real science that hasn't at all been disproved.
  • Exponential population growth that would not abate but population greater than 1970 levels is unsustainable;
  • Growing gaps between rich and poor countries because of faster growth rates in rich countries;
  • "Desperate land shortages before the year 2000 if per capital land requirements and population growth rates remain as they are today" [referring to shortages of agricultural land]
  • Running out of non-renewable resources, with scary graphs about Chromium. You know about the big Chromium shortage right? Noticed how the cars don't have chrome bumpers anymore? Totally evidence.
  • While rising GDP per capita would reduce family size in developing countries, the proportion of families wanting four or more kids is totally increasing in income in richer places. You've seen a lot of families around with four or more kids in rich places, and especially among richer people, right? 
  • Population greater than 1970 levels is unsustainable.
All that's wrong. Population growth is levelling off and the problem in rich countries is potentially declining population absent migration. Poor countries are growing faster than rich countries, with dramatically slowed growth in rich places. Chromium prices in 2014 were higher than in 1974 in real terms (but lower than the price in 1975!), but has anybody heard of some looming shortage? No. There's also no shortage of food and no looming shortage of food. The main places where there's scarcity of food are places that have explicitly rejected 'neoliberalism': Venezuela and North Korea. Family size in rich countries is declining. There's plenty of chrome for anybody who wants chrome. Simon won his bet.

The main thing that the Club of Rome really got right is carbon dioxide emissions and global warming - although they missed the declining carbon intensity of production.

But carbon emissions aren't a problem of neoclassical economics either. That's a problem of not putting in a global carbon tax or a global emissions trading regime. There are tons of orthodox economists that lefties would call 'neoliberal' who are in Club Pigou. It would be a fun exercise to go through the membership list of Pigou Club and see how many times each member has been called a neoliberal. I don't think the number would be small, especially for Mankiw, but I can't be bothered to check. Anyway, if you think there's something called neoliberal, well carbon taxes are totally neoliberal. 

Here's another:
The divide between the rich and the poor, despite "trickle down", is growing faster in New Zealand than in any other developed country.
Is growing. That's the present progressive tense. Something that grew and continues to grow. Ok. What about this then?

Just look at that growing growth! It's totally growing. Scary growing. Like the Chromium shortage and Mike Joy's credibility.

Do university academics' duties as critic and conscience of society require them to talk nonsense about stuff well outside of their fields of expertise?

Massey might consider asking Joy to get an economics degree if he intends on continuing to purport expertise in the topic.

I think the Foote, 2015 piece he cites is one on which he's coauthor. If it is, then isn't it a bit odd to cite a piece favourably without noting you helped write it? About that study:
Professor Frank Scrimgeour, director of the Institute for Business Research at Waikato University, slammed the research as "sloppy" and argued its bold claims could not be substantiated.

"The authors do not do any original data collection, estimation or modelling," he said.

"They synthesised existing data without ensuring that measurements are consistent through space or time.

"Foote, Joy and Death are right that there needs to be holistic conversation in New Zealand regarding performance of the dairy industry but papers like this do not enhance the conversation."

Wednesday 26 October 2016

The bout round the bach? The fight in the Ferns?

I chatted this afternoon with Jim Mora's Panel at Radio NZ about the potential government funding of a coming boxing match. There's apparently been Cabinet-level discussion of whether the government should throw money at the boxing match to make sure it happens in New Zealand rather than someplace else.

I covered a few points:
  1. A boxing match is a commercial endeavour. If investors thought it would be more profitable here than it would be hosted elsewhere, they’d be putting in private money in anticipation of that return. 
  2. Government funding to bring it here then only makes sense if:
    1. It would not have happened here unless it were funded (likely); but more critically,
    2. There is a real benefit to New Zealand in hosting the match here that would not be enjoyed were it hosted elsewhere; and, further,
    3. That this benefit, relative to the government’s outlay, is bigger than the government can get from spending the money elsewhere, or from leaving it in taxpayers’ pockets in the first place.
  3. Governments love subsidising big sporting events. They talk a lot about the extra spending that tourists coming to events bring with them, but the kinds of studies backing these things up are usually pretty flawed. 
    1. First, they’ll count spending by visitors rather than profits on spending by visitors. Where there are costs involved in providing services to visitors, those need to be brought into the analysis.
    2. Second, they’ll assume that the visits would not have happened but for the event, and that the visits that do happen do not displace other visits. Both of these are often wrong. People who had always planned on visiting New Zealand and who like the event might shift the timing of a visit to coincide with the event. And other people who could only visit New Zealand during the time of the event might be put off: hotels get booked out for big events, for example, and rental caravans can be hard to find during things like the Lions’ tour. Just looking at the spike of visits during a big international event isn’t enough. You also have to account for displacement.
    3. Finally, none of this much enters into the picture for a boxing match which would draw fewer tourists in than a big sporting tour anyway.
  4. Minister Joyce noted that he’d hope that the government might be paid back if the match turned a profit. If I were operating under that kind of contract, I’d be pretty sure to pay myself and staff bonuses big enough to make sure there weren’t profits, or to buy my supplies from a related company at inflated prices to make sure there weren’t profits to pay back. But maybe the companies with whom the government strikes these kinds of deals are more publicly spirited.
Government funding of boxing matches... I'm just reminded too much of Mobutu Sese Seko fronting the costs to host the Foreman-Ali fight: the Rumble in the Jungle.

RNZ's panellists weren't having a bar of it either. Neill Miller has great economic intuitions - he also pointed to most of the stuff that I covered. And I doubt I'd disagree with Gordon Harcourt's take that the main point isn't the economic benefits of having tv cameras reporting from an indoor arena in Auckland instead of wherever else, but rather the potential drawing of voting support from South Auckland fans of Joseph Parker.

I followed on immediately after Marewa Glower's excellent discussion of vaping as a way of avoiding the weight gains that otherwise may come with quitting smoking.

Update: Catch also Sam Richardson on point here. I also heard him on Radio NZ on the way in to work this morning.

SimCity, South Frame

Christchurch's game of SimCity continues. Has it been 6 years already?

Part of the Grand Plan for downtown had the Crown buying up blocks of land running along the south side of the old downtown. The area along the north side of Moorhouse Avenue had a pile of car dealerships, among other businesses. The Master Planners thought it would be nicer as a park with walking access, and with potential to be turned into apartment buildings or townhouses someday down the track. The wishes of the owners of that land were rather secondary to the Master Planners' visions.

You can do funny things when you're a Master Planner. Like designating a strip through the middle of someone's business as the necessary walking path, deciding the rest of the property is no less usable because of the taken strip, and trying to pay compensation for the taking just for the strip down the middle. SimCity is a fun game - for the planners at least.

Here's the Christchurch Press on the South Frame:
Private negotiations between the Crown and central city businesses appear to be holding up plans to acquire the last plots of land sought for Christchurch's south frame anchor project.

The Crown says it has just 4000 square metres of land left to acquire, after spending the last four years spending $25 million buying up 25,000sqm for the shrinking anchor project.

The project, containing laneways and public spaces, was designed to frame the core of the city, along with the east frame and north frames and Avon River precinct.

Otakaro Limited has confirmed designations covering much of the south frame land remained relaxed, with south frame designation fully, or partially, lifted on 54 per cent of properties initially in the plan.

But Colliers International's Christchurch managing director, Hamish Doig, did not understand why the Crown was continuing to pursue land for the project,  labelling the south frame a "folly".

An Otakaro spokesman said talks with a "range of landowners" were ongoing, but refused to comment further or provide further details because of the "commercial nature" of the discussions.

"The south frame will be delivered in stages as land is acquired for the laneways and public spaces.

"In many cases only a portion of a parcel of land will be required for the south frame public realm," he said.
So negotiations continue, with the threat of eminent domain in the background. But why? More from Hamish Doig:
Doig said he was not surprised negotiations had taken four years, but he was surprised the Crown was continuing to acquire land for the south frame.

"What surprises me [is] that they're continuing to pursue it.

"I think the whole idea of laneways through the southern frame and through the Health Precinct is an absolutely flawed concept," Doig said.

The project would have some merit if there was "connectivity" between the blocks earmarked for development.

"So you've got this swathe of lanes through the middle of the blocks . . . Colombo St, Durham St, Montreal St and you have to walk up to the lights to to actually go across at a controlled intersection.

"One thing I do know is that basically we humans are lazy, we're going to take the course of least resistance, so why wouldn't we walk down the footpath rather than walk through a lane?

"It just seems an absolutely flawed way to commute . . . I just don't understand it," Doig said.
It isn't that hard to understand.

Somebody in government thought that downtown Christchurch was too spread out before the earthquakes, that car dealerships never belonged downtown in the first place, and that restricting the space available for a downtown would force it to be denser. Designating the frames would take land out of circulation and prop up prices downtown, which by the magic of underpants gnomes would encourage people to rebuild downtown. And the parkland frame could later be put to residential use to encourage more people to live downtown. Lovely.

But nothing quite worked out as planned. And so the parks became laneways and nobody could quite admit that a dumb sunk cost should be abandoned. Maybe abandoning it would encourage those property owners put out by the designations and the consequent legal costs to seek compensation for the very real harms done them; maybe it's just too hard to admit you're wrong.

SimCity isn't quite as bad as Wargames, but still....

Meanwhile, Barnaby Bennett points to this additional problem:
It's all still held in some back archive, but if you thought you'd saved useful links for later research, well, if you didn't cache the page in Evernote, you're probably out of luck.

In Seinfeld, when George realised that every instinct he'd ever had was wrong and that he just needed to do the opposite, he needed to remember what his usual pattern was. Doing the opposite doesn't work if you can't remember what normal is.

Come Wellington's eventual earthquake, just doing the opposite of CERA and CCDU wouldn't be far from wrong - but that requires remembering what the government did to Christchurch. Breaking the links doesn't help with that.

Sunday 23 October 2016

Secondary kitchens, again

During the earthquake recovery, my Canterbury colleague John Fountain wanted to build a secondary flat into his house to help meet the demand for housing.

The planning czars stopped him.* 

John's since moved to Nelson. Nelson also isn't keen on secondary flats. John's on the case. Here's his piece at the Nelson Mail.
Tourism in the Nelson-Tasman area is booming, but residential households are excluded from sharing in the gains by a prohibitive regional tax. The same tax also inhibits the development of affordable rental housing in decent residential areas in our region.
The tax in question masquerades as a "development contribution" on second kitchens : $25,000 in Tasman and $10,000 or more in Nelson. A second kitchen in one residential dwelling is "deemed to be" an actual second dwelling in each region's District Plan, and therefore subject to a full, second development contribution.
Homeowners can and do choose to have as many bedrooms, bathrooms, toilets, living rooms, study spaces, recreation rooms, garages and workshop spaces, as they want and can afford. But try to have a second kitchen and you'll have to pay an extortionary tax, if you meet all other requirements for a second dwelling on your property. Since a renovated/new second kitchen might cost anywhere between $10,000 to $25,000 homeowners effectively pay a sales tax well over 100 per cent of actual costs. Naturally, few homes with second kitchens are ever built (at least legally).
* The only sense I've been able to make of it is that the Grand Pooh-Bah of Christchurch planning at the time couldn't be bothered to change the rules that pre-dated the earthquakes - and especially not if some of the relatively undamaged houses around the University might turn into student flats and annoy rich privileged old homeowners near the university who loved to walk their silly little dogs around campus but would be happier to see the university burn for want of student housing than to ever have a student live anywhere near themselves.

Saturday 22 October 2016

I, Pencil, I Whisky

I've loved Leonard Read's I, Pencil. It's a classic.

Reed slowly explains how nobody in the world knows how to make a pencil. Knowing how to make a pencil means knowing how to get the wood, which means knowing how to make the axes and transport vehicles, which means knowing how to mine and smelt iron, which means knowing how to make the machines to do all that, and how to feed and clothe and house all of the people involved at every step in the process. It's a beautiful exposition of what the market coordinates voluntarily, automatically, without anybody much thinking about it.

There's an excellent kids' book version of it now out. My kids have enjoyed; yours might too.

But for the grownups, consider I, Whisky.

Friday 21 October 2016

The Rise of the Vogons

Matt Ridley doesn't call a Vogon a Vogon, but that's what he's talking about at The Times. The UK has a process-based nightmare in planning. New Zealand is in the same boat, but Peter Dunne will not allow the government to fix the Resource Management Act to solve it.

Here's Ridley:
At last, the government is about to decide on a third runway at Heathrow airport — by the end of this month, I hear. It’s only been ten years since Tony Blair’s government first proposed the plan. Yet it will be three years until planning permission is granted and another six before the runway is finished. That’s two decades. Heathrow’s original three runways in 1946 took less than two years to build from scratch in a war-ravaged country depleted of funds and fuel. Why do such projects now take so inordinately long?

Land-use planning in Britain is not a joke; it’s a disgrace. The present system is grotesquely biased, not so much in favour of opponents or proponents of development, but in favour of delay and cost. I happen to think HS2 and Hinkley Point C are mistakes, but if I’ve lost those battles — and I probably have — then at least let’s get on and build them quickly, rather than spend the next decade paying lawyers and consultants to slow them down and inflate their costs.
Ridley points to a new iron triangle. Lobbyist charities do well in fundraising and point to blocking things as evidence of success. Politicians take astroturfed complaints from the lobbyist campaigns as evidence of popular opposition and so insulate themselves through lengthy processes - which also suit the bureaus. And lawyers intermediate, with complicated processes both providing avenues for suits and for regulatory consulting work.

Ridley concludes:
As C Northcote Parkinson might have put it (as an example of his eponymous law), the civil servant who delays a decision because he is inundated with protests, then pleads a backlog of work as a reason for needing a bigger budget and expanded team, is not being irrational; far from it. But nor is he taking decisions solely in the public interest. The protester whose actions lead to a goldmine of publicity and the besieged public servant who thereby gets a budget increase, and the lawyer who interrogates both in court — are all benefiting from delay.

If this government wants to govern it must grasp how this process works. The risk is not just that the state is ineffective but that it gets consumed. Like a caterpillar full of parasitic wasp larvae that will eat its vital organs last, Britain can still inch forward in the world economy despite its ridiculous planning system and its powerful protest industry. But not for ever. Somehow we have to rebalance the incentives in favour of faster and cheaper decision-making.

Thursday 20 October 2016

Threatening data

AUT's Rhema Vaithianathan sees the potential for big data in the public service.
The age of Big Data has come to consumers rapidly, reinventing how we shop, socialise, bank and get from A to B. And a Big Data revolution is slowly rolling through the public sector too.

If we do this right, in 20 years or so the government ministries that currently employ thousands, and sprawl across central Wellington should each fit into a small Thorndon villa.

The vast bureaucracies of Wellington serve two main purposes.

First, they monitor. For example, ensuring that schools are open the requisite days, that police are on the beat and other taxpayer-funded services are working as they are supposed to.

Second, they collect information about these services useful for planning and policy advice. This helps the government to decide how best to spend our money. Is the existing service working? Should it get more, less or no funding? Is a new intervention needed, and how much funding should it get?

Fortunately, when it comes to monitoring and informing, Big Data can really deliver. So once our data is up to the task, these jobs won't need to be done the old-fashioned way by armies of civil servants.
It sounds great. But the power implications within government make it all a bit tricky.

It is thoroughly feasible for NGOs to ask the government to run evaluations on their own effectiveness. They can provide the government with the details on the people they're serving and what outcomes they're targeting. The government can then set a control group of people matched to the NGO's clients in IDI, or to do one better and help the NGO randomise treatment and control where the NGO can't afford to help everyone they'd like to help. Then any outcome measure they want can be tracked and evaluated: future interactions with CYF, prison recidivism, workforce attachment, child doctor visits, child immunisations - anything on which there's administrative data. And, even better, the NGO can then tell the government what their cost of outcome delivery has been.

Once that's in place, interesting things happen. Rhema notes the massive potential disemployment in the Wellington bureaucracies. One of the big advantages Ministries have over their Ministers is information. They're the ones who know things, and who can tell the Ministers things when Ministers want to know things - or refrain from providing useful information. There's a whole public choice literature on bureaucracy, agencies' information advantage over Ministers, and equilibria when Ministers can implement costly legislative control devices to help them better monitor agencies' true costs and output. Big Data, done right, can help route around it all that.

And if that can be combined with real information on the real costs of not just delivering services but of providing the outcomes that the Minister wants - that's a game changer.

In our report on Social Impact Bonds, we looked forward to a world in which any NGO or community group could pitch an outcomes project to Treasury, Treasury would tell them the current going price for improving that outcome, and the NGO would then seek investor funding to deliver the service. Whether you see the resulting data on real outcomes and real costs of providing outcomes as a bug or a feature may depend on whether you're part of a monolithic Ministry with a big information monopoly that's under threat.

Wednesday 19 October 2016

Mason is a special place

The Chronicle has a great feature piece on GMU's Robin Hanson. A snippet:
A few times a week, Hanson has lunch with a group of George Mason economists. One brisk Thursday, Tyler Cowen, John Nye, Bryan Caplan, Alex Tabarrok, and Hanson drive over to China Star, a Sichuan-style Chinese restaurant near the campus.
The atmosphere is collegial; they talk about bets they’re making with one another, what they’ve already won and lost (also painstakingly detailed online, as several of them are prominent bloggers), and tease Hanson for his grandiose visions of immortality. Cowen, author of An Economist Gets Lunch (Dutton, 2012), orders for the table, and over spicy dishes passed around they dig in.
"Robin is so fond of generalizations that he’ll often ignore varying details," Nye says. "It leads to good ideas, but it also leads to, in my view, crazy ones."
"That comes from physics," replies Hanson.
"There’s a reductionism that comes from physics," Cowen says. "Reductionism, monism, trying to recreate the problems of theology, moralizing, ‘meta,’ and hating hypocrisy — that’s Robin in 10 words. He’s a modern gnostic."
Later, after digressions into The Lord of the Rings, futarchy, and the relative innovativeness of the iPhone, Hanson wonders aloud why his ideas aren’t more widely circulated or accepted in academe. His colleagues don’t hesitate to offer theories.
"Robin’s work would be much more accepted if he just did one weird thing and everything else was normal," says Caplan. "If everything was normal but he did the future, that’d be OK. But he has seven or more weird things."
"I’m rolling more dice, so there’s more of a chance one of them will come out right," Hanson says.
"But," replies Nye, "there’s also more of a chance it’s crazy."

Tuesday 18 October 2016

Police priorities

In today's Dominion Post we learn that Wellington area police have an ongoing investigation against a euthanasia group.

They've arrested an elderly woman who'd imported drugs that could be useful in euthanasia, and confiscated another elderly woman's helium balloon kit.
It is understood a second elderly woman was also involved in the October 7 raid, part of what police are calling Operation Painter, and that one of the women spent the night in a police cell. 
I wonder if they took any lessons from Arlo Guthrie's Officer Obie in making sure that the cell was safe.

Meanwhile, some of the War on Meth has become self-financing courtesy of New Zealand's asset forfeiture legislation.
A $15 million boost for anti-drug initiatives is not an admission that the Government is losing the war on P, Prime Minister John Key says.

However, Key acknowledges methamphetamine has become "the drug of choice" for some Kiwis, while police must do more to stop P coming into the country through remote areas like Northland.

The Government has announced the funding for 15 anti-drug initiatives, coming from money and assets seized from criminals, as part of its Tackling Methamphetamine Action Plan.
The war may be lost, though.

Earlier this month, Radio NZ had the Police Association telling us that meth is now purer and cheaper than ever before. Remember that half-billion dollars' worth of meth seized on 90 Mile Beach? No apparent effect on the price of meth. There is so much meth out there that the biggest seizure ever in New Zealand has had zero effect on prices.

And I still need to stock up on working pseudoephedrine-based cold medicines whenever I go back home to Canada - all in the futile fight against meth.

The police actions on meth will be futile, but help build a pool of seized assets. I don't know what the police think they're achieving in raids on elderly people who want to be able to end their lives painlessly should need to.

Coasean neighbours

Brendon Harre spells out the case for formalising neighbours' Coasean bargains. He argues we should all be able to build up to three stories by right, with provisions against encroaching on neighbours' sun, but with better ways of mutually waiving those provisions.

Neighbours can always agree to not object to each others' encroachments into recession planes. But you then can have a sequencing issue. If I agree today to allow you to go up to three stories and block my backyard sun because you're agreeing to let me build up in the back yard anyway, that's great. But if you then sell the house, your agreement doesn't move with the property. And so I might be reluctant to agree in the first place - unless I can get things lined up to build quickly as well.

I think this idea came originally from Stephen Franks. I touched on it in my piece at The Spinoff; it's great to see Brendon laying out more of the details.

Monday 17 October 2016

Rorschach tests: Alcohol marketing edition

When Freud saw a picture of a cigar, he wasn't so sure it was a cigar. 

When some folks see a picture of cricket bats, well, we get this

Horiana Henderson thinks this poster - from NZ Cricket, with no alcohol industry branding on it, is somehow marketing alcohol to kids. 
I was disturbed by the poster intended for my eight year old because the message I received was that our national sports team and his sporting heroes, the Black Caps, were associated with alcohol.

The wood-grain of the bats, the elegantly wrapped handles, the striking composition, the colours as well as the lighting all gave off an impressive and sophisticated look.

The reasonable placement for such a poster would have been on his bedroom wall where he would pass it each night before he went to sleep and each morning when he woke up. No battery, electricity or charger required.

Are the Black Caps a vehicle to circumvent the Law Commission's regulations regarding alcohol marketing to children? 
So anything that is elegant, striking, impressive and sophisticated must be part of some big alcohol conspiracy.

Alcohol can often be elegant, striking, impressive and sophisticated, but not all elegant, striking, impressive and sophisticated things are alcohol-funded.

Last week, I presented at the Hospitality Association's annual conference in Auckland. I noted there that some folks, like Alcohol Healthwatch, seem determined to turn any stat into evidence of a crisis - even if the stat shows a big reduction in problems. I suppose this is another for that file.

Sportsfreak is on point:
We are truly living in the age of moral outrage becoming a lifestyle choice for some.

Moral outrage is one thing, like recording stuff behind a locked door, but moral outrage based on seeing strange stuff is something else...

Should badminton rackets have been used? (old-fashioned bottles of cognac)? Hockey sticks? Abstemious tennis rackets?

No. Given this is about cricket, then probably cricket bats are probably are the most appropriate. New Zealand Cricket has confirmed that the items in the poster were in fact cricket bats. They said that, in the end, and following due diligence, they felt that cricket bats were a good fit for what, after all, was a cricket promotion.

Calling sporting organisations for wrongdoing is a worthy pastime, but it really does help when there is based on a bit of reality.
I don't favour lifestyle regulation or lifestyle taxes. But I'll make an exception for the moral outrage lifestyle. That one does have substantial negative externalities that should be mitigated.

Friday 14 October 2016

Dangerous cheeses

The NZ government continues its crusade against an elderly woman whose four cows produce the milk for her small-scale raw milk cheeses. My piece in this week's Insights newsletter:
Thomas Hobbes told us the State is necessary to protect us. The war of all against all that would ensue without a State to protect us from each other would be worse than even a terrible despot. 

New Zealand’s Hobbeseans can this week thank the State for protecting us from artisanal cheese. 

Biddy Fraser-Davies’ ongoing fight with the Ministry for Primary Industry again bubbled up into the media spotlight. She makes award-winning small-batch raw-milk cheeses in Eketahuna. Radio New Zealand reports that, last year, at least half of the $40,000 her four cows’ cheese earned went to cover the State’s regulatory fees. 

She says, “It works out that the raw cheese testing cost for me is $260 per kilo, which doesn’t include the ancillary costs of actually making the cheese.”

I was surprised that MPI still hounds Biddy. The 2014 Food Act was supposed to scale regulatory burdens to the risk imposed, but that doesn’t seem to have affected cheeses under the Animal Products Act. Biddy has to submit samples for expensive testing from ten consecutive tiny batches. She has four cows. 

There’s an old joke about farming under different political systems. Under communism, you have two cows that you have to take care of, and the government takes all of the milk. Meanwhile, under capitalism, if you have two cows, you sell one to buy a bull. 

Well, artificial insemination means you don’t really need the bull any more. But it looks like under New Zealand Nanny Statism, if you have four cows, you have to milk two of them to cover the regulatory compliance costs for the other two. And that’s its own load of bull. 

Worse, New Zealand raw milk cheeses are reported to be held to a higher standard than European ones sold in New Zealand. 

But just think how much worse it would be without the State to protect us here. Under the terrible, terrible ravages of voluntary interaction, makers of very safe large-batch cheeses would be able to put certification stickers on their cheeses advertising that fact. Makers of small batch cheeses could put labels on theirs saying that small-scale artisanal products are riskier than big commercial products, but sure are tasty. And consumers could weigh up the risks and make their choices. 

I wonder if Hobbes adequately considered the tyranny of those who would protect and torment us for our own good.
The 2009 regs on raw-milk cheeses came in under National. National's 2008 election campaign was all about doing away with the Helengrad Nanny State.

If readers can think of any policy area in which National has proved less nanny-state than Helen Clark's Labour government, please let me know in comments. I cannot think of any currently. There are some areas where they have held the line against increasing paternalistic regulation, but it is much harder to think of areas where they reversed things. Fully legalising gay marriage could count, but it isn't like Helen Clark wouldn't have done that had she won in 2008.

Tuesday 11 October 2016

Private and public benefits

Massey University's Professor Giselle Byrnes, Assistant Vice-Chancellor (Research, Academic and Enterprise), writes on the public benefits of tertiary education in this past week's NBR.

She makes a good case for the existence of public benefits; the main thrust of the piece is that the Productivity Commission's report on tertiary pays insufficient heed to the public benefits while focusing on the private benefits and the appropriate share of those borne by students.

Leaving aside for now that the Prod Comm report was rather broader reaching than that, the casual reader of Professor Byrnes's would likely be surprised to find out that the government is already covering about 82% of the cost of tertiary education, once you factor in the subsidy provided through the zero percent loans scheme. Mightn't it make sense to point out the private benefits if making the case for bringing the private and public cost shares into closer alignment with private and public benefits?

I wrote in the foreword to our recent report on the student loans scheme:
In systems where student loan repayments are made through the tax system and are conditional on earning enough to make those payments, interest charges are no barrier to participation in tertiary education. The real barrier to more equitable access to tertiary education comes earlier, in primary and secondary schools, where too many students do not receive the training they need to succeed in post-secondary schooling.

In this respect, our report echoes the findings of the 1994 Ministerial Consultative Group report, “Funding Growth in Tertiary Education and Training”. That report presented two options for change in the tertiary sector. Under Option A, students would bear a greater part of the burden of financing higher education, with their share rising from 20% to 25% of the cost of providing tertiary education. Option B went farther, recommending shifts in funding from tertiary tuition subsidies towards targeted improvements in primary and secondary school. Students’ share of the burden of tertiary study, under Option B, would have reached 50% by 2000 – for those students earning higher incomes after graduation.3

In reality, students’ share of the direct costs of tertiary education fell to 16% by 2010, due largely to the subsidy provided through interest-free loans.4 Where the main barrier to accessing tertiary study, whether at university or polytech, happens before a student completes NCEA, improving access requires earlier intervention. Funding can and should shift accordingly.

Charging market interest rates on student loans and devoting some of the hundreds of millions in annual savings to enhancing lower decile students’ preparation for university, and to needs-based student assistance, would do much more good for students who really need the help.

3 Ministerial Consultative Group, “Funding Growth in Tertiary Education and Training”, (Wellington: Ministry of Education, 12 May 1994),18-21.
4 Rachel Baxter, “Sharing the Private and Public Costs of Tertiary Education”, Policy Quarterly 8:2 (May 2012), 49. See also the New Zealand Productivity Commission “New Models of Tertiary Education” (Wellington: New Zealand Productivity Commission, February 2016), 57, which puts the ratio at 18% private to 82% public.