Wednesday 29 May 2019

Oh Treasury ... again

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

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

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

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

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

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

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

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

Saturday 25 May 2019

Process cost

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

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

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

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

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

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

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

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

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

Let's stick with the funny though:

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

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


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

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

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

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

Friday 24 May 2019

Herald on sugar

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

It was two-pages of unreferenced bullet points.

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

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

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

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

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

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

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


Thursday 23 May 2019

Data termination

Awww, nutbunnies.

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

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

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

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

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

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

Wednesday 22 May 2019

Parliament and Twitter Hate

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

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

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

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

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

Friday 17 May 2019

Treasury on the Heartwork event

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

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

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


Thursday 16 May 2019

State-owned investment vehicles

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

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

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

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

Tuesday 14 May 2019

Morning roundup

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

Wednesday 8 May 2019

Blindness, hairy palms, and varicoceles

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Monday 6 May 2019

Parent Visas

New Zealand stopped processing parent visas under the prior government. 

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

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

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

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

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

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

Friday 3 May 2019

Platforms and incentives

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

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

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

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

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

Thursday 2 May 2019

Short Ireland?

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

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

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

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

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

Markets and meth

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Wednesday 1 May 2019

W=MP is a harsh mistress

I love today's SMBC

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

This should be on every labour economics syllabus. 

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


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

The 2018 results are now up.

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

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

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

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