Thursday 5 August 2021

Something always allocates

Scarcity is a fact of the world. When demand for something scarce exceeds the supply of it, something has to allocate scarce resources across competing uses. 

The nice thing about using the price system to allocate scarce resources is that it provides incentives on all sides. On the demand side, it encourages those whose effective demand is relatively low to find other ways of meeting their needs. On the supply side, it encourages more production of scarce things that are highly valued. 

If your main objection to all of that is that poorer people can be outbid for those resources, the main way we have of handling that in modern liberal democratic states is by taking money from richer people and giving it to poorer people.  

New Zealand's MIQ system does not work that way. Capacity in the system is very limited. The government manages the booking system for scarce MIQ spaces, charging a price of zero for entry, but with some chance of sending people an invoice weeks after their stay if their stay wasn't to be free. 

Anyone entering NZ has to go through MIQ, so demand is very high. 

What allocates scarce spaces?

Somebody at MBIE decides whether you get priority entry. If you're a person of national significance, like a sports player or a diplomat, then you can get in that way. If you have an exceptionally compelling hardship case to make, you might have a chance - but there are far more such cases than there is capacity to deal with them. 

So entry for the rest then comes down to whether you're lucky in being able to refresh your browser quickly enough to get a slot, or hire an agent to do that for you - whether physically or with a script. 

It isn't a workable system. Those with political pull always seem to find a way in through special dispensation. Those without, cannot. 

If your pull is strong enough, you'll make sure that the rules are written so that you're explicitly allowed through. Heck, America's Cup teams were able to bring a team nutritionist through the system for a short stay at the same time as migrants here were unable to get their families in - no bribes required. That's New Zealand's way: write it right into the rules, and provide discretion for officials to find a way through when the political need is great. 

If money doesn't allocate scarce resources, something else does. And that something else right now is political pull for those who have it, and a broken MIQ booking system for everyone else.  

A year ago, we proposed a better way. Or at least a way we thought was better and that I still think is better (suitably updated to account for better testing and vaccination now). 

  • Let MIQ facilities charge whatever they like. 
  • Let them run their own bookings. 
  • Have the government charge the facilities for the services that the government provides in ensuring safety. 
  • Set audit trails on compliance with all the public health requirements. 
  • Let new facilities enter the system so long as they meet public health standards. If there's a lot of demand to come into the country and room fees are high, hotels and others will find it worth their while to upgrade to serve that market. Heck, somebody might make a big bet that this mess will last a while and set up a purpose-built new facility. 
  • Instead of letting everyone into the system for free and charging some people afterwards, flip it. Returning Kiwis would apply to MBIE for a voucher equivalent to the cost of a stay at a basic facility at an off-peak time. They could top up the voucher with their own money to stay at a nicer facility, or to travel at peak times. They would pay while making their booking, so we wouldn't wind up with the mess of multiple bookings that result in rooms being underallocated and empty spaces. The voucher would be used at time of booking and couldn't be used simultaneously in any other booking. 
The proposal found a fairly warm reception. But we did take a bit of stick on this idea from those who thought it was bad because it would let richer people into the country more easily than poorer people 

This morning we've found out that Larry Page was able to get into the country.

Billionaire Google co-founder Larry Page visited New Zealand amid Covid-19 border restrictions after his child fell ill in Fiji, Stuff can reveal.

Kiwi businessman and philanthropist Sir Stephen Tindall, who knows Page personally, confirmed he visited New Zealand because his young child required hospital treatment in Auckland.

Page, who is reportedly spending the Covid-19 pandemic in Fiji, has since left New Zealand, Tindall said.

Page, who founded Google with Sergey Brin in the 1990s, is the sixth-richest person in the world with a reported wealth of US$121b (NZ$171b).

Various details of the visit, including where Page stayed, whether he spent two weeks in a managed isolation facility and the grounds on which he was granted entry across New Zealand's closed border, remain a mystery.

Immigration and internal affairs ministers won't comment on the case and the Government refused to say whether Page was a citizen.

Immigration NZ border and visa operations general manager Nicola Hogg said in a statement: “Immigration New Zealand (INZ) can confirm Larry Page met relevant requirements to be approved entry to New Zealand.”

It is unclear on what grounds Page was granted entry.

I absolutely do not begrudge Page's entry. Any reasonable system would have granted his entry. Mine certainly would have. Maybe the existing system treated the application in the same way as other medical necessity cases, but even those seem subject to political pull. Or maybe it was entirely political pull. Impossible to tell. 

But I do know that if we used prices to allocate scarce spaces, we wouldn't have to worry about it. Instead we could rejoice in that higher fees for entry paid by folks like Page would help build the capacity that could be used for more people to be able to get through MIQ. 

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