Volcano powered

I love that GNS is looking at supercritical geothermal generation.

They've commissioned Castalia to look at timelines and economic feasibility. It's looking good, from 2037, if we can get fast-track consenting - and if there aren't other substantial hiccups. 

NZ will need a whole lot more generation as carbon prices rise and folks shift away from carbon-intensive energy sources.

Great thing about geothermal is that it just runs. It doesn't care if the wind blows or the sun shines.

Waste heat can be used for other processes - like milk powder drying, or making wood pellets.

As reminder, here's Eli Dourado's piece from a couple years ago on the big-picture on this stuff.

Afternoon roundup

The tabs!

• “Is it unfair on everybody else that has paid for that road and doesn't use it? I mean, this equity stuff's bollocks, this is about traffic. ...Consultation’s bollocks as well.” Mayor Brown ain't wrong.
• Predictions that Labour and Te Pati Maori will strike a deal where TPM seeks only the electorate votes in Maori districts and Labour seeks only the party vote in those districts. Biggest question is why MMP has avoided these kinds of rorts so far. They're the obvious play. 
• Good time to be a liquidator.
• 35 kilograms seems like a lot of cocaine to seize in one go for a country of 5m people. Are there reasonable measures of demand elasticity? One could perhaps work out the size of the market based on price movement. If the price doesn't move much, either the market is huge or suppliers are able to quickly plug even a 35kg hole. If it moves a lot and stays high for a long time, less so.
• My normal drill on carbon forests and biodiversity is that if you want more biodiversity, don't screw up the ETS accounting - use a separate policy instrument. But if this is right, then biodiverse forests sequester more carbon. And if it also applies to NZ forests, then making sure the settings accurately reflected sequestration would encourage greater biodiversity. 
• Don't envy Shane Reti this hospital pass. The health system is not in good shape. 
• Works in Progress on Upzoning NZ
• Maybe post-prison half-way houses should be next door to judges' primary residences. Skin in the game and all that.
• NZ needs a dedicated agency whose only task is infectious disease. Indeed.
• Andrew Norton on Australian attempts to centrally plan higher ed.
• Why We Need Taiwan.
• Mercatus on cutting zoning down to size. Tons of good stuff in here on problems with single-family zoning. 
• Good News! New Zealand is at less of a competitive disadvantage relative to Australia! Bad news: it's because they dropped by more than we did.

Advice to an incoming government from Dominic Cummings

Or, at least, some very sharp observations on how the system works. It won't be much different in New Zealand. 

Here's Cummings on Dwarkesh Patel's podcast, and some snippets from the transcript. Superb throughout. If an incoming National government wanted to know what they're getting into, listening to this would be a decent start. 

Dominic Cummings 00:04:08

A fundamental problem with how the British state works is this question of prioritization and the Prime Minister’s time. So you have all of these normal parts of the system that essentially can’t really do anything quickly at all, even in a crisis. So the Prime Minister’s time and the Prime Minister’s prioritization is the most important asset. But also it’s something which is constantly pulled hither and thither by all of this craziness.

One of the things that obviously we wanted to do was fundamentally reorient Number 10, away from what it’s been since Thatcher, which is a kind of press entertainment service. Where the whole building is just built to respond to what the media says and instead say, “What do we actually think is important?” And what is the management system you’re going to build that actually can maintain focus on those things whilst the inevitable chaos goes on?

 ...

Again, one of the funny conversations I had with Boris was, you know, we should say to the ministers that here’s your actual priorities as defined by us. Whether or not you get promoted and whether or not your career goes well is going to be defined by how well your department actually fulfills these goals. We don’t care about all of your interviews. We don’t care if you are on TV or never on TV. That’s not how we’re going to judge. Because they’ve all grown up in a culture where they think whether or not they’re going to be promoted really depends on: Are they seen as a good media performer? Or do they botch things on the media? Well, that’s just a fundamentally bad criteria, not least because their definitions of what’s good on the media are themselves terrible. By approaching government like that, you’re incentivizing them to think that their goal is making friends with the media. So then they get good interviews. That also incentivizes them to leak everything. So again, the culture and the incentives are self reinforcing in a very negative way.

...

I’ll tell you a story about it that kind of summarizes it. At the peak of COVID craziness in March 2020, on the day itself that the PM tested positive for CoVID, a bunch of people come into Number 10 sit around the table and we have a meeting and it’s about supplies of PPE to the NHS.

They say, “None of this ppe that we’ve ordered is going to be here until the summer.”

“But the peak demand is over the next three to four weeks.”

“Sorry, Dominic, but it’s not going to be here.”

“Why not?”

“Well, because that’s how long it takes to ship from China.”

“Why are you shipping from China?”

“Well, because that’s what we always do. We ship it from China.”

But A, we need it now and B, all of the airlines are grounded. No one’s flying anything.

“So call up the airlines, tell them that we’re taking their planes, we’re flying all the planes to China, we’re picking up all our shit, we’re bringing it back here. Do that now. Do that today. Send the planes today.”

We did that. But only the Prime Minister could actually cut through all the bureaucracy and say, Ignore these EU rules on Blah. Ignore treasury guidance on Blah. Ignore this. Ignore that. “I am personally saying do this and I will accept full legal responsibility for everything.”

You multiply that kind of problem by hundreds and thousands of problems, you get a sense of partly why COVID was so crazy. This is normal government. But in a crisis, when no part of the system can actually move fast, all of these bottlenecks end up very dramatically escalating to the PM’s office. And if you read Jared Kushner’s book, Memoir about the White House, there are very, very similar tales there. That a lot of things that obviously should have been solved elsewhere couldn’t be solved at any other part of the system. They all end up cascading upwards in these centralized bureaucracies, because ultimately only the president or only the Prime Minister can give certain kinds of orders.

...

And in fact, In 2020, for example, when we did some things very differently, it was extremely disruptive and extremely unwelcome to the large part of the system. Hence why a lot of what we did was closed down.

Did they say, “Okay, the vaccine task force and operation warp speed and the state have been great successes. We should massively reinforce them. We should build the next generation of vaccines. We should spread the lessons of how the task force operated.”?

No, they basically closed the task force. Sewage monitoring closed. Rapid testing, basically closed and forgot to order enough tests the following year.

So if you look back at 2020, most of the people who were most wrong were given awards and honors by the system and promoted to new jobs. The people who were most obviously repeatedly right have almost all left.

What incentive is there for people to speak out about how these things work? No one expects anything to change. Even after something as big as COVID, when you see what the reaction is, everyone can now see the truth. You can have a once century pandemic. It can kill tens of thousands of people unnecessarily. It can be a complete carnage for the economy, and everyone will just basically go back to normal. MPs will ignore it and nothing much will change.

So if you’re a standard official inside the system, all the signals to you are very clear. In fact, in 2021, it was even more powerful than that. There were a whole load of legal actions brought to say that the real problem with 2020 was that we went too fast and we did things too quickly. People actually brought legal actions against the vaccine task force. They brought legal actions against rapid testing. They brought legal actions against all sorts of activities.

The system didn’t say “This is completely insane. Actually, the bureaucracy and the sloth killed thousands of voters.” It said “Yes, we’re going to investigate all of this.” Every signal propagated through the system was essentially back to normal. You will be promoted for being the most insane process, and you will be demoted and blacklisted if you say this process is insane and try to do better.

...

Dominic Cummings 00:24:16

Manhattan Project is much in the news with the Oppenheimer movie. If you look at the very last bit of General Grove’s book on Manhattan Project, he talks about what are the most fundamental principles about why it succeeded? And one of those principles is relevant to government. Actually, they’re all relevant to government.

One of the principles is that the quality of the people is fundamental. Another one is that responsibility and authority are always delegated together. The entire British constitutional system and management structure is based on the fundamentally opposite principle. Responsibility and authority are not delegated together. So if you’re asking about something like the vaccine task force, in the normal system, nobody really is in charge of anything. Lots of people can criticize, lots of people can complain, lots of people can argue about things. Lots of people can veto. Almost nobody ever has the authority just to build something or just to do something.

Why did we create the vaccine task force the way we did? Well, because we were trying to actually embody principles like responsibility and authority pulled together. We brought one person in, we said “You are responsible.” But once we’d gone, then what happens to that entity? It’s sitting there amid Whitehall while all the normal parts of Whitehall just start going back to being normal. So what happens? They say, well, they are exempt from all of these rules on HR that the Cabinet Office imposes on every part of Government. This should change because it’s going back to normal. They have to do the following things properly. We gave them special dispensations because of the extraordinary circumstances of summer 2020, but these now come to an end.

So those sorts of things come in. The treasury says, “The spending rules and how the people in the vaccine task force make decisions, that was an emergency thing. Now the normal rules apply again.” So before you know it, all the different parts of the system have basically said, the thing that you created outside of the normal system now has to obey all of the things that it was specifically created to avoid.

Now, the system will just do that automatically unless there is a very powerful counterforce. Fundamentally, again, only the PM can say,”No, we’re not having that. In fact, I want to strengthen the vaccine task force. We want to move on to the next generation of vaccines. etc.” If they don’t do that, and if the people in charge of it can’t call on the PM’s authority, the system will just devour the new entity very, very quickly and force it to conform with all of the normal system.

I’ll give you another example of this on rapid testing. One of the things that we did to get the rapid testing to work was we got a guy who formerly was commanding officer of the SAS, British Special Forces, and this guy got a bunch of his friends from Special Forces also to work on rapid testing. When we first got this pushing from Number 10, I got the critical people from procurement, commercial HR, etc, into the Cabinet room with the Cabinet Secretary, the single most important official in the whole country, and the two of us said, “The PM wants rapid testing dealt with as if this is a wartime crisis.” We’re going to have a second wave. There’s going to be thousands more people getting CoViD, there’s NHS. People are dying, etc. We can’t have any of the normal civil service HR. We can’t have any of the normal civil service bullshit on procurement. Exactly the same as with the vaccine task force. Everyone sits around the cabinet table, they all nod their heads.

A week later, I call this guy, a former SAS boss and say, “So, how’s it going? Are you getting who you want and is everything working great?”

He says, “No, it’s all the same shit show.”

So I have to get all the people back in the same room with the country’s most senior official and say, who the fuck have we got to fire around here to make clear that these people doing testing don’t have to do all of your bullshit HR?

That’s how extreme things have to be. It was only by doing that a second time and making clear that I would get the PM to actually just start firing senior people in the Cabinet office. It’s only then that the system will kind of part and go, “Okay, this element is allowed to.” But you imagine as soon as that countervailing force is removed, all the normal sea floods back.

...

Dominic Cummings 00:31:25

Sorry to interrupt, but imagine as well what the promotion system is like and who ends up getting to the top of these systems. A lot of people say, “Oh, you’re so negative about the civil service. You’re all saying that everyone there is rubbish, and it’s not fair.” That’s not my view. In fact, if you look at the civil service, you actually see a lot of very able people, but most of them are young. What happens is the young, excellent people get weeded out by self-selection, largely because they go in idealistic, they’re there for a few years, but then they look at what the process is to be promoted, and they look at their bosses, and the best of them look at it and go, “I don’t want to be like that.” I don’t want to have to make those decisions. I don’t want to have to make those compromises. I don’t want the job like that, where it’s almost all bullshit. We can’t actually build anything.

The most entrepreneurial, the kind of people who actually want to get on and do stuff now, leave and the most HR compliant, disastrous people to be in charge of supposedly fast moving agencies are the ones who are promoted to take over. And then that culture itself becomes highly self reinforcing. Once you get a whole cadre of leadership at the top that’s like that, it’s extremely difficult to break out of.

I'll stop clipping there or I'll wind up just having the whole darned thing. 

Afternoon roundup

The tabs!

• Universities continue to be very quick to cancel events. 
• NZ Pharmacists warn that if the $5 co-pay on prescriptions returns, customers might start using Chemist Warehouse again rather than community pharmacies. 
• David Harvey argues for a licensing regime instead of the Fair Digital News Bargaining Bill. I don't think it'll work either. If the fee is high enough to save the media, the platforms would probably block news links altogether. Just let the Bill die at committee.
• Reasonable Covid wave coming through; your reminder of what to do.
• Which cuisine will reign supreme? All of them, thanks to globalisation. 
• Consumer NZ wants to turn audiology into a government-enforced cartel. That outfit's becoming increasingly reliable as a "do the opposite of whatever they're on about" signal. 

Preparing for the new government

Tova O'Brien at Stuff reports on leaked emails at MBIE that point to preparations for downsizings.

In a statement, MBIE said the cuts were in response to the savings targets imposed by the outgoing Labour government and being mindful of the cost of living crisis.

“This work to date has been based on the targets and expectations set by the current Government. We will have conversations with the new Government when it is formed on how we have worked to date to achieve the fiscal savings target,” Tremain told Stuff.

In late August, just ahead of the election campaign, Labour’s Finance Minister Grant Robertson announced $4b in public service savings including cutting back on contractors and consultants and trimming agencies’ baselines by 1 and 2% of which MBIE faced the largest cut at $110.8m

But further changes being considered may be in anticipation of the new government making good on its “cut the waste” campaign rhetoric; in the email, Tremain says “we are preparing for change” and that “this is inevitable as we get ready to support a new government and new Ministers”.

I was curious where some of this might be going and had put in an OIA a while back. 

Treasury had started a pre-election information exercise to help them prep for Budget 2024. I figured that whatever they got back from the Ministries would be a heck of a lot more informative than what's served up in Briefings to the Incoming Ministers. 

Because it would be a lot more informative, Treasury withheld all of it. And fair enough. 

But they did give me the questions they'd asked. I'll copy it all here. 

It's relevant to today's story from O'Brien because a lot of this process started before the election, and there was a Baseline Savings Proposal that was underway. 

But Treasury was also asking for substantive changes to stop or scale down current services or activities - as it ought to be. 

Also interesting - Treasury was asking what projects hadn't yet been started, presumably so they could be cut if needed. I wonder if any agencies started scrambling to start spending on projects to lock them in.

I wonder what all showed up as savings options in Section Two.

Afternoon roundup

The end-of-week closing of the browser tabs

• Seeing like a Bank. Superb explanation of bank IT systems, tradeoffs between customer fees and customer experience, how helpdesks actually work, and problems in cobbled-together systems. It explains a lot more than banks. 
• Interesting piece on price dispersion in generic pharmaceuticals. One snip: "Regulations around pharmacy ownership in Australia and New Zealand make them more difficult to compare." Indeed. 
• If you think the social discount rate should be very low, you should support reductions in transfers to the elderly. Forthcoming in Econometrica. 
• The Rocket Lab launch failure a while back comes down to an electrical arc in a power supply under partial vacuum; they're enclosing and pressurising the power supply system. 
• Wellington Council selling its shares in the airport to have less exposure to quake risk seems sensible. 
• Low attendance at school, Covid is given as one reason. Meanwhile, schools still aren't properly ventilated, nobody uses masks, and the government bans boosters for those under 16. Kinda crazy. Government requires scaffolding for jobs where a ladder would be perfectly safe, with company directors liable for risks. But government bears no liability for unsafe schools and prohibitions on full youth vaccination. 
• "What's so scary about Bryce Wilkinson?" The caption under a smiling picture of Bryce. What indeed! Bryce is lovely. 
• An 88 megawatt solar farm blocked in the Mackenzie Basin. There's uncertainty about how some native plants might change because of shading and sheltering from the panels on a sheep paddock. NZ officials do not want net zero. They want a return to the Pleistocene. 
• Turns out that there's a summer camp for training left-wing activists in NZ. Wonder whether the reporting on a pro-liberty version would be as friendly.

Making coal

Trees are very good at sucking carbon out of the atmosphere. Unfortunately, they eventually release it back into the atmosphere. Some gets stored for the longer term, but our ETS pretends it's all released at point of harvest. And there can be a good case for that if most of it does and if it's hard to track.

But there are other options.

I have no clue whether the economics of this option would stack up, but it should be allowed in principle.

Suppose a carbon forest owner harvested the forest, dug a very deep pit, put the harvested trees into the pit, and covered them with layers of clay so no gasses would seep up. The process takes carbon from the atmosphere and sticks it back into the geosphere. Give it time and it'll be coal.

I've always figured that if a carbon forest owner did that properly, that permanent sequestration ought to count against any surrender obligations that come with cutting down a carbon forest. For every tonne durably sequestered, a one NZU reduction in surrender obligation.

Turns out Bill Gates is backing a neater version of this. Story from December 2022 but I only just caught it.

A California startup is pursuing a novel, if simple, plan for ensuring that dead trees keep carbon dioxide out of the atmosphere for thousands of years: burying their remains underground.

Kodama Systems, a forest management company based in the Sierra Nevada foothills town of Sonora, has been operating in stealth mode since it was founded last summer. But MIT Technology Review can now report the company has raised around $6.6 million from Bill Gates’s climate fund Breakthrough Energy Ventures, as well as Congruent Ventures and other investors.

In addition, the payments company Stripe will reveal on Thursday that it’s provided a $250,000 research grant to the company and its research partner, the Yale Carbon Containment Lab, as part of a broader carbon removal announcement. That grant will support a pilot effort to bury waste biomass harvested from California forests in the Nevada desert and study how well it prevents the release of greenhouse gases that drive climate change. 

It also agreed to purchase about 415 tons of carbon dioxide eventually sequestered by the company for another $250,000, if that proof-of-concept project achieves certain benchmarks.

Whenever I've suggested "Why don't we consider just letting people bury trees," NZ climate people look at me like I'm crazy. 

Meanwhile:

A handful of research groups and startups have begun exploring the potential to lock up the carbon in wood, by burying or otherwise storing tree remains in ways that slow down decomposition.

Trees are naturally efficient at sucking down vast amounts of carbon dioxide from the air, but they release the carbon again when they die and rot on the ground. Sequestering trees underground could prevent this. If biomass burial works as well as hoped, it may provide a relatively cheap and easy way to pull down some share of the billions of tons of greenhouse gas that studies find may need to be removed to keep global temperatures in check in the coming decades. 

One of the usual objections from the kind of climate people who love to grope for excuses to ignore things that might help the climate (because those things don't force Radical Structural Change and Deep Decarbonisation) is that forests are risky because a forest that offsets emissions from a tonne of coal means a transfer of carbon from the geosphere to the biosphere, and the biosphere is risky. 

Well, carbon stored in trees can be stuck back into the geosphere. 

Look at all these approaches being tried. 

Burial costs

Other startups and research efforts are taking different approaches to the problem. 

The Australian company InterEarth believes that allowing trees to soak up salty groundwater before burying them will effectively pickle the wood, preserving it for extended periods.

The Carbon Lockdown Project, a public benefits corporation founded by University of Maryland professor Ning Zeng, has proposed creating pits that are lined with clay or other materials with low permeability.

In a paper this year, Zeng and a colleague also highlighted a number of other potential approaches, including storing biomass in frozen sites, underwater, or even in above-ground shelters. His earlier work found that harvesting and storing wood could potentially remove several billion tons of carbon dioxide a year at a cost of well below $100 a ton.

You don't need all of them to work. Or even any of these ones - there's lots of other projects being tried, including mineralisation. 

Run a clean ETS focused on net emissions and run the accounting properly. If any of these techs can scale up at low cost, we hit net zero at a low carbon price and could push for net negative, to undo the damage already done. If none of them do, we still hit net zero - just at a higher carbon cost.

I was on a panel discussion earlier this week about COP28 hosted by the NZ Institute of International Affairs - remotely, as daughter currently isolating with Covid and I don't want to impose risk on others (she's fine).  

@ClimateMorgan had an engaging exchange at Vic Uni last night with NZ experts @KaedenWatts @ZEALANDIA @EricCrampton on how to keep 1.5° in sight @ #COP28 🌏🌡️ Change is urgent & possible if we act quickly & decisively together! Thanks to @NZIIA_live for facilitating this panel pic.twitter.com/0Hr4UtdrVf

— Germany in New Zealand (@GermEmbWell) November 8, 2023

But the whole discussion was so frustrating. 

A friend who'd attended said my presence there was felt, like a fart in Church, despite my being remote. 

I talked about the ETS, changes to help it drive to net zero durably, tech bets NZ should be making, other tech underdevelopment. 

Germany's climate rep wanted to focus on gross emission reduction. But when I asked about Germany turning off its nuclear plants and now having to rely on coal, she said nuclear is bad because of Chernobyl. I have a very difficult time taking these people seriously. Unfortunately, they set the agenda at COP.  

Anyway - burying trees isn't as crazy as it might have seemed. 

Afternoon roundup

A closing of the browser tabs

• Dave Frame batting back the usual (often older) arguments from those who don't like climate science. 
• Alice Evans on the origins of 'Dayooth'
• Ben Kepes on the Māori parallel to the Jewish experience
• Consumer NZ figures that if one of our grocers lowers its back-end costs, there could be zero passing-on of savings to consumers. Even a standard monopoly model would have a reduction in price. It would be a fun microeconomics problem set question: come up with conditions under which Jon Duffy could be right (if any), and provide an answer simple enough for him to understand. Consumer NZ just keeps getting more absurd. 
• I like that NZ's Accident Compensation Commission is hiring a Lead Advisor, Econometrics.
• Pharmac's posted its final decision about pulling 27 drugs from funding consideration, 24 of which were proposed to be pulled because there was no apparent prospect of Medsafe registration. They've decided to pull 24 drugs, 22 of which are because there's no prospect of Medsafe registration. Tafamidis and Cefuroximine might get onto Medsafe's radar. This system is so stupid. 
• But the new stadium would really put Christchurch on the map, just like Ogdenville and New Haverbrook. 
• Interesting proposal around investment in buying out IP rights to make lower-carbon tech more affordable in developing countries. Loyal readers may remember that I've long argued that NZ could do something similar as moonshot on ag biotech. If AgResearch figures out low-emission pastoral systems, GE or otherwise, with government funding, don't try to earn money on any patent. Release it globally on a royalty-free licence that simply requires that a small fraction of the resulting global emission reduction credits to NZ's account. Lowish chance it pans out, but if it did, it would have high return. 

A Rule of Two for new drug approvals

Requiring Medsafe to automatically approve any drug that had already been approved by at least two trustworthy overseas regulators would sharply hasten new drug approvals without adding particular risk. 

Giving Medsafe an emergency handbrake for use in exceptional circumstances, subject to ongoing review to make sure they were using it appropriately, would reduce what minimal risk might otherwise result. 

I call it a Rule of Two. 

It's my column in Newsroom this week, and a report we put out on Thursday last week. 

The FDA spends hundreds of millions of dollars more on drug approvals than Pharmac spends buying drugs. It is exceedingly unlikely that Medsafe would ever find anything that the FDA missed. It is even more exceedingly unlikely that they'd catch something that both the FDA and the European Medicines Agency had missed. Or the EMA and Australia. Or the FDA and Canada. Or Canada and the UK. 

Medsafe has about 60 staff. Take this job off them and let them focus on areas where they might add real value. 

It isn't just that Medsafe pulls stunts like taking fifteen months to approve Ozempic after it had already been approved by everybody else and after it had already been on the market overseas for four freaking years. It's that Novo Nordisk didn't bother to even apply here until December 2021, because what's the point? Medsafe is too much hassle relative to the size of our market. They haven't submitted Wegovy for approval here yet, for obvious reasons. 

The full delay isn't the fifteen months Medsafe spent evaluating. The full delay is the over five years from the drug's second overseas approval until its approval here. 

Government here, and especially during Covid, loved blaming pharmaceutical companies for not getting their paperwork into Medsafe early. 

It would be like requiring Ferrari to send six of their latest and most expensive models to NZ for destructive crash testing, rather than relying on overseas approvals, and then blaming Ferrari for that there are zero Ferraris on the market in New Zealand. In that case it would be the stupid rule that would be the problem, not Ferrari. It's crazy that we seem able to (sensibly) rely on foreign approvals for cars but not for medicines. I'd think relying on just one would be fine, but a Rule of Two would be sufficiently better than what we have that that's fine too. 

Our report draws on the work of a couple of teams of Canterbury econ students who checked whether Medsafe approval ever really actively protects Kiwis. Turns out there's basically no cases where Medsafe long-term declined drugs that would have been approved by a Rule of Two, and Medsafe withdrawals of drugs from the market tends to follow foreign leads anyway. 

So. Set a Rule of Two. 

Policy doesn't have to be stupid. 

Daycare socialism

Maybe it wasn't a good idea to try running a central planning model for daycare?

Susan Edmunds points to some of the really rather serious consequences, and their cause.

Centres in Cromwell, to which she and her partner moved to be able to buy their own house, are full. She was told they would not have space until the end of 2024 or 2025. She was also on waitlists for home-based care.

...The Early Childhood Council said it was a problem in several parts of the country.

Its survey showed 50% of centres were 91% to 100% full, 15.56% of all centres had a wait list of more than a year and 15% had a waitlist of seven to 12 months.

Chief executive Simon Laube said network management rules introduced in February had made it much harder to open new centres.

“Originally the problem was too many centres springing up in the same place – you might get three centres on opposing corners which is not good for anyone because all three don't do well. That is a problem, but in that problem, the providers lose because they don't hit the occupancy level and the business fails. The solution of stopping centres opening gets rid of that problem but parents and families are losing out.”

He said the council would write to the new government to ask it to remove that regulation.

“I don’t know what you could do to tweak it, there was a real problem that led to it, but it’s not the right solution.”

Too many daycares is a problem that sorts itself out, if you let it. Regulations blocking new daycares is not a problem that sorts itself out. And then you get a pile of people who cannot return to work after having a baby. That has serious consequences too. Longer spells out of work will make it harder to return to the workforce for a lot of professions. Skills deteriorate. Experience isn't gained. 

And remember that barriers to exit (from childcare) are barriers to entry into that circumstance. Some people will delay or reduce the number of children they'd be having because government has screwed this up. 

He said research showed the average amount of time it took to establish a new service was 2.6 years, including planning and consents. Regulation meant that operators might sink a lot of time and money into a business only to find they were not allowed to open, he said. He said 200 centres had closed in the last year.

Oh and there's also this. The government also screwed up the labour market for early-childhood centres. 

He said centres were also facing disruption from the pay parity opt-in scheme, designed to address disparity in pay between teachers working in kindergarten and those in education and care centres.

Is there any part of childcare that government hasn't screwed up? All the regulations might sound well-meaning. And maybe they give some sense of meaning to the otherwise futile lives of the bureaucrats who write the rules. But the rules cause harm. 

And there's this on top of it:

Under the Building Act a single missed or unrecorded inspection in the past 12 months, for example, would prevent the issue of the warrant. 

A building would instead be issued new forms to show there had been non-compliance, and there would be no way to obtain a warrant of fitness until the next year. 

Auckland Council had previously issued a “report in lieu” to building owners if this were the case and a warrant of fitness could still be obtained.  

But last month the council stopped using the lieu reports and began using the new forms, meaning the workaround was no longer available.  

Early childhood council chief executive Simon Laube said a centre’s licence was conditional on operating out of a building that complied with the Building Act, which for a large number of Auckland centres meant having a building warrant of fitness.

He said there was concern the Ministry of Education would be heavy-handed with following the letter of the law, if centres did not technically have one. 

“The Ministry of Education are taking licenses off providers for a lot less than this, anything in the kind of grey areas they're moving in really heavy-handed, so something that's black and white like this … we just know what the Ministry of Education is like and they don't go lightly.”  

The outgoing Labour government has handed a lot of awful hospital passes to the incoming National-led government. An utter mess in ECE is one of them.  

Morning roundup

A closing of the browser tabs:

• The Economist's write-up of Barcelona's new Museum of Prohibited Art. The museum's website is here. 
• Europe considering pricing agricultural emissions.
• Bill Gates on some of the climate tech in the pipeline.
• Cass Sunstein on goods that people buy but wish did not exist. Fun as a logical exercise - this class of goods could exist in this way. But banning them would just push status-seeking onto other margins. Other margins can be worse. And what if there's an additional class of goods: ones that people loudly claim they wish didn't exist, but secretly enjoy? In that case, could you ever tell which ought to be banned?
• Stephen Jennings's Conversation with Tyler. Great stuff on building new cities in Africa, and a gloomy bit about New Zealand. 
• What happens when central government tries to centrally plan daycare. Maybe Stephen Jennings is right to be pessimistic about the place. 

Maybe spend less on stuff that isn't pipes?

If this is correct, it seems even more irresponsible for Wellington Council to be spending any substantial amount of money on anything other than the pipes for a while. 

A billion dollars a year is what it would take to fix Wellington’s water woes, but the boss of Wellington Water, Tonia Haskell, says that is a figure beyond councils to fund.

“Councils can’t afford it and a new water entity probably could not afford that either, unless the Government chips in,” Haskell said in an interview with The Post.

...She describes $1b as an “unconditional budget” and notes that it could take many years to do the work required. “I do not know at what point that tails off.”

The annual figure of $1b includes the cost of such things as a new wastewater outfall pipe for Hutt Valley, installing meters, new reservoirs, upgrading wastewater storage and treatment plants across the region and completely renewing the piping network.

I do not know whether there's gold-plating in the treatment plant upgrades that could be trimmed back. If the costs here include completely renewing the piping network, the costs of that renewing ought to be spread over decades rather than borne up-front. And note that these costs are for the whole region rather than just Wellington. 

But however you structure it all, the costs won't be small. The same set of households and businesses will be paying the combination of rates and water charges to cover the bills over the decades to come.

Spending a hundred million more than necessary on a central library, and another hundred million on town hall, and the convention centre, and who knows what bill yet to come on the Michael Fowler Centre and the Opera House and the insane-looking subsidy to a multinational movie theatre company and whatever's going on in transport... c'mon folks. Give it a rest until we know what kind of burden we're all looking at for fixing the pipes. 

Or at least quit whining to central government that you need bailouts when you're simultaneously deciding to spend a heck of a lot on projects that look pretty iffy while the pipes are falling apart. 

Forced de-banking

AML compliance in the US is imposing a lot of harm on people mistakenly suspected of moneylaundering. 

The New York Times provides a few worrying examples. The algorithm flags something, and accounts go poof. 

Bryan Delaney has owned several New York City bars over the decades, and he and his business partner and general manager, Jennifer Maslanka, have a longstanding system for handling cash: It goes to the bank on Fridays and Mondays.

As card use has increased over the years, the size of the deposits has decreased. To make the accounting easier on new staff who started working during the pandemic, Mr. Delaney and Ms. Maslanka often rounded deposits down to the nearest thousand and kept the rest of the cash on hand to make change.

This year, Chase closed the bar’s account, plus personal checking and credit-card accounts for Mr. Delaney, his wife and Ms. Maslanka, giving them a handful of weeks to make other banking arrangements.

Federal law requires depositors to fill out a form if they’re depositing or withdrawing more than $10,000 in cash. Sometimes, in an attempt to avoid the gaze of the authorities, account holders will engage in “structuring,” making a series of transactions just under $10,000. It’s one of the top reasons that banks file suspicious activity reports.

Mr. Dubrowski, the JPMorgan Chase spokesman, said the bar’s series of deposits was indeed the problem.

“We must know our customers and monitor the transactions that flow through our bank,” he said. “That includes instances where we see a pattern of cash deposits that are just below federal currency reporting thresholds.”

Mr. Delaney said he had not been engaged in structuring when depositing money in round numbers. All the cash had come from the bars, he said, and he reported his income and paid his taxes as he was supposed to.

The bank’s explanation is especially maddening, given that he and Ms. Maslanka had filled out plenty of the $10,000 forms over the years. “What’s to gain from not filling it out?” he said. “What’s the risk of filling it out? I’ve done both when deposits warranted that.”

“I’m still so confused,” Ms. Maslanka said. “Do you think I’m part of some underground Mafia, laundering money through my little beer bar?”

I wonder how common this is in NZ. 

Morning roundup

The closing of the tabs....

• Free speech used to be a US left-wing value. On American campuses, only conservative students would support allowing a controversial speaker they disagreed with to speak on campus. This is very bad. 
• There's some support for free-speech on the NZ left, mostly Chris Trotter and Josie Pagani and Bryce Edwards. The rest pretends that free speech is some American neoliberal imposition and that we need nuanced approaches in which enlightened Wellingtoneans (themselves) would get to tell everyone else what speech is allowed. I wish we had better data on broader preferences.  
• The growth of the public sector over the past six years.
• The US National Institute of Justice rated the South Dakota 24/7 sobriety project as promising. Their whole database is likely useful for those keen on approaches that have some evaluation. 
• A $1 increase in US minimum wages is associated with a 0.92 percentage point reduction in percentage of employers offering health insurance and a 1.93 p.p. increase in prevalence of plans with deductibles. Always remember that total compensation bundles are more than just wages, and that squeezing one element of that bundle may affect the others. 
• The Paul Ramsay Foundation thinks Evidence Institutes, which trawl the lit [like the US National Institute of Justice, above] are a good idea. 
• Oh, I'm going to have to come back to this one as a dedicated post or column. Luming Chen's job market paper at UW-Madison. Policy uncertainty around wind energy destroys $5.9 billion in value in the US.