The case for unilateral recognition

Bilateral, plurilateral, and multilateral are words that New Zealand's civil service love. There is nothing that can't be improved by doing it in concert with others. 

Sometimes there's good reason for just doing stuff. 

New Zealand made the right decision when it unilaterally slashed all of its tariffs. It also progressed all the other trade agreements that helped make trade easier. But it didn't wait for those lengthy processes. Just cutting tariffs earlier was just fine. 

A couple of weeks ago in Newsroom, I made the case for doing the same thing with standards recognition. We already do it with automobiles. We don't need bilateral or any other agreements between New Zealand and other places to make sure that the cars we import are safe. Instead, there's a long list of standards that New Zealand considers to be good enough, whether the standard-setting countries like it or not. Pretty unlikely that they'd object though. 

New Zealand is part of FSANZ - a bilateral standards-setting body for food-labelling. NZ and the Australian States jointly set the product labelling rules. But it also means that imported foods that aren't labelled for the NZ-Oz market have to carry the stupid little stickers that add cost but no real value. 

Like it did with cars, New Zealand could unilaterally say that products labelled for the American, Canadian, Singaporean, UK, Irish, or EU markets (so long as the labelling includes English) is good enough for here too. We don't need bilateral, multilateral, plurilateral, or any other kind of -lateral agreements to do it. We could just do it. 

Sure, it would be even better if those countries all said that FSANZ labelling is good enough for their markets. But getting that agreement seems impossible for Canada, and probably hard for the rest. And much of the market-access benefit can be achieved through unilateral recognition. If NZ unilaterally said that products labelled to Canadian standards were good enough for NZ, then a NZ producer targeting the Canadian market could just label everything to the Canadian standard and sell that version here and there. 

First best would be everyone just agreeing that everyone has been stupidly precious about all of this, and that the labelling for any of these markets is good enough. Then nobody would have to set country-specific labelling runs. And if it were likely that NZ could have agreements with piles of countries to accept each others' labelling, then an NZ producer wouldn't have to decide which of those markets it was targeting. NZ labelling would be good enough for all of them. 

But bilingual labelling in Canada is best viewed as a religious commitment. 

MinReg this week put up an excellent report on the costs of this kind of labelling nonsense. It makes the case for, among other things, mutual recognition of international labelling standards with trusted jurisdictions. 

I don't disagree, conditional on those agreements being feasible to achieve in finite time and not precluding NZ acceptance of other country standards as well. 

But unilateral recognition should also be on the table. Having UK-labelled stuff on the shelves here would be just fine. And it'd make it easier for a UK-based supermarket to open stores here, if it wanted to.

Migration or Stagnation

Michael Clemens shows that a rise in noncitizen worker prevalence in Korea from 3% to about 14% over four decades would offset the effect of Korea's demographic shift. 

The Republic of Korea (ROK) faces an economic crisis driven by rapid population aging, approaching negative economic growth. I quantitatively examine the full range of policy responses and find that enhanced temporary labor migration is necessary, sufficient, and feasible to offset demographic drag. It is necessary because no other policy channel (including capital accumulation, artificial intelligence adoption, elderwork, education, or pronatalism) has the clear quantitative potential to meaningfully offset aging in the best available forecasts. It is sufficient because a rise in noncitizen worker prevalence from 3% to about 14% over 4 decades would offset most of the demographic drag on economic growth in the ROK. And it is feasible because this trajectory resembles that already experienced by Malaysia and Australia. Many advanced economies will follow in the ROK’s demographic footsteps and have much to learn from its decisions.

I'd run some rough figures earlier in the year. If NZ maintained net migration of around 1.8 young net migrants for every person turning 65, you could maintain the current under-65 to over-65 ratio. The absolute number of migrants would have to go up as resident migrants age. If other ways of changing NZ Superannuation are ruled out, this would be an alternative.

Potential deregulations

Cato's Handbook on Affordability provides a set of policy recommendations for reducing unnecessary government-imposed costs. 

There's the usual stuff you'd expect, much of which is US-focused.

But a few bits are worth thinking about here too.

In the chapter on healthcare, Cato suggests automatic removal of prescription-only requirements from medicines. They write:

• Eliminate prescription regulation. The FDA makes medicines less affordable by requiring patients to obtain unnecessary and costly prescriptions. Adults can safely self-medicate with many medicines—including birth control pills, HIV prophylaxis, and GLP-1s—for which the FDA currently requires a prescription. Overall, prescription regulation increases prices, increases the nonprice costs of obtaining medicines, reduces access, and ironically reduces patient safety. While direct-to-consumer platforms such as TrumpRx, Cost Plus Drugs, Amazon Pharmacy, and GoodRx can theoretically reduce prices by injecting transparency and competition, the more effective reform would be to strip the FDA of its power to require prescriptions. 
• Remove unnecessary prescription requirements. If Congress cannot take prescription regulation power from the FDA, then Congress should enact rules that automatically remove prescription requirements after a certain period of time, which would allow consumers to purchase more medicines directly. Greater over-the-counter access would reduce the price and nonprice costs of medicines. 

John Key made pseudoephedrine-based cold medicines prescription-only. It seemed unlikely to substantially affect access to methamphetamine. Within about four years it was very clear that the policy failed. But it took about a decade more before that prescription-only status was removed. 

New Zealand could schedule review of longstanding prescription-only classifications, with a presumption favouring equivalent access where trustworthy overseas jurisdictions allow non-prescription access. Maintaining prescription-only status would require published justification that takes into account the added cost and burden imposed by prescription requirements.

In the chapter on childcare, Cato recommends expanding the supply of au pairs on the J-1 visa, simplifying the administrative burden facing households employing in-home care, broadening visas for childcare more generally (noting that a 10 percent increase in low-skilled immigration may reduce childcare costs by 2 percent), easing degree requirements for childcare workers, and subjecting car seat mandates to cost-benefit review.

A lot of those recommendations could carry over to here. 

The benefits of car seats for older kids aren't that big, and the costs are real. 

Immigration NZ guidance says that a niece or cousin visiting for six months to help with childcare is likely to count as working, with consequent need for a work visa. And if that work tallies to more than 30 hours per week, the relatively-simple IR56 isn't available. Surely a simplified visa and tax process could apply. 

The rest of the report's worth looking at - but mainly focuses on US issues or things that I've already covered otherwise. 

For a sense of proportion: datacentre water use

I like this chart, from Andreas Heuser and Phil Whittington's excellent piece making the case for datacentres.

Nobody has a sense of perspective on industrial-scale water use. 

Disappointing - Updated

The ACT Party has announced a new policy that would:

• Remove the existing Permanent Resident visa category;
• Require all Resident Visa holders to receive a 5 year travel facility, replacing the current two-year initial travel condition;
• Require all Resident Visa holders to be physically present in New Zealand for at least 730 days within any rolling five-year period, with exemptions for those working overseas for NZ employers, accompanying family-members, military personnel serving overseas, those with a citizen-spouse, or other compelling humanitarian reasons.

I have questions. 

• Are existing Permanent Residents to be grandparented to that status, with the category only closed to new entry? Or do we all lose Permanent Residence?
• If existing Permanent Residents lose that status, are we punted into the resident category or does something else happen?
• Many countries forbid dual citizenship, or make dual citizenship really hard. Some will withdraw your existing citizenship if you take up citizenship in a second country. Anyone who is a citizen of one of those countries and is resident in NZ would be forbidden from splitting time between the two countries without taking up NZ citizenship, which would mean the loss of that other citizenship. Would this count as a humanitarian reason for an exemption? How much red tape will be involved in getting that kind of exemption? What would be the associated regulatory burden both on those required to jump through the new hurdles, and those required to process the paperwork?
• The Active Investor Plus visa provides a path to residence in which those investing at least $5 million can be eligible for residence with 21 days' presence over three years, or by investing $10 million and spending 105 days here over five years. Investors in that pathway, who will have invested millions of dollars, are promised that they can obtain Permanent Residence after meeting those requirements. They are not listed as an exemption. And you have promised to abolish the category that formed the basis for their investments. Many of them will be managing investments across multiple countries, and New Zealand's general not being giant jerks to migrants pitch has been part of the deal. Will you provide them with a grandparented right to the Permanent Resident visa category? If not, will you compensate them for any losses if they liquidate NZ investments where you've broken the deal? 
• To what actual problem is your proposed policy the most cost-effective solution, and do you really think the benefits exceed the cost? There are going to be a whole pile of unintended consequences if you go ahead with this. 

Update:

An ACT Party spokesperson has provided a few additional details. What they have in mind is not as bad as the worst-version.

The policy is not retrospective, so existing Permanent Resident Visa holders would not be affected.  Nobody who already holds a Permanent Resident Visa would be moved onto another visa, required to reapply, or subjected to the new 730-day requirement. ...

The Active Investor Plus Visa is exempt, so the existing arrangements for those investors, and future ones in the same category, would remain.

I still really do not like any of this. But at least it is not retrospective. And at least those coming through the Active Investor Plus category will not be affected. I don't know whether they'd achieve that by voiding the days-test for residents who came through that pathway, or by closing the PR pathway to everyone but those coming through specific channels. 

Conditional on there having been some decision to create a wider differential between residence and citizenship, I think it would have been better to also maintain a PR channel for residents whose passport-country forbids or makes dual-citizenship onerous.