Morning roundup

Another closing of the browser tabs, including a couple from Auckland University's Prof Robert MacCulloch, who's caught a few things I'd missed.

• MacCulloch catches a piece from John McDermott, former RBNZ Chief Economist, criticising the Bank's recklessness. Adrian Orr likes to paint his critics as being some kind of right-wing extremists. Bit harder to do that with McDermott. But it's also worth noting that some of the decline at RBNZ happened under McDermott's watch. That's when research capabilities started being pushed out. 
• MacCulloch finds Shamubeel Eaqub's critique of ACT Party leader David Seymour's economics more than a little thin. Bottom line: it's off to paint Seymour's positions as 'illiterate' and 'lies' when plenty of economists agree with Seymour on that excessively loose fiscal policy can contribute to inflation when we're up against supply constraints. Perhaps some of is definitional? I'm generally happy to say that inflation is always and everywhere a monetary phenomenon, but if government is running giant deficits while facing a positive output gap, it's going to be pushing up prices by doing so. FWIW, here's Waikato's Prof Frank Scrimgeour also noting pointing to the consequences of the continued inappropriate fiscal push. 
• Under pressure over testing, Director General of Health Bloomfield told press "To improve our horizon scanning and considering new tests, we have established an innovation team... reviewing other countries' experiences with the use of testing technologies." There was no such team. What's the way of phrasing things in NZ that avoids defamation... the guy seems to have a habit of saying things that wind up having been entirely wrong, and that any reasonable person in his position should have known to have been falsehoods. 
  
• Things that are overdetermined are overdetermined. Queensland District Council refusing to provide a consent for Peter Thiel to build a lodge on his land: the normal Resource Management stupidity? Council just doesn't like the guy? Both?
• 2022 vs 2008
• Barriers to prescribing medicinal cannabis. 

Afternoon roundup

The afternoon's worthies

• Covid tests considered reliable enough to let you board a flight to New Zealand aren't considered reliable enough to be allowed to be imported into the country. We truly are run by Vogons. 


• Glad to hear that Michael Reddell is feeling better. On 7 March he posted that his household had caught Covid but all was well. On 29 March he posted that he'd been unable to maintain concentration for any sustained period: "Reading one 8 page memo bright and early yesterday morning completely did me in for the day." 28 April, he notes things are improving. I'm very glad that things are improving.  


• Parliament is scrambling to put some kind of enforcement regime around its stupid road user charge holiday. I feel bad for NZTA here. I expect they were blindsided on this one, that they told government that all of this was stupid, and they're stuck having to administer it. But I'll have to wait for the OIA results to find out. 


• David Dodge, former Bank of Canada Governor, argues for very large and rapid interest rate hikes. Stimulatory monetary policy in an overheated economy is a bad idea. Meanwhile, Adrian Orr assures us RBNZ has everything in hand and thinks his interest rate increases thus far are courageous. I miss the old Tui Billboard "Yeah, Right" campaigns.


• Darian Woods sings about GDP on this Planet Money episode. Very suitable for NCEA classroom use. Darian was in the same superstar cohort with James Graham (now teaching at Sydney) and Nick Sander (Bank of Canada). Good times. Here's an old RNZ piece on his album with Lucy Botting. 


• Russians supporting the current thing


• The Auditor General's worried about Covid spend. Treasury hasn't seemed really able to keep on top of this spend. And Treasury noted that it only likes the government's new debt ceiling if there's a focus on value-for-money in spending. So we have a new public finance regime that requires more vigilance from Treasury, an not a lot of reason to believe that Treasury is up to the bigger task. 
• Next time we're out near Dunedin, we'll definitely be checking this out for the kids: a 12 year old down there is running her own business, doing horse riding experiences for other kids. 


• A private backer was ready to sponsor Moana Pasifika - but the NZ government prefers to crowd out private investment. 


• Divorce rates are down, but largely on the back of marriage now largely being only chosen by those with strong preferences around being married. 51% of babies born in 2021 had married parents. Yikes.


• The convoluted ownership structures for the proposed amalgamated water entities might not even achieve balance sheet separation.  


• Hard to tell if this is the normal RMA stupidity, or bureaucrats sticking it to Peter Thiel just because. Either way it ain't great. 


• Monetary policy in pandemics. "If the activist policy was appropriate, by year end 2022, inflation will be on the way back down to 2 percent with an unemployment rate remaining near 4 percent. If the nonactivist policy would have been better, inflation would remain near double digits and would recede only with a recession."

Citizen Thiel

A new year brings a new New Zealand media and Twitter zeitgeist.

Tired:

Low-skilled immigrants from China and the Pacific are ruining our economy. They’re hurting New Zealand’s productivity stats, they’re making New Zealand a low-wage economy, and they’re stealing all the houses. We need to focus on getting higher skilled migrants, and especially ones from places with not-scary last names that sound more familiar. We wouldn’t need to think about maybe having some terraced housing close to downtown in a city of a million people if the low-skilled migrants went away.

Wired:

Rich, highly skilled and highly connected American tech immigrant investors who buy properties none of us could afford anyway are totally the problem. Why would anybody give citizenship to a rich entrepreneur who’s invested millions in Xero and who can help build connections between the NZ tech sector and Silicon Valley? That’s totally corrupt.

Here’s another one.

Boring 2016:

Democracy totally sucks because it managed to elect Trump. How can we build a system that protects rubes from their own voting behaviour?

2017’s new hotness:

Peter Thiel is an awful dangerous extremist because he said that democracy often doesn’t yield the policy outcomes he likes. Doesn’t he believe in democracy?

Last year’s take on immigration really was pretty tired. Next week, the New Zealand Initiative will be releasing a report showing just how tired it was – and how out of line it was with the evidence. But 2017’s isn’t an improvement.

Here’s a better alternative on the Thiel question: the government was right to grant New Zealand citizenship to Peter Thiel in 2011.

I make the case for it over at The Spinoff. Enjoy!

I don't like Thiel's support of Trump, but that's all well after 2011. And his support for seasteading was great.

If we take a potted intellectual history of Seasteading, it would look like this. Chicago University economist Milton Friedman said that people were too optimistic about the government’s benevolence and competence, and so government needed to be kept to fairly limited roles. His son, David Friedman, a law and economics scholar at Santa Clara University, said his father was too optimistic about the potential for constraining government to doing only good things: anarchism was the more sensible approach. And Patri Friedman, David’s son, then said his father was too optimistic about the chances of government ever relinquishing control: we need to take to the seas.

Patri helped set up the Seasteading alternative, in which people could set up a wide variety of different ways of organising society could be attempted on the high seas. Think of a Seastead as being like a body corporate, but with complete freedom to set whatever rules it wanted – about everything. And its residents, if they didn’t like how things were panning out, could simply unmoor their boat from the Seastead and float on over to an alternative. Each of us gets to choose which store to shop at or which neighbourhood to live in; Patri wants us to have the same ability to choose which kind of governance arrangement to live under. It could be a socialist commune or it could be far more laissez-faire. But it would be the government you chose because it was right for you.

I’m sure you can quickly come up with a half-dozen different obvious problems, but the Seasteading Institute has done a fair bit of thinking about them. And, ultimately, you really don’t have to believe it will work. The only people who will try it are those who do – you don’t have to agree with them, and that’s the beauty of it. And Peter Thiel provided some of the funding to help things along. It’s a long-shot, but it’s interesting. Imagine what we could learn about the merits of different policy arrangements if this kind of experiment really got going.

I supervised Brad Taylor's Masters thesis at Canterbury; he went on to do some work with the Seasteading Institute to flesh out the details. He's now a lecturer over at South Queensland. Here's his piece with Patri on seasteading.

Update: Here's the government's response on Thiel's citizenship.

Freedom's Angel Investor

Peter Thiel gets a nice feature write-up in Details:

Despite the innovations of the past quarter century, some of which have made him very, very wealthy, Thiel is unimpressed by how far we've come—technologically, politically, socially, financially, the works. The last successful American car company, he likes to note, was Jeep, founded in 1941. "And our cars aren't moving any faster," he says. The space-age future, as giddily envisioned in the fifties and sixties, has yet to arrive. Perhaps on the micro level—as in microprocessors—but not in the macro realm of big, audacious, and outlandish ideas where Thiel prefers to operate. He gets less satisfaction out of conventional investments in "cloud music" (Spotify) and Hollywood films (Thank You for Smoking) than he does in pursuing big ideas, which is why Thiel—along with an all-star cast of venture capitalists, including former PayPal cohorts Ken Howery and Luke Nosek, and Sean Parker, the Napster cofounder and onetime Facebook president—established the Founders Fund. Among its quixotic but potentially highly profitable investments are SpaceX, a space-transport company, and Halcyon Molecular, which aspires to use DNA sequencing to extend human life. Privately, however, Thiel is the primary backer for an idea that takes big, audacious, and outlandish to a whole other level. Two hundred miles west of the Golden Gate Bridge, past that hazy-blue horizon where the Pacific meets the sky, is where Thiel foresees his boldest venture of all. Forget start-up companies. The next frontier is start-up countries.

"Big ideas start as weird ideas." That's Patri Friedman, a former Google engineer, the grandson of the Nobel Prize-winning economist Milton Friedman, and, as of 2008, when Thiel seeded him with the same initial investment sum he'd given Mark Zuckerberg four years earlier, the world's most prominent micro-nation entrepreneur. Friedman, a short, kinetic 35-year-old with a wife and two children, maintains an energetic online presence that ranges from blogging about libertarian theory to tweeted dispatches such as "Explored BDSM in SF w/big group of friends tonight." Four years ago, a Clarium Capital employee came across a piece Friedman had written about an idea he called "seasteading." Friedman was soon pitching to Thiel, a staunch libertarian himself, the big, weird idea.

I'd love to spend a sabbatical year on a Seastead.
I'm extraordinarily pleased that my former Masters student and co-author Brad Taylor is working with Patri to make Seasteads happen.