Cultural preservationism

Branko Milanovic worries that a world of free migration would be a world where some cultures would cease to exist. He says some countries would empty quickly under open borders, and suggests their cultural traditions would then end.

Destroying the variety of human traditions is not costless, and I can see that one might believe that maintaining variety of languages and cultures is not less important that maintaining variety of the flora and fauna in the world, but I wonder who needs to bear the cost of that. Should people in Mali be forced to live in Mali because somebody in London thinks that some variety of human existence would be lost if they all came to England? I am not wholly insensitive to this argument, but I think that it would be more honest to say openly that the cost of maintaining this “worldwide heritage” is borne not by those who defend it in theory but by those in Mali who are not allowed to move out.

There is a clear trade-off between the maintenance of diversity of cultural traditions and freedom of individuals to do as they please. I would be happier if the trade-off did not exist, but it does. And if I have to choose between the two, I would choose human freedom even if it means loss of tradition. After all, are traditions that no one cares about worth preserving? The world has lost Marcomanni, Quadi, Sarmatians, Visigoths, Alans, Vandals, Avars and thousands others.  They have disappeared together with their languages, cultures and traditions. Do we really miss them today?

Those trade-offs exist at the margin, but consider this too:

The dancing snow-shovellers are from the Maritime Bhangra Group in Halifax, Canada. 

Culture is dynamic. We've lost the Visigoths, but we've also lost the French as they existed in 1600 (though we have some reads into it from literature, music, and rural Quebec). Insisting on cultural preservationism in the cross-section by preventing migration would not be that much different from insisting on cultural preservation in the time-series by setting out enclaves isolated from further cultural development. Like Amish communities, but set out to preserve "America as it was in 1950", or endless other iterations. One neighbourhood in Portland might be required to maintain man-buns, forever.

Milanovik is right in his ultimate policy conclusion - that any benefit there might be in preservationism is dwarfed by the improvement in welfare generated by letting people move to places where they can have happier lives. 

But I think he's too pessimistic about cultural preservation within multicultural western societies like Canada's. The cultural traditions of home adapt to the local conditions. Like Bollywood-style snow-clearing. 

I also expect he's not right in the general equilibrium. In the first stage, sure, you'd get big migration in response to open borders. But huge existing differences in incomes due to institutional and policy inefficiencies are maintained over time in part because of border walls. Tearing down those walls pushes us closer to Tiebout worlds, where differences across communities' policies are driven by heterogeneous preferences rather than by whether you're stuck with powerful kleptocratic rulers. Maybe, just maybe, the resulting cultural differences across countries would be more authentic than the ones we get where the Dictator has his own ideas about what national culture should look like.

The targeted cohort

If you're surprised by the latest results from the Dunedin cohort study, you haven't been paying attention:

We integrated multiple nationwide administrative databases and electronic medical records with the four-decade-long Dunedin birth cohort study to test child-to-adult prediction in a different way, using a population-segmentation approach. A segment comprising 22% of the cohort accounted for 36% of the cohort’s injury insurance claims; 40% of excess obese kilograms; 54% of cigarettes smoked; 57% of hospital nights; 66% of welfare benefits; 77% of fatherless child-rearing; 78% of prescription fills; and 81% of criminal convictions. Childhood risks, including poor brain health at three years of age, predicted this segment with large effect sizes. 

A relatively small group generates the preponderance of social cost. And it's G-loaded. A rough measure of child intelligence at age 3 predicted a lot of bad outcomes.

Some of those relationships eased back in multivariate analysis with childhood SES included. But that's a tricky thing. If income is increasing in IQ (albeit concavely), then childhood SES depends on parents' IQ, but parents' IQ is a predictor of the child's adult IQ independently of of childhood SES. Some of the effect of childhood measures of brain health on adult outcomes is then unduly attenuated by inclusion of childhood SES in the regressions as some of the IQ effect could be picked up as a measured SES effect. On the other side, a higher IQ kid born into a lower SES household with lower IQ parents would select into worse environments for cognitive development over time, following the Dickens-Flynn kind of model. You need twin studies or adoption studies to start teasing that out properly.

While a fifth of the Dunedin cohort was responsible for massive amounts of the cohort's crime, prescriptions, hospital stays, fatherless children and social welfare costs, another cohort had almost nil costs.

The paper is optimistic about the potential for interventions on the identified group to reduce long-term costs and improve outcomes. I agree that identifying the cohort for targeting is important, but I'm a bit more pessimistic about the chances of success.

They note the data is right-hand censored at age 38 years. I wonder how many children had accrued to people in each of the above-pictured cohorts by that age.

Stay weird, Portland - but not like that

Weird can be good and bad.

Good weird:

Bad weird:

Today, Portland, Oregon, became the first jurisdiction in the United States to use the tax code to address the phenomenon of outrageous CEO pay. The City Council passed an ordinance, sponsored by City Commissioner Steve Novick, that requires publicly traded corporations to pay a surtax if they pay their CEO more than 100 times their median worker.

It looks like the levy would run through the business license tax for firms that operate in Portland and who consequently would have to get a business license. The Tax Foundation comments:

Whatever the ratios turn out to be, however, the Portland ordinance, if approved, might be little more than window dressing—more of a gesture than a policy prescription. Maybe CEO pay is too high and maybe it isn’t, but a Fortune 500 corporation is unlikely to renegotiate its chief executive’s compensation package to avoid an additional tax hit of a few thousand dollars in Portland, Oregon.

And even if somehow the tax did lead some company (perhaps a Portland-based business, with much higher liability in the city) to reconsider executive compensation packages, there is very little reason to believe that any of the savings would accrue to employees. Like it or not, businesses are not benevolent societies, and it would be curious if companies with allegedly inequitable compensation schemes would, having made a savings on executive compensation, simply gift that amount to employees in the form of pay raises. Rather, any savings would likely accrue to shareholders or perhaps be reinvested in the company.

Assuming there are any savings at all. Corporations presumably seek to avoid paying their CEOs more than they are worth to the company. They may get this wrong—perhaps even frequently. If they thought that the company would do just as well with a lesser-compensated chief executive, though, they would likely go that route, and if their initial judgment was correct, a company that actually feels compelled, for tax purposes, to curtail executive compensation would see a decline in its fortunes, with attending losses for shareholders and wage earners alike.

So a surtax that raises little in revenue but makes a statement about the weirdness of Portland. I prefer Darth Vader with flaming bagpipes on a unicycle.

HT: Glenn Boyle

Assorted links

The Friday closing of the browser tabs brings us a few gems:

• Noah Smith is absolutely correct. The academic mill is partially to blame for declining trust in science. Why? Lots of people who aren't really up to producing great, or even just good work, face strong incentives to publish anything. For similar reasons, I worry about accounting being subject to the same research and publication requirements as other disciplines in New Zealand.


• Danyl Mclauchlan's take on Key is excellent. I disagree with him a bit at the end though. New Zealand's system on emissions trading lets New Zealand automatically get serious about carbon emissions when the rest of the world does too: prices here will lift when international acceptance of dodgy credits ends, which is when everybody else is getting serious, which is when we should be too. 


• Kiwis with American friends have always had friends ship stuff over that's not here available. Great to see some entrepreneurs making this available to everybody. 


• Thomas Schelling died last week. Here is Schelling's explanation of organised crime. See also Ortmann and Cowen.


• The new process for settling Kaikoura EQNZ insurance claims is far better than the one that applied in Christchurch. EQC had told the government before the Christchurch quakes that its job should only be to cut cheques, not to run assessments. EQC had to take on a bigger job than that in Christchurch; it didn't go well. Those with insurance claims in Christchurch will be able to deal instead with their private insurer. Hooray! Meanwhile, Lew Stoddart provides a bit of commentary on Brownlee's push-back against criticism from folks dissatisfied with other parts of the government's response.


• Arthur Grimes and Richard Fabling find that Ultra-Fast Broadband on its own did nothing to improve firm productivity, but that firms that jointly invested in UFB and organisational ICT-based changes did do well. The average effect on productivity's being insignificantly different from zero will not be encouraging for those expecting more than that. 
• Market indicators to watch to tell how Trump's doing: foreign policy edition.


• Diet soda also increases obesity: consumers of diet sodas eat more afterwards. View these results, as all results in this area, with due scepticism. 


• The evidence strongly suggests that the world entered a bizarro-timestream somewhere around June of this year. 


• Brendan O'Neill's celebration of Christmas excesses.


• This headline makes no sense. "Euthanasia debate: 'Those in pain shouldn't have to die like a dog because of ego and conceit of others'. But vets euthanise dogs that are in pain. People don't get that option. I blame Trump for the "like a dog" thing.


• New Zealand's drug laws disproportionately affect Māori 

So endeth the lunchtime closing of the browser tabs. My but they accumulate. 

Different strokes for different folks

Yesterday, the Initiative's excellent policy analyst Jenesa Jeram squared off against the Ministry of Health's superb health economist Sarah Hogan for a fun Christmas debate for the Government Economics Network. The moot? "New Zealand needs a sugar tax to protect us from Christmas excesses".

The positions were assigned by the hosts; Sarah had to argue the case for a sugar tax. She did as good a job in doing so as is really possible, given the inherent indefensibility of the thing. And Jenesa's case against was very good as well. I really liked the introduction; one of our hosts suggested that the moot should have been "New Zealand needs a sugar tax like it needs a hole in the head."

I was less enthralled with one Wellington sugar-tax campaigner [lousy Chatham House rules] who zipped in at the end, not having caught the presentations properly, to ask Jenesa whether she were 'totally cool' with high diabetes rates since she argued against a sugar tax. Where a sugar tax has tiny effects on consumption, one can both not like diabetes and think that a sugar tax is a bad idea, as Jenesa pointed out to him more kindly than I'd have been tempted to in her place.

The attendees at the debate voted at the end to reject the moot (and so to reject a sugar tax) by about a 2:1 margin; Sarah won for best presentation - she did do an excellent job in presenting the far more difficult case. I had urged Jenesa to follow the example set by MoH economist Bronwyn Croxson when she debated against me on the merits of Christmas full-stop: she plied the audience with chocolate-covered almonds. Unfortunately, Jenesa's scruples are too binding for such things.

As I clear through the browser tabs at the end of the week, here's the New York Times with a reminder against One Big Thing approaches to obesity. Different diets work for different people - obesity and its treatment can be rather person-specific. Some can have massive success with one diet, which does nothing at all for somebody else, and appetite-suppressing drugs can also work for some people too.

Cataloguing Outcomes

Ever wanted to know what the government's targeting, how it's measuring outcomes, and what programmes are intended on hitting those outcomes?

Here's Superu's Treasury and Superu's Government Outcomes Catalogue Tool. The rather slick Excel tool lets you select the domain you want, the sub-domain, and filter a bit on demographic, unit or coverage basis. Hit Search and it'll tell you what initiatives are in place, the indicators they're using as measure of the stated outcomes, whether it's part of the better public service goals, and for what groups the outcomes are measured.

And some of the outcome domains:

I can't see any linkage through yet into what the figures are on the measured outcomes, but I'd expect those would come in time. At least now you can tell pretty easily what initiatives are out there, their status, and how they're intending on measuring things.

Kudos to Superu for getting this out. 

UPDATE: Credit where credit is due, and apologies. It is on Superu's site, but it looks like Treasury did the bulk of the work on this one. Apologies!

Iwi assets

A new report from Phil Barry and his team at TDB highlights some great success in iwi asset management.

We estimate the total assets of the post-settlement entities are now valued at around $6b. This report considers eight iwi - Ngāi Tahu, Ngāpuhi, Ngāti Porou, Ngāti Whātua Ōrākei, Port Nicholson Block, Rangitāne o Wairau, Tūhoe and Waikato-Tainui - with combined assets of around $4.3b.

Treaty settlements provided substantial assets to iwi. By and large, they've been well managed. The separation between commercial and social arms seems important:

The eight iwi we have reviewed generally have similar corporate structures. While these structures are often complex, typically there is an overarching trust that makes decisions about distributions and the nonfinancial objectives of the group, while a separate commercial entity has been established to manage the group’s commercial assets and to make investment decisions under a commercial mandate.

One side is profit maximising; the other side uses the earned profits to achieve iwi social objectives. Keeping a clean line between the two forces a harder line on asset management. The report notes a bias toward property investment which puts some risk into the portfolio.

And whoever at  Ngāi Tahu negotiated the relativity payments is a genius.

Over the last 10 years, Ngāi Tahu has nearly tripled its asset base, from $561m in 2006 to $1,504m in 2016. With little debt, Ngāi Tahu’s net worth has grown significantly over this period. 2016 was no exception, with the asset base increasing by 12% and net worth increasing by 11%. Ngāi Tahu has received numerous relativity payments from the Crown over the period, with payments in 2013, 2014 and 2015 of $69m, $13m and $29m respectively.