DPB and work requirements

I haven't had the time to look in any depth at National's proposed changes to the welfare system. In general I favour work requirements and I favour low abatement rates to keep effective marginal tax rates low.

But I do wonder if anybody's keeping stats on birth spacing. If mothers on the Domestic Purposes Benefit are going to be subject to work requirements when their youngest child turns 6, that provides a reasonable incentive to have another child when your youngest is 5. It would be interesting to see whether there are any suspicious spikes in likelihood of having another child at that interval conditional on being a DPB recipient. We do know that folks are suspiciously likely to find work in the week in which their unemployment benefit would otherwise run out.

Lindsay Mitchell keeps far better track of these things than I do; she's also worried about the elasticity of childbirth to benefit timing.

Oh, for a world of lump sum transfers....

Given that Susan returned to work 3 months after Ira's arrival, and will return to work 3 months after our forthcoming daughter's arrival, at least partially because of excessive taxes on my income to provide transfers to mothers who wish not to return to work and are happy to live with their children in relative penury, I'm somewhat unsympathetic to DPB recipient concerns about having to put their children in childcare. I'd even sometimes be inclined to call it an abomination that we find ourselves required to be a two income household in order to fund the lifestyle choices of those who prefer to be a no income household. But that would be stepping from dispassionate economic analysis into areas where I've little comparative advantage.

Professional juries?

Today's Dominion Post helps build the argument for professional jurors over our current conscription system:

The Court of Appeal has talked of jurors consulting a ouija board during a trial and leaving deliberations to have sex.

Another juror who left the jury room screaming that they would not go back was grabbed and drawn back into the room, according to three judges.

The unusual legal discussion came up yesterday after the court was told that a juror had complained of being bullied while deciding the verdict against Auckland prostitute Dionne Liza Neale, who stabbed her some-time partner to death.

And we'd expect otherwise when jury duty pays next to nothing, is compulsory unless you have a good excuse, and ability to come up with a good excuse is g-loaded?

Kiwiblog pithily notes:

The sex breaks for jurors is quite novel. Does the Ministry of Justice supply the sex also, or do jurors have to find their own?

The use of the ouija board was the fault of the Judge with his instructions. He told the jury not to discuss the case with any living person. So obviously they concluded seeking guidance from dead people was fine.

And physically restraining a screaming juror who wants to leave is obviously just modelled on the Catholic method of selecting a Pope.

So there’s really nothing to worry about at all.

Malpass on MMP

Luke Malpass and Oliver Hartwich argue for a rather substantial change in New Zealand's Parliamentary structure: a lower house elected by FPP and an upper house elected proportionately by region. They rightly argue that the aim should be for a "least worst" system rather than a best one.

There are some big problems in squaring bicameralism with Westminsterian parliaments. First and foremost, from whom must the executive seek confidence? If an important bill fails in a Parliamentary system, there must typically be a confidence vote. Would a Kiwi senate striking down a piece of legislation trigger a no-confidence vote? If so, then all of MMP's problems with coalition formation return. If not, and the Senate can strike down money bills, what happens in case of deadlock? I've no particular problem with deadlocks, but they don't sit well with the notion of Parliamentary supremacy.

Malpass and Hartwich suggest adopting the Australian system where the Prime Minister can dissolve both houses and hold a full re-election should a government bill be twice rejected by the Senate. This solves one problem, but eliminates a potential benefit of bicameralism: namely, having an upper house elected on a much longer term than the lower house to insulate policy from the transient whims of the electorate.

Brook-Cowen, Cowen and Tabarrok's 1992 primer on constitutional change in New Zealand suggests that, relative to the unicameral first past the post system then operant, bicameralism offered little.

In New Zealand, the introduction of a strong second chamber would fundamentally alter the nature of accountability in government, and in a manner which would in our view be unsustainable. Westminster systems of government revolve around the accountability of the executive to parliament. With two equally powerful but differently composed chambers, the executive will face continuing conflicts in defining the interests to which it is accountable. As a result of these conflicts, we might expect a general weakening of accountability to the electorate. In particular, we would expect:

• a reduced incentive on the part of politicians to mirror the preferences of the median voter;
• an increased incentive to serve the interest of strong special interest groups;
• an increased incentive to maximise revenue and redistribute resources from citizens to the government;
• an increased incentive to favour particular regions and districts at the expense of other regions and districts; [fn: This outcome will hold where the second chamber is elected under a federal system or by means of regionally-based proportional representation.]
• an increased incentive for politicians to indulge their own policy preferences or ideology;
• a reduced incentive to respond favourably to international constraints.

Accountability conflicts of the kind described here are not necessary features of bicameral systems. Rather, they are a product of the particular combination of strong bicameralism and a Westminster parliamentary system. Strong bicameralism and accountable government could, by contrast, be combined if New Zealand were to adopt a more consensual system of government (for example, with the first chamber being elected on a proportional representation rule), or a presidential system of government (with executive power distanced from the legislature).

The status quo has of course changed since then. MMP means that Parliamentary parties must form coalitions to govern; forming coalitions across houses ought not be particularly more difficult than forming them within houses. So the costs of adding a second chamber are now much lower than they were from the 1992 status quo. But it's not clear to me that the main problems of the current system - too short an electoral time horizon, difficulty in ascribing responsibility in coalitions, generally excessive power for minor players - would much be solved by adding a second chamber.

The best argument I've seen for a second chamber is that it slows the implementation of reform such that it's more likely to be embedded: Australia having taken the slower route to economic reform but having brought more voters along. But would a bicameral system as here proposed really slow things down that much?

Every three years we'd vote for a lower house by FPP and for an upper house by regionally-based PR. It's the rare case in which the party with the smaller fraction of the vote gets a Parliamentary majority under FPP. It happens, but not all that often. So the dominant lower house party would also be the dominant upper house party. In the lower house, it would likely have a majority; in the upper house, it would have to form coalitions with minor parties. I'm not sure I see much difference between a large centrist party having to form coalitions in a unicameral parliament and that same large centrist party having to form coalitions in one house of a bicameral system. Moreover, as the party lists developed for Senate elections would be controlled by the party apparatus, the odds of there being substantial within-party differences across the two houses are slight.

I'd modify Malpass's proposal as follows:

• House elections (FPP) every four years; Senate terms of eight years with staggered terms - half elected each time there's an election in the House
• Senate elected by a national PR vote rather than regional PR to reduce geographical coalitions across houses: enough incentives for geographical redistribution in the lower house; demographically-based coalitions in the upper house should check the worst geographic pork-barreling (though massively attenuated as upper house parties are clients of lower house via party list structure)
• The Australian double-dissolution trigger seems a good one. The Executive is beholden to the House for confidence, but a bill twice rejected by the Senate lets the Prime Minister dissolve both houses for election; in that case, some Senatorial seats would be up for three-year and others up for six-year terms.

I'm still rather unsure of the benefits of a bicameral system with an upper proportional house over a unicameral first past the post system in a small country. Increasingly, the main criteria for me is whether voters can adequately apportion blame for bad outcomes. Westminsterian FPP fares best on that metric.

Other reactions:

• Brad likes the proposal.
• NBR reports here.

Yakuza and extra-legal contract enforcement

BoingBoing's interview with Jake Adelstein suggests that one of the Japanese Yakuza's main lines of work is in provision of extra-legal contract enforcement and dispute resolution:

In fact, lots of normal people go to the yakuza to solve problems. In Japan, civil lawsuits take forever to get resolved, and even if you win the lawsuit nobody will enforce it — if a guy owes you money but won't pay up, police officers aren't going to go out there to seize his assets. If someone owes you money or you're in a civil dispute, the yakuza will take half of whatever they can get out of the person who wronged you. But at last you get half, and it's fast.

...

Here's the thing: Japanese people kind of like the yakuza. They admire them. There are movies about them, comic books about them, there are fan magazines... they're part of the culture. They promote traditional values.

One of the reasons Japan has low street crime rates is because these guys are very good enforcers. In the neighborhoods where they're running businesses or collecting protection money, you won't see people getting mugged because the yakuza don't want people to be afraid to come there and spend money. They are a second police force and in that sense, and perform a valuable role in Japanese society.

Inefficiency in state provision of contract enforcement and security promotes competition?

NZ-US free trade: roundup

New Zealand's in negotiations with the US for a "Trans-Pacific Partnership" free trade area.

The US Dairy lobby has thirty senators complaining of New Zealand's "anti-competitive practices". Never mind that New Zealand has close to the freest market in the world for dairy products. Rather, it's Fonterra's largish size that has them worried.

Fonterra reminds the Americans that while Fonterra is big in traded milk, it's relatively small in total milk production:

American lobbyists complaining about the potential for a Trans-Pacific Partnership (TPP) trade treaty to give New Zealand greater access to the United States domestic dairy market have been urged by Fonterra to look at the issue in context.

"The US dairy industry is by far the largest among the TPP countries, producing approximately 70 percent of the milk in the TPP region, while New Zealand produces a little over 13 percent," Kelvin Wickham, Fonterra's managing director of global trade, told NZPA.

Lance Wiggs laments the strong language used by some on the NZ side complaining of anti-trade American practices; Bernard Hickey reckons NZ has been too meek.

Hickey goes further today, reiterating prior warnings that any trade deal with the US is likely to exclude dairy but include a pile of copyright nonsense.

For most countries, a free trade deal gives them a chance to kill a bunch of their own protectionist policies that are popular with voters: "We had to stop bashing ourselves in the head with the hammer if we wanted the other guy to do the same; it isn't so much that we don't like bashing ourselves in the head, but it's more important to stop the other guy from doing it because his mess occasionally splatters on us." But New Zealand stopped bashing itself in the head rather some time ago.

I'd be surprised if whatever deal went through actually wound up much constraining the Americans against continuing with dairy protectionism: dispute resolution under these agreements is long, arduous and expensive. Was the new bit of dairy protectionist legislation really the kind of thing prohibited under the TPP? Let's spend 20 years in the courts sorting it out (whaddya gonna do about it, put a tariff on US imports? You and I both know it won't hurt us 'cause we're big and you're tiny). But the copyright provisions would be enforced pretty vigilantly with retaliatory trade action: the MPAA doesn't think your ISPs are spending quite enough monitoring their subscribers; get them in line or we'll stop taking your dairy.

Says Hickey:

These FTAs are never about free trade from an American point of view. They are about creating another opportunity to strong-arm smaller countries into granting trade concessions to large American businesses. A much fairer, cleaner and freer option is proper reform of trade rules and tariffs through the World Trade Organisation. America and Europe have blocked reforms there because they would upset their apple carts of huge subsidies for farmers paid for by taxpayers and consumers through higher taxes and higher prices.

John Key is right to say a TPP without agriculture (and dairy in particular) is unacceptable. He should be prepared to walk away if the Americans try too hard to monster us in these talks.

Not so sweet

You only have to ask the Australian sugar farmers about the Australian FTA with America to find out how good that was. American sugar interests blocked sugar from the deal. American drug companies tried to shut down Australia’s version of Pharmac.

Australia’s exporters have hardly benefited from the deal.

I'm also skeptical. Worth giving it a try, but also worth remembering that no deal is better than many deals that could emerge when enforceability is factored in.

The dangers of demagoguery

David Frum writes thoughtfully on Obama's health care bill:

At the beginning of this process we made a strategic decision: unlike, say, Democrats in 2001 when President Bush proposed his first tax cut, we would make no deal with the administration. No negotiations, no compromise, nothing. We were going for all the marbles. This would be Obama’s Waterloo – just as healthcare was Clinton’s in 1994.

Only, the hardliners overlooked a few key facts: Obama was elected with 53% of the vote, not Clinton’s 42%. The liberal block within the Democratic congressional caucus is bigger and stronger than it was in 1993-94. And of course the Democrats also remember their history, and also remember the consequences of their 1994 failure.

This time, when we went for all the marbles, we ended with none.

Could a deal have been reached? Who knows? But we do know that the gap between this plan and traditional Republican ideas is not very big. The Obama plan has a broad family resemblance to Mitt Romney’s Massachusetts plan. It builds on ideas developed at the Heritage Foundation in the early 1990s that formed the basis for Republican counter-proposals to Clintoncare in 1993-1994.

...

We followed the most radical voices in the party and the movement, and they led us to abject and irreversible defeat.

There were leaders who knew better, who would have liked to deal. But they were trapped. Conservative talkers on Fox and talk radio had whipped the Republican voting base into such a frenzy that deal-making was rendered impossible. How do you negotiate with somebody who wants to murder your grandmother? Or – more exactly – with somebody whom your voters have been persuaded to believe wants to murder their grandmother?

I’ve been on a soapbox for months now about the harm that our overheated talk is doing to us. Yes it mobilizes supporters – but by mobilizing them with hysterical accusations and pseudo-information, overheated talk has made it impossible for representatives to represent and elected leaders to lead. The real leaders are on TV and radio, and they have very different imperatives from people in government. Talk radio thrives on confrontation and recrimination. When Rush Limbaugh said that he wanted President Obama to fail, he was intelligently explaining his own interests. What he omitted to say – but what is equally true – is that he also wants Republicans to fail. If Republicans succeed – if they govern successfully in office and negotiate attractive compromises out of office – Rush’s listeners get less angry. And if they are less angry, they listen to the radio less, and hear fewer ads for Sleepnumber beds.

So today’s defeat for free-market economics and Republican values is a huge win for the conservative entertainment industry. Their listeners and viewers will now be even more enraged, even more frustrated, even more disappointed in everybody except the responsibility-free talkers on television and radio. For them, it’s mission accomplished. For the cause they purport to represent, it’s Waterloo all right: ours.

(emphasis added)

If the analysis I've seen on the bill is right, it's a bit depressing. The best coverage combination - pay for things yourself by negotiating prices while carrying coverage for catastrophic care - is now illegal in the United States. Although, of course, we could just have achieved that via a sneakier route: the $2000/year fine for having no insurance coverage effectively being the premium for catastrophic coverage. Then, buy the insurance once you've discovered that you need something costly.

It's also interesting that the Stupak Amendment, which I'd thought might well kill the deal, was artfully negotiated around by Obama promising that money from the bill wouldn't be used for abortions.

It's a lot easier to stay calm about the Americans doing harm to their health care system when you're a thirteen hour flight away.

The government health care system here provides quality of service probably only slightly worse than Medicaid in the States (my estimate: better than Medicaid on the small stuff, worse on cancer treatment); high deductible catastrophic care insurance is cheap ($100/month for the three of us); paying privately for regularly scheduled maintenance is relatively cheap and simple.

The real downside in New Zealand is that we benefit greatly by free-riding on American medical innovations. As costs balloon under the new US system and eventual cost-control mechanisms knock innovation back a few pegs, we'll have a harder time doing that.

But Frum's right. It's a shame that the monster-shouters formed the negotiating bottom line rather than the opening position.

Results I don't believe [updated]

Kiwis almost never look for pornography on the web, a survey partly conducted by AUT University has found.

The survey of 1250 people in 30 countries showed that fewer than 5 per cent of Kiwis admit using the internet for pornography daily. More than 80 per cent said they never looked for sexual content on the web.

1250 people in 30 countries? 42 respondents per country if it's not population weighted; maybe a dozen Kiwis answered the survey if it was? Or do they mean 1250 people in each of 30 countries. [DPF, comments, confirms 1250 per country, phew!]

Alexa is a bit more forthcoming: 6 of the top 100 sites visited by New Zealanders are porn. #s 46, 64, 65, 66, 73, and 81, at least judging by titles or tags that are obvious in the Alexa headings. If folks are more likely to block tracking toolbars like Alexa when surfing that kind of content, then these results understate things. The one ranked #46 here is ranked #54 globally.

Or maybe the 5% in the survey really downloads a whole lot of content. But I doubt it.

Who runs surveys of 1250 people across 30 countries? The margins of error have to be huge!