Treating migrants badly

When we moved to New Zealand in 2003, the contrast between the US Immigration system and New Zealand's was stark. 

They were near opposite, really. 

The US system seemed designed to discourage entry. 

New Zealand's was far better. 

I had received the job offer from Canterbury by March 2003. I accepted and put in for a skilled migrant visa. There was no need for an immigration lawyer because everything was simple. The only complication happened when the Canadians took forever to run my police background check. The FBI ran my prints and took about 3 weeks to say I wasn't known to be a criminal. The Canadians got my prints at the same time and took 4 or 5 months. They took so long that my medical certificates from the US expired while I was waiting. 

So I had to redo the medical check while on a post-doc in Germany. 

All of it meant that my paperwork was only fully completed for the Kiwis far later than I'd have liked. Our worldly possessions were in a 40' shipping container on their way to NZ; we were in Germany and set to leave for NZ in a bit over a month. But a phone call to Immigration NZ had it all sorted; they rushed the paperwork through to make it all work. It wasn't their fault, it was the useless Canadians. But they still jumped to help, so we wouldn't be stuck.

That's just how things worked here. 

After we got here, we put through our paperwork for residence as quickly as we could. You had to be in country for a period first, and then the government revamped the points system for residence and we had to wait a few months while that was bedding in. But it was obvious that it was all going to sort out. 

It ain't like that any more. 

Dileepa Fonseca goes through some of the ways that it just isn't working any more.

It is easy to pull the rug out from under thousands of migrant workers, but nobody ever tells you the carpet might just bounce back and hit you in the face.

The country is now overwhelmed by a wave of economic capacity issues most of which are linked in some way to severely reduced migration and border flows.

Which is why, after scrambling to let migrants know they are not welcome the Government is frantically moving in the opposite direction.

If you were a migrant and feeling angry about how things have gone since lockdown you might take a strange sort of comfort in the way inflation has spiked, job vacancy advertisements have soared, job re-training budgets have proven woefully inadequate to the task of retraining people, and employers have been unable to fill vacancies.

... The Government tightened the screws on these workers last year when it started renewing their visas in short six-month increments at a time when they were at their most powerless.

What were they going to do? Back then no vaccine had been approved in the United States and flights were few and far between. Even if you caught one, any place worth flying to was probably still in lockdown. The only rational decision was to suck it up, live with the uncertainty, and await a new press release from the immigration minister (first ​Iain Lees-Galloway then ​Kris Faafoi) every few months.

Fonseca has a few bits from me in the piece as well. 

I used to be about the strongest advocate there is for moving to New Zealand. I'd constantly berate people for not having moved to New Zealand. Under Helen Clark, and under John Key, it was just a great place to move to. 

I can't recommend that any more. 

The first term of the Ardern government saw Immigration NZ's job change from facilitating migration to stockpiling applications and using bureaucratic process to discourage people from moving here. They should have been up on charges for fraud, really. They were taking applications and charging fees for the applications while knowing full well they won't be processed. I expect that a private company doing anything similar for any service would have been hit by the consumer protection side of MBIE. 

The government now says it wants to attract skilled migrants. Well, if you're considering moving here, caveat emptor. Read everything about how Labour has been treating the migrants who are here. And choose somewhere else. Being here is fine if you have residence. But coming in and trying to get residence now seems a bad idea. 

Bomb the city to save it?

The ongoing difficulties with heritage restrictions in Wellington are a bit of a problem. Can't build houses where people want to live. Can't bowl earthquake-prone defunct old buildings. And can't even get decent ticketing systems at the rail station because somehow the turnstiles would impede the heritage stuff. 

When you get this level of institutional ossification, well, the bombers may be the only solution.

This week's third column in the Initiative's newsletter. The third column is meant to be satire. Or despair. 

Japan’s post Second World War economic growth was astonishing. Despite widespread devastation, Japan produced an economic miracle.

Economist Mancur Olson provides the most compelling explanation.

I wonder whether his lessons might apply to continued difficulties in Wellington.

Olson argued that political institutions become ossified over time. Entrenched interests block improvements. Wiping out existing political hierarchies and veto players enabled sustained growth.

Ideally, that kind of change is possible without the bombers. But one does wonder.

Wellington’s draft spatial plan debates a month ago were bad enough.

Some councillors did their best to prevent owners of old wooden tents in Mount Victoria from redeveloping their properties into modern townhouses and apartments.

While Council reduced the extent of heritage protection, substantial bans still prevent building new housing in places where people want to live – despite a massive housing shortage.

But it gets worse.

Wellington enjoys a heritage rail ticketing system, complete with paper tickets to be punched by conductors. While the bus system has electronic payment, getting that system onto the trains has been slow.

This week, Kāpiti Coast District Councillor Gwynn Compton found one reason why. Gwynn requested correspondence between Heritage New Zealand, Greater Wellington Regional Council, and KiwiRail regarding the rollout of any integrated ticketing system.

The response ran to three volumes and 128 pages. Heritage Impact Assessments needed to be prepared for necessary infrastructure. Comment on the Heritage Impact Assessments needed to be assessed. The size, colour, and location of six temporary posts checking electronic fare cards needed to be considered. Bold colours that might let commuters tell where to find things were considered too intrusive.

If you think that the Wellington rail station is a museum piece, fair enough. But it does also try to be a working commuter rail station. Britomart in Auckland somehow managed to integrate electronic ticketing into its heritage facilities.

But everything heritage in Wellington is simply too hard.

And that brings us back to my bomber-based solution. Every two years, Wairarapa has an airshow. When we are lucky, an American B-52 flyover delights the crowds.

It flies over Wellington on the way, on a well-advertised flight path providing plenty of notice.

Next time it could have payload.

Clearing Mount Victoria, the Gordon Wilson Flats, the unfixable-at-any-reasonable-cost library, and a few other spots could kickstart an economic and housing miracle for the Capital.

I wish there were an easier way.

Another day, another J-curve

From the Mayo clinic:

During a median follow-up of 8.9 years, we documented 8652 incident cases of all-cause death, including 1702 cases of cardiovascular disease death, 4960 cases of cancer death, and 1990 cases of other-cause death. After adjustment confounders and amount of alcohol consumed, higher DHS was significantly associated with a lower risk of all-cause mortality, cardiovascular disease mortality, cancer mortality, or other-cause mortality (Ptrend<.001, Ptrend=.03, Ptrend<.001, and Ptrend<.001, respectively). We observed that the amount of alcohol consumed have different relationships with the risks of all-cause mortality and cause-specific mortality among participants with distinct drinking habits, grouped by DHS. For example, in the joint analyses, a J-shaped association between the amount of alcohol consumed and all-cause mortality was observed in participants with unfavorable DHS (Pquadratic trend=.02) while the association appeared to be U-shaped in participants with favorable DHS (Pquadratic trend=.003), with lower risks in those consuming greater than or equal to 50 g/wk and less than 300 g/wk.

DHS here means a Drinking Habit Score based on whether one drinks with meals and drinking at least 3 times per week. 

So all-source mortality risks are minimised by drinking with meals at least three times per week, with consumption no less than 5 standard drinks per week and no more than 30 standard drinks per week. 

The benchmark I keep in my head, from the older DiCastelnuovo metastudy, is that risks are minimised at about a standard drink a day (a bit less for women, a bit more for men), with risk back up to abstinence-baseline at around 4 standard drinks per day (a bit less for women, a bit more for men). And remember that the "sick quitter" confound is already considered in the DiCastelnuovo work. 

The latest from Mayo is entirely consistent with what we'd expect, for those who pay attention to the literature rather than the prohibitionists. But it's great to see this work continuing to bear up in repeated studies. 

For a better price cap

New Zealand's ETS has a price cap. It needs a better one.

When the carbon price hits $50, the government releases more units into the system. Some of those units are ones that are already within the cap. The government reduces the number of units auctioned each year within the cap to account for stockpiled older units it expects to be redeemed that year. If those stockpiled units fail to be redeemed and are instead held, there will be price pressure. So the government then auctions more units. And again - this is still within the cap. If the stockpile isn't run down this year, there will be more stockpile left next year, and we'd then expect fewer units auctioned by the Crown to account for that. 

After that runs out, the government can release more units - units that are over the cap. These over-cap units don't actually break the cap as they are backed: each unit released must be backed by an equivalent emission reduction elsewhere. 

But that does introduce risk to the Crown - it has to come up with ways of backing those units. 

The government has signaled that it won't change the price cap this year. If we hit the cap, nobody quite knows what the government would do to back units. 

Last year, we suggested tying the NZ price cap explicitly to prices in the European market so that, at worst, hitting the cap could mean buying credits there to back units released here. A better approach could instead have the government ask the Climate Commission to assess which ETS are robust, then take a weighted average of prices across those systems as constituting the NZ price cap. The price cap would move around but that's okay. If people needed to, they could hedge against European prices on European markets; a weighted average based on volumes will mostly follow Europe anyway. But the government could then just buy credits in whichever market is currently cheapest to back units at the cap. That would mean it would make gains rather than losses when hitting the cap. Right now, they'd lose a lot if they had to go to Europe to buy credits to back units - prices there are about double what they are here.

My column this week went through the case:

The Government could use that surplus to reduce global emissions even more quickly by buying more units. Or it could rebate more money back to households to offset the equity effects of higher ETS prices.

But perhaps more importantly, an explicit link to international prices, combined with securing permission to purchase credits elsewhere, brings credibility to the price cap. The price cap is not credible if the Government is promising to lose a lot of money by using it. A non-credible price cap encourages buying credits at $50 in the expectation that the Government will increase the cap rather than continue losing money.

The Government needs to update the price cap before the next ETS auction. Rather than choose some new price level, like $70 or $100, it should set the cap to follow international carbon prices. It would make for a better, and more durable, path to net zero.

Minister Shaw has since ruled out updating the cap this year. It's defensible: there are also credibility risks in changing the settings hastily. And prices here have risen more quickly than anyone expected. 

But it's still worth building that better cap, and updating to it when possible. 

Morning roundup

The morning's browser tabs:

• Newsroom picks up on BusinessDesk's prior reporting on MIQ ghost rooms. Much credit goes to Cameron Conradie's constant reporting on the numbers. BusinessDesk pointed out that the MIQ system is constantly overwriting its own data so that it is impossible to get, from them, the prior track. I wonder what the Archivist would make of this because it sounds like deliberate destruction of Official Information which may have to have been backed up by a Disposal Authority. Anyway we're losing skilled migrants who rightly view there as being no chance that the government will fix the system, because the government starts by hating migrants and viewing allowing any of their families in as actually being a bad thing. While it is still good to live in NZ as a permanent resident, I could not recommend that anyone try moving here, unless their utility enters negatively into my utility function - and I don't have that kind of utility function. 
• The government is going to run into real problems in maintaining nursing staffing. If I've understood the state of play correctly, nursing salaries in NZ are similar to salaries in the UK but Australia has some of the highest pay rates going for nurses. Training nurses here in a common labour market with Australia can result in outflow. NZ has made up the gap by importing nurses - some from the Philippines, some from the UK. But while there's provision for entry through MIQ for nursing staff, it's still a big constraint. Australia is far richer than NZ and can afford to pay more. It's entirely plausible that the government here is behaving as monopsonist in keeping nursing wages down, but even if that weren't the case there would still be a problem. 
• NZ is importing and burning a lot of coal currently. In one sense, this is not a problem at all: the Emissions Trading Scheme sets a binding cap, the current ETS price roughly doubles the cost of using coal, so any coal that's used is very likely in spots where it would be real expensive to substitute away from. But there are still two more substantial problems. First, some of the coal burning is because Megan Woods banned gas exploration in Taranaki, reducing capacity in those fields. So we're being forced to use a worse alternative because the government set very bad policy. Second, optics. While all that coal is accounted in the ETS, nobody understands the ETS, and seeing coal imports makes people think the ETS isn't working. And that builds pressure for even worse interventions. I wish that National would aim for less political point scoring here and instead be looking to underlying causes. 
• The government is going to be having an inquiry into crypto. I kinda knew what was going on in crypto 3 years ago; that tech is moving crazy fast and keeping up with it would be a full time job. I hope Auckland's Alex Sims helps them out a bit, and I also hope they seek some of the expertise over RMIT. Parliament's Select Committee couldn't figure out how the Uber app works a few years ago. This won't end well unless they get some serious help. 
• NovaVax also looks pretty good. Seems futile to hope it will get evaluated and considered for roll-out here, where dose availability is a binding constraint. We are sitting ducks here if Delta gets out. 
• Environment Minister Parker is holding off on nitrate limits on waterways - for now. I still think cap and trade solutions can get that job done. Report on that will be out soon. 
• The government's reluctance to have effective vaccine mandates for border workers - it's just incomprehensible. There can be practical difficulties that need to be overcome; sending nurses out to worksites over a few shifts could make a lot more sense than trying to get all those workers separately to make long commutes out to places where they can be vaccinated. If compulsion is warranted anywhere in public health, it's in vaccination. There are very real and substantial negative externalities from not being vaccinated - and especially among workers who are at risk of contact. We wind up with a health system happy to ban soda in the hospital cafeteria but that can't manage to get workers vaccinated. It's nuts. 
• Another for the "is government actually evil?" file: The Ministry of Ed refuses to fund a teacher's aide for a special needs student (limited budgets; understandable) but also refuses to allow the parents to privately fund the aide. 
• Industrial policy as casino economics. Do you feel lucky?
• Cuba's health policy successes are wildly exaggerated and based on bad data. Here's hoping that the new revolution brings down the communist dictatorship. 
• Remote work won't work for everything. Face-to-face still matters. Planet Money interviews Enrico Moretti. 
• Not crazy to worry about inflation. But if you have strong opinions about it and you think you're right, well, here's the data series on nominal bonds and here's the series for inflation-protected bonds. If you think inflation is going to go through the roof, make the appropriate play. If you think that everyone else is just way too worried about inflation, take the opposite appropriate play. 

The Grand Deal

Josh Gans explains how getting vaccines developed and delivered is supposed to work, and how Australia (and NZ, though he doesn't mention us) have failed. 

I worry that NZ is set to repeat this particular kind of failure. We need to be getting orders in right now for the delta-variant shot that Pfizer's developing. Pay a pile for it up front. Order twice as much as we need, for rush delivery at the actual front of the queue. Give the doses we don't need to whichever other country looks like they most need it. It's still a bargain, and it's the right thing to do. 

Here's Josh:

Let me explain the grand deal because I don’t think it is commonly thought about and it is certainly not explicitly written down. But it goes like this. If we were to think purely ethically, we would want every person in the world to have an equal chance of being the first to be vaccinated. That is we would take scarce supply and randomly allocate doses.

That doesn’t happen for lots of reasons. First of all, it is cheaper to surge vaccine doses in particular regions — aka countries — rather than send them out willy nilly. Second, some countries can actually get doses to people quicker than others which tips the balance. But the final consideration is: someone needs to pay for all of this. We don’t have a world government etc and so we have individual governments. Every single one of those has opted for some version of the ethical distribution (with adjustments) locally so it isn’t like this isn’t understand. But it is also understood that there were some billions of dollars to be paid for all of this and not just the vaccines we ended up using but the ones that didn’t work out.

When you have this type of problem — how to allocate fixed costs — you then move from ethics to economics. The social planner facing a budget constraint is going to allocate the funding of most of those costs to the groups most willing and able to pay for them. That means that everyone is happy to participate but also that if you happen to be poorer you are not obliged to pay more than you can afford. Now we could do this the fully ethical way world-wide if we just had a global tax system to sort out the allocation of costs but, as I mentioned, we don’t. So we just make do with what we have.

The thing you do then is the same thing many businesses do. You price discriminate. In this case, if you are a drug company, you set the prices of earlier deliveries many times higher than of later ones. Then you approach the groups you think might (a) afford to pay for those early deliveries and (b) might want to. This is what Pfizer and every other vaccine developer did. (Yes, even the ones from China and Russia).

The idea was that those countries would lock in deals and then the companies would go down the list with lower prices until the market cleared. From a global perspective, the rich countries get the doses sooner which means that it doesn’t look like the ethical outcome but hidden away there is the fact that the rich countries are, in effect, paying for the main costs of this. None of the companies is doing this as a charity. Ultimately bills need to be paid. So that must be happening.

Canada was a great example of a country that went with this deal. It bought country sufficient doses from many comers and then, when so many vaccines worked out, looked like it had embarrassingly ordered 10 times more than it needed. But the folks in Ottawa could actually add and they knew what they were doing. The doses they didn’t need would be gifted to other countries. This is the most transparent kind of way of dealing with the grand deal.

Australia’s cut and run

Australia didn’t do that. They won’t even reveal what they did do citing “national security” which is odd. Did they low-ball? It looks that way. Did they fail to diversify? Absolutely. Was that a crazy thing to do? To anyone who has thought for two seconds about the costs and benefits of any pandemic expenditures, it would seem so.

Afternoon roundup

The browser tabs...

• The Internet Archive will help improve access to a lot of books currently held by the National Library. Naturally, this upsets some people. 
• Mike Joy wins a battle over what "natural levels" of nitrate in aquifers might mean.
• Places where the local schools are funded by higher levels of government wind up trying to privatize the public schools through zoning. Everything's tradeoffs though, eh? If schools are funded by the local communities, poor places get really bad schools. It's instead a good argument against even greater anti-NIMBY vigilance.
• Potential nudges to improve compliance with scanning-in for Covid tracing. I'd add one more: put the QR codes in lots of places. Make it easy. At the entrance is great, but if your phone isn't ready and you'd be holding up a queue, maybe you won't scan and you'll forget to on the way out. Put them everywhere. 
• The EMA makes a very bad argument about unemployment rates. The point of inflation targeting and increasing rates when you're hitting capacity constraints isn't to create some stupid Marxist reserve army of unemployed, which seems to be what they're arguing for. The point instead is that if a monetary push gets you past NAIRU, you just wind up back at higher unemployment rates anyway once contracts adjust AND you have higher inflation to go with it. Anyway, because either EMA put it badly or it was reported badly, a billion tweets followed claiming the Marxists were right all along. 
• Heather du Plessis-Allan cites me here on Treasury's diminished capabilities. Worth noting: all of that was prior to the current Secretary's appointment. She may well have improved things since; I need to get OIAs in to check. 
• Shipping is a mess.
• Remember back at the Budget Economic and Fiscal Update when Treasury put in a footnote saying they couldn't produce a structural deficit figure this time round because they couldn't tell how to place some of the Covid-spend? And it seemed odd because Covid-spend is supposed to be emergency = one-off = not-structural? Well, looks like the free school lunch programme is Covid spend. I simply do not understand how this works. Shouldn't the Auditor General be going after this kind of thing as misappropriation? 
• The government isn't bothering to check on whether people got their Covid tests before travelling. Some of them get caught ex-post, with the option to go into quarantine or return to Oz, after they've been circulating in New Zealand already. If they went back to Oz and turned up positive, what hope would we have on contact tracing them? However low your expectations of government competence are, you just keep being surprised.