Friday, 23 September 2016

Things I don't properly understand: Trump edition

Over the past months bemusement has shifted to horror. Surely, any day now, a hefty contingent of the GOP establishment would announce something like the following:
We have fine Republican candidates running in this year's Presidential election. They are two Republican governors who stand for Republican values of individual liberty, responsibility, and fiscal prudence. They recognise that America is great, and has to be a lot better for a lot of people. But they know too that American greatness is built on a foundation of shared American values that are open to all who hold them, regardless of their racial or religious backgrounds. 
If the prospect of a Trump Presidency makes you fear not only for the future of our party but also for the future of our country, don't sit this election out. Staying home will not only hand Hillary Clinton the Presidency, it will also deliver her a Democratic Senate. If Hillary gets the Presidency and the Senate, just watch what she does to the Supreme Court.
And there is a far better alternative. Gary Johnson and Bill Weld. They are fine Republicans, who this year are running on a Libertarian ticket. And they do more to espouse the core Republican values that we all share than do either Trump or Hillary. So join with us, and with the millions of young Americans who have already figured this out, and support Gary Johnson for President.
I thought this was going to happen well before the cutoff for the Presidential debates - Johnson/Weld needed 15% in the polls to be allowed into the debates. And then it didn't happen, and kept not happening.

What the heck has gone wrong with the Republican Party that they haven't yet disavowed Trump? Can they really let this happen? If Trump loses with the backing of the GOP establishment, changing the GOP after the election will be harder. And if he wins...

Meanwhile, Immigration New Zealand is still taking applications. Our refugee quota is much lower than our skilled worker intake, so get in while there's time.

Update: looks like my problem was that I just wasn't cynical enough.
I had thought that the GOP establishment had enough invested in the GOP and its long-term success that they'd act in the Party's best interest. That interest cannot be a rump party supported by white-identity disaffected people who will never be more than 25-30% of the population. But each instead seems to be looking out for his own career interest in that potential rump party. Tullock's rationality of revolution might apply, or they might not even be thinking about any divergence of interest. Either way, it is very grim.

Thursday, 22 September 2016

What Member's Bills are for

I'm really excited about this one.

Last year, Chris Bishop's Member's Bill on compensation for live organ donors was drawn from the ballot. New Zealand provided some small amount of compensation to donors for their lost income, but under ACC rules that come with strict caps on how much can be paid - for reasons that make sense for ACC but not for live organ transplant.

We submitted on the bill, based on our report showing that the government saves about $120,000 in costs for every kidney transplant. Our report, and our submission, are here. We recommended:
  • strengthening the compensation regime from 80% of lost earnings to 100%, up to a cap in case, say, a bank CEO becomes a live donor;
  • playing fairly to those not in employment by compensating them as though they were employed full time on the minimum wage;
  • providing live donors with priority access to transplants should they ever need one later;
  • compensation should be handled by MoH rather than through Work & Income, who were not doing a great job with the cases they were seeing.
  • strengthens compensation to 100% of lost earnings;
  • makes some provision for those donors not in employment, so that existing work rules on benefit receipt don't make a mess of things, and so those on benefits who are in some part-time employment are not disadvantaged, but doesn't quite go as far as we'd have liked;
  • does not implement a priority system, but that would have been too substantial a change to add into the Bill in the committee process anyway (room for future improvement);
  • runs compensation through MoH.
I'm really happy about this outcome. The bill had great cross-party support all the way through, and I expect it will be passed soon. It will do a lot of good, and save the government money in the process. There aren't many Pareto moves out there, but this is one. 

This is exactly the kind of thing that the Member's Bill process is for. Chris has done a fantastic job here. 

Wednesday, 21 September 2016

Not so hasty

It's taken just over six weeks, but B.C.'s controversial tax on foreign home buyers is now facing a major legal challenge.
A class-action lawsuit has been filed in B.C. Supreme Court on behalf of virtually all non-Canadians who have been forced to pay an extra 15 per cent under amendments to the Property Transfer tax act.
If the lawsuit is certified by the courts and succeeds, the province could be forced to repay hundreds of millions of dollars — much of the expected revenue now earmarked to pay for affordable housing for British Columbians.
The story explains how a Chinese student scraped together the money for a 10% deposit on a Vancouver house, before the tax, and signed a contract to buy the place. The tax means she has to find an amount of money one and a half times bigger than her deposit to pay the tax, or abandon the deposit and void the sale.

Among the interesting grounds for challenge:
The suit argues the provincial government has acted outside its jurisdiction, and that only the federal government has the exclusive power over "the conduct and regulation of foreign trade, aliens and the regulation of trade and commerce."
The lawsuit also claims the additional tax has the "sole effect of discriminating against [foreign buyers] because of their status as foreign nationals."
And that, her lawyer argues, violates more than two dozen international treaties that Canada has signed with nations ranging from Argentina and China, to Russia and the United States — the latter covered by NAFTA, the North American Free Trade Agreement.

Tuesday, 20 September 2016

The ever-reliable Alcohol Healthwatch

Whatever the survey, Alcohol Healthwatch is going to say it shows that the government needs to crack down on booze.

An alcohol watchdog hopes a survey that shows more than one in four teens aged between 15 and 17 often drink a risky amount of alcohol serves as a sharp wake-up call.
About 27 percent of the teens questioned for the survey, carried out for the Health Promotion Agency, said they had at least eight drinks the last time they consumed more than two drinks of alcohol.
More than 50 percent said they had had five or more drinks.
Alcohol Healthwatch director Rebecca Williams said more needed to be done to reduce the availability and cost of liquor, and the marketing of alcohol.
Ok, let's turn then to the survey. It's the Health Promotion Agency's Attitudes and Behaviours towards Alcohol Survey (ABAS). Let's walk it through.

Back in March, the HPA reported that:
  • 59% of kids aged 15-17 reported that they're non-drinkers. 
  • 13% said they had consumed, but not in the past month.
  • 29% said they'd consumed in the past month (56 kids)
There were 193 kids aged 15-17 surveyed. 60 kids reported having had a drinking occasion in the past 3 months in which they'd consumed two or more drinks; presumably 133 didn't. 

Of those 60:
  • 45% (presumably 27 kids) had between 2-4 drinks;
  • 28% (presumably 17 kids) consumed 5-7 drinks;
  • 27% (presumably 16 kids) consumed 8 or more.
This week's release had a bit more detail on what kinds of alcohol were consumed by that group, but there really wasn't much in there otherwise that wasn't in the March release. 

What about the time trend? None reported in the HPA survey. I think HPA runs ABAS regularly, but the only one I can find on their website with results for youths aged 15-17, other than the most recent one, is the 2013 ABAS. There:'

  • 48% of kids aged 15-17 said they had not consumed alcohol in the past 4 weeks because they were non-drinkers;
  • 14% said they drink, but hadn't in the past month;
  • and 38% said they had consumed in the past four weeks.
The 2013 survey was a bit different on the risky-drinking question: instead of asking about whether the kid had an occasion in the past 3 months in which they'd consumed 2 or more drinks, they respondents how often in the past 4 weeks they'd consumed five or more drinks. In 2013, of those saying they had had any alcohol in the past 4 weeks (38% of the sample), 57% said they'd had five or more drinks at least once. In 2016, 55% of the 60 kids (31% of the sample) who'd consumed two or more drinks in the past 3 months had had 5 or more. That has to be a decline. [Update: I give one scenario here where it could be an increase, but I don't think it is given the NZ Health Survey figures.]

So Alcohol Healthwatch takes what looks to be a substantial decline in kids reporting drinking as reason for more controls on alcohol. 

Oh, and remember too the NZ Health Survey. Drinking, and hazardous drinking, remains down among kids aged 15-17.  Here are the trends for that group.

Consumed alcohol in the past year Hazardous drinkers (AUDIT score ≥8, among total population) Consumption of 6+ drinks on one occasion at least monthly (total population)
2006/07 74.5% 19.5% 25.0%
2011/12 59.6% 11.7% 13.4%
2012/13 55.9% 8.0% 12.0%
2013/14 60.6% 15.3% 12.5%
2014/15 57.1% 10.8% 10.7%

Friday, 16 September 2016

The most predictable thing ever

Here's the Adam Smith Institute on New Zealand's sperm shortage.
The world simply will not make sense if you do not grasp the first and most basic thing you must know about economics. Which is that incentives matter.

What the incentive is, what the action or activity is, those are things which can all vary wildly. Whether something acts as an incentive or a disincentive can change too. But it really is crucial to understand that whatever else might be going on, incentives matter:
In 2004 the New Zealand government introduced legislation banning anonymous sperm donations and preventing donors from receiving any payment for their services.

Donors in New Zealand have minimal costs covered (such as travel to the clinic) but are not compensated for their time, which after rigorous medical testing and counselling, can be significant.

Under the new law, the sperm donor must also agree to being identified to any offspring when the child turns 18.

A decline in sperm donations following the introduction of the legislation coincided with a sharp rise in same-sex and single women applying for donated sperm.
It's not difficult to predict is it? On the application side the greater controls mean that fertility through donation is more desirable. On the production side the greater controls make production less desirable. Note that there's no money floating around this system but we've still got a change in demand and a change in supply.
And given that we've not got a price that can change to balance them we've got a mismatch.
We've covered the gamete-payment ban many times before here at Offsetting. But it is interesting how, in the same week that the Opposition is talking about wanting to get rid of the requirement that single mothers on benefits name the child's father (which lets the government collect support from the father), we're also talking about sperm shortages caused by not allowing payment or anonymity.

The 2004 Act is here. One night stand: legal. Prostitution: legal. Providing valuable consideration for provision of a human gamete: up to a year in jail, $100k fine, or both. Bit odd that whatever benefit is provided to the donor in a motivated one-night stand doesn't count as a valuable consideration.

One of our staffers here at the Initiative, who will remain nameless unless she wishes to be named, wondered whether there might yet be a market opportunity here. Business plans welcome in the comments: bridge the gap caused by the legislation, while not doing anything illegal in the process. I can kinda think of one, but y'all go first.

Update: the Herald reports that the Minister is considering allowing in foreign sperm. I wonder if Winston is worried. More seriously, think of the mental gymnastics required to think it ok to indirectly pay foreign donors via foreign clinics, but bad to allow domestic payment? Come on, National. Learn to liberalise for once. Do you have to keep everything dumb that Aunt Helen gave us?


Wednesday, 14 September 2016

Elephant curves

I've seen the elephant curve in more than a few news stories about inequality. The curve suggests that while income growth has been strong in middle-income countries, income growth for the poor to middle class in rich countries has been very weak.

The Resolution Foundation dug into things and found that the trough is mostly dismal performance among former Soviet economies and Japan, with population growth and countries transitioning from fast growing developing countries into slower mature ones also playing a role. 

Here's Resolution's Head of Research's tl;dr:

Meanwhile, growth in household incomes in New Zealand remains broadly shared.

Tuesday, 13 September 2016

Get moving already

Two years ago, we at the Initiative pointed out that housing costs were what were behind many of the stats worth worrying about in poverty and inequality.

This year's stats make it so obvious that it's unavoidable.

New Zealand has some problems with low productivity and consequently lower wage growth than we'd like, but growth in household incomes is broadly shared. Here's household income growth since 1990. The tracks for the 20th percentile, the median, and the 90th percentile are identical. Some blips along the way where one outpaces the other for a bit, but they start and end at the same point.
And the data cuts strongly against this kind of read on things:
The growing economy has seen increasing household incomes across the board. This isn't some "only the rich benefited" thing. On child poverty, I'm going to give a great big blockquote from Perry's latest report.
Housing costs and the longer-run trends in child poverty (1982 to 2007, 2007 to 2014)

The BHC 50% CV-07 anchored line rate was lower in 2015 than what it was in the 1980s, around 10%, down from around 20% (see chart below), and the BHC moving line rates were around the same in 2015 as in the 1980s (see Figures F.3 and F.4 on the following pages).

The AHC long-run trends are quite different: the AHC 50% CV-07 rate was still just a little above what it was in the 1980s, and the moving line rate in 2015 was much higher than in the 1980s.

The graph below shows the different trends for BHC and AHC anchored line measures respectively.
A key factor in explaining the longer-term differences between AHC and BHC rates is that housing costs in 2007 on average made up a higher proportion of household expenditure for low-income households than they did in the 1980s.  For example, in 1988 16% of households in the bottom quintile lived in households that spent more than 30% of their income on housing.  In 2007 there were 38%, after peaking at 48% in 1994. 43% in 2015.

Both the income-related rental policies introduced in 2000 for those in HNZC houses and changes to the Accommodation Supplement (AS) settings in the mid 2000s helped to reduce net housing expenditure for some low-income households compared to what it would have been. This support contributed to the reductions in child poverty as measured on an AHC approach from 2001 to 2007.

The policy settings for the AS have remained unchanged since 2005.
What we've got here, between those two graphs, isn't some "Oh, the gains from growth only go to rich people and leave people behind" story. It's largely a housing cost story. Low income rates for children are well down if we look at before housing cost incomes, but flat at a higher level than the mid-80s on an after-housing-cost measure.

Now Perry's AHC and BHC table above uses a fixed-line low-income measure: they anchor things based on a prior year's income, but inflation adjusted. They take a prior year's low-income threshold, set as a fraction of that year's median income, then just inflation adjust that number for every subsequent year. So if current incomes are above a prior year's inflation-adjusted low income threshold, then that counts to the good side.

But you get a similarly large gap between AHC and BHC figures if you use a relative measure instead. More tellingly, the fraction of low-income people with very high housing expenditures relative to incomes has increased a fair bit despite the household income growth in the first chart.

Misdiagnosing the problem means you are going to screw up when trying to fix it with policy.

Time to get moving on housing.