Wednesday, 30 July 2014

Taxes or Haircuts?

There's an interesting dialogue here between economist Thomas Piketty and anthropologist David Graeber whose piece on bullshit jobs is good fun.* Graeber gets schooled a bit by Piketty.
Piketty: ...I loved your book, by the way. The only criticism I would have is that capital cannot be reduced to debt....
Piketty goes on to point out that capital has grown faster than debt, so collectively "we" are actually better off economically. But when growth stalls, as it has, wealth concentration increases (because r > g).
Piketty:  ...This is not a problem from a strictly economic point of view, but it certainly is in social terms, because it brings about great concentrations of wealth....
I think this is correct: wealth concentration is primarily a social issue rather than an economic one, though the desire to protect wealth might well induce policies that limit economic activity. Anyway, there are basically three options for mitigating concentrations of wealth:

The two gents disagreed over these options: Piketty favoured wealth taxes while Graeber kinda went along with haircuts. We take up the dialog just after Piketty points out how easy it is for the wealthy to offload liability onto some poor sap, thereby avoiding the consequences of any debt cancellation.
Graeber: No one is saying that debt abolition is the only solution. In my view, it is simply an essential component in a whole set of solutions. I do not believe that eliminating debt can solve all our problems. I am thinking rather in terms of a conceptual break. To be quite honest, I really think that massive debt abolition is going to occur no matter what. For me the main issue is just how this is going to happen: openly, by virtue of a top-down decision designed to protect the interests of existing institutions, or under pressure from social movements. Most of the political and economic leaders to whom I have spoken acknowledge that some sort of debt abolition is required. 
Piketty: That is precisely my problem: the bankers agree with you!
Piketty implies that neither the bankers nor their major clients (on average) will be seriously hurt. It'll be some other random that took a risk and therefore deserves to carry the can. That's basically a tax efficiency problem: you aim at the wealthy and hit someone just getting by who sank their life savings into a bond.

A wealth tax wouldn't have this collateral damage. It could also be quite an efficient tax compared with taxing income (less likely to undermine effort) though there would be evasion through tax havens. Still, I have to agree with these last comments from Piketty
Is it possible to fight tax evasion? Yes, if you want to, you can. When modern governments really want their decisions to be respected, they succeed in getting them respected.
When Western governments want to send a million soldiers to Kuwait to prevent Kuwaiti oil from being seized by Iraq, they do it. Let’s be serious: If they are not afraid of an Iraq, they have no reason to fear the Bahamas or New Jersey. Levying progressive taxes on wealth and capital poses no technical problems. It is a matter of political will.
So there you have it: back to politics.

* Ryan Avent has a good review of Bullshit Jobs here.

Tuesday, 15 July 2014

How you gonna come?

I've been hating on the SS Times since their editorial on Sunday which called Tania Billingsley a self-confessed 'activist' (h/t Russell Brown). What a repugnant and revealing expression.

Life serves up tricky questions all the time and we choose whether to ignore them or respond in a more active way. An old woman falls in the street - do you passively avoid her or actively help? What if she was being robbed - look away or do something? In both cases, most of us would be active and would not feel ashamed about helping out. No need for confession.

What then is the essential difference between this kind of activism and the stuff the SS Times considers shameful? Both seek to help victims, that's for sure. But they do so in quite different ways. Administering aid is universally admired activism but seeking to change the conditions that give rise to the need for aid, as Billingsley has done, is somehow dirty or sinful.

The reason for this distinction is perfectly obvious: political sensitivities. Billingsley raised the broader issue of rape culture, and criticized McCully's bungling and Key's boredom. That's three strikes, all at once. Not to mention the timing: just as we were all having such fun laughing at Cunliffe. This is why the SS Times went for her.*

They missed the irony of course, which is their own activism. Bravely stepping in to smack down Ms Billingsley who they consider a dangerous perpetrator, of something.

Speaking of such things, Bill English is reported today as saying the NZ is "not taking sides" in the latest genocide by Israeli. This takes the passive strategy to a whole new level. We can all see the old woman being kicked to death by a gang, but we look the other way and pretend that what's happening is a fair fight. Not even lip service to human rights or dignity. Despicable.

And now, in preparation for work, I shall rinse my brain out with the Clash.

*The patronising concern troll stuff does not deserve a response.

Saturday, 12 July 2014

Factory milk

If anything should shock my fellow dairy farmers into a rethink, it'd be the commercial threat of this non-cow milk.

What a great idea. Who needs all that outdoor drudgery? Lets just make milk in a factory - eliminate the costly middle-animals (cows, farmers). This plan is efficient, disruptive, and innovative. What's not to like here?

And it must be right, right? Because it's scientific, and we trust scientists for they are truth seekers. So this is must be a truth, which raises a few questions.

Most obviously, why doesn't this absolutely trump any potential dairy-related benefits from GMO grasses etc? The localGMdudes reckon we need to go this way, but if lots of people really don't give a shit about the quality of their milk, would lab-milk not be just as attractive as GM-fed-milk?

For the rest of us, this is all the more reason to work on our understanding of environmental and natural systems.

Wednesday, 9 July 2014

Campaign finance: open-source polling edition

I'm really enjoying the contest of ideas thrown up by this election but am utterly in despair at the way the political game is played. A recent pair of examples shows the benefit and curse of competitive politics. In both cases, ideal policy settings would reflect a trade-off between two desirable things, but that can't be admitted in competition because a differentiated stance will get more votes.

You've probably already guessed that my examples from the last week are education policy and the environment/economy issues. On education, it is obvious to all of us that we should aim for smaller classes and better teachers right? Yet we are being asked to pick one and vote for it which is way beyond annoying for many of us I'm sure.^

I don't find the environment/economy issues quite so tricky because National wants to gut the RMA which for all its faults does actually require trade-offs to be assessed. Fast tracking the economy over the environment is obvious madness, so the choice is easy. In this case, what really gets my goat is the utterly disingenuous propaganda pedaled by the Feds, who hate the Greens and their carbon tax so much that they'll make up any old rubbish to rally the troops.* So maybe, since there seems to be no rational argument, there really is a fundamental conflict about what we value.

Which would be a great thing to be discussing. But we don't discuss our own values, do we? In fact, at times like this only the political parties have insight into what we value through their polling. But they filter all the information and use it to design policies they think we'll like.

So here's the crazy idea. Give political parties a publicly funded polling budget, so they can find out what we think, on the condition that all polling data are provided on a free and open-sourced basis.

The pollies get to pose the questions, but everyone gets to see the questions and the answers because we paid for it. This would empower citizens to spot madness and offer new ideas, or at least get a better feel for how our fellow Kiwis feel about stuff.

^ If policy was rational, it'd surely consider advancements in quantity and quality.
* I will remember this when the Feds new President fires up his pro-GE campaign, as he surely will.

Friday, 4 July 2014

New or Improved?

There is an interesting tendency for politicians to prefer selling entirely new ideas over the alternative of improving what we already have. I'm not sure how general this is, and it is perhaps mainly an opposition trait, but two examples stand out.

Electricity is one. As I've been saying, the main thing needed in our electricity sector is for the existing regulator to use its existing powers in a more effective way. The regulator apparently disagrees, so we're all suffering from a dearth of independent retailer competition. Faced with this scenario, opposition parties advocate something entirely new in the form of NZPower.

Much the same phenomenon is happening in climate change policy. We already have a cap & trade scheme in place (the ETS), but it has been neutered by politicians. An obvious option would therefore be to un-neuter it. Instead, the proposal is for a carbon tax. I happen to think a tax is a better idea because of the price certainty it gives investors. But there would also be great benefits from a properly calibrated ETS.

Reform is clearly needed in both these cases, and politicians have to sell reform somehow (except when they give us those nasty post-election surprises). What surprises me a bit is that "new" is perceived as more attractive to voters than "improved" in these cases. It suggests that the existing systems have lost a lot of credibility.