Monday, 22 June 2015

Gabriel's Choice

Treasury Secretary Gabriel Makhlouf gave a widely reported speech at the Mystery Creek Fielddays about choice, on which topic the kiwi vernacular is closely aligned with standard economics: choice is definitely choice. More choice is better than less choice.

Anyway, Gabriel reckons we're being offered "false choices" and being "denied" choice and need to "reclaim" choice. He starts with three "false choices" and proceeds to bust the myth:

  • prosperity vs sustainability. This is a false choice because "the premium on ethical, sustainably produced, healthy goods continues to rise."
  • high technology vs New Zealand's primary industries. This is a false choice because of all the GPS guided farming stuff we do to improve on farm productivity.
  • protection vs use of natural resources. This is a false choice because the tourism industry relies on our outstanding natural beauty.
Next comes the punch line...
Instead of accepting these false ‘choices’ we have an opportunity to focus on ensuring our system gives us the freedom to make the choices we actually want. 
One example is in the space of bio-technology.
I am not going to get into the question of genetic modification specifically. What I will say is that when new technologies come along - both GM and non-GM – our current system denies us the choice over whether we want them. Meanwhile, our international competitors do have this option.
Got that? We're being denied choice. The regulatory system is so screwed up that we can't choose because we don't have the freedom to choose.  

Except that we do actually choose - that's what we pay the EPA for. Gabriel just doesn't like the choices they're making. 

I can see where he's coming from and I'm not anti-GM. Bio-tech sellers would love looser laws, so obviously we need to review them. Let's just make sure we're thinking clearly and fairly about this public choice. 

We should really start by looking at the actual proposal but it is still secret so we can't. We just know that the aim is to materially increase the number of new organisms we admit. Biotech investor William Rolleston is reportedly keen on the idea.

Kiwis know something about new organisms already. We have some good ones like kiwifruit, ryegrass and trout, and some duds like stoats, gorse and ragwort. 

None of the people spruiking those old new organisms knew how things would really turn out and that uncertainty is an essential feature of new organisms. Stoats, gorse and ragwort all seemed like a great idea once, a long time ago before the HSNO Act started denying us choices. 

Since we can't really know for sure in advance how any particular new organism is going to affect us, it's always something of a gamble: sometimes we win (kiwifruit) and sometimes we lose (stoats). 

Gabriel obviously wants much more gambling, presumably because he expects more kiwifruit than stoats in the future.

His argument is much more aggressive though, suggesting there won't be any more stoats if we allow a lot more new organisms, that this is another one of those "false choices" we need to "reclaim". We can have lots more new organisms and all that prosperous sustainability capturing the rising "premium on ethical, sustainably produced, healthy goods".

Latin scholars know that the root of the word "decide" means to cut off - something is always foregone and economists refer to that thing as the opportunity cost. Gabriel seems to argue there is no cost in this case, which is pretty difficult to believe. I think he should play his own part in "setting the conditions for a more informed debate" by:
  • showing us the plan for this radical change to the HSNO Act;
  • admitting that it will increase risk; and
  • estimating the potential cost of those extra risks.
It's all very well to point to the latest productivity dream like the mythical drought-resistant grass that we've had vapour-ware about for ten years and has never quite arrived. How exactly do we protect against commercial disasters like what has recently happened to the Canadian flax seed industry in Europe and US corn industry in China?

No comments:

Post a Comment