Friday, 30 October 2015

Socialism sells

Legendary sevens coach Sir Gordon Tietjens spoke at a bank-sponsored do in Nelson last night and echoed many of the themes and values Steve Hansen has been discussing. The bank CEO endorsed them too, talking about their "partnership" with the NZ Rugby Union and how excited they are about the leverage opportunities.

The values at issue here are essentially socialist. They're all about the collective (team) and unity and trust and love for each other - the antithesis of the individual ruthless calculating homo-economicus concept that underpins so much public policy in New Zealand and beyond.

What the corporates have figured out is that they are also winning values. Although the NZ Rugby Union is now too embarrassed to use the word, the union concepts pushed by Hansen & Tietjens are a major cause of their success. And by pushing the message of unity, corporates hope to persuade us that they're jointly engaged in our own struggles.

Wednesday, 21 October 2015

Motorcycle accident costs

I like the basic design of New Zealand's accident insurance system which is administered by the ACC. Insurance monopolies have some clear economic advantages and the "no fault" concept avoids a lot of unproductive rent-seeking by lawyers.

That said, ACC does seem to have a blind spot when it comes to motorcycling, an activity that we all know is somewhat dangerous. Personal injury is more likely if you are riding a motorcycle than if you are driving a hummer, or indeed any vehicle with 4+ wheels and a steel cage.

I have no problem with the way ACC treats bike-only accidents. Bikers should pay levies that cover the full cost of those accidents.

Most of the accidents involving motorcycles (about 2/3 of them) are crashes with other vehicles though. So imagine/remember a motorcycle being cleaned out by a much stronger vehicle. Most of the resulting injury costs will be to fix up the biker and in the ACC's view bikers should pay for all of these costs.

Some obvious questions arise. What happened to the "no fault" concept? Is it my "fault" that I ride a motorcycle and am therefore vulnerable to the behaviour of idiots in cars? Why don't drivers of cars, trucks & buses have to share the cost of the damage they cause to motorcyclists?

And if you think bikers should be treated this way, imagine if the same idea was applied to other categories of vehicles. ACC levies would be lower, the larger the vehicle. You're more exposed in a Daihatsu Charade than a Ponsonby tractor, so you should either pay more in ACC levies or join the arms race.

Friday, 16 October 2015

GM Scientists need Adult Supervision

As you probably don't know, there is a softly softly top-down campaign underway to radically weaken New Zealand's system for regulating GMOs. Feds boss William Rolleston pushes it in almost every speech, Treasury boss Gabriel Maklouf is clearly on board and it seems that the new head of the EPA Allan Freeth is sympathetic.

Presumably these folk and their backers are seriously annoyed at local government moves to regulate GMOs under the Resource Management Act (RMA). Hastings District which includes the massively productive Heretaunga Plains has recently declared itself GMO free, agreeing with evidence presented by food producer group Pure Hawkes Bay. Now the Auckland Council is considering similar provisions(pdf) as the first of a group of councils from Auckland northwards.

I gave economic evidence at hearings in Hastings and Auckland (my three statements for Auckland are here, here and here). A few days after the Auckland hearing RadioNZ called asking for comment on a proposal for change from NZBio, the industry association for biotech investors.

Three things need noting about the NZBio plan.

  1. It is entirely verbal. There seems to be no written argument or proposal. The only thing clear from NZBio's website is that they're after "eased restrictions on GMOs". That is at least much more direct and honest than the coded whisperings of Treasury and the Feds, but where is the policy analysis?
  2. It really is radical. The international consensus on GMO regulation is contained in the Cartegena Protocol and it is process-based, meaning that GMOs are regulated because of the process (GM) that created them. NZBio propose shifting instead to trait-based regulation. For example, herbicide tolerant (HT) swedes are already approved in NZ and that is a trait, so herbicide tolerance engineered into GMOs will also be approved under NZBio's plan.
  3. It ignores the views of food exporters. Fonterra and Horticulture New Zealand are both on record as opposing field trials and outdoor release of GMOs in New Zealand. They do this because they are customer-facing and our customers don't like GMOs.
That last bit is fascinating isn't it? I can't figure out whether the local GM developers are not talking to the people who sell our primary produce internationally or they know their views but don't care.

Either way, my conclusion is that GM scientists/investors need adult supervision.

Tuesday, 6 October 2015

The Trade Negotiation Game

Tim Groser announcing the TPP deal:
At the end of the day the trade negotiation game isn't that sophisticated. You negotiate as well as you can with whatever weapons you've got - political, logic, whatever - and when you sense the bus is going to take off you jump on board. It's as simple as that.
I hope this quote ends up on a game theory exam for some economics students this year with the question being: if you were negotiating against this guy, what probability would you assign to him walking away from any deal?

The easy answer is that in all future trade negotiations he will sign anything and will never walk away. So cheers for that Tim.

Things are slightly more tricky as regards this particular deal though, because he only announced this cunning plan after it was all over. But a rational negotiator would still be highly confident he'd sign anything, partly because he has never once publicly contemplated walking away, but also because as the closing stages arrived Tim's boss procured from Helen Clark a public endorsement of an almost identical negotiating position.

Conclusion: it was ever thus. Once you hook NZ into the room, we'll sign any old deal that pops out.