Matt Nolan

Auckland airport – what’s the issue?

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So the government has announced changes that have been pushed through parliament in order to ensure that “ministers will be able to block the sale overseas of any land or assets if it runs counter to the need to maintain New Zealand control of strategically important infrastructure on sensitive land“.

Now I’m not an expert on why or how we should maintain New Zealand control of strategically important infrastructure. Around the blogsphere, I see some people arguing against this proposal (here, here, here, and here) and people arguing for it (here and here). From all our special conversations about positive and normative economics we know that we cannot make a definitive conclusion with making some value judgments – however that shouldn’t stop me from describing some of the things I believe are pretty close to facts about this policy.

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jamesz

Marshall’s maths

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Bluematter quotes Alfred Marshall:

(1) Use mathematics as shorthand language, rather than as an engine of inquiry. (2) Keep to them till you have done. (3) Translate into English. (4) Then illustrate by examples that are important in real life (5) Burn the mathematics. (6) If you can’t succeed in 4, burn 3. This I do often.

It seems to me to be fairly good advice, but Bluematter’s not convinced that either the maths or the real world examples are useful! Let’s examine a real world example to illustrate the issue. Read more

Matt Nolan

The luxury of cheese: A reply

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There was an article in the Dominion post by Linley Boniface. In the article she talk about how cheese used to be a staple, and now it is a luxury.

Now I find I don’t need to argue with her, as she practically makes her own case against herself in the second paragraph, namely:

Bikes were always second-hand, a new coat was a purchase that needed to be weighed up for months in advance, and meals in restaurants were for birthdays only. When I think back to my childhood, the only thing I can remember being given access to in unlimited abundance was cheese.

So she is saying that people can now afford bikes, new clothes, meals in restaurants etc but not cheese.  The reason for this is that we are trading with countries that make these things more relatively more efficiently than we do, it’s called comparative advantage .  I’m willing to pay a higher price of cheese for the lower price of goods such as TVs, cars, computers etc, but then again I don’t like cheese 😉

She also levels the claim that we aren’t hearing enough about the issue (which by itself is a lie – there are several articles a week on it) because it is the poor that are suffering.  However, aren’t the poor gaining from access to ridiculously cheap manufactured goods (washing machines, clothes, shoes, TVs).  If they are actually net losers from trade out there, then why don’t we compensate them (akin to Kaldor-Hicks) – wait a second we do with the level we set welfare payments.

Matt Nolan

Goalkeepers and rationality

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At Stumbling and Mumbling the author is discussing why goalkeepers don’t maximise their chance of making a save from a penalty kick. According to this paper they only stood still during a penalty kick 6.3% of the time, even though 28.7% of kicks were down the middle.

Mr Mumbling puts forward three reasons why the goalkeeper may stand still less than is optimal:

  1. It puts pressure on the striker in some way,
  2. It is a social norm – way of minimising regret (as a dive looks cooler than standing still),
  3. Goalkeepers also value not getting yelled at, it is less likely people will make fun of you if you miss a penalty kick when diving than when you miss the kick when not moving.

These are all good reasons which probably explain the phenomenon, however I have a couple of other ideas:

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jamesz

Tall tales of taxing talent

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Matt’s post on equity and efficiency reminds me of a paper by Greg Mankiw and Matthew Weinzierl on optimal taxation. The idea is as follows. Suppose that we think equity means a society where everyone has the opportunity to earn income proportional to the effort that they exert. The hardest workers are those who succeed in earning the most money, while others may choose a life of leisure and earn less. Well, to establish such a utopian place we’d have to do a lot more than eliminate racism, sexism and xenophobia from the human race. Read more

Matt Nolan

Labour market shortages and mobility

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Kiwiblogblog raised the issue of labour shortages in New Zealand. As well as mentioning the labour shortages in New Zealand, they also stated that similar labour shortages exist overseas. Some of these shortages (eg doctors) have existed for a long time, all around the world. However, if this is the case why isn’t the wage rising to try and take care of these shortages?

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