Matt Nolan

Private costs are not policy relevant

/29 Comments/in , /by

Repeat after me:

Private costs are not policy relevant

Private costs are not policy relevant

Private costs are not policy relevant

Now when the Law Commision says (on pg 169) (ht Offsetting behaviour):

These are controversial issues and the Law Commission is in no position as
yet to arbitrate in this debate which has become highly charged.

What they really mean is that, they would like to pretend private costs are policy relevant. However, since they don’t want to be criticised for it they will pretend they aren’t making that value judgment.

How do I know they are making a value judgment – well they come up with policy recommendations like “increasing the tax on alcohol”. Making a recommendation involves making a value judgment, regular readers will remember this.

Law Commission, you have come out on a specific side by giving a policy recommendation. Pretending you are being objective when you aren’t (which reminds me of this quote the Hand picked up) is not cool.

Update:  Anti-Dismal covers as well.

Matt Nolan

My recent addiction

/12 Comments/in , /by

Following today’s discussion on an addiction study I have realised that I must have an addition.

For the last 2 months I have been painfully addicted to a horrendous substance – not drinking (except for this one intervention that was staged about 3 weeks ago).

It has had all the negative impacts associated with addiction:

  1. It has visibly negatively impacted on my health – I have had the flu a few times after all,
  2. The longer I haven’t drunk the harder it has been to go out and drink (a sure sign of addiction, and in conjunction with funky discounting this could lead to time inconsistency),
  3. It has caused externalities (namely my complaining to other people).

All I know is that I’m personally concerned about this addiction, and I’ll be doing what I can to solve it tonight.  Even so, can the government really trust an irrational agent like me to drink enough?

Given this I think I need some government intervention.  How about the government subsidises my alcohol and the Law Commission pushes for the regulation of alcohol towards me.

Note:  The only parties I’m making fun of in this post are the government, the Law Commission, and myself (for not drinking for 9 weeks) – not any of the economic analysts.

And don’t try to convince me not drinking isn’t an addiction – I seriously have been struggling to break it!

Matt Nolan

Missing the point on productivity

/3 Comments/in , /by

I hate the “goal” of productivity growth personally. I think any policy goals we have should be based on equity and allocative efficiency, not trying to make arbitrary ratios look pretty.

However, I also disagree with Idiot/Savant’s description of productivity and how he feels that a productivity target is anti-worker (h.t. CPW).

Read more

goonix

The carbon emission circus is coming to town

/17 Comments/in , , , , , , /by

Late last week the Government announced that they were running a public consultation on the emissions target for 2020.

The Government already have a long term goal of reducing carbon emissions to 50% of 1990 levels by 2050. Long term goals tend to work quite well for Governments as it gives the public the idea that they are proactively doing something but realistically they will never be held to account if and when they don’t meet the target, as they don’t align all that well with the three year election cycle. But I digress.

This consultation process is part of setting the ‘interim’ goal for the year 2020. Environment Minister Nick Smith has quite correctly identified that setting this target requires a trade-off between our economy, our international reputation and, obviously, the environment.

Ultimately this 2020 goal will be presented in international climate change conferences at the end of the year, including the post-Kyoto Copenhagen Conference. I’m sure we will all be waiting with bated breath to see what the outcome of this Conference will be.

Of far more interest are recent ‘cap and trade’ developments around the world. Obama *just* got his bill passed by the House of Representatives while in Australia the proposed Carbon Pollution Reduction Scheme (CPRS) is very much struggling to gain legs.

New Zealand’s version of cap and trade, which will aim to reduce emissions to the 2020 (and subsequently 2050) goal looks set to be determined sometime later this year, although early indications are that it will be somewhat like the Aussie model. To blatantly oversimplify things, the Aussie model is a more politically palatable version of cap and trade, with lots of pressure-group exemptions and handouts to favoured sectors, as compared with the version NZ originally had planned for under the previous Government, which was more of an economically pure ‘you pollute, you pay’ model.

The final design of New Zealand’s scheme will be very interesting indeed…

Matt Nolan

Governments love to take credit for things they have nothing to do with Part XXX

/15 Comments/in , /by

So when consumer confidence rose in December because of falling fuel prices there were people saying it was because of the National government. When net migration started to turn at the start of 2009 there were mummers of it being because of the National government. Now that it is clear that departures have collapsed Immigration minister Jonathan Coleman has decided to show us just how deluded politicians can be by stating:

“Under the Labour government, with its high taxes and disincentives to getting ahead, thousands of our brightest and most talented people chose to seek their fortunes overseas,” Dr Coleman said.

“Now, these people are choosing to either stay in New Zealand or return home to build a better, brighter and more prosperous future under the National government.”

You have to be frikken kidding me. For one, the National government is still running the same set of policies as Labour. And more importantly as the article points out:

Dr Coleman did not say whether the international recession had anything to do with the situation.

When the international recession IS the reason. Foreign labour markets have collapsed, why would New Zealanders leave the safety and comfort of family here when there are no jobs for them overseas. It is blatantly obvious that the ability to get and security of work overseas is a more important factor for individuals than which set of politicians is sitting around in the Beehive.

Now, I guess it makes sense for a politician, the actual immigration minister no doubt, to pretend that they have had an impact. However, they have not. In fact I find this sort of talk embarrassing, as it trivializes the ways that I believe government can help society and mis-informs people as to the primary role of government.

Update:  Seems that some of the comments at Kiwiblog also take Dr Coleman’s message to heart.  I realise David Farrar didn’t say it, he knows better than that, but I also don’t see him correcting Dr Coleman’s assertion in the same way he would have corrected it when Labour was in power …

jamesz

Do smokers think of those around them?

/15 Comments/in , /by

We’ve written a lot on this blog about taxing cigarettes. The usual arguments focus on health costs and potential ‘internalities’. When you look at the calculated costs of these things you usually get a number much smaller than the tax rate on a pack of cigarettes. Today it was suggested to me that cigarettes are nonetheless undertaxed in NZ. That’s because those calculations don’t include the statistical value of lives lost from smoking. If the value that people place on a life were taken into account at around $4m/life the cost of smoking would be far higher than the tax imposed. It would then take into account the harm to all those around the smoker who would be devastated at the loss of their life.

I’ve been fascinated with the new starbucks dabuccino and I really hope that vaping it will produce less health issues. I haven’t had a chance to think it over in detail so I’m interested to know what you think about the argument. While I don’t have any numbers to back anything up, my initial thoughts are:

  • Smokers’ lives aren’t usually all that much shorter than anyone else’s. It’s not like car accidents which claim people of all ages. That makes it difficult to apply the same number, unless we have an age adjusted figure available.
  • Smokers do care about those around them so they’ll take into account the feelings of others when they make the decision to smoke. Some of the cost to those around them is thus internalised.
  • People close to the smoker have an opportunity to directly bargain with them over their cigarette consumption. Perhaps government intervention isn’t needed to solve this problem.
  • VSL calculations are usually done using willingness to pay to avoid harm. That approach puts a number on how much someone values their own life. Does that $4m figure represent the valuation of one’s own or someone else’s life? I imagine willingness-to-pay to avert the death of others is significantly lower. In fact, given people’s willingness to pay to save the lives of blameless and starving African children, I imagine they aren’t going to pay a whole lot to save someone with a pack-a-day habit.

I don’t know how big this number is, but it does sound kinda significant even given my reservations. So why isn’t it included in the calculations of people like Viscusi, Gruber and Koszegi? I’m sure there’s an obvious answer, but I don’t have it so I’m hoping your collective wisdom can help me out here 🙂

Reference: Pensacola Florida Long Term Disability Lawyer | Ortiz Law Firm.