Matt Nolan

8% weekly interest rates: What’s going on

/17 Comments/in , , , /by

Following the “revelation” that a loan shark in Porirua was charging 8% interest per week on loans, the government has offered to do nothing. Blogs on the left hand side of the spectrum were irritated by this, as they feel that people are being taken advantage of (the Standard) (Tumeke) (Frontline – prior to this incident). Lets investigate the issue.

Now I am not disputing the fact that people are, in some sense, “being taken advantage of”, however I do disagree with the solution that the other blogs follow – setting a cap on interest rates. In this sense I am in agreement with government policy. Read more

Matt Nolan

Compensation and the ETS

/4 Comments/in , , , /by

Although the blogs appear to be quite quiet about it, I’ve heard a number of people complaining about the government compensating people for the impact of the emissions trading scheme.

Effectively, people who are unhappy about it are telling me that such compensation appears to be pointless as it “cancels out the effect” of pricing carbon in the first place. Ultimately, we can discuss the issue in a little more detail then that. Lets try to figure out how it works – and discuss what this compensation implies, both in terms of achieving carbon/Kyoto liability funding goals, and in terms of social welfare.

Read more

Matt Nolan

Think Big and the balance of payments

/7 Comments/in , , /by

When I was listening to Radio NZ on Sunday I heard some people discussing why they thought “Think Big” was a good idea.

Although I agree with some of the points they raised, if those points are actually true (namely that they felt, given forecasts at the time, these projects would have been viable – and that there were substantial barriers to private entry) I also disagreed with large amounts of it.

One of the main things I disagreed with was the call that increased “self-sufficiency” in terms of steel and fuel improved our “balance of payments”. Now this is a claim I’ve heard from a number of “Think Big” supporters – and as a result it is a claim I plan to discuss here.

Read more

Matt Nolan

Benefit policy: Another value judgment

/19 Comments/in , , /by

Following our discussion of one possible value judgment associated with benefit policy I’ve decided to have a crack at another one. Now note that what I say here is not necessarily my opinion – a fact that should be obvious given that it is completely different from my last post.

This post will be based on an article by Nigel Pinkerton in the Dom post on Saturday (link here). Furthermore, we will start off by discussing the same line as we did last time from the press article:

It is widely accepted now that long-term dependency on welfare benefits should be avoided where possible

Lets see what we come up with:

Read more

Matt Nolan

Benefit policy: Give me a value judgment

/17 Comments/in , , /by

I have avoided discussing Nationals benefit policy so far. I just haven’t seen any need given that I like to stay relatively apolitical – and also given that it does not imply much of a change from the status quo (do you guys know how difficult it is to renew your benefit anyway nowadays!).

For anyone that does want to see the partisan discussion we have:

Kiwiblog links, The Standard links, No Right Turn.

However, I’m low on things to write about, so when Kiwiblog linked to this article in The Press, I thought I would form some value based argument on the first line of the article (it is not necessarily my beliefs – just an argument against the first line) – then we can discuss what value judgments I’m making etc in the comments.

So the first line is.

Read more

Matt Nolan

What is poverty?

/8 Comments/in , , /by

Poverty is not an issue that we have touched on terribly much on this blog – however it is a fundamentally important issue when it comes to discussing what outcomes we want as a society.

Now the general impression is that poverty is bad, at least that is how I feel when I hear the word. However, a general feeling is not enough to base policy on – we have to define “poverty” and then define what we think is an appropriate way of increasing social welfare with respect to poverty.

There are two different ways of defining poverty in a population of people: Relative and absolute.

Absolute poverty measures tell us that if a person/household cannot afford a certain bundle of goods, they are experiencing poverty. Relative poverty tells us that if a person/household is in a certain income decile, or earns only a certain proportion of the average wage then they are poor.

A good casual defense of the absolute poverty measure is provided by Tim Harford (*) while a strong case for discussing relative poverty is given by Terence at LAANTA (*)

Now both poverty measures are extremely useful, but neither neatly fits into the strict “feeling” of poverty that society as a whole wants to deal with. In order to understand how to use these measures, we have to ask “why does society care about poverty”?

Read more