Matt Nolan

Where is the outcry/defence?

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Given the relatively unimportant issues that get wide coverage in the blogsphere I am very surprised not to see many people ranting about the possible “revoking of visas” for temporary workers in New Zealand.

Now, we (well mainly me – I don’t want to put words in the other authors mouths) have ranted a lot – and will rant at least a little bit more – about how this seems wrong headed.

However, when I went across the top 50 blogs according to the Tumeke rankings yesterday there were no posts on the issue. Looking at my regular reading today, I noticed a post by Not PC, and I know Anti-Dismal has covered the issue in the past (Paul, if you have a link to the post where you called this National’s buy NZ made campaign could you tell me so I can link to it 🙂 ).

Does no one else have an opinion on the issue – either for or against? Revoking someones visa on nationality grounds because of a recession is quite a big, loaded, move – it seems like the thing you are either against or for, not neutral about.

If anyone has written on the issue, put a link in the comments and I’ll link here …

Update: Eric Crampton has written about the issue, looking at data to work out the attitude of NZer’s – it is an excellent post, I suggest you read it right now. Brad Taylor comes out as well. Paul Walker discusses here.  Nigel Kearney represented his frustration before all of us here.  Bill Bennett discusses here.

Update 2: Casey Mulligan on the issue in the US (ht Eric Crampton)

Matt Nolan

The lump of labour fallacy

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I have noticed that there is a belief out in New Zealand that there is a set “lump” of jobs – and if foriegn people come in they take them, and “New Zealander’s miss out”.

Now if this matters to us this may be concerning – however, we have been talking about migrants “creating work” and saying that they do “different jobs” than the New Zealand trained workers.

The idea that there is a fixed lump of jobs does not fit this description. However, the idea has a name: The lump of labour fallacy.

The confusion stems from a fundamental misunderstanding surround what labour is. Labour is an input to production. However, as people (who we value in society) get their income by acting as an input we sometimes view work as income. From this step – we end up saying that other people are “stealing our income” by doing this work.

However, what this argument ignores is that labour is an input to production – if you bring in more people, more stuff can be produced. If the addition person is really productive (skilled labour, or domestic poorly provided unskilled labour) then when they come in to society they quickly help everyone else.

As a result, policies to kick current skilled labour out of the country will be counter-productive. Even if we didn’t care about the welfare of foreign people (which of course we do – and really should equally, but oww well) we are effectively cutting off our nose to spite our face. Keep that in mind.

Matt Nolan

Unintended consequences: Sanlu poisoned milk

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The Sanlu poisoned milk saga was extremely sad, no-one likes to hear of deaths caused by products.

Beyond the tragic deaths, the saga was expected to hurt Fonterra heavily – they had a large stake in Sanlu, and it was expected to sully their reputation in China.  However, this wasn’t the case.

After the crisis became public in September, Chinese dairy companies started buying milk from overseas rather than sourcing it locally, he said.

That was the largest of three drivers of the increase in Asian revenues.

It appears that the Chinese public still trusted Fonterra – but did not trust domestically made milk at all.  As a result, Fonterra ended up with a huge boost to sales.  A surprising result.

Matt Nolan

Support of inheritance tax in NZ and the UK

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Two of my favourite applied economists have come out in support of inheritance taxes (to some degree):

In NZ we have David Grimmond of Infometrics:

A means of correcting for dynastic privilege is to introduce a uniform tax on capital. The absence of bequest taxes, in combination with a lack of uniform tax on capital, is a stark aberration in the New Zealand tax system

Then in the UK we have Patrick Nolan of Reform:

In this environment it is unclear why reducing inheritance tax should be a priority. It could be argued that falling property prices mean it would now be relatively cheap, with some estimates indicating that the cost has fallen by almost half to £1.3bn for 2011-12. Yet this is money that could be put to better uses – including reducing other more harmful taxes.

I am a fan of inheritance taxes – as they don’t distort economic behaviour to the same degree as other taxes.  If we want to change the tax system this is the sort of tax we should be introducing – with a corresponding cut to the top tax rate.

Matt Nolan

Jobs and production

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In the comments to the “Sigh” post, rainman raises the following reason for government action against currently employed temporary workers:

What then do the displaced workers like the welder in this story do? Go on the dole?

Now, the primary argument against this is that the “displaced workers” aren’t solely displaced. The immigrants are doing a job making things, and therefore this will “create work” for other people.

However, there is another, more fundamental argument against that. And it comes from the idea that we aren’t actually after “making work” (work is a cost after all) we are after making stuff and having a nice living standard for people.

Read more

goonix

Immigration and specialist labour – the CEO’s defense

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I heard an interview with the CEO of the metals firm last night in the middle of the immigration furore on Radio NZ. His point was that he had employed specialist Filipinos to fill roles for which there was no local supply. This was during boom time. Local people, on the other hand, were undertaking non-specialist work. As demand for their products fell, there was less specialist work available. So he re-allocated some of the specialist (i.e. Filipino) staff to perform non-specialist tasks in their downtime, and laid off the non-specialist (i.e. local staff). So now the specialist staff are undertaking specialist work when they can, and non-specialist work at other times. Which makes complete sense. You’re not going to lay off the specialist staff or there will be nobody left to do the real work once demand increases!

I feel sorry for the guy trying to run a business while politicians look to score political capital from xenophobia. Embarrassing.