Archive for category: Other

Ahh I see two Tyler Cowen posts up in the past 24 hours that I have to list down for future reference:

1. On the jump in bond rates as the Fed suggested a tapering in QE was in sight.
2. On the differences of views between the economics community and economics blogs.

I would note a couple of things.

The term structure of interest rates are always confusing – and hard to interpret without reference to other variables at the same time.  The drop in asset and commodity prices at the same time as the drop in bond prices indicates “tighter monetary policy” (I prefer avoiding the bubble line – as the word is a bit loaded, and a ‘bubble’ based on cheap credit is different than a ‘bubble’ based on out of whack expectations … in fact I wouldn’t even use the term in the first case) – the real question of interest for me is “what were expectations of Fed tapering prior to the announcement”?  This seems like a strange reaction for an announcement that in many ways should have been expected!  [Add this from Money Illusion, and all the links within – the simultaneous events in the US and China make this a messy thing to read indeed]

And in terms of blogs, Cowen is right that economists are generally less overconfident and moralistic in their research than they are on blogs.  Economics research is neat to read, and is unlikely to get you hot under the collar in the same way blogs do 😉 .  Now this is the difference between writing as an economic researcher, and writing as an individual, so it should really be expected 😉

I had heard a rumor the Productivity Commission was going to make a blog – and what do you know here it is … Prod Blog (link fixed)!

They are talking here about migration to Australia.

Contrary to popular belief, those leaving for Australia aren’t necessarily our best and brightest. Rather, their education profile broadly matches that of the New Zealand population as a whole. Also, inward migrants, who bring new skills and experience to New Zealand, generally out-number those leaving New Zealand – prompting some to refer to our migration pattern as a brain exchange rather than a brain drain.

Duncan Garner has posed the question of whether we should charge tourists more to use DOC trails to save the 100 Kiwi jobs the government is cutting at DOC

Should we charge tourists more to walk our DOC tracks and use our huts to save 100 kiwi jobs? Is this a shortsighted Govt? @RadioLIVENZ 3pm

— Duncan Garner (@Garner_Live) March 25, 2013

Now this conflates two separate issues:

• If it is efficient to price discriminate and charge tourists more to use DOC tracks, why aren’t we doing it already?
• Are the jobs necessary to provide the desired level of service from DOC?

Charging tourists more

The first issue implies that the government is leaving money on the table. If it is, then maybe this should be looked at. There may however be valid reasons why the government hasn’t. A basic requirement for price discrimination is that arbitrage isn’t possible. It’s entirely possible that if this pricing structure was implemented people would just get around as locals would find ways to buy tickets (or whatever one does when they book a tramp on a doc track) and pass them onto foreigners at a profit. I don’t know about you but I personally feel a little uncomfortable with the idea of DOC staff checking passports on the trails. It’s also possible that tourists would resent the price discrimination and be put off, which would have the opposite effect.

But, if the reasons to not do it don’t stack up (i.e. it would be profitable), the government should be doing it independent of whether or not it cuts 140 jobs….

Trimming the fat at DOC

The second issue is whether it was efficient for these people to be employed at DOC. I.e. Is DOC “carrying too much fat”/would we be better off with these people serving some other role in the economy? This leads on the next question of analysing whether the social costs of firing them (unemployment/retraining etc..) outweigh any efficiency benefit.

And that is something which I can’t personally answer due to a lack of information. But I would note that if there is an issue of the structure of the hierarchy leading to “too many chiefs”, cutting staff isn’t really going to have much of an impact on service – and it should be taken into account. If this is the factual situation we are in, then the government keeping them employed is a form of welfare, which should be taken into account when analysing the social costs of firing them.