goonix

Gambling at the TAB, monopolies and innovation

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I like to place the odd sports bet. In New Zealand I have no official option but to do this through the TAB, which is a state-sanctioned monopoly.

In other countries there are often many competing institutions offering odds on various events, including sports. In fact, there are now many companies that operate across borders in many countries. Recently the best real money casino apps for US players at www.EasyMobileCasino.com started offering sports bets as well as other online casinos.

The lack of competition in the betting market in New Zealand stifles innovation in the betting options they offer. One recent pundit proclaimed the TAB “the most conservative betting agency in the world”. Essentially the TAB has no incentive to innovate, as they know punters have limited ability to legally gamble through other avenues or https://casinos-enligne.fr/.

The TAB have started opening more interesting books on the FIFA World Cup, such as whether Lionel Messi will score more goals during the campaign than the All Whites combined (Messi the hot favourite at $1.55!).

If the gambling market were officially opened up to competition I suspect we would see a lot more of this innovation in amazing games like bar bar black sheep slots.

*I’m not sure of the legal status of these organisations in New Zealand, although I understand it is possible to open accounts with them (legally or otherwise).

Matt Nolan

GST rise “helping the poor”

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Hone said that the increase in GST will hurt the poor.  His justification is:

GST hits poor people the hardest because nearly all of their money is spent on things that you pay GST on – food, petrol, electricity – so any increase is going to really hurt them

Interesting.  I was under the impression that low income households spent proportionally more of their income on “housing services” (read rents) which are exempt from GST …

Also if we believe that the poor have borrowed relatively more of their income in the past, then an unexpected decrease in a flat portion of income tax and an increase in the flat portion of GST will actually be a transfer too them from people who have saved.

It would be pretty easy to spin the idea that higher GST and broadly lower income taxes would help the poor … but I guess that wouldn’t roll with his politicking now would it 😉

Matt Nolan

Sir Roger’s alternative budget

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Notice that I just stole the title from Kiwiblog – as it was really the best title in my opinion 😉

This is the first set of policies for the Budget, so it is the first post for our “Budget 2010” series.

Kiwiblog has a great rundown, I’ve only got a few points to add:

  1. Yes it would increase efficiency and GDP.
  2. Yes it would have “equity” costs.
  3. Given that no party was elected on the basis of this sharp a change in “redistribution” between equity and efficiency it isn’t the budget I would recommend for actual policy at the current time.
  4. I do applaud Roger Douglas for doing a realistic run through of what his budget would look like though – I respect transparency.

As more Budget or alternative budget details come through we will have a crack at looking at them.

Matt Nolan

Motivating effort through flagellation

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Following yesterdays brainstorm on compulsory work, another post on NZ catching Australia has inspired a policy prescription.  State funded flagellation agents for firms.

Government has set a prosperity target, to match Australia’s GDP per capita by 2025.

Efforts to increase the availability of capital for productive firms and to innovate more effectively are important steps in the right direction, but effort improvement should contribute too.

Labour productivity, the output per hour worked, is the most significant driver of a nation’s GDP per capita. New Zealand performs relatively poorly on measures of labour productivity, ranking 22nd of 30 OECD countries, whereas Australia ranks 13th.

Improving labour productivity can be achieved by improving, amongst other factors, contributions from innovation, capital and effort.  Flagellation motivates managers and workers to find ways to produce more valuable output per hour worked.

Growing New Zealand’s prosperity depends on developing successful international businesses, and businesses will only be successful if they are competitive. Achieving competitiveness, by providing more valuable products and services or by having lower cost structures, requires world-class effort.

The target to match Australia’s GDP per capita by 2025 is ambitious. Effort improvement is only part of the solution but it is very important.

On a serious note, an individual’s decision to develop skills and the such is part of their choice given the payoffs available in the labour market.  If we are going to subsidise it let’s actually try to figure out what the “public returns” are from this education – rather than spouting off truisms regarding labour productivity or flagellation.

Again, remember that the purpose of policy is to improve/maximise welfare – not to meet GDP targets or redesign the economy/society in our own image …

Matt Nolan

Compulsory 10 hours of unpaid work

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Inspired by this post on compulsory superannuation, here is a post on “compulsory work” (eg slavery).

Without compulsory work New Zealand is destined to become an economic backwater. Our relative standard of living, particularly when compared to Australia, will continue to decline.

Two important actions can reverse our long term economic decline, effective labour market regulation and compulsory work.

Compulsory work had been an unmitigated success in the New World and has helped transform their economy. While NZ academics can argue about whether or not it has increased their overall savings rate, it is clear that it has improved the amount that is produced in the economy.

Moving back away from the sarcasm let me say:

  • Compulsory superannuation is the love child of fund managers – as they can’t see past the idea that “more savings = more funds = more investment”.
  • Even those that do see past self interest only think of “GDP”.  However, the goal of policy is to maximise welfare not output – if people want to consume they should be allowed.  Forcing people to save is abhorrent.
  • Yes compulsory saving leads to more saving, and possibly to more investment (at least to lower borrowing).  But it does this by making people credit constrained – implying that people can’t smooth consumption over time and have lower lifetime satisfaction.

To me, compulsory superannuation/saving schemes are very wrong.  The people trying to push them need to learn that the purpose of policy isn’t to increase GDP or fatten their wallet, it is to ensure that we have a society where welfare is maximised.

Matt Nolan

We need a new Green party

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So I’ve been told by CPW that the Green party has a new policy regarding electricity generation. I will discuss it here, and then explain why I’ve titled the post as such – overall, I do think we need an actual Green party who aren’t just redistributionists in green drag …

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