A dollar a year?!
Dilbert is on the money again. This time on the subject of CEOs working without pay as a show of penance.
Aid vs development
Lant Pritchett comes out strongly in favour of aid agencies that promote economic development on Aid Watch:
There are many ways of providing assistance to people in poor countries that do little or nothing to produce development. While we might all whole-heartedly agree that de-worming is demonstrated to be cost-effective assistance, its impact on development is, at best, tiny.
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[A]ddressing a series of important problems for well-being like vaccinations, schools for girls, HIV/AIDS prevention or malaria does not add up to a development agenda.
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Development, as accelerated modernization… is the only demonstrated and sustained way to achieve the objectives of increased well-being.
This is particularly relevant in NZ now that Murray McCully wants to make NZAID promote development, rather than poverty elimination. Are his opponents just concerned about political manipulation of aid money, or do they really think that development is the wrong goal for an aid agency? Read more
Tourism funding
Deciding how to fund tourism is tricky: On the one hand there are a fairly well-defined group of firms who gain most of the benefits. On the other hand, a large, ill-defined group of firms benefit somewhat from tourism and promotion of New Zealand as a destination is common property. Once you’ve spent money on a promotional campaign and people decide to come to NZ, you can’t restrict access to those tourists to the firms that paid for the campaign. However, tourists’ spending is rival since each dollar can only be spent at one place. The problem with common resources is that nobody has the incentive to provide them.
Ordinarily you might ask the government to sort out the problem, but then the government is basically subsidising an advertising campaign for the tourism industry. One answer is for a tourism industry body to fund advertising campaigns for its members jointly. The problem here is that nobody has an incentive to join such a body, since they get the benefits of promoting NZ as a destination whether they’re in it or not. Furthermore, the industry rightly points out that its advertising is subsidising revenue for all businesses who have some custom from tourists.
John Key’s solution is to match industry advertising spending dollar-for-dollar. Read more
Bollard on banking
You’ll have to wait until Matt returns from sick leave to get our perspective on the latest MPS, but I do have a few questions about Alan Bollard’s comments on the banking sector:
The banks needed to weigh their responsibility to their shareholders against their responsibility to the New Zealand economy, [Bollard] said. “We think some pressure on the banks will pay dividends,” he told MPs.
Why is it that Dr Bollard thinks banks should decrease their rates on the basis of ‘social responsibility’? Is he asking private companies to act inefficiently, or is there something else going on? Is he just anxious that banks are not responding as strongly as he would like to monetary policy and trying to muscle them into line? Read more
Swine flu pandemic
The WHO has now declared the swine flu a global pandemic. There are 27,737 cases confirmed worldwide and the number is growing fast. However, only 141 deaths are confirmed, which gives the swine flu a mortality rate of 0.5%. Compared with the Spanish flu which killed about 10% of those infected it might be seen as a lot less severe.
However, focussing on the mortality rate would be misleading. If the swine flu were as infectious as the Spanish flu, but had a mortality rate of only 0.5%, it could still kill 6,500 New Zealanders or over 11 million people worldwide. That’s a LOT of people and really reinforces how important the spread of the disease is.
On the other hand, 18 million people die every year from poverty-related causes. Is the response to the pandemic proportionate to our response to global poverty? I guess my point is twofold: first, it’s important to put percentages and proportions in context to understand them but, secondly, once you’ve put them in proportion in throws into relief the lack of effort we put into similarly severe problems.
It’s not about the (plus) size
Apparently American clothing stores are cutting their plus-sized clothing lines at the moment, even as the average American woman gets larger. Why? Because the mean size isn’t the important one. There’s an excellent explanation here:
…it has to the do with the fact that the distribution of weights is skewed to the right. The costs of production result in a focus toward the modal body size, not the mean or median.
Basically, it costs more to make more sizes. The manufacturer wants to make the fewest sizes to fit the most people. Lots of people fit the small sizes. Large people span a huge range of sizes, so not many will fit each big size. Hence, it’s profit maximising to produce only the smaller sizes.
Weight distribution of American women