Matt Nolan

Keep an eye on migration tomorrow

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My economics tea leaves are suggesting to me that there will be fewer than 4,747 departures to Australia in the February figures. If this is the case, the number of departures to Australia will be LOWER than in Feb 2008.

It is this sort of speculation that is giving me dreams suggesting that net migration will pick up quite quickly, very interesting.

The reason I think it is important to keep an eye on this is because I’m getting hacked off with news stories talking about the “huge outflow to Australia” when its growth has been drastically slowing since the end of 2008 😛

Update:  Realised today is Wednesday – not Thursday.  The numbers are out on Friday 😛

jamesz

Where the streets have no signs

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Eric Crampton points to an example of offsetting behaviour in driving reported by Popular Mechanics:

…modifying roads and intersections so drivers are less comfortable—by making driving, in some ways, more dangerous—forces people to slow down and pay attention, producing a change in behavior that, paradoxically, results in more safety. This is also true for pedestrians, who Vanderbilt says are more cautious away from crosswalks than within them because they don’t know if cars will actually stop.

It reminds me of the idea of shared space that’s gained some popularity, particularly in Europe. Read more

Matt Nolan

Moral Philosophy’s role in economics

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I always felt that the role of moral philosophy in economics entered when value judgments appeared – and as a result, it would be possible to separate this issue from the domain of economic science.

However, a book I just purchased (Economic Analysis, Moral Philosophy, and Public Policy – by Hausman and McPherson) appears willing to attack this belief of mine:

Our job will be … to show how knowing moral philosophy helps one do economics and policy evaluation better

Given how heavily another Hausman book (The Philosophy of Economics:  An Anthology) helped shape my view of the economic method, I am sure that this book will end up with me talking like a very different economist.  You have been warned 😉

Matt Nolan

Australians denied insurance

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When I saw this headline:

Australians refused insurance because of poor genes

And this headline (ht Marginal Revolution):

Australians denied insurance for genetic reasons

I immediately thought that they were talking about all of Australia.  Then I read the article and realised how ridiculous this thought was 🙂

Supposedly some insurers are not allowing insurance because of newly testable genetic risk.  Now how do you guys view this, I see two ways:

  1. It is good.  It gets rid of the asymmetric information problem to some degree, so that we can have the “optimal” level of insurance.  People that are low risk will now be able to insure themselves more cheaply afterall.
  2. It is bad.  There is an endowment issue – some people are endowed with bad genes, and we want to redistribute to these people to make up for it.

Personally, I think even if we believe the second issue it would be better to have an efficient insurance industry and then redistribute ex-post …

Matt Nolan

In defence of bank’s forecasts (sort of)

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Roger J Kerr at the interest blog has made a number of good points in this post.

I agree that long-term mortgage rates look a bit vulnerable – if I had a mortgage the 5 year rate at 6.49% would be pretty tempting.  Still, I’m no expert (I’m barely an amateur) at picking mortgage rates, so I wouldn’t do anything on this speculation.

Still, there is one thing I don’t agree with in this post – his determination to bag the retail banks.  Roger makes it sound like bank forecasters and the RBNZ have a massively different view.  However, both expect a sharp bounceback – the main difference is “timing”.  Fundamentally, retail banks expect it to be 6-12 months later than the RBNZ does.

This graph from ANZ illustrates the point well (found here under 12th March 2009):

anz-rbnz-forecasts

Matt Nolan

Unions: More xenophobia

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The Union’s want non-New Zealanders fired before New Zealanders.  We’ve seen this type of nationalistic sentiment before, about outsourcing and through Buy Kiwi made.  This is all pure xenophobia – and I hope that our grandchildren will look back on this and be embarrased.

I have three issues with the idea that we should arbitrarily favour “New Zealand” workers:

  1. It presumes there is a limited pool of work – in actuality, having more workers also “creates more jobs.
  2. It presumes that the goal is “jobs” – the actual goal should be to create happiness.  A closer proxy to happiness would be efficient production – not “job creation” (which is just a wild catchphrase).  I realise that creating an environment of gainful employment is important – but the trade-offs have to be kept in mind.
  3. It presumes that we value New Zealanders more than non-New Zealanders.  Surely we are not that racist.

If a business chooses to keep on a non-New Zealander instead of a “New Zealander” it is because they are a better worker, or they offer greater flexibility to the firm.  Why should we impede the liberty of the firm and worker to trade freely just because we want to get an inefficient, inflexible, New Zealander in the job?

And trust me, the argument that Australia is doing it so we should is rubbish – do we really want to say that we have the same attitude to other races that Australia does!