% of New Zealand mortgages that were fixed and floating since 2004

Despite the best efforts of the libertarian paternalists to sell the other people are stupid fallacy, ordinary New Zealanders are quite nimble at moving between fixed and floating rates depending upon their forecasts of the future of interest rates. Price controls on floating rate mortgages, as suggested by the New Zealand Labour Party, would make this more difficult, not easier.

image

Source: S8 Banks: Mortgage lending ($m) – Reserve Bank of New Zealand.

Fruits and vegetables, wild vs. domesticated

https://twitter.com/freakonometrics/status/695365967761666048

How to deal with science denialists

Most climate alarmists do not separate the policy issues, the economic issues, from the science of global warming as suggested in this flowchart. Specifically, they do not ask what is the economic and social cost of global warming.

@NZGreens @nzlabour @uklabour @berniesanders bite a gift horse in the mouth when complaining about the ignorance of the average voter

Left-wingers do whinge about voters not understanding; about how if only the voters understood better their arguments than they do now. The Left thinks voters just keep getting it wrong.

They do not know how lucky they are. Rational ignorance and rational irrationality are a rich harvest for the policies of Labour and the Greens.

image

Most of the policies of Labour and the Greens are premised on cultivating the rational irrationalities of voters. These lead to Bryan Caplan’s pessimism bias, an anti-market bias, an anti-foreign bias and make-work bias:

The evidence—most notably, the results of the 1996 Survey of Americans and Economists on the Economy—shows that the general public’s views on economics not only are different from those of professional economists but are less accurate, and in predictable ways.

The public really does generally hold, for starters, that prices are not governed by supply and demand, that protectionism helps the economy, that saving labour is a bad idea, and that living standards are falling.

Politicians mindful of re-election must pander to these four biases.

Fortunately, for the New Zealand Labour Party and the Green Party of Aotearoa New Zealand, voters have no rational reason to correct these four biases. Voters are rationally irrational. As each individual counts so little, why spend any time correcting biased political beliefs?

Anti-market bias: The tendency to underestimate the benefits of the market mechanism. The typical voter equates market phenomena such as profitability and interest as examples of unbridled monetary confiscations by ‘greedy’ businesses. This  biased against the market, despite all its successes, is a rich field to till for both Labour and the Greens

Anti-foreign bias: The tendency to underestimate the economic benefits of interaction with foreigners. This antagonism towards such trends as outsourcing employment overseas, or selling raw materials to faraway traders, is reminiscent of the mercantilism Adam Smith so brilliantly demolished but it still lives on today in the hearts of the voting citizenry. Labour and the Greens play to that bias shamelessly.

Make-work bias: The tendency to underestimate the economic benefits from conserving labour. Those who look to the visible face of job losses overlook the job gains (often by those who lost their jobs) to be made tomorrow in emerging industries. The Greens and Labour are sure-fire enemies of creative destruction.

Pessimistic bias: The tendency to overestimate the severity of economic problems, and to underestimate the recent past, present and future performance of the economy. In The Progress Paradox (2003), Gregg Easterbrook ridicules abundance denial:

Our forebears, who worked and sacrificed tirelessly in the hopes their descendants would someday be free, comfortable, healthy, and educated, might be dismayed to observe how acidly we deny we now are these things.

Many average voters seem to feel that Malthus was correct in diagnosing the allegedly poor prospects for the market economy.

Where would the voting base of the Greens be without a pessimism bias? They are professional pessimists and doomsday prophets from their earliest days. Labour assumes working class Tories are dupes of what is left of fading media barons such as Rupert Murdoch.

Don’t you miss the good old days before TV when democracy was less transparent

Reasons to vote for @JeremyCorbyn @UKLabour reloaded

Cmon aussie c’mon original

Here’s where Republicans and Democrats differ on the role of government

What to call your academic event

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Political activists for all their activism are bone lazy

The rise of Jeremy Corbyn has reminded me of how lazy political activists happen to be. For all their lifelong agitating, they think that as soon as they get a degree of prominent, their work is done. Suddenly, everyone who has disagreed with accidentally prominent activists for all that life will flock to their side and they will win the next election.

The thing about being a political fringe dwelling is you are a political fringe dweller. Only a tiny percentage of the population support you. To get anything above that requires hard work and a considerable amount of compromise to expand your base.

Those that already agree with you already agree with you. If you want more to agree with you, you have to start agreeing with those that disagree with you rather than they agree with you. It is a slow laborious process of compromise.

Occasionally, parties rush to prominence. Left-wing and right-wing populists are examples of these as are the anti-immigration parties. Their support is soft and can quickly disappear. Trump, Corbyn and Sanders should remember this.

Most of all, political activists who slip into prominence forget that voters tend to vote retrospectively: on past performance and out of anger than voting for a particular agenda of the alternative parties.

Because of this political ignorance and apathy, Richard Posner championed Schumpeter’s view of democracy. Schumpeter disputed the widely held view that democracy was a process by which the electorate identified the common good, and that politicians carried this out:

  • The people’s ignorance and superficiality meant that they were manipulated by politicians who set the agenda.
  • Although periodic votes legitimise governments and keep them accountable, their policy programmes are very much seen as their own and not that of the people, and the participatory role for individuals is limited.

Schumpeter’s theory of democratic participation is that voters have the ability to replace political leaders through periodic elections. Citizens do have sufficient knowledge and sophistication to vote out leaders who are performing poorly or contrary to their wishes.

The power of the electorate to turn elected officials out of office at the next election gives elected officials an incentive to adopt policies that do not outrage public opinion and administer the policies with some minimum honesty and competence.

That lack of competence and judgement are what will bring Trump, Corbyn and Sanders down. They are just not up to the job. There are better left-wing and right-wing populists and firebrands about.

The outcome of Schumpeterian democracy in the 20th century, where governments are voted out rather than voted in, is most of modern public spending is income transfers that grew to the levels they are because of support from the average voter.

Political parties on the Left and Right that delivered efficient increments and stream-linings in the size and shape of government were elected, and then thrown out from time to time, in turn, because they became tired and flabby or just plain out of touch.

There is considerable excitement about how popular and elite preferences seem to have equal chances are being implemented.

If Americans at different income levels agree on a policy, they are equally likely to get what they want. But what about the other half of the time? What happens when preferences across income levels diverge?

When preferences diverge, the views of the affluent make a big difference, while support among the middle class and the poor has almost no relationship to policy outcomes. Policies favored by 20 percent of affluent Americans, for example, have about a one-in-five chance of being adopted, while policies favored by 80 percent of affluent Americans are adopted about half the time. In contrast, the support or opposition of the poor or the middle class has no impact on a policy’s prospects of being adopted.

These patterns play out across numerous policy issues. American trade policy, for example, has become far less protectionist since the 1970s, in line with the positions of the affluent but in opposition to those of the poor. Similarly, income taxes have become less progressive over the past decades and corporate regulations have been loosened in a wide range of industries.

This is a dewy eyed view of democracy that would make HL Mencken proud. The notion of a democracy is governed by the rule of law, checks and balances and the protection of minority rights is lost in these dewy eyed conception is a democracy. As Matthew Yglesias said:

…the idea that the point of democracy is to implement legislative outcomes that are supported by broad-based surveys seems almost like a straw man dreamed up by an eighteenth-century monarchist.

Gilens concedes that other values—the protection of minority rights, for example—may also be important, but this misses the forest for the trees. The purpose of a political system is to resolve political questions in a satisfactory way….

The watchword of democracy should not be responsiveness but rather accountability.

In a well-functioning system, voters should elect a team of politicians and then fire them if their performance is seen as unsatisfactory. Seen in this light, the problem with American democracy today is that the intersection of counter-majoritarian legislative procedures and increased partisan polarization has blurred the lines of responsibility. 

My confidence in the median voter theorem returned when Bryan Caplan and Sam Peltzman pointed out that it is difficult to point to a major government program in the 20th century that does not have majority support.

Director’s law is the bulk of public programmes are designed primarily to benefit the middle classes but are financed by taxes paid primarily by the upper and lower classes. Based on the size of its population and its aggregate wealth, the middle class will always be the dominant interest group in a modern democracy.

Within this framework of accountability and voting on the basis of performance rather than promise, there is considerable rotation of power. The fact that this particular activist or populists stumbled onto the treasury benches does not mean much. They usually got there because the previous administration was no longer seen as competent. Nothing more than that.

Behind on my bashing of homeopathy

DHMO is a dangerous acid

Whose voting base has succumbed to unthinking populists?

https://www.facebook.com/WeAreCapitalists/photos/a.157549024416648.1073741826.157541337750750/474168992754648/?type=3&theater

Organic milk simply costs more – there are no other differences

Scientific evidence for popular health supplements:

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