% of American children living with a single parent

My parliamentary submission on assisted dying petition

Assisted suicide has had popular support for many decades. Opinion polls show that about 60% of the population support it and these opinion polls date back 20 years.

The two previous attempts at passing a Death with Dignity Bill failed despite widespread public support:

The reason political parties do not act is those who are against assisted suicide are passionately against it and will change their vote because of such a bill. Those who are for assisted suicide are unlikely to change their vote if a bill is not passed by Parliament.

Any bill that does go for on assisted dying will divide Parliament in much the way it divides the community which is into three equally sized groups.

  • One-third will be against assisted dying on moral or religious principle.
  • One-third will be for it.
  • One-third will be for it will be but will be riddled with doubts about the ability to draft a bill that safeguards against abuse and misadventure.

Those doubts are legitimate and entitled to be satisfied before an MP votes for the bill. Many who support euthanasia in principle have serious reservations about the ability to craft a Bill that prevents abuses. Parliaments have an interest in protecting vulnerable groups–including the poor, the elderly, and disabled persons–from abuse, neglect, and mistakes.

Many people have very strong views on exactly when and when not euthanasia is permissible because of their views about the sanctity of life and the risk of abuse. The recent High Court judgement on an unsuccessful application for an exception to the criminal law on assisted suicide said that:

The sanctity of human life principle underpins the criminal law relating to culpable homicide. It was said by Blackstone to be the first rule of English law.

When making an exception to the first rule of law, people want to know exactly what they are voting for and exactly what safeguards apply the proposed exceptions.

A badly drafted bill may offer insufficient assurances to some MPs about preventing abuse and ensuring people who are depressed are not offered options that are not in their best interests.

Others have moral or religious objections. The religious objections were summarised by Blackstone, in his Commentaries on the Laws of England, where suicide was also a spiritual offence:

…in evading the prerogative of the Almighty, and rushing into his immediate presence uncalled for

Many Bills have failed such as recently in the Scottish Parliament and in 2003 in the New Zealand Parliament because they were badly drafted and were considered by many  to offer insufficient protection of the vulnerable against abuse and melancholy.

Even when courts rule favourably on the matter, such as in Canada with its recent Supreme Court decision under its Bill of Rights, that court suspended its judgement upholding the right to euthanasia for 12 month so that the Canadian Parliament could work out the ever so vital details by passing a Bill. As the Supreme Court of United Kingdom recently ruled:

… unless the court can be satisfied that any exception to the subsection can be operated in such a way as to generate an acceptably small risk that assistance will be afforded to those vulnerable to pressure to seek to commit suicide, it cannot conclude that the absolute prohibition in the subsection is disproportionate to its legitimate aim.

That is the essence of reservations about end of life choice. Blackstone’s ratio applies to standards of proof in criminal proceedings: it is better that 10 guilty go free than one innocent suffer.

The law has long acted to prevent, by force if necessary, suicide – including suicide by refusing to take appropriate measures necessary to preserve one’s life after the point at which life become unbearable. Whether the patient’s wishes to be honoured in this area is left to elected representatives to legislate. Justice Scalia asks

Are there, then, no reasonable and humane limits that ought not to be exceeded in requiring an individual to preserve his own life? There obviously are, but they are not set forth in the Due Process Clause.

What assures us that those limits will not be exceeded is the same constitutional guarantee that is the source of most of our protection – what protects us, for example, from being assessed a tax of 100% of our income above the subsistence level, from being forbidden to drive cars, or from being required to send our children to school for 10 hours a day, none of which horribles is categorically prohibited by the Constitution.

Our salvation is the Equal Protection Clause, which requires the democratic majority to accept for themselves and their loved ones what they impose on you and me.

The biggest threat to an End of Life Choice bill passing the New Zealand Parliament is judicial intervention in this charged social issue that will only mobilises the opponents of the very right the applicants to the court seek. Scalia again this time on the risks of the courts moving in advance of the popular will, and thereby poisoning the democratic process:

Leaving this matter to the political process is not only legally correct, it is pragmatically so. That alone… can produce compromises satisfying a sufficient mass of the electorate that this deeply felt issue will cease distorting the remainder of our democratic process.

As an example of the importance of democratic compromises in securing the votes in Parliament, there is a voluntary euthanasia bill currently before the Scottish Parliament. It has been stuck in committee for two years because it not only promises end of life choice, it also grants a right of euthanasia to those with progressive degenerative diseases.

By overreaching to progressive degenerative diseases, this Bill in the Scottish Parliament is bogged down because euthanasia as distinct from a death with dignity is a step too far from many members of Parliament willing to support end of life choice for the terminally ill such as provided for in the House of Lords Private Member’s Bill on end of life choice which later failed in the Commons.

The great strength of democracy is a small group of concerned and thoughtful citizens can band together and change things by mounting single issue campaigns or joining a political party and running for office and winning elections or influencing who wins.

Indeed, it is that very strength of democracy – small groups of concerned citizens banding together – is what is holding up legislating on an end of life choice. It is not that minorities are powerless and individuals are voiceless. Exactly the opposite.

Many people have passionate opinions for and against an End of Life Choice Bill. These opinions are taken into account by members of Parliament in fine detail depending on how voters will vote at the next election.

What can be undemocratic about members of Parliament paying attention to how a wide range of ordinary members of the community might vote if they disappoint them.

The key safeguard of minorities against the majority is their ability to block vote. Yes, those in the majority will be annoyed at the power of the minority to slow down the passage of a End of Life Choices Bill.

Yet on some other matter passionate to them those currently in the majority will one day or another end up in a minority. The rotation of power is common in democracies, and the worst rise to the top.

It is wise to design constitutional safeguards to minimise the damage done when those crazies to the right or left of you get their chance in office, as they will sooner or later rather than focus on the powers you and those that currently agree with you should have in your few days in which you fleetingly have a majority.

Too many policies and ideas of the one political party or another assume that they are the face of the future, rather than just another political party that will hold power as often as not and always for an uncertain time.

New Zealand Parliamentary elections are always close because of proportional representation. This makes reality of ending up in the minority again very quickly in a few years very real.

Yesterday’s majority of the vote sooner or later and often sooner than they expect will break off into different minorities on the next big issue of the day.

These newly formed minorities will use that same ability to band together as a minority to block vote to protect what they think is important and advance agendas they think are to be wider benefit despite the opinion of the current majority to the contrary. All reforms start as a minority viewpoint.

You can’t complain about democracy not working because it’s working precisely as it should: parliamentarians paying close attention to how a great number of people from all walks of life vote in light of how they as members of Parliament voted on specific issues important to them.

The democratic process must strike a proper balance between the interests of terminally ill, mentally competent individuals who would seek to end their suffering and the State’s interests in protecting those who might seek to end life mistakenly or under pressure. The pros and cons of euthanasia as a practical matter is ably summarised by Richard Posner:

 Countries and states that authorize physician-assisted suicide impose strict requirements that minimize the danger of involuntary euthanasia—too strict, some believe (such as the requirement in Dutch law that the patient’s suffering be “unbearable” before he can invoke physician assistance to end his life).

These requirements (which further reduce the stigma of physician-assisted suicide by confining the practice to cases of genuine desperation) are not airtight, or uniformly observed.

Any system will be abused. The question is whether the incidence of abuses, combined with the other costs of the system, outweigh the benefits.

Gary Becker has written frequently on the issue of euthanasia and suicide. Indeed, he wrote the Economic Theory of Suicide, not long after his wife took her own life in the early 1970s. He argues well about people’s ability to weigh the considerations:

Rational forward–looking persons with good information about their future circumstances would commit suicide only when convinced that they would be worse off by continuing to live.

David Hume said (in his Essays on Suicide and the Immortality of the Soul) “That suicide may often be consistent with interest and with our duty to ourselves no one can question, who allows that age, sickness, or misfortune may render life a burden, and make it worse than annihilation.”

Schopenhauer was also confident about the rationality of suicide, “It will generally be found that, as soon as the terrors of life outweigh the terrors of death, a man will put an end to his life” (Parerga and Paralipomena).

Becker also wrote insightfully of the terrors of death:

Hume adds “I believe no man ever threw away life, while it was worth keeping. For such is our natural horror of death”, and Schopenhauer makes the same observation “But the terrors of death offer considerable resistance…”

The reason why Death with Dignity Bills fail in Parliament is those in the community who are against it are passionately against that it and will change their vote if it passed. Those that are for it are not swinging or single issue voters.

I support the End of Life Bill submitted to the private members bill ballot by David Seymour. The way in which a bill on assisted dying is to be passed is normal democratic means: by trying to persuade each other and elections. As United States Supreme Court Justice Antonin Scalia said

The virtue of a democratic system [with a constitutionally guaranteed right to free speech] is that it readily enables the people, over time, to be persuaded that what they took for granted is not so and to change their laws accordingly.

Yes, assisted dying years a passionate issue and some people are impatient and want to use the courts, but again I believe Justice Scalia is right when he said:

We might have let the People decide. But that the majority will not do. Some will rejoice in today’s decision, and some will despair at it; that is the nature of a controversy that matters so much to so many. But the Court has cheated both sides, robbing the winners of an honest victory, and the losers of the peace that comes from a fair defeat. We owed both of them better. I dissent.

That importance of a fair defeat at the ballot box and in Parliament is important both to when and if a bill on end of life choice is passed, and to how quickly support opposition to that bill will be mobilised before such a bill even is put into the Parliamentary ballot of private member’s bills.

Nothing stirs up the impassioned (and most other people as well) more than depriving them of their right to support or oppose what is important to them through political campaigns and at an election. The losing side, we all end up on the losing side at one time or another, are much more likely to accept an outcome if they had their say and simply lost the vote at the election or in Parliament.

This committee should report favourably on the petition. Hopefully the private members bill by ACT Party Leader David Seymour will be drawn from the ballot soon.

Haggling and the gender pay gap

Geoff Simmons attributes part of the gender wage gap to the reluctance especially among women in high-paying jobs to haggle over pay. These women at the top end of the labour market are more likely to accept the first offer.

This relative reluctance of women to haggle over their pay is important to explaining why the gender wage gap is much larger at the top end of the labour market than at the bottom according to Geoff Simmons. Women have to haggle more if the gender pay gap is to close further.

Haggling over the wage has costs as well as benefits as Richard Epstein explained 20 years ago within a search and matching framework when commenting on a paper written by Carol Rose in 1992:

If one party is known to gobble up virtually all the cooperative surplus, then that party will find it difficult to attract deals. People anticipate getting some portion of the gain and will have a tendency to migrate to other individuals and transactions when they do not have to be ever watchful of their fair share of the gain.

If women have the characteristics that Rose attributes to them, then they would be able to enter more deals and find jobs more easily than men. At this point it becomes an empirical question: whether the greater frequency of deals (or shorter periods of unemployment) offset the tendency to gain a larger share of the profits of any given transaction.

Women will find it easier to get a job because they haggle less and therefore negotiations are less likely to breakdown, which will increase their lifetime income. This reduction in the cost of search because of a greater prospect of a match offset the losses in wages from successful haggling.

Indeed, does not this reluctance to haggle among women make it more likely that employers will hire women and promote the because their reluctance to haggle makes them cheaper. This starts off a competition between employers that will slowly drive up the wages offered to women.

It is also the case that women invest in human capital that is more mobile between the jobs and they are more likely to quit the workforce and return again after motherhood.

The ability to quickly find a job after a career interruption is a competitive advantage rather than a disadvantage.

Men have more specialised human capital and are more likely to stay in one job so they have more to gain from haggling. In comparison, women invest in human capital that is more mobile between jobs because they anticipate downscaling or quitting because of motherhood.

In such a case, it is advantageous to have human capital that appeals to a wide range of employers and become can be quickly matched so that full-time or part-time employment and the associated income stream can start quick as quickly as possible. Workers who changed jobs more often and have shorter job tenures have less to gain and more to lose from haggling and not getting the job at all.

If women do not like to haggle, does this not imply they are less likely to be attracted the jobs with performance pay? Alan Manning investigated this specific question a few years ago.

The propensity of women to seek or avoid jobs with performance pay in a more competitive workplace is an important question because up to 40% of jobs have some form of performance pay which would put women off if they do not like to haggle as Geoff Simmons implies.

Manning used jobs with performance pay in the the 1998 and 2004 British Workplace Employees Relations Survey as a proxy for the level of competition in the workplace.

If Geoff Simmons is right, women should shy away from jobs with performance pay. Women should be less likely to hold these jobs with performance pay, other things being equal. That is precisely the hypothesis that Alan Manning explored. He is a world-class labour economist. What did he find?

We find very modest evidence for differential sorting into performance pay schemes by gender, and small effects of performance pay on hourly wages. Furthermore, and unlike the laboratory studies, we find no significant effect of the gender mix in the job on the responsiveness to performance pay.

We do find some evidence for an effect of performance pay on a measure of work effort in line with the experimental evidence but the bottom line is that a very small part of the gender pay gap can be attributed to these factors.

The gender pay is already tiny in New Zealand and only a tiny part of that can be explained as any reluctance of women to compete in the workforce such as through signing on for performance pay.

Manning found that the gender mix of jobs in occupation is not affected by the presence of performance pay but it should be if women are reluctant to angle and to be competitive as suggested by Geoff Simmons.

The reluctance of women to sign on for performance pay maybe be an aspect of the asymmetric marriage premium and the marital division of effort. Mothers, unlike fathers, cannot afford to go home at the end of the workday completely exhausted if there are children to care for.

Women have a long history of carefully selecting education and other human capital and occupations to anticipate the responsibilities of motherhood and minimising human capital depreciation during the associated career interruptions. Anticipating that motherboard is a lot of work is no stretch on that occupational sorting by women.

That division of effort between the sexes has got nothing to do with the behaviour of employers and everything to do with the marital division of labour. As to what to do about that Richard Posner raised a very good conundrum in a paper from 20 years ago:

The idea the government should try to alter the decisions of married couples on how to allocate time to raising children is a strange mixture of the utopian and the repulsive. The division of labour within marriage is something to be sorted out privately rather than made a subject of public intervention.

Liberal and radical frameless can if they wanted women to stay in the labour force and have no children or fewer children, or, persuade their husbands to assume a greater role in child rearing. Others can search the contrary. The ultimate decision is best left to private choice.

I remember from decades ago a couple at work who were very modern and trying to share the child rearing equally. Their three-year-old daughter was not very cooperative because she found that her mother was much better at braiding her hair than a father. That tantrum by their three-year-old was the beginning of the end of a grand plan.

@garethmorgannz @geoffsimmonz the labour supply effects of UBI – updated

One of the many drawbacks of the universal basic income is it will induce the recipients to cut back on their labour supply. There are studies of this labour supply effect through the study of what happens when people win the lottery – either the big one or a small prize.

Winning the lottery is the equivalent of winning an annuity equal to whatever annual income you can get it current low interest rates and share market returns.

A surprisingly number of people on the Left who deny that taxes have significant labour supply effects will nonetheless accept that winning the lottery will induce people to quit work permanently or cut back at least. The most likely reason is they buy lottery tickets too.

A study has just come out on the labour supply effects of winning the Swedish lottery. The sample in this study was really big: several million Swedish lottery winners.

Sweden seems to be like the USA in that both are awash with interesting economic data to the many other countries do not collect. Moreover, they were able to study these Swedish lottery winners over a 5 to 10-year period. Labour supply detail at that level is like going to heaven for an empirical labour economists.

Source: Labour supply responses of lottery winners | VOX, CEPR’s Policy Portal.

The researchers found that in common with a previous study of the labour supply of lottery winners after their win that there were

modest reductions in labour earnings suggesting every dollar of universal basic income would reduce labour earnings by roughly $0.11.

The new research also found productivity losses of $1.40 for every hundred dollars of lottery winnings and that the partners of the lottery winners cut back on their labour suppliers well. No surprise there. Taking all these labour supply effects into account, our researchers concluded that:

every dollar won in a lottery reduces lifetime after-tax labour earnings of winners by $0.10-$0.20.

All in all, the universal basic income will be a negative productivity shock built on a negative productivity shock. First of all, there is the great big new tax to fund the universal basic income. Then the recipients of the basic income will cut back on their labour supply further compounding the massive social costs of the universal basic income.

A universal basic income is a bad idea from start to finish and that is before you consider the many advantages of encouraging people to work for their living. Working for your living is a central expectation of adult life.

UPDATE: what is the magnitude of this labour supply drop from universal basic income? The usual labour supply effect of a recession as recently summarised by Richard Rogerson is as follows:

Consider by way of comparison the labour market fluctuations associated with the business cycle. Going from normal times to a fairly severe recession is usually associated with a drop in total hours worked of about 3 percent.

A universal basic income will push the New Zealand economy into recession off the back of labour supply effect from the windfall increase in incomes alone. That is before you consider the massive productivity shock pushing the economy down further through a massive increase in the taxation of capital, which is the most inefficient form of taxation.

The Return Of Australian Indigenous Land to 2013

Bedford’s law is an example of forensic statistics

@greencatherine @cjsbishop zero US, UK & Swiss gender pay gaps for single women

If victory is a zero gender wage gap, some countries have achieved it already for single female workers and long ago according to the data charted below is from the Luxembourg Income Study.

Source: IZA World of Labor – Equal pay legislation and the gender wage gap from the Luxembourg Income Study.

Discrimination cannot explain why the gender wage gap for single female is tiny relative to the family wage gap. As Solomon Polachek explains:

…the wage gap for married workers is between three and 30 times greater compared with single workers.

Employers cannot be to blame for the large difference between the single female worker gender wage gap and the family wage gap.

Aside from explaining why employers only discriminate against married women, you must explain how employers managed to find out which female applicants are married so they can discriminate against them.

Without that vital information on the marital status of female applicants and the presence and number of children as well is their spacing, the vast male chauvinistic conspiracy responsible for the glass ceiling and the sticky floors against promotion does not get off the ground.

How do employers actually pay married women less? Advertising jobs that pay women less has been unlawful for decades. Yet another hurdle to overcome for the vast male chauvinistic conspiracy.

Women move between the large number of jobs as do men accumulating human capital as they go? Somehow employers, including female owned firms, must sabotage the accumulation of human capital by married women as soon as they have children but without paying them lessen in their current jobs or advertising jobs that pay married women less.

The main drivers of the gender wage gap are unknown to employers such as:

  • whether the would-be female recruit or employee is married,
  • whether their partner is present,
  • how many children they have,
  • how many of children are under 12, and
  • how many years are there between the births of their children.

These are the main drivers of the gender wage gap – all of which are factors totally unknown to employers and of no relevance to them in making a profit.

Most explanations of the gender wage gap centre around human capital. In anticipation of time outside of the workforce for motherhood, women self-selecting to occupations that penalise career interruptions less.

Women invest in human capital that is more general, human capital that is more mobile between jobs and into spells of part-time work. Women anticipate home time after they have children so they invest in human capital that depreciations at a slower rate during career interruptions. Women also invest less overall in new capital because they expect to spend less time in the labour market.

All of these investments are made by women themselves in anticipation of motherboard rather than employers somehow paying them less after they marry and have children.


The solution to closing the family wage gap requires radical biological changes in who has children. There are more radical changes required than this because mothers actually like babies and enjoy spending time with them rather than going to work.

Equally challenging is the required changes in the dating market. There is an average age difference between boyfriends and girlfriends and husbands and wives of 2 to 3 years. As the husband or boyfriend is a few years older, he has usually accumulated more human capital and is more likely to be at a critical career point for promotion.


Because the husband or boyfriend is 2 to 3 years older, it pays off well in terms of the father investing more in market-related human capital and the mother devoting more time to childcare.

Another major driver of the gender pay gap is the dating market as identified by Richard McKenzie. He pointed out that evolutionary psychology has found that in every culture one of the factors of influencing pairing off in the dating market is that the boyfriend or husband must have good prospects although this preference is weakening over this last century.

One of the reasons for the increase in single parents is that low-paid men are not as inviting prospects as long-term boyfriends or husbands is a few generations ago. There are too few good men.


Source: Why Popcorn Costs So Much at the Movies: And Other Pricing Puzzles – Richard B. McKenzie – Google Books.

University educated couples are not called power couples for nothing – their earning power is this stunning compared to going it on your own. The emergence of power couples means that less educated women may prefer to stay single and raise children on their own rather than marry what is left in the marriage pool.

Because of the requirement among women across all cultures that husbands to be must have good prospects, men have an extra incentive to invest in human capital and work harder and longer hours because of the gender specific payoff in the marriage market.

Men will also take more risks than women because risky jobs carry wage premiums. That risk premium is topped up in the mating market terms are marriage prospects because of the higher wages. Women get a wage premium for taking risky jobs but less of a payoff in the mating market for the higher wages. There is an evolutionary psychology explanation for the family wage gap.


All in all, a key requirement for the closing of the family wage gap and what little is left of the gender wage gap is women drop their standards in terms of who they choose as boyfriends and husbands. Not very likely.


Workplace safety, spans of control and directors’ duties

Workplace safety arises as a by-product of economic growth. Risks in the workplace and outside that would not countenance now were routine a few decades ago because the risk of eliminating them was high.

The soon to take effect New Zealand health workplace safety legislation makes it much more difficult to have independent directors and part-time directors of companies. That will both weaken the ability of shareholders to prevent insider control as well as introduce a diversity of views onto boards of directors.

The resignation of Sir Peter Jackson is an example of this. Talented entrepreneurs are no longer able to run large numbers by sitting on the board and intervening on a management by exception basis.

Rupert Murdoch as an example of an executive able to run a global empire. He would ring up the chief executives of his subsidiaries for one minute to month. If they are talking about something interesting, he would listen for longer. He was the ultimate one-minute manager who built a global empire around his supreme entrepreneurial talent.

The new legislation on workplace safety will increase the cost of building a successful business from the ground up. Entrepreneurs will not be able to quickly intervene in the company and dismiss underperforming executives who look after things while they are away. This is because they are not on the Board of Directors.

One constraint on the growth of any firm is entrepreneurs have a limited span of control (Coase 1937; Williamson 1967, Lucas 1978; Oi 1983a, 1983b). A span of control is the number of subordinates that an individual supervisor has to control and lead either directly or through a hierarchical managerial chain (Fox 2009). There are only so many tasks that even the most able of entrepreneurs can carry out in one day. Over-stretched spans of control motivate entrepreneurs to hire professional managers and delegate to them a wide range of decision-making rights over the firms they own (Williamson 1975; Foss, Foss and Klein 2008).

Entrepreneurs and the professional managers they hired to assist them must divide their respective time between monitoring employees, identifying new business opportunities, forecasting buyer demand and running the other aspects of their business (Lucas, 1978; Oi 1983, 1983b, 1988; Foss, Foss, and Klein 2008). The larger is the firm, the more employees there are for the entrepreneur to direct, monitor and reward. These costs of directing and monitoring employees will increase with the size of the firm and larger firms will encounter information problems not present in smaller firms (Alchian and Demsetz 1972; Stigler 1962)

The time of the more talented entrepreneurs is more valuable because they had the superior managerial skills and entrepreneurial alertness to make their firms large in the first place and remain deft enough to survive in competition. Time spent on the supervision of employees is time that is spent away from other uses of the talents that got these more able entrepreneurs to the top and keeps them there (Williamson 1967; Lucas 1978; Oi 1983b, 1988, 1990; Idson and Oi 1999; Black et al 1999).

Firms in the same industry tend to exhibit systematic differences in their organization of production and the structure of their workforces because entrepreneurial ability is the specific and scarce production input that limits the size of a firm (Lucas, 1978; Oi 1983b). The less able entrepreneurs tend to run the smaller firms while the better entrepreneurs tend to lead both the currently large firms and the smaller firms that are growing at the expense of market rivals (Lucas 1978, Oi 1983b; Stigler 1958; Alchian 1950).

There has been a tremendous improvement in the working conditions over the 20th century. The main driver was the incentive and employers to provide safe workplaces as real wages grew. Adam Smith noted that more dangerous and unpleasant jobs always attracted a wage premium as he explains in the Wealth of Nations:

The five following are the principal circumstances which, so far as I have been able to observe, make up for a small pecuniary gain in some employments, and counterbalance a great one in others: first, the agreeableness or disagreeableness of the employments themselves; secondly, the easiness and cheapness, or the difficulty and expense of learning them; thirdly, the constancy or inconstancy of employment in them; fourthly, the small or great trust which must be reposed in those who exercise them; and, fifthly, the probability or improbability of success in them.

First, the wages of labour vary with the ease or hardship, the cleanliness or dirtiness, the honourableness or dishonourableness of the employment. Thus in most places, take the year round, a journeyman tailor earns less than a journeyman weaver. His work is much easier. A journeyman weaver earns less than a journeyman smith. His work is not always easier, but it is much cleanlier. A journeyman blacksmith, though an artificer, seldom earns so much in twelve hours as a collier, who is only a labourer, does in eight. His work is not quite so dirty, is less dangerous, and is carried on in daylight, and above ground.

Honour makes a great part of the reward of all honourable professions. In point of pecuniary gain, all things considered, they are generally under-recompensed, as I shall endeavour to show by and by. Disgrace has the contrary effect.

The trade of a butcher is a brutal and an odious business; but it is in most places more profitable than the greater part of common trades. The most detestable of all employments, that of public executioner, is, in proportion to the quantity of work done, better paid than any common trade whatever.

Hunting and fishing, the most important employments of mankind in the rude state of society, become in its advanced state their most agreeable amusements, and they pursue for pleasure what they once followed from necessity. In the advanced state of society, therefore, they are all very poor people who follow as a trade what other people pursue as a pastime. Fishermen have been so since the time of Theocritus. A poacher is everywhere a very poor man in Great Britain. In countries where the rigour of the law suffers no poachers, the licensed hunter is not in a much better condition. The natural taste for those employments makes more people follow them than can live comfortably by them, and the produce of their labour, in proportion to its quantity, comes always too cheap to market to afford anything but the most scanty subsistence to the labourers.

Disagreeableness and disgrace affect the profits of stock in the same manner as the wages of labour. The keeper of an inn or tavern, who is never master of his own house, and who is exposed to the brutality of every drunkard, exercises neither a very agreeable nor a very creditable business. But there is scarce any common trade in which a small stock yields so great a profit…

The wages in any particular job will vary with the risks that are known to the worker in that job. That is an important qualification.


Competition in labour markets ensures that the net advantages of different jobs will tend to equality. This theory of the labour market originating in Adam Smith, which drives much of modern labour economics became to be known as the theory of compensating differentials.


Firms can choose their production technology to offer workers greater safety or they can economize on safety and offer the savings to workers in the form of higher wages. There is a trade-off in offering more safety or higher wages, holding constant the level of profits. As Kip Viscusi explains:

Wage premiums paid to U.S. workers for risking injury are huge—in 1990 they amounted to about $120 billion annually, which was over 2 percent of the gross national product, and over 5 percent of total wages paid.

These wage premiums give firms an incentive to invest in job safety because an employer who makes his workplace safer can reduce the wages he pays. Employers have a second incentive because they must pay higher premiums for workers’ compensation if accident rates are high.

One of the effects of safety regulation is the employers no longer have to pay this wage premium in more dangerous or disagreeable jobs but as Fishback wrote:

Studies of wages before and after the introduction of workers’ compensation show, however, that non-union workers’ wages were reduced by the introduction of workers’ compensation. In essence, the non-union workers “bought” these improvements in their benefit levels.

Even though workers may have paid for their benefits, they still seem to have been better off as a result of the introduction of workers’ compensation. Many workers had faced problems in purchasing accident insurance at the turn of the century. Workers’ compensation left them better insured, and allowed many of them to spend some of their savings that they had set aside in case of an accident.

What literature there is about suggest that workers overestimate small risks and underestimate large risks. Surveys of manufacturing employment show that one third of workers quit because they found out the job they accepted was more dangerous than they expected.


Source: Evaluating OSHA’s Effectiveness and Suggestions for Reform | Mercatus

One clear trend of the 20th century is as countries got richer, workers demanded more safety at work and larger wage premiums. Market incentives for better worker safety dwarf legal incentives such as from being sued, which in turn dwarf regulatory incentives.

There is also evidence of a glass coffin effect. About 95% of workplace deaths of men. Indeed, there are some interesting journal papers about how occupational choice is affected by motherhood, sole motherhood and sole fatherhood. Single parents are more cautious about their occupational choices.

It is unfortunate that the unions in New Zealand opposes a risk based system of workers’ compensation. The current system is not only no fault, employers pay premiums based on the risks of their industry, not of their individual workplace. There is plenty of evidence to show the charging premiums based on the risks of an accident and the previous record of workplace safety greatly reduces workplace deaths and injuries as Viscusi explains:

The workers’ compensation system that has been in place in the United States throughout most of this century also gives companies strong incentives to make workplaces safe. Premiums for workers’ compensation, which employers pay, exceed $50 billion annually. Particularly for large firms, these premiums are strongly linked to their injury performance.

Statistical studies indicate that in the absence of the workers’ compensation system, workplace death rates would rise by 27 percent. This estimate assumes, however, that workers’ compensation would not be replaced by tort liability or higher market wage premiums.

David Friedman explains incentive incompatibility and comparative institutional analysis

Source: Hidden Order: Chapter 20.

Carbon trading, fisheries quotas & deregulatory takings @cjsbishop @franks_lawyer

Like carbon trading permits, an individual transferable quota (ITQ) to a fish catch can be construed as a exclusive, perpetual right. An individual transferable quota (ITQ) is an allocated privilege to land a specified portion of the annual fish catch.

Fisheries regulators consider ITQ quota shares not to be property, but to convey a privilege to catch an amount of fish or shellfish in a given year that can be renewed or revoked. ITQs are quota shares may represent a different resource quantity every year as the total allocated catch may vary from year to year. Nonetheless, the ability to sell or lease ITQ shares implies a more enduring, if not permanent, fishing access privilege.

No one has yet successfully argued that the ability to adjust and modify an ITQ program constitutes grounds for a regulatory taking in the USA.

The Australian courts have found that fishing entitlements, although similar in terms of the privileges conferred, are not the common law property right of profit á prendre. They are a statutory entitlement. A profit á prendre is a right to take part of the soil, minerals, natural produce including fish and wild animals. The person does not own the thing gathered whilst it is on the land, but has a right to gather it.

Compensation for modification and extinguishment of these rights depends on whether there is compensation payable under applicable legislation or on whether the plaintiffs can rely on constitutional guarantees of acquisition of property on just terms. The courts have clearly indicated that fishing entitlements are rights created by government as means of regulating the fishing industry and are thus governed by the legislation that created them.

By annulling that legislation, the entitlement no longer exists. By modifying the legislation, the entitlement is redefined. Statutory licences are ‘inherently susceptible’ to modification or extinguishment.

See ‘ITQs and Property Rights A review of Australian case law’ by Sevaly Sen, Barry Kaufmann and Gerry Geen Fisheries Economics, Research and Management Pty. Ltd. Australia

Deregulatory takings is another name for reducing the size of carbon trading permits and individually transferable fisheries quotas. There is a large literature on deregulatory takings and regulatory contracts in the USA.

In electric power generation deregulation, ‘Stranded Costs’ represents the existing investments in infrastructure for the incumbent utility which may become redundant in a competitive environment. Stranded costs can also be defined as any investment that will be less valuable under competition than under regulation. Stranded costs are another name for the transitional gains trap.

Given there are no constitutional protections against regulatory takings, it would be ironic that there were constitutional protections against deregulatory takings.

It would be even more ironic that the viability of carbon trading is undermined by the unwillingness of the environmental movement to accept investor certainty over individually tradable quotas to a fishery catch. High-handed reductions of fisheries quotas set the stage for the same in carbon trading. Given that sovereign risk, the business community and investors will be less willing to support the regime been established in the first place.

Homicide rates across the OECD

image

Data extracted on 08 Jan 2016 21:44 UTC (GMT) from OECD.Stat

Assault and mugging rates across the OECD

Why are assault rates so low in the USA that they are next to Japan?

image

Data extracted on 08 Jan 2016 21:44 UTC (GMT) from OECD.Stat

Deaths by Police Taser in the USA in 2015 by race

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Source: The Counted: people killed by police in the United States in 2015 – interactive | US news | The Guardian.

2015 police shootings of unarmed blacks by cause

Despite what you see on TV, surprisingly few unarmed people are shot because they are reaching for a weapon. Most unarmed suspects shot by police last year were resisting arrest. A few were killed in crossfire or by mistake. The chart below does not include unarmed Blacks who were attacking police when they were shot and killed according to Washington Post database.

image

Source: Investigation: Police shootings – Washington Post.

Police killings of the mentally ill by threat level in 2015

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Source: Investigation: Police shootings – Washington Post.

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