Great Escape passed by @WorldBank’s preoccupation with RCT (randomised controlled trials) as next big thing in development policy
04 Dec 2016 Leave a comment
in development economics, economics of bureaucracy, growth miracles, history of economic thought Tags: randomised controlled trials, The fatal conceit, The Great Escape, The pretense to knowledge
Who is the real stupid party? #Corbyn @jeremycorbyn #toriesforcorbyn
03 Nov 2016 Leave a comment
in applied price theory, constitutional political economy, development economics, economics of bureaucracy, growth disasters, Marxist economics, Public Choice Tags: British politics, economics of socialism, Leftover Left, Old Left, The Great Escape, Venezuela
South Korea and Industrial Policy
23 Oct 2016 Leave a comment
in applied price theory, development economics, economic history, economics of bureaucracy, entrepreneurship, growth miracles, industrial organisation, Public Choice, rentseeking, survivor principle Tags: industry policy. South Korea, picking winners
#homeslessnessinquiry champions contracting-out @NZLabour @NZGreens @Maori_Party
10 Oct 2016 Leave a comment
in economics of bureaucracy, politics - New Zealand, poverty and inequality Tags: homelessness
Did they swallow a dead rat! After complaining bitterly about the privatisation of social housing and the contracting out of government services and in particular social services generally, the New Zealand Labour Party, the New Zealand Greens and the Maori Party all accepted that part of the solution to better emergency housing services to the homelessness is to fund community housing providers to build them houses. A greater role for the private sector, be it the NGO sector, in solving pressing social problems.
Source: Cross-party enquiry into homelessness.
It is pious to say that NGOs should build new social housing but existing social housing should not be sold to them to administer better than the bureaucrats.
The private sector has always been the last line of the defence for the social safety net for the homeless. Hotels and motels are used for emergency housing. There are plenty of them and it takes very little time to book into one as long as WINZ sends along the documentation to guarantee payment.
The report of Labour, the Greens and the Maori Party included reference to the Kate Amore data on homelessness which comfirms its credibility. That data shows that homelessness has fallen significantly in NZ since 2001 and 2006.
Homelessness is a by-product of bureaucratic inefficiency. So few people are actually sleeping rough or in shelters on any one night that is really an issue of why are those people are not in a shelter or permanent social housing.
The problem of homelessness is the efficiency of the bureaucracy in identifying these people, putting them in temporary quarters be at a hotel or motel if necessary, and then moving them into social housing.
No one is surprised at a homelessness shelter is run by a church or charity all with the assistance of government funding. No one seriously expects bureaucrats to be any good at running homeless shelters or the hotels or motels where the homeless are occasionally booked in.
.@PPTANews @TraceyMartinMP made best ever argument 4 #charterschools @maori_party
28 Sep 2016 Leave a comment
in comparative institutional analysis, economics of bureaucracy, economics of education, politics - New Zealand
Talk about giving the giving the game away. The only way a state school can do as well as a chartered school in delivering to students is giving it more money than a chartered school can do to deliver the same results.
That is the best ever argument for a charter school, they provide better value for the education dollar. Is my logic faulty?
How expensive are charter schools?
09 Sep 2016 Leave a comment
in economics of bureaucracy, economics of education, industrial organisation, Public Choice, rentseeking, survivor principle Tags: charter schools, expressive voting, New Zealand Greens, New Zealand Labour Party, rational rationality, teachers unions
The Rhodesia Solution – Yes Minister
13 Aug 2016 Leave a comment
in economics, economics of bureaucracy, Public Choice Tags: Yes Minister
Why politicians and bureaucrats can never pick winners?
12 Aug 2016 Leave a comment
in economics of bureaucracy, entrepreneurship, industrial organisation, politics - New Zealand
If politicians and bureaucrats were any good at picking winners, they will be on a fabulously well paid package at a hedge fund.
The Road To Serfdom on YouTube
12 Aug 2016 Leave a comment
in comparative institutional analysis, constitutional political economy, economics of bureaucracy, F.A. Hayek, Public Choice, rentseeking
Yes Prime Minister on a minister of manufacturing @jamespeshaw @julieannegenter
21 Jul 2016 Leave a comment
in comparative institutional analysis, economics, economics of bureaucracy, economics of media and culture, industrial organisation, international economics, politics - New Zealand, Public Choice, rentseeking, survivor principle, television Tags: corporate welfare, industry policy, New Zealand Greens, picking losers, picking winners, Yes Prime Minister
Tullock vindicated by how the Romanian revolution succeeded
16 Jul 2016 Leave a comment
in applied price theory, comparative institutional analysis, constitutional political economy, defence economics, economics of bureaucracy, Gordon Tullock, Public Choice, rentseeking Tags: economics of revolutions, fall of communism, military coups, people power, Romania
The obituaries today for Victor Stanculescu, the Romanian army chief at the time of the 1989 revolution, vindicated Gordon Tullock’s view that popular revolutions are in fact military coups.
Tullock argues that any dictator can survive popular revolts as long as he has
- a secret police that is moderately competent and willing to torture and kill; and
- offers large rewards for informing on members his own entourage plotting to overthrow him.
Ordinary citizens obey dictators because if they don’t, they are highly unlikely to make any difference in any revolt and could get killed during the uprising even if it succeeds. Worse awaits them if the revolt fails.
Most dictators do not anoint a formal successor while they are in office. Tullock argued that as soon as a likely successor emerges, loyal retainers start to form alliances with that person and may see private advantage in bringing his anointed day forward.
More than a few autocrats were murdered in their sleep. To his very last day, Stalin locked his bedroom door because he did not trust the bodyguards who had been with him since the 1920s.
The role of street protests in the Arab Spring was to throw in the possibility of mutinies and desertions in the army and police. Previous alliances are thrown into doubt especially as the autocrat is old and sick, but had for many years grooming his 39 year-old son to inherit power.
Turning back to the Romanian revolution, Victor Stanculescu was the recently appointed army chief and initially stuck by the regime. He ordered the troops to open fire on protesters and at least 1000 died from in the shootings in the street.
In common with the Arab Spring, a large street protest did led him to reconsider his position:
Sniffing Mr. Ceausescu’s defeat, General Stanculescu quickly returned to Bucharest, where he faked a broken leg to avoid further counterrevolutionary deployment. Promoted to defense minister after the incumbent minister killed himself, he helped Mr. Ceausescu and his wife, Elena, flee by helicopter from the roof of party headquarters.
But fearing that the copter had been spotted by radar and would be shot down, the pilot hastily landed. Mr. Ceausescu hijacked a passing car, but he and his wife were soon surrounded and arrested.
After the couple were captured, General Stanculescu organized their trial by a military court and recruited the firing squad (before the verdict, by some accounts) that executed them on Christmas Day. He then joined the new government.
But for this late switch by the army chief, the popular revolt would never have succeeded. The army was needed to put down the still loyal security police. The army chief’s top priority was to execute Ceausescu as quickly as possible so that he was not a rallying point for a counter coup.
Ceausescu found out that his game was up when who he thought was his still loyal army chief arrived at his hideout with military judges to try and execute him.
About 10 years later, the Romanian government turned against the man who made the revolution and put him in prison for the many deaths in the street when he was on the side of the regime putting down the revolt.
Not so good an idea. A little bit of forgiveness carries a lot of weight encouraging late switching within the ruling elite and army that makes the difference to bringing down the old regime.
The Economist Crony Capitalism Index
08 Jul 2016 Leave a comment
in applied price theory, applied welfare economics, comparative institutional analysis, constitutional political economy, development economics, economics of bureaucracy, entrepreneurship, financial economics, growth disasters, growth miracles, industrial organisation, politics - USA, Public Choice, rentseeking, survivor principle Tags: crony capitalism, superstar wages, superstars, top 1%
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Nitpicking @stevenljoyce reply 2 @TaxpayersUnion on corporate welfare @JordNZ
05 Jul 2016 Leave a comment
in applied price theory, applied welfare economics, comparative institutional analysis, economics of bureaucracy, industrial organisation, politics - New Zealand, Public Choice, rentseeking, survivor principle Tags: creative destruction, endogenous growth theory, industry policy, innovation, picking losers, picking winners, public goods, R&D, water economics
The best the Minister for Economic Development, Steven Joyce, could do in response to my recent report on corporate welfare was nit-picking. Joyce said my definition of corporate welfare was flawed and that spending on R&D will grow the economy. He said
“To brand things like tourism promotion and building cycle-ways as corporate welfare is, I think, creative but not accurate at all.”
Joyce also said my report was
just somebody picking out a whole bunch of government programmes that in many cases don’t involve payments to firms at all…
Those that do involve payments to firms are specifically designed to encourage the development for example of the business R&D industry. Politicians don’t choose them.
Payments in kind are business subsidies. R&D is so important to the economy that the last thing you want is its direction to be biased by funding from government. Bureaucrats have a conservative bias and do not fund oddballs and long shots. The oddballs and hippies in the picture below could only afford the photo because they won a radio competition in Arizona.
The R&D expenditure that was criticised in my report was commercialisation, not basic research, which was specifically praised. Which research to commercialise is for entrepreneurs.
There is no reason whatsoever to think bureaucrats administering R&D subsidy budgets set by politicians are any better than private entrepreneurs at picking the next big thing.
Page 33 of "An Illustrated Guide to Income" more economic #dataviz at: bit.ly/10M7lqR http://t.co/FcmaqZWB32—
Catherine Mulbrandon (@VisualEcon) May 09, 2013
If bureaucrats were any good at picking winners, were any good at beating the market, they would go work for a hedge fund on an astronomically better salary package. The salary package of one top hedge fund manager exceeds the entire payroll budget of most New Zealand government departments including those administering R&D subsidies and other hand-outs.
Government expenditure in vital areas such as innovation should be justified on the basis of cost-benefit ratios and a rationale for why bureaucrats have superior access to information about the entrepreneurial prospects of unproven technologies and product prototypes.
Subsidies should not be defended because of their popularity and sexiness as Mr Joyce did for the film industry, tourism promotion and ultra-fast broadband
If they told New Zealanders that in their view tourism promotion should be cancelled, the film industry should close down, that their shouldn’t be any ultra-fast broadband…I don’t think people would be that enamoured with it.
On irrigation funding, Mr. Joyce cited a report by NZIER that found irrigation contributes $2.2 billion to the economy. Irrigation is a private good which can funded by pricing it properly including the recovery of capital costs. There is no case for a subsidy.
Public goods have spillovers, private goods such as water and irrigation do not. Users can fund the irrigation themselves buying as little or as much water as they are willing to pay out for out their own pockets. The NZIER report noted that it was not about the case for public funding:
… we are not able to quantify the environmental or social impacts if irrigation had never occurred. We also do not attempt to investigate the relative merits of public versus private sector funding of the schemes.
Utopia, you are standing in it! 
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