Source: “Free Trade Agreements and the Consolidation of Democracy” (April 2014) American Economic Journal: Macroeconomics. American Economic Association.
Can free trade agreements help solidify emerging democracies?
24 May 2016 Leave a comment
in constitutional political economy, defence economics, international economics, Public Choice, rentseeking Tags: autocracy, customs unions, emerging democracies, free trade agreements, military coups, preferential trading agreements
Bryan Bruce’s boy’s own memories of pre-neoliberal #NewZealand @Child_PovertyNZ
23 May 2016 Leave a comment
in applied welfare economics, comparative institutional analysis, economic history, economics of regulation, income redistribution, industrial organisation, politics - New Zealand, poverty and inequality, Public Choice, rentseeking Tags: child poverty, conspiracy theories, expressive voting, family poverty, Leftover Left, living standards, neoliberalism, Old Left, pessimism bias, rational irrationality, reactionary left, top 1%
New work by Chris Ball and John Creedy shows substantial *declines* in NZ inequality.
initiativeblog.com/2015/06/24/ine… http://t.co/f94fw4Bhae—
Eric Crampton (@EricCrampton) June 24, 2015
You really are still fighting the 1990 New Zealand general election if Max Rashbrooke makes more sense than you on the good old days before the virus of neoliberalism beset New Zealand from 1984 onwards.

Source: Mind the Gap: Why most of us are poor | Stuff.co.nz.
Bryan Bruce in the caption looks upon the New Zealand of the 1960s and 70s as “broadly egalitarian”. Even Max Rashbrooke had to admit that was not so if you were Maori or female.
The present rate of technology adoption is nearly a vertical line —@blackrock https://t.co/3oS3YAI4ld—
Vala Afshar (@ValaAfshar) January 22, 2016
Maybe 65% of the population of those good old days before the virus of neoliberalism. were missing out on that broadly egalitarian society championed by Bryan Bruce.
As is typical for the embittered left, the reactionary left, gender analysis and the sociology of race is not for their memories of their good old days. New Zealand has the smallest gender wage gap of any of the industrialised countries.
The 20 years of wage stagnation that proceeded the passage of the Employment Contracts Act and the wages boom also goes down the reactionary left memory hole.
That wage stagnation in New Zealand in the 1970s and early 80s coincided with a decline in the incomes of the top 10%. When their income share started growing again, so did the wages of everybody after 20 years of stagnation. The top 10% in New Zealand managed to restore their income share of the early 1970s and indeed the 1960s. That it is hardly the rich getting richer.
@350nz fossil fuel protesters admit plan was to intimidate ANZ, not peaceful protest
16 May 2016 Leave a comment
in comparative institutional analysis, constitutional political economy, economics of crime, energy economics, environmental economics, global warming, law and economics, politics - New Zealand, Public Choice, Rawls and Nozick, rentseeking Tags: climate activists, climate alarmism, law and order, non-violent direct action, peaceful protest, reactionary left
In a letter to the editor today in the Dominion Post defending a climate change protest that closed a branch of the ANZ bank, one of the participants Jimmy Green said
Of course our intention wasn’t to intimidate individuals – our intention was to intimidate ANZ into shifting its investments after the bank ignored us asking.
This honesty about the willingness to intimidate to advance a political agenda shows that climate protesters are engaging in plain thuggery. Peaceful protest has its role in any democracy.
What these thuggish protesters forgot about is how we resolve our differences in a democracy. That is by trying to persuade each other and elections. Let the people decide.
These protesters are keen to pass laws to save the environment but they’re more than happy to break laws they disagree with. I wonder if they extend that same courtesy to others they regard as less enlightened than them? They expect others to obey the laws for which they successfully lobbied.
Why do these climate action protesters think they can break laws that others secured through lawful, peaceful democratic action? Is some direct action more equal than others? Why do these climate action protesters think their vote counts more than mine?
John Rawls makes the point that the purpose of civil disobedience is not to impose your will upon others but through your protest to implore others to reconsider their position and change the law or policy you are disputing.
Rawls argues that civil disobedience is never covert or secretive; it is only ever committed in public, openly, and with fair notice to legal authorities. Openness and publicity, even at the cost of having one’s protest frustrated, offers ways for the protesters to show their willingness to deal fairly with authorities.
Rawls argues: for a public, non-violent, conscientious yet political act contrary to law being done (usually) with the aim of bringing about a change in the law or policies of the government; that appeals to the sense of justice of the majority; which may be direct or indirect; within the bounds of fidelity to the law; whose protesters are willing to accept punishment; and although civil disobedience involves breaking the law, it is for moral rather than selfish reasons, and the willingness to accept arrest is proof of the integrity of the act of peaceful protest.
Rawls argues, and too many forget, that civil disobedience and dissent more generally contribute to the democratic exchange of ideas by forcing the dominant opinion to defend their views.
The civil disobedient is attempting to appeal to the “sense of justice” of the majority and their willingness to accept arrest is proof of the integrity of the act as a contribution to democratic persuasion not intimidation says Rawls:
…any interference with the civil liberties of others tends to obscure the civilly disobedient quality of one’s act.
Rawls argues that the use or threat of violence is incompatible with a reasoned appeal to fellow citizens to move them to change a law. The protest actions are not a means of coercing or frightening others into conforming to one’s wishes.
The intimidation by the protesters at the ANZ bank and their promise to do it again as shown in the adjacent tweet is a breach of the principles of a just society. These climate change protesters blockading an ANZ bank branch were attempting to coerce and frighten others into conforming with their political views. That ‘might does not make right’ is fundamental to democracy and the rule of law. 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.
When the climate protesters lose at the ballot box, they always claim it is rigged by the corporate interests. This is just sore losers.
How the left-wing and liberal visions of democracy are different nymag.com/daily/intellig… http://t.co/Qk5vS9SaV4—
Jonathan Chait (@jonathanchait) August 13, 2015
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.
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.
Indeed, it is a strength of democracy – small groups of concerned citizens banding together – is what is holding up legislating in many areas. It is not that minorities are powerless and individuals are voiceless. It is exactly the opposite.
Parliaments elected by proportional representation such as in New Zealand, and in Australian upper houses reinforces the ability of small groups of citizens to band together to win a seat.
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. Scalia warned of, for example, the risks of the courts moving in advance of the popular will, and thereby poisoning the democratic process
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.
These climate change protesters want to rob the winners of their honest democratic victory over the balance between oil and coal exploration and other energy options. They are also robbing themselves of a fair defeat.
A fair defeat flows from laws and policies secured through normal democratic means knowing that one day you may be in a majority. Only by respecting the will of the majority when you are in the minority do you have any right to expect future minorities to respect your honest democratic victories as the majority of some future day. Democratic majorities of patched together through give-and-take and the reality that even the most important policies may be reversed in the future.

Climate change protesters should respect the political process because democracy alone can produce compromises satisfying a sufficient mass of the electorate on deeply felt issues so as to not poison the remainder of the democratic process. 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.
Corruption and Public Sector Wages
11 May 2016 Leave a comment
in development economics, economics, economics of bureaucracy, economics of crime, growth disasters, growth miracles, law and economics, Public Choice, rentseeking Tags: bribery and corruption
I hope no one in @OxfamGB’s #taxhaven clip were fresh from a #TPPANoWay march?
11 May 2016 Leave a comment
in applied price theory, development economics, economic history, growth disasters, growth miracles, income redistribution, international economic law, international economics, Public Choice, rentseeking Tags: antiforeign bias, Left-wing hypocrisy, neocolonialism, Oxfam, rational irrationality, reactionary left, tax havens, TPP
I hope none in this clip protesting against tax havens as short changing everybody else were fresh from protesting how international economic agreements such as the TPPA infringe on the sovereignty of countries.
If you standing up for national sovereignty that includes standing up for the right of other countries doing things that you do not like within their own country.
If countries have the right to set taxes and tariffs as high as they like, they have just the same right to set them as low as they like.
All that plucky rhetoric of TPPA no way and how international economic agreements violate the sovereignty of countries and developing countries in particular is forgotten in a flash by Oxfam.
Oxfam manages the blinding hypocrisy of opposing the Transpacific Partnership on national sovereignty grounds and at the same time call for international treaties to bully small countries about their tax policies, which overrides their economic sovereignty.
The sovereign rights of developing countries to find their own way does not extend to undermining the tax bases of the rich countries struggling to finance their welfare states.
The Pacific Islands, the once were heroes of the recent Paris climate talks, turn into pariahs once they start looking out for themselves and setting up offshore financial centres and tax havens.
Developing countries are free to impoverish themselves by embracing socialism, but if they decide to attract investment and jobs through low tax rates and offshore financial centres, a new form of colonialism is embraced by the reactionary left as embodied by Oxfam.
When my father was born, 7 in 10 people lived in absolute poverty.
Today, it's 1 in 10! https://t.co/1Caqku3AY1—
Tim Fernholz (@TimFernholz) October 21, 2015
Buying 9 more houses than the Australians = dominating housing market says @nzherald
10 May 2016 Leave a comment
in economics of regulation, politics - New Zealand, Public Choice, rentseeking Tags: antiforeign bias, housing affordability, land supplied, rational irrationality
Chinese tax residents bought 321 Auckland properties (29.5 per cent of the total); Australian tax residents purchased 312 Auckland properties (28.6 per cent).
With friends like these, the #UBI will not live to face its enemies @jordNZ
09 May 2016 Leave a comment
in applied price theory, applied welfare economics, politics - New Zealand, politics - USA, public economics, rentseeking Tags: universal basic income
Running around saying that Universal Basic Income will make work optional leaves open the question of who will be the suckers who actually do the work and pay enormous taxes to fund the idyllic lifestyle of the bohemian rest.
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Source: What If Everybody Didn’t Have to Work to Get Paid? – The Atlantic.
@AndrewLittleMP all but admits rents to go up after Healthy Homes Bill?
08 May 2016 Leave a comment
in applied price theory, applied welfare economics, economics of regulation, Public Choice, rentseeking Tags: economics of housing, economics of mandates, expressive voting, fatal conceit, rent controls, The pretense to knowledge
Opposition Leader Andrew Little accepts that mandating insulation and heat pumps into rental properties will increase their value. But he denies that this will affect rents!
Source: Healthy Homes Bill won’t up rents Little | Politics | Newshub.
An upgrade increases the value of a rental property if the improvements that increase its rental value. You cannot have the increase in the value of the asset without the increase in rent.
I will contract out the rest of my answer to David Friedman’s superb book Laws Order:
For an application of economics to a different part of the law, consider the nonwaivable warranty of habitability, a legal doctrine under which some courts hold that apartments must meet court-defined standards with regard to features such as heating, hot water, sometimes even air conditioning, whether or not such terms are provided in the lease—indeed, even if the lease specifically denies that it includes them.
The immediate effect is that certain tenants get services that their landlords might not otherwise have provided. Some landlords are worse off as a result; some tenants are better off. It seems as though supporting or opposing the rule should depend mainly on whose side you are on.
In the longer run, the effect is quite different. Every lease now automatically includes a quality guarantee. This makes rentals more attractive to tenants and more costly to landlords. The supply curve, the demand curve, and the price, the rent on an apartment, all shift up. The question, from the standpoint of a tenant, is not whether the features mandated by the court are worth anything but whether they are worth what they will cost.
The answer may well be no. If those features were worth more to the tenants than they cost landlords to provide, landlords should already be including them in their leases—and charging for them. If they cost the landlord more than they are worth to the tenant, then requiring them and letting rents adjust accordingly is likely to make both landlord and tenant worse off. It is particularly likely to make poorer tenants worse off, since they are the ones least likely to value the additional features at more than their cost.
A cynical observer might conclude that the real function of the doctrine is to squeeze poor people out of jurisdictions that adopt it by making it illegal, in those jurisdictions, to provide housing of the quality they can afford to rent.
If my analysis of the effect of this legal doctrine seems implausible, consider the analogous case of a law requiring that all cars be equipped with sunroofs and CD changers. Some customers—those who would have purchased those features anyway—are unaffected. Others find that they are getting features worth less to them than they cost and paying for them in the increased price of the car.
How to fight corruption
07 May 2016 Leave a comment
in economics, income redistribution, Public Choice, rentseeking Tags: bribery and corruption
Straight talking from @BernieSanders on #sugartaxes @JordNZ
06 May 2016 Leave a comment
in applied price theory, health economics, income redistribution, politics - USA, Public Choice, rentseeking Tags: 2016 presidential election, do gooders, heavy-handed Samaritans, meddlesome preferences, nanny state, regressive taxes, sin taxes, soda taxes, sugar taxes
why the world isn’t even more corrupt than what we observe
04 May 2016 Leave a comment
in applied price theory, development economics, economic history, economics, economics of crime, economics of regulation, entrepreneurship, Gordon Tullock, growth disasters, growth miracles, income redistribution, law and economics, Public Choice, rentseeking Tags: bribery and corruption, Tullock paradox
The renewable energy curse – does corruption turn clean energy into dirty? @GarethMP
30 Apr 2016 Leave a comment
in comparative institutional analysis, constitutional political economy, energy economics, environmental economics, global warming, Public Choice, rentseeking Tags: European Union, expressive voting, green rent seeking, Italy, renewable energy, solar power, wind power
Massimo Tavoni and Caterina Gennaioli published a nice paper showing that corruption and violence was higher in the high wind provinces of Italy after the installation of wind generators. They built on earlier work about countries with abundant renewable resources and weak institutions. The main question in their paper
… is whether an increase in the expected returns of investments in wind energy, following the introduction of the new policy regime based on a green certificate system, has driven economic agents, namely bureaucrats and entrepreneurs, to engage more in rent seeking activities.
As they studied Italy, there is no surprise about the answer which was yes. High winds ensure high returns of the wind farm investment, but whether this translates into more bribery depends on institutional quality. There was more corruption, and so especially in high-wind provinces of Italy.
Source: Green policy and corruption | VOX, CEPR’s Policy Portal.
The construction of an average wind park is associated with an increase of criminal association activity of 6%. Italy will have more corruption than elsewhere in the old European Union.
The wider problem is renewable energy is a celebrity technology. In the context of expressive politics, so many cheer for solar and wind power that standards drop in terms of who qualifies for subsidies and who should lose support when their investments do not turn out as promised.
https://twitter.com/CountCarbon/status/715136022414299138
Wind power is not new, it is intermittent, is unsuitable for modern work, and is land constrained but it is still subsidised. Green rent seeking is a real risk even in countries with the best political institutions.
Environmentalists are the biggest science deniers of all #EarthDay
24 Apr 2016 Leave a comment
in economics of regulation, energy economics, environmental economics, global warming, Public Choice, rentseeking Tags: antimarket bias, antiscience left, green rent seeking, Greenpeace, nuclear power, pessimism bias, rational irrationality, wind power
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