Top 10 Evil Actions By Usually Nice Countries
29 May 2016 Leave a comment
in economic history, economics, International law, laws of war, war and peace
Kowloon: City of anarchy
22 May 2016 Leave a comment
in economics of crime, international economics, International law, law and economics, property rights Tags: Hong Kong
#Morganfoundation discovers that #Ukraine is a dodgy place to buy credence goods
19 Apr 2016 Leave a comment
in economics of climate change, economics of crime, economics of information, environmental economics, global warming, industrial organisation, international economic law, international economics, International law, law and economics, politics - New Zealand, survivor principle Tags: adverse selection, asymmetric information, carbon trading, climate alarmism, climate alarmists, credence goods, experience goods, inspection goods
Morgan Foundation yesterday put out a report pointing out that many of the carbon credits purchased from the Ukraine under the carbon trading scheme are fraudulent.
That comes with no surprise to anyone vaguely familiar with business conditions and the level of official corruption in the former Soviet Union. Russia is a more honest place to do business.
Carbon traders who buy from the Ukraine are not buying an inspection good. An inspection good is a good whose quality you can ascertain before purchase.
They are not buying an experience good. An experience good is a good whose quality is ascertained after purchase in the course of consumption.
Source: Russia, Ukraine dodgy carbon offsets cost the climate – study | Climate Home – climate change news.
What these carbon traders in New Zealand are doing is buying credence goods from the Ukraine. The credence goods are the carbon credits, which the Morgan Foundation and others have found often to be fraudulent.
A credence good is a good whose value is difficult or impossible for the consumer to ascertain. A classic example of a credence good is motor vehicle repairs.
You must trust the seller and their advice as to how much you need to buy of a credence good. Many forms of medical treatment also require you to trust the seller as to how much you need.
Carbon credits are such a credence good. You know there is corruption in the Ukraine and many other countries that supply them. You may never know at any reasonable cost whether the specific carbon credits you buy were legitimate.
The reason why carbon credits are purchased from such an unreliable source is expressive voting. As is common with expressive politics, what matters is whether the voters cheer or boo the policy. The fact whether it works or not does not matter too much.
The Greens are upset about this corruption in carbon trading. They did not mention the corruption in international carbon trading and climate aid when they welcomed the recent Paris treaty on global warming but that is for another day.
https://twitter.com/kadhimshubber/status/721831502372302849
Co-ordinated international action on global warming is rather pointless if some of the key countries with carbon emission caps are corrupt, which they are.
As Geoff Brennan has argued, CO2 reduction actions will be limited to modest unilateral reductions of a largely token character. There are many expressive voting concerns that politicians must balance to stay in office and the environment is but one of these.
Once climate change policies start to actually become costly to swinging voters, expressive voting support for these policies will fall away, and it has.
Networked Carbon Markets
Source: World Bank Networked Carbon Markets.
One way to stem that fading support is to buy carbon credits on the cheap and there is plenty of disreputable suppliers of cheap carbon credits. Buying dodgy carbon credits as a way of doing something on global warming without it costing more than expressive voters will pay.
One of the predictions of the adverse selection literature is that if consumers cannot differentiate good and bad goods from each other, such as with used cars, the market will contract sharply or even collapse because buyers cannot trust what is on offer. This risk of adverse selection undermining a market applies with clarity to carbon trading.
Source: How Can Your Vote Shape a Low Carbon Future? It Starts with Carbon Pricing.
@JulieAnneGenter tax havens underwrite The Great Escape from extreme poverty in developing countries
08 Apr 2016 Leave a comment
in applied price theory, constitutional political economy, development economics, economic history, economics of bureaucracy, economics of crime, growth disasters, growth miracles, International law, law and economics, property rights, rentseeking
Tax havens and offshore financial centres are vital to the economic development of poor countries. There are plenty of countries, poor countries, where the ability to move funds offshore is fundamental to successful investment. That is missed in the reporting of the Panama Papers:
Consider the big names that have shown up so far on the list. With the notable exception of Iceland, these are not countries I would describe as “capitalist”: Russia, Pakistan, Iraq, Ukraine, Egypt. They’re countries where kleptocratic government officials amass money not through commerce, but through quasi-legal extortion, or siphoning off the till. This is an activity that has gone on long before capitalism, and probably before there was money.
Tax havens and offshore financial centres offer a way in which entrepreneurs can make an honest investment, secure a return and put it aside safely from the reach of the minister’s cousin who wants to muscle in once the business succeeded.
A major problem in poor countries is short time horizons for investment. Entrepreneurs must make their money quickly.
Many years ago there is a survey of entrepreneurs in Russia and Poland. It was in the early 1990s. Each was asked whether an investment project that doubled their money in two years was worth the risk. The Russian entrepreneurs mostly said no, the Polish entrepreneur said yes.
So insecure are the returns from investment in Russia at that time that the phenomenal returns were required before an investment was made. They would only invest if they could double the money in two years.
Many years ago, Mancur Olson wrote an insightful book about prosperity and dictatorships. He introduced the concept of rights intensive production.
As countries become more and more developed, investment horizons lengthen and depends more and more upon the enforcement of contract and property rights in a tolerably honest way.
Instead of being the first entrepreneur to introduce the most basic technologies and profit handsomely, entrepreneurs are introducing a product upgrade or new product that is a minor improvement on current offerings. Such investments will take time to pay off.
In many developing countries, China as an example, property rights are insecure. One way to secure your investment is to take the proceeds offshore to a tax haven. If everything goes wrong, at least you got some nest egg overseas.
As many developing countries have corrupt politicians and dishonest courts, the way to secure gains from honest investments is to move some of the profits offshore. That is why tax havens are essential to poor countries growing richer.
One of the sources of Hong Kong prosperity was investors would deal with a Hong Kong-based company with the requisite political and economic links to China. They could enforce their contracts in China against their Hong Kong assets because the contract was based in Hong Kong under British law.
If the local legal system is inadequate, entrepreneurs well look overseas for mechanisms to force contracts and secure their returns on investments against confiscation.
Top 10 Infamous Barrier Walls Throughout History
07 Apr 2016 Leave a comment
in defence economics, economics, international economic law, international economics, International law, law and economics Tags: economics of borders
#TPPA CTU @FairnessNZ appeals to secretive @ILO committee to challenge NZ sovereignty over employment law
09 Mar 2016 Leave a comment
in constitutional political economy, international economic law, International law, law and economics, unions Tags: Left-wing hypocrisy, union power
The unions are very much against investor state dispute settlement provisions of trade agreements, but are happy to be serial complainants to secretive International Labour Organisation (ILO) committees about employment law amendments they do not like. A fair defeat in the floor of parliament was not good enough for them.
As far back as 1993 the Council of Trade Unions has complained to secretive ILO committees about labour market deregulation in New Zealand. These secretive committees are formed under ILO conventions in New Zealand signed decades go.
The competence of these ILO committees are clearly in question if they hear an appeal under a convention New Zealand has not ratified. Imagine the outrage if an investor state dispute settlement panel heard on appeal despite New Zealand having a carve-out for the topic concerned. An example would be tobacco regulation.
Justice Scalia has a fine critique of those who believe in activist judges and living constitutions that applies just as well as to activist international adjudicators and living international treaties:
You think there ought to be a right to abortion? No problem. The Constitution says nothing about it. Create it the way most rights are created in a democratic society. Pass a law. And that law, unlike a Constitutional right to abortion created by a court can compromise. It can…I was going to say it can split the baby! …A Constitution is not meant to facilitate change. It is meant to impede change, to make it difficult to change.
Rather than use normal democratic means – trying to persuade each other and elections – the union movement threatened to go to a secretive ILO committee made up of members of uncertain competence and impartiality over the recent laws on collective bargaining.
The union movement was outraged at the fact that New Zealand laws it likes could be questioned at international forums. It said this in a recent submission to the Health Select Committee of Parliament.
The unions were equally outraged about dispute settlement procedures in the recent free trade agreement with Korea. The unions were absolutely affronted at the idea that the sovereignty of the New Zealand Parliament could be challenged at a foreign forum.
Source: Submission of the New Zealand Council of Trade Unions Te Kauae Kaimahi to the Foreign Affairs, Defence and Trade Select Committee on the Free Trade Agreement between New Zealand and the Republic of Korea, Wellington 24 April 2015.
These protestations of the union movement would have much more credibility if union did not run off to a UN or ILO committee every time they were on the losing side of a vote in parliament. The unions are happy with those parts of international economic law that serve its interests but behave hypocritical about the other parts that do not. 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.
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, and 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. Power to the people as long as I am on the winning side instead is the motto of the union movement.
The unions losing on labour market deregulation is no different from any other political difference within New Zealand. Both sides passionately but respectfully attempt to persuade their fellow citizens to accept their views.
Win or lose, advocates for today’s losing causes can continued pressing their cases, secure in the knowledge that an electoral loss today can be negated by a later electoral win, which is democracy in action as Justice Kennedy explained recently in the US context:
…a democracy has the capacity—and the duty—to learn from its past mistakes; to discover and confront persisting biases; and by respectful, rationale deliberation to rise above those flaws and injustices…
It is demeaning to the democratic process to presume that the voters are not capable of deciding an issue of this sensitivity on decent and rational grounds.
The process of public discourse and political debate should not be foreclosed even if there is a risk that during a public campaign there will be those, on both sides, who seek to use racial division and discord to their own political advantage.
An informed public can, and must, rise above this. The idea of democracy is that it can, and must, mature. Freedom embraces the right, indeed the duty, to engage in a rational, civic discourse in order to determine how best to form a consensus to shape the destiny of the Nation and its people. These First Amendment dynamics would be disserved if this Court were to say that the question here at issue is beyond the capacity of the voters to debate and then to determine.
Partition of India and Pakistan 1947
22 Feb 2016 Leave a comment
in economic history, International law Tags: British empire, India, Pakistan
Refugee camps in France and Turkey
10 Feb 2016 Leave a comment
in Economics of international refugee law, International law
The great Palestinian lie
06 Feb 2016 Leave a comment
in defence economics, International law, war and peace Tags: Gaza Strip, Israel, Palestine
@billshortenMP Why @TurnbullMalcolm will back Kevin Rudd for UN Secretary General
05 Feb 2016 1 Comment
in economics of bureaucracy, International law, politics - Australia, Public Choice
What a splendid opportunity! In an Australian election year, Kevin Rudd will be back in the Australian news, frequently front page.
This re-emergence of Kevin747 will remind Australian voters of how dysfunctional he was and how dysfunctional the last Labour government was.
Most of the reporting of Kevin Rudd in the Australian media be about how that control freak and social cripple will bring his dysfunctionality to United Nations and international relations generally.
Bill Shorten must hate the idea. The last thing he wants as an unpopular opposition leader is for the last Labour Prime Minister, who he stabbed in the back as prime minister first time round, to be back in the news.
Mark Latham uses to say that the only reason Kevin Rudd was popular with the Australian people was that never met him.
#TPPANoWay sovereignty objections apply equally to @ILO conventions
04 Feb 2016 Leave a comment
in constitutional political economy, economics of regulation, international economic law, international economics, International law, labour economics, law and economics, politics - New Zealand, unions Tags: employment law, employment protection, employment regulation, ILO, labour market regulation, social clauses, TPPA
New Zealand has signed and ratified dozens of International Labour Organisation Conventions dating back to 1921. They all fetter the sovereignty of New Zealand. As a member of the ILO, New Zealand is required to report on its application of ILO Conventions.
That limitation on the sovereignty of New Zealand is no more and no less than in an international trade agreement. New Zealand can renounce an international trade agreement and has renounced nine International Labour Organisation conventions.
Jane Kelsey makes the following points about the legal implications of the Trans-Pacific Partnership agreement:
The 30 chapter Trans-Pacific Partnership Agreement (TPPA) constrains domestic law and policy at central government level, and in places by local government and SOEs, in diverse areas beyond traditional aspects of international trade.
…The TPP provides cumulative opportunities for foreign states and corporations to influence domestic decisions which may be burdensome and intrusive.
The exact same objections apply to the ILO conventions. The union movement does not hesitate to argue that the democratic process in New Zealand should be overridden because the proposal at hand purportedly conflicts with an ILO convention.
For example, when the government was choosing to deregulate collective bargaining, the sovereignty of Parliament was questioned because of an ILO convention. Helen Kelly, CTU President said:
in Parliament on 4 June, the Minister was asked if he agreed with advice from officials that the ability for employers to opt out of multi-employer bargaining may breach our obligations under ILO Convention 98 on the right to organise and collective bargaining.
…There is no point attending such an important UN ILO conference at the time your Government is being advised it is breaching its undertakings to that very organisation…
The CTU President also referred to the regulatory impact statement prepared for that collective bargaining legislation:
The paper also points out that these changes open NZ up to international examination by the International Labour Organisation (ILO) for non-compliance with Convention 98 – on the Right to Organise and Collectively Bargain, which New Zealand has signed up to.
Helen Kelly says “at least four of the proposals are deemed to be inconsistent with our international obligations, and two of them are classified as uncertain. Why the Government wants law changes that damage our international obligations is unclear.”
Council of Trade Unions submissions to minimum wage reviews have at least a dozen references to ILO conventions and the requirement to honour their provisions.
Posner and Goldsmith rightly argue that international law is a product of states pursuing their interests on the international stage. It does not induce states to comply contrary to their interests. The possibilities for what it can achieve are limited.
Government sign-up to various international agreements depending on their political priorities. You cannot complain that governments that you did not vote do what government you voted for also did, which was sign up to international agreements that suited their political agendas. The solution is to work harder to win the next general election.
As for opposing trade agreements on sovereignty grounds, it is rank hypocrisy for the union movement to do so given the number of times it cites international labour agreements when it suits them and seeks their inclusion in trade agreements to raise labour costs in developing countries.
Why @HelenClarkUNDP will not be UN Secretary General
04 Feb 2016 2 Comments
in economics of bureaucracy, International law, personnel economics, politics - New Zealand
Back in the day, I was having a beer in Bob Hawke’s office along with the rest of the economic division staff from his department. We were told to avoid discussing racing as Hawke would never stop talking about it.
Somehow the conversation got on to Malcolm Fraser becoming secretary general of the Commonwealth Secretariat. He had recently lost the race.
Bob Hawke told us a story about a conversation he had with Margaret Thatcher on the candidature of Malcolm Fraser.
Hawke said that Thatcher said do you really want Malcolm Fraser beating down your door every day about apartheid. She had a point.
I took that remark by Hawke to mean that Fraser had independent stature as a former prime minister. He could annoy powerful people because he had nothing to lose and everything to gain.
The Nigerian chief who got the job will be so grateful for the appointment that he would not upset his sponsors. That is why Helen Clark will not become UN Secretary General. She is overqualified.
UN Secretary General is not the best job Clark has ever had. She has independent gravitas and everything to gain and nothing to lose by being an activist secretary general.
All previous Secretary Generals were obscure foreign ministers who will be just so grateful for the big promotion. They did not have independent gravitas.
If you look at positions such as president of the European commission, managing director of the IMF or president of the World Bank and other international appointments, they do not go to statesman.
Utopia, you are standing in it! 
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