The condescension of the politically correct
21 Oct 2017 Leave a comment
in economics of religion, liberalism, politics - USA
Has @WJRosenbergCTU shown @jacindaardern’s first lie in office?
21 Oct 2017 Leave a comment
in economic history, politics - New Zealand, poverty and inequality
Ardern said there had been market failures in New Zealand such as … most people’s incomes not keeping up with inflation…

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

#moreinclusivenz @povertymonitor Killer graphs & #infographics by NZ Children's Commissioner. Shameful content, NZ http://t.co/mG987C5kh0—
Isabella Cawthorn (@fixiebelle) July 26, 2015

Only Nixon could go to China, only @PhilTwyford could reform the RMA?
20 Oct 2017 Leave a comment
in politics - New Zealand, Public Choice, urban economics
Right-wing politicians can sometimes implement policies that left-wing politicians cannot, and vice versa under Cowen and Sutter’s only Nixon can go to China theorem:
The point is that politicians with a previous record of opposing a policy shift are often the only ones who can bring it about, because their policy support provides a credible signal of policy quality to the relevant interest groups who would otherwise oppose the policy.
Contemporary wisdom has it that only Nixon could go to China and make a deal because his decades of fierce anti-Communist stance gave him credibility with fellow conservatives and shielded him from any domestic attack.
Cowen and Sutter say that a policy could depend on information – on which policies or values everyone could potentially agree, or on which agreement is impossible.
Politicians, who value both re-election and policy outcomes, realise the nature of the issue better through inside and secret information and superior analytical skills (or access to those skills), whereas voters do not have access to such information base or skills.
Only a right-wing president can credibly signal the desirability of a left-wing course of action. A left-wing president’s rapprochement with China would be dismissed as a dovish sell-out. Nixon must be going to China because that is the best possible policy choice and he would never do so otherwise giving his previous record of firm anti-Communism.
Left-wing parties adopt right-wing policies because they are good ideas that will get them re-elected. Bob Hawke, Tony Blair, and Bill Clinton were centre-left economic reformers who can credibly signal the desirability of their economic reforms because of the brand name capital they invested in distributional concerns and protecting the poor.
The same goes for reforming the Resource Management Act (RMA) in New Zealand. Only a left-wing government can implement major reforms such as abolishing the Auckland urban limit and other restrictions on land supply. Deregulation is normally a right-wing policy.
The irony of National voting against freeing up restrictive zoning and land use rules. @dbseymour @bernardchickey… twitter.com/i/web/status/8…—
Phil Twyford (@PhilTwyford) April 12, 2017
When a left-wing policy undertake reform of land use regulation, things must be so bad on the housing affordability front that they accept that the reforms must be done despite their natural reluctance to deregulate anything on ideological grounds.
Up until past the 2014 New Zealand election, the Labour Party undertook scare tactics on land use regulation reform as a way winning votes from environmentally leaning voters.
Housing affordability situation is now so bad, with a whole generation locked out of housing, that even the ideological opponents of deregulation accept that restrictions on the housing supply are a bad idea.
Naturally the Greens continue to have their head in the sand. That is the big difference between them and the Labour Party. The Greens are policy dilettantes. The Labour Party is made up of people who believe in making difficult choices and the need for trade-offs.
Why Bernie Sanders’ Medicare for All is a Bad Idea
19 Oct 2017 Leave a comment
in applied price theory, health economics, politics - USA Tags: health insurance
Trump studies!
18 Oct 2017 Leave a comment
in politics - USA, Public Choice Tags: political correctness
Brexit will lower company tax rates everywhere
17 Oct 2017 1 Comment
in fiscal policy, politics - New Zealand, public economics
Brexit will turn the British Isles into one great big offshore tax haven. The post-referendum plans for a 15% company tax rate (and the Australian plans for a 25% company tax rate) will put pressure on New Zealand to follow suit.
A common argument against a much lower company tax in New Zealand is the clipping of the ticket argument. A lower company tax rate in New Zealand is said to mean no more than the higher after-tax dividends are taxed at a higher tax rate in the home country of the foreign investor. Less company tax is paid in New Zealand but more tax is paid back home for no net gain to the investor.
The 12 ½% Irish company tax rate attracted investment
The strongest evidence against this is the Irish were relentlessly bullied by the rest of the European Union over its 12 ½% company tax. The other EU finance ministers rightly feared a loss of investment to Ireland. This 12.5% rate applied initially to exports, then manufacturing and then trading profits. The fiscal bounty of the Celtic Tiger years allowed the Irish to finesse these complaints based on EU laws about fiscal discrimination by phasing their 32% general company tax rate down to 12 ½ %.
Our Minister of Finance certainly would not welcome the plans (Senate permitting) for a 25% company tax rate in Australia by 2026. Rather than rubbing his hands in anticipation of more tax revenues on dividends repatriated from New Zealand subsidiaries in Australia, Mr. English will worry about loss of domestic and offshore investment to a more competitive neighbouring tax jurisdiction.

Source: OECD Stat.
The first big country low company tax rate
The British already have the lowest company tax of any major economy with the 20% company tax rate that started on 1 April 2016 (see graphic). This rate will fall to 19% on 1 April 2017, and 17% on 1 April 2020. Brexit will take that rate down to 15% at a date to be determined.
No Minister of Finance welcomes the prospect of a leading world economy and Europe’s key financial centre having by far the 2nd lowest company tax rate of any developed economy by 2020. They will worry about lost investment rather than expect a higher local tax take.
High company tax rates lower wages
Too many people mistakenly believe that company taxes are paid by shareholders through lower dividends. With capital highly mobile across borders, countries with high company tax rates attract less investment because of the lower after-tax returns relative to competing destinations.
This capital flight means lower wages in high company tax jurisdictions because their workers have less capital to work with. A lower company tax means higher wages because of more investment.
Even the USA is under pressure
The US got away with a very much above average company tax rate (38%) because its economy is so large relative to the rest of the world but it too is under pressure from footloose capital and corporate inversions. The US company tax system is so full of holes that if all tax loopholes were closed, its federal company tax rate could be cut from 35% to 9% with no net loss of revenue.
Leading US tax economist Laurence Kotlikoff estimated that this tax reform would increase wages by 8%, output by 6%, and the amount of capital invested by 17%. Australian Treasury modelling found that a 10-percentage point cut in their company tax rate would increase wages by 1.4% to 3%.
The race is on
The British company tax rate is now well below anywhere else bar one. That will force other countries, other big economies, to reconsider their position. New Zealand should not be left behind in harvesting the large wage increases that flow from a much lower company tax rate.
.@sarahinthesen8 @SenatorMRoberts and beneficiaries living better than kings of 200 years ago; dumb and dumber alert
16 Oct 2017 Leave a comment
in economic history, politics - Australia
You probably enjoy a better life than John D. Rockefeller did 100 years ago. Rockefeller lived in a big draughty house with lots of servants. Cars were primitive as was medicine. No refrigerators, washing machines or other domestic appliances we take for granted. Running water, much less safe tap water were brand new inventions at best. He lived a long life. The odds of getting to the age of 15 when he was born were probably better than 50%.

People forget how horrible the good old days before the Industrial Revolution really were.

The great increase in life expectancy of all classes of people should never be underrated.

Peaceful protesters should always plead guilty
12 Oct 2017 Leave a comment
in constitutional political economy, economics of crime, politics - New Zealand, Public Choice
By pleading not guilty to maritime safety charges from his offshore drilling protest, does Russel Norman think that his vote counts for more than mine on environmental policy? He is mounting a greater good defence. Does his views count for more than mine on what is the greater good?
We resolve our differences about what is the greater good on offshore drilling, on environmental policy, on any policy by normal democratic means. That is, by trying to persuade each other and elections. We just had an election which gave us a rich taste of the political views of New Zealanders.
By openly breaking the law non-violently, accepting arrest and pleading guilty, that act of peaceful defiance implores the majority to reconsider their position. Through their passion, their sacrifice, their willingness to risk a conviction on their record, protestors are pleading from the bottom of their heart with the majority to think again and contemplate the possibility that they may be wrong.
Central to political protests is the notion is by making a lot of noise and showing your passionate disagreement, your fellow voters will respect that passion and hear you out. Instead, Greenpeace is trying to impose its conception of the greater good by harassment and court room manoeuvring rather than by their side of the argument winning at the ballot box or on the floor of Parliament.
Greenpeace deserves the respect of taking them at their word; that they want to stop offshore drilling by their protesting alone making it too difficult to continue. They are not saying we are staging a publicity stunt that respects maritime safety laws to implore voters to think again.
Protests should not be attempts to impose views on others. Civil disobedience contributes to the democratic exchange of ideas by forcing the dominant opinion to defend their views. A willingness to accept a conviction is proof that the protest is a passionate, selfless attempt to persuade voters to join their side.
Protests should never be a means of coercing or frightening others in a democracy into conforming to your wishes. Greenpeace expects others to obey the laws for which it successfully lobbied. Why does Greenpeace think they can break laws that others secured through normal democratic means?
Some find democracy frustrating because they cannot win at the ballot box even under proportional representation. Environmentalists such as Greenpeace must be the last to complain so. Greenpeace activists and environmentally conscious voters were spoiled for choice at the most recent election.
Two parties were competing principally for their vote. The older of the two spent the last four weeks of the campaign desperately rebranding itself as principally an environmental party. The new party was an environmental party that was also at peace with the market economy. The two major parties were also campaigning strongly on many policies that might win over environment minded voters.
The great virtue of a democracy is it readily enables the people, over time, to be persuaded that what they took for granted is not so and change the law accordingly. Noisy protesters from across the political spectrum stage publicity stunts to catch the public’s eye in the hope of doing this.
What is holding up legislating in many areas is not that minorities are powerless and individuals are voiceless. It is exactly the opposite. By banding together, passionate minorities can resist the tyranny of the majority. They can trade off their support in other areas in return for policy concessions most dear to them. A small group of concerned and thoughtful citizens can band together and change things by mounting single issue campaigns that influence who wins. An MMP democracy is about building winning coalitions made up of a great many different policy agendas and several parties.
If you want to reform the world, Greenpeace should do what we ordinary folk must do: change our vote, write to an MP, protest, donate to or join a political party, or run for parliament. Sometimes you win, sometimes you lose, but you had your chance at the ballot box every 3 years so you must live with the peace of a fair defeat. By pleading guilty, protesters show that they are trying to win the majority over with their deep-felt passion for which they will willingly pay the price for in court.
Smart idea: privatise Pike River reentry including H&S liability
10 Oct 2017 Leave a comment
in economics of regulation, health and safety, labour economics, politics - New Zealand

Why does @SenSanders lie about waiting lists in Canadian healthcare?
06 Oct 2017 Leave a comment
in economics of bureaucracy, health economics, politics - USA


The Reagan Show | Theatrical Trailer | 2017 Tribeca Film Festival Official Selection
29 Sep 2017 Leave a comment
in movies, politics - USA, television Tags: Ronald Reagan
#Morganfoundation @top_nz do not understand the transitional gains trap
25 Sep 2017 Leave a comment
in applied price theory, economics of regulation, politics - New Zealand, rentseeking, urban economics
It is unfortunate that the Morgan foundation economists and purported economists do not understand the concept of rent capitalisation when discussing tax concessions for housing in New Zealand.
The classic example is how restrictions on supply result in the capital value of taxi licenses going up, and now through Uber, collapsing.

The same goes with a tax concession for any particular asset. The value of the tax concession will immediately capitalise through a spike in prices.

After that, the underlying trend price growth will continue. For housing prices to continually rise, there must be a restriction on the supply of land. Tax treatment changes will only result in transitory price spikes.

There is nothing special about private homes have been an exemption from capital gains tax in New Zealand. What matters is the restriction on land supply.
We Read Hillary’s Book So You Don’t Have To
24 Sep 2017 Leave a comment
in politics - USA Tags: 2016 presidential election, Hillary Clinton
David Niven on Marlon Brando, Humphrey Bogart & others
23 Sep 2017 Leave a comment
in movies, politics, television
Was 75% of Piketty’s class war a measurement error?
18 Sep 2017 Leave a comment
in applied welfare economics, politics - USA, poverty and inequality

Source: “Using Tax Data to Measure Long-Term Trends in U.S. Income Inequality.”
David Splinter and
Gerald Auten. Working paper for the 2017 Annual Meeting of the American Economics Association, 2016.
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