Health spending has been slow for a few years now
15 May 2015 Leave a comment
in health economics, politics - Australia, politics - New Zealand, politics - USA Tags: public health expenditure, welfare state
Further evidence that street politics is counter-productive
14 May 2015 Leave a comment
in constitutional political economy, politics - Australia, politics - New Zealand, politics - USA, Public Choice Tags: activists, civil disobedience, Leftover Left, protesters, street politics
Public disorder and rioting by a large leads to a law and order response among the public and a hardening of social attitudes against whatever the desired social reform might be when it is tainted by civil disorder.
The Left, the Green Left and the watermelons in particular want to believe that street protests change things. They have to validate their youthful offences against public order.
Sadly, no; sadly for them but not for the law-abiding rest of us who resolve our differences by trying to persuade each other and elections.
The law-abiding rest of us believe in democratic equality. Your vote counts as much as mine in a democracy with free speech. The only way you can change my vote is by free speech, not by public disorder, threats and intimidation and taking the law into your own hands.
Does tax reform lead to lower taxes?
14 May 2015 Leave a comment
in politics - Australia, politics - New Zealand, politics - USA, public economics, taxation Tags: efficient taxes, tax reform
Labour lost the working-class vote a long time ago
13 May 2015 Leave a comment
in economic history, politics - Australia, politics - New Zealand, politics - USA, Public Choice Tags: British Labour Party, Labour Party, Leftover Left, Twitter left, UK politics, withering away the of proletariat
Just passed 40th anniversary of top climate scientists wanting to melt Arctic ice cap
13 May 2015 Leave a comment
in environmental economics, global warming, politics - Australia, politics - New Zealand, politics - USA Tags: climate alarmism, global cooling, global warming
We have just passed the 40th anniversary of our top climate scientists wanting to melt the Arctic ice cap. http://t.co/2ccvJgBREy—
Steve Goddard (@SteveSGoddard) May 12, 2015
Why is the gender wage gap so big in the public sector that the unions invoiced the government for it?
12 May 2015 1 Comment
in discrimination, gender, human capital, labour economics, politics - New Zealand, unions Tags: employer discrimination, gender wage gap, gender wage gap discrimination, government discrimination, New Zealand Greens, sex discrimination
The unions representing public servants and the Green Party are very excited about the gender wage gap this week. So much so that the public service union presented the Treasury with an invoice for that wage gap in the public sector of 14.1%.
Women in the public service are paid 14.1% less than men. We've invoiced @honbillenglish for the missing $294,827,136 http://t.co/QW5z4tU7bv—
(@NZPSA) May 11, 2015
Oddly enough, despite their concerns with the gender wage gap in the public service, the public service unions are stridently against both privatisation and contracting out.
It is almost trite to note is that one of the earliest analytical results in the labour economics of discrimination was that profit maximising employers are much less likely to discriminate than firms that are not subject to a profit and loss constraint and the discipline of bankruptcy.
A prejudiced employer pays a wage above the competitive wage to attract the particular recruits he or she is prejudiced in favour of and does not hire enough workers because he must pay higher wages. This results in lower output and profits than without discrimination.
@greencatherine Unadjusted NZ gender pay gap is 6%, the best in world. http://t.co/2fYuVbJg9E—
Jim Rose (@JimRose69872629) March 19, 2015
Bureaucrats can indulge their prejudices without putting the survival of their business in jeopardy. Entrepreneurs who don’t hire on merit risk running out of going out of business because their costs are hire and their businesses less productive.
…market mechanisms impose inescapable penalties on profits whenever for-profit enterprises discriminate against individuals on any basis other than productivity. Though bigoted managers may hold sway for a time, in the long run the profit penalty makes profit-seeking enterprises tenacious champions of fair treatment.
Early examples of the greater propensity for discrimination in the public sector and non-profit organisations are by Armen Alchian and Ruben Kessel in Competition, Monopoly, and the Pursuit of Money in 1962 and Gary Becker’s pioneering The Economics of Discrimination in 1957.
Are 40% of workers on zero hours contracts, almost?
12 May 2015 1 Comment
in labour economics, labour supply, managerial economics, organisational economics, personnel economics, politics - Australia, politics - New Zealand, politics - USA, theory of the firm Tags: zero hours contracts
4 in 10 hourly workers know their schedules just a week or less in advance brook.gs/1wkfkXW http://t.co/6JNkYlftjL—
Richard V. Reeves (@RichardvReeves) December 11, 2014
The economic forces underpinning the housing affordability crisis
12 May 2015 2 Comments
in applied price theory, economics of regulation, politics - Australia, politics - New Zealand, politics - USA, urban economics Tags: housing affordability, land supply, land use regulation, RMA, zoning
The key point is that increases (declines) in demand can bring sharply rising (falling) house prices when supply is constrained. However, when land supply is not regulated, it adjusts to demand and house price volatility is reduced.
As long as commentators focus primarily on the demand side of the housing market, whilst ignoring supply-side constraints, they will never fully understand the drivers of housing bubbles and busts. The resulting incorrect diagnosis will inevitably lead to poor policy prescriptions and outcomes.
Can there be a shy NZ Labour vote when voter turnout is already high?
12 May 2015 Leave a comment
in politics - Australia, politics - New Zealand, politics - USA, Public Choice Tags: a shy Labour voter, shy Tories, voter demographics, voter turnout
The Left over Left truly believes there is a shy Labour vote out there waiting for the call of hard left policies. One flaw in that hypothesis is voter turnout in New Zealand is high by international standards.
Indeed, voter turnout doesn’t seem to vary that much with the political composition of governments. Despite compulsory voting, where those shy Labour voters would have to vote, most of the post-war period in Australia was governed by the Liberal party.
Do violent protests win votes for your cause?
12 May 2015 Leave a comment
in constitutional political economy, economic history, economics of crime, law and economics, politics - Australia, politics - New Zealand, politics - USA, Public Choice Tags: 1960s, activists, civil disobedience, Democratic Party, George Wallace, nonviolent protest, Richard Nixon, riots, Vietnam war, violent protests
Monkey Cage blogged on a very timely study on the impact of violent and nonviolent protests on voting behaviour. Non-violent protest in the 60s enticed sympathy and increased voter support for the Democratic Party in the 1964, 1968 to 1972 presidential elections:
Black-led nonviolent protests… exhibit a statistically significant positive relationship with county-level Democratic vote-share in the same period.
This is not surprising because nonviolent protest acknowledge fidelity to law and democratic equality. No one likes to be bullied and one of the purposes of the secret ballot is to prevent voters from being bullied because no one knows how you voted.
Indeed, there is a long history of anonymous pamphleteering, which has evolved into anonymous trolling as a way of people expressing their political views without facing backlash from both the majority and a vindictive minority.
In a democracy, it’s up to me to persuade you to change your mind – that what you took for granted for so long is not so. That’s how liberal democracies work: by trying to persuade each other and voting.
Violent protests had the exact opposite effect to peaceful protests on Democratic Party voting shares in the 1964, 1968 in 1972 presidential elections. There was a law and order backlash among voters against what were relatively widespread rioting and civil disorder:
…black-led protests in which some violence occurs are associated with a statistically significant decline in Democratic vote-share in the 1964, 1968 and 1972 presidential elections.
This is a roundabout way of saying that a Republican won the 1968 election on a law and order platform, not a Democrat on a peace platform. The country was convinced, including Liberal Democrats, that law and order had broken down and that the Democratic Party could not restore law and order.
In the 1968 presidential election, there is a third party candidate, George Wallace, who won won almost ten million popular votes and 46 electoral votes, including in the electoral college on an even harsher law and order platform than Nixon.
Wallace was a racist Southern Democrat the Democratic Party would prefer us to forget and a nasty political opportunist to boot. His political rhetoric included the only words four letter words the protesters didn’t know was work and soap.
As I recall warmed over Marxism, the idea of violent protests is to provoke a law and order backlash, initially with popular support of the working class. The resulting police repression will overreach and cause the proletariat to breakthrough their false consciousness to see that capitalists for whom they are and rise up to overthrow them.
Rise up ye workers, rise up for you have nothing to lose but your chains. These days that call to the barricades would have to be rise up ye workers, rise up for you have nothing to lose what your smart phone and air points.
The killer air pollution that the Greens never mention
12 May 2015 Leave a comment
4.3 million die every year. Indoor air pollution is the least reported problem of the world. bit.ly/1BfMiZg http://t.co/CDhafWSbj8—
Max Roser (@MaxCRoser) May 07, 2015
How Taxes Affect Investment Decisions For Multinational Firms
11 May 2015 Leave a comment
in applied price theory, politics - Australia, politics - New Zealand, politics - USA, public economics Tags: company tax rates, foreign investment, multinational corporations, tax competition
How Taxes Affect Investment Decisions For Multinational Firms onforb.es/1Oe5lKu by @ErikCederwall http://t.co/BduZZbHs2n—
Tax Foundation (@taxfoundation) April 15, 2015
Housing affordability and land regulation around the globe
11 May 2015 Leave a comment
in politics - Australia, politics - New Zealand, politics - USA, urban economics Tags: land supply, land use regulation, NIMBYs, RMA, zoning
Auckland is up with London and New York in terms of housing unaffordability relative to median incomes. US cities with responsive land regulation don’t experience housing bubbles.
Glaeser and Gyourko summarised the findings of a number of studies on land supply and housing prices:
Recent research also indicates that house prices are more volatile, not just higher, in tightly regulated markets …. price bubbles are more likely to form in tightly regulated places, because the inelastic supply conditions that are created in part from strict local land-use regulation are an important factor in supporting ever larger price increases whenever demand is increasing.
…. It is more difficult for house prices to become too disconnected from their fundamental production costs in lightly regulated markets because significant new supply quickly dampens prices, thereby busting any illusions market participants might have about the potential for ever larger price increases.
Via The Truth About the U.S. Housing Market | Seeking Alpha.
Full-time work on the minimum wage is enough to keep a NZ family out of poverty!
10 May 2015 Leave a comment
in labour economics, minimum wage, politics - Australia, politics - New Zealand, politics - USA, poverty and inequality Tags: capitalism and freedom, child poverty, family poverty, Left-wing hypocrisy, living wage, New Zealand Greens, New Zealand Labour Party, Simon Chapple
Where a 40-hour workweek doesn't lift families from poverty: bloom.bg/1AFOD0q http://t.co/eBoJSz1TkX—
Bloomberg VisualData (@BBGVisualData) May 23, 2015
An OECD chart that shows New Zealand parents only need to work a little over 40 hours a week on the minimum wage to lift a family out of poverty in New Zealand.
The figure above shows that a lone parent with two children needs to work about 25 hours a week stay out of poverty in 2013 in New Zealand Once taxes are taken into account as well as additional family benefits such as in-work tax credits. New Zealand is one of the easiest places in the world to get out of poverty by working part-time for a sole mother.
The figure above from the OECD shows that New Zealand couple with two children needs to work about 40 hours a week to stay out of poverty. Of course, what is poverty depends on the definition of the poverty line and in this case by the OECD, it is defined as 50% of the median wage after taxes and family benefits. Another common definition of poverty is earning less than 60% of the median wage
The minimum wage is $14.75 per hour in New Zealand while proposals for a living wage in New Zealand are now $19.25 an hour. The Labour Party wants to increase the minimum wage to $15 per hour.The Greens want to increase the minimum wage to the living wage.
Simon Chapple and Jonathan Boston pointed out in their excellent book last year on child poverty in New Zealand that full-time work by one parent and part-time work by the other in the same household is enough to lift families out of most definitions of poverty:
Sustained full-time employment of sole parents and the fulltime and part-time employment of two parents, even at low wages, are sufficient to pull the majority of children above most poverty lines, given the various existing tax credits and family supports.
The best available analysis, the most credible analysis, the most independent analysis in New Zealand or anywhere else in the world that having a job and marrying the father of your child is the secret to the leaving poverty is recently by the Living Wage movement in New Zealand.
According to the calculations of the Living Wage movement, earning only $19.25 per hour with a second earner working only 20 hours affords their two children, including a teenager, Sky TV, pets, international travel, video games and 10 hours childcare. This analysis of the Living Wage movement shows that finishing school so your job pays something reasonable and marrying the father of your child affords a comfortable family life.
The OECD’s analysis also showed that incentives for New Zealanders to work more and earn more is better than in most countries in terms of what happens if they earn a wage increase.
In New Zealand, when there is a 5% minimum wage increase, four percentage points of that wage increase actually stays in the hands of the worker.
In some countries such as Australia, the USA and UK, 60 to 80%of the minimum wage increase is gobbled up in reductions in benefits and taxes. At the same time, the minimum wage increase makes it less profitable for your employer to retain you so your job is more at risk.
The only explanation I have for why the Labour Party, NZ Greens and the living wage movement don’t highlight the success of the existing minimum wage in reducing family poverty in New Zealand is mass kidnappings.
But for these abductions most fowl, I’m sure the Labour Party, NZ Greens and the living wage movement would be dancing in the street celebrating successes of capitalism and freedom in New Zealand in keeping families out of poverty through the minimum wage.
Land use regulation knocks 10 points of US GDP!
10 May 2015 Leave a comment
in economic growth, economics of regulation, income redistribution, macroeconomics, politics - New Zealand, politics - USA, rentseeking, urban economics Tags: Enrico Moretti, Green Left, housing affordability, Inner-city Left, labour mobility, land supply, land use planning, land use regulation, NIMBYs, regional mobility, RMA, zoning
Bloomberg Business highlighted a great new study by Enrico Moretti on power of the regulatory restrictions on land supply to destroy wealth.
Moretti focused on the impact that restrictions on land supply have on the ability of workers to move to higher productivity cities. Moretti is the second best urban economist working at the moment. The best is Ed Glaeser. Moretti concluded that
A limited number of American workers can have access to these very high-productivity cities
He concluded that a more efficient distribution would be “a general benefit for the entire economy.”
The secret of his analysis was to look at how different US cities, the high productivity cities, contributed to national economic growth. He then explore the implications of fewer and fewer workers been able to move to these cities to take advantage of the great productive potential. The barrier to them moving was high housing prices and high rents.
For example, labour productivity grew quickly in San Francisco, New York and San Jose overt 45-years. All of these cities are famous for their human capital-intensive industries including technology and finance. These cities weren’t America’s growth engine:
The reason is that the main effect of the fast productivity growth in New York, San Francisco, and San Jose was an increase in local housing prices and local wages, not in employment.
Despite the large difference in local GDP growth between New York, San Jose, and San Francisco and the Rust Belt cities, both groups of cities had roughly the same contribution to aggregate output growth.
The drivers of US growth between 1964 and 2009 were southern U.S. cities and 19 other large cities. These cities attracted many residents because of good weather and abundant supply of cheap housing.
The lesson both the US and for New Zealand, and Auckland in particular, is this reallocation of population away from the expensive cities with restricted land supply reduced national output because these population movements bring workers to cities "where the marginal product of labour is low."
In a technology boom town such as San Francisco, it is now what like New Zealand will be as Generation Rent runs its course – 65% of residents are renters:
Over the past year, the City and County of San Francisco boasted the second strongest labour market in the nation, adding 25,000 new jobs. Yet only 2,548 new housing units were permitted and even fewer were built.
Just think: 25,000 new workers and their families have been knocking on San Francisco doors, but there are new units for less than 10 percent of them. It is not surprising that apartment prices get bid up.
Utopia, you are standing in it! 
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