Sweden – the OECD's highest per capita recipient of asylum seekers bit.ly/1vfFEUh http://t.co/y6DmdJjAsE—
Guardian Data (@GuardianData) December 02, 2014
Australia takes eight times as many refugees as New Zealand, per capita
27 Mar 2015 Leave a comment
in Economics of international refugee law, politics - Australia, politics - New Zealand Tags: economics of immigration, refugees
Is the gender wage gap in New Zealand 6% or 9.9%?
26 Mar 2015 Leave a comment
in discrimination, econometerics, gender, labour economics, labour supply, occupational choice, politics - New Zealand
The OECD puts the gender wage gap in New Zealand at about 6% for full-time employees on an hourly basis when measured using median earnings.
The Ministry of Women’s Affairs puts that gender wage gap estimate at 9.9% by measuring median hourly earnings, but the Ministry includes both full-time and part-time employees.
Conflating full-time and part-time earnings when measuring wage gaps is unwise. The level of compensating differentials in full-time and part-time jobs differ. More of the net pay package of a part-time job would be convenience and flexibility. A full-time job tends to indicate greater commitment to the labour force day in day out and less interest in flexibility and time off during the week.
The New Zealand gender wage gap is 6%, not 36% as the Greens claim
25 Mar 2015 Leave a comment
in discrimination, gender, human capital, labour economics, labour supply, occupational choice, politics - New Zealand Tags: gender wage gap
Gentlemen Reading Each Others’ Mail: A Brief History of Diplomatic Spying as a force for peace and nuclear stability
24 Mar 2015 Leave a comment
in politics - New Zealand, politics - USA, war and peace Tags: game theory, mutually assured destruction, nuclear deterrence, nuclear war, Ronald Reagan
At the 2009 G20 meetings in London, GCHQ set up fake internet cafes for delegates to use to log their keystrokes. If you are dumb enough to use an Internet cafe for official business, you deserve to be spied on.
Barack Obama, even with special encryption software, is now allowed to email only some 20 aides, family members and friends whose devices have similar protections.
All this spy v. spy stuff is a force for peace. At the 1921 Naval conference aimed to limit naval capability among the world’s powers as a way of curbing the war-ship arms race at the time, the U.S. wanted Japan to concede to having fewer ships, but Japan wanted slightly more. With code-cracking, the U.S. discovered that it was more important to the Japanese to preserve their relationship with the U.S. than to be able to spend more on their navy.
“We pressed hard, and Japan abandoned its position that it wanted to build more,” Kahn said. “We won a great victory for not just the U.S., but for the whole world because we built fewer war ships and we had more money to build roads and for other infrastructure.”
Richard Posner in a lecture some years ago talked about how useful spying was during the cold war. Each side develop a far more accurate appreciation of the other’s strengths. As a result, it did not overreact nor under react to threats. For example, it was through U-2 spying that the USA learned that there was no missile gap with Russia. In fact, Russia is very weak and much less of a threat.
In 1983, Ronald Reagan learned through secret intelligence that through a series of misinterpretations of routine military manoeuvres in Western Europe, and some bureaucrats at Russian embassies trying to inflate their own importance and knowledge of the workings of their host governments, the Soviet leadership came to the impression that they were a ruse for war and they were under the threat of imminent attack. The Russians started to prepare to counter attack.
At the same time, a Korean airline was shot down by the Russian air force. Privately, Reagan and his advisers are horrified that such a thing could happen through a comedy of errors and that could lead to something far worse through mutual alarm and tests of will.
Historians now regard 1983 as the closest time there was a possibility of a nuclear war since the Cuban missile crisis. It all arose through a series of misunderstandings of a series of routine military manoeuvres against a background of worsening relations with the Soviet union. Robert Gates, Deputy Director for Intelligence in 1983, has published thoughts on the exercise that dispute this conclusion:
Information about the peculiar and remarkably skewed frame of mind of the Soviet leaders during those times that has emerged since the collapse of the Soviet Union makes me think there is a good chance—with all of the other events in 1983—that they really felt a NATO attack was at least possible and that they took a number of measures to enhance their military readiness short of mobilization.
After going through the experience at the time, then through the post-mortems, and now through the documents, I don’t think the Soviets were crying wolf. They may not have believed a NATO attack was imminent in November 1983, but they did seem to believe that the situation was very dangerous. And US intelligence [SNIE 11–9-84 and SNIE 11–10–84] had failed to grasp the true extent of their anxiety.
This secret intelligence led Reagan to both reappraise his attitude to the Russians and put out some peace feelers and take other stabilising measures. The period is known as the Reagan reversal. In his memoirs, Reagan wrote of a 1983 realization:
Three years had taught me something surprising about the Russians: Many people at the top of the Soviet hierarchy were genuinely afraid of America and Americans. Perhaps this shouldn’t have surprised me, but it did…
During my first years in Washington, I think many of us in the administration took it for granted that the Russians, like ourselves, considered it unthinkable that the United States would launch a first strike against them.
But the more experience I had with Soviet leaders and other heads of state who knew them, the more I began to realize that many Soviet officials feared us not only as adversaries but as potential aggressors who might hurl nuclear weapons at them in a first strike…
Well, if that was the case, I was even more anxious to get a top Soviet leader in a room alone and try to convince him we had no designs on the Soviet Union and Russians had nothing to fear from us.
Reagan began seeking a rapprochement with the Kremlin fifteen months before Gorbachev took office. Reagan spoke of common concerns, the mutual desire for peace and the urgent need to address “dangerous misunderstandings” between Moscow and Washington.
via Gentlemen Reading Each Others’ Mail: A Brief History of Diplomatic Spying — The Atlantic, L. Gordon Crovitz: Gentlemen Read Each Other’s Mail – WSJ and Able Archer 83 – Wikipedia, the free encyclopedia.
In Defence of Negativity in Politics – John G. Geer
24 Mar 2015 Leave a comment
in economics of information, economics of media and culture, politics - Australia, politics - New Zealand, politics - USA, Public Choice Tags: Attack Ads, expressive voting, John G. Geer, political psychology, rational ignorance, rational irrationality
John G. Geer, author of In Defense of Negativity: Attack Ads in Presidential Campaigns, argues that negative ads are positive. They focus on important political issues and give voters critical information about differences between candidates. Attack ads do not degrade, but rather enrich the democratic process. When political candidates attack each other, they raise doubts about each other’s views and qualifications. Voters—and the democratic process—benefit from this clash of opinions.
Far Left Mana Movement admits it’s really cheap to feed the kids
23 Mar 2015 Leave a comment
in applied welfare economics, labour economics, politics - New Zealand, poverty and inequality, welfare reform Tags: activists, child poverty, Leftover Left, school breakfast programmes
Joe Trinder, the Mana News editor, today blogged about the great expense of feeding the kids for ordinary families. In the course of doing so, he showed how extremely cheap it was for parents to make their children breakfast. The Far Left has inadvertently capitulated on school breakfast programmes been outside the reach of ordinary families.
I completely agree with Joe. A 1 kg box of Weet-Bix costs $7 and a 2 L bottle of milk costs $5.55. I buy the cheaper brands of Weet-Bix than this myself.
1 kg box of Weet-Bix will last maybe two weeks. 2 L of milk will last not much less than that if you pour the milk on Weet-Bix to the extent I do. Two weeks breakfast will cost much less than one dollar per breakfast as argued by Eugene Rush in her letter to the editor a few months ago.
If a family can’t find $.55 to make their children breakfast, they need targeted specific intervention from Work and Income New Zealand to see what additional financial assistance they need, including budget advice, and from the child protection agency, Child, Youth and Families.
- Providing a hungry child with breakfast at school through a Feed the Kids Bill is parliamentary grandstanding that doesn’t strike at the root of the problem.
- These hungry children are not provided with breakfast either at the weekend or during the school holidays. They are abandoned by the process set up under the Feed the Kids Bill championed by the hard left.
- Worst of all, what about the parents? No good parent would have breakfast while their child goes hungry.
No provision is made by the hard left in its Feed the Kids Bill to feed the parents of these hungry children who also go hungry every morning. There is no other charitable explanation as to why their children were not given breakfast. No one in the house can afford breakfast both during school days, at the weekend and in school holidays.
As shown from the screenshot above, the Otago University’s annual Food Cost Survey suggests that to meet basic needs, a family must spend $44 per week for a five-year-old and $34 per week for a four-year-old in Wellington, which is where I live. That is, it costs about five or six dollars per day per child to feed them. A liberal diet for a small child for a day costs not much more than a cup of coffee at a cafe where I’m going shortly. The real issue is the income of parents.
The best solution to poverty is to move people into a job. Simon Chapple is quite clear in his book in the middle of last year with Jonathan Boston that a sole parent in full-time work, and a two parent family with one earner with one full-time and one part-time worker, even at low wages, will earn enough to lift their children above most poverty thresholds.
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 escaping poverty is recently by the Living Wage movement in New Zealand.
According to the calculations of the Living Wage movement, earning only $18.80 per hour with a second earner working only 20 hours per week 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 Guardian on the strength of the scientific consensus on global warming and on GMOs
22 Mar 2015 Leave a comment
in environmental economics, health economics, politics - Australia, politics - New Zealand, politics - USA
I marvel at the ability of The Guardian to launch a diatribe against science deniers on GMOs, and not mention that most of them come from the left-wing of politics and the Greens and the environmental movement.
Sorry @WJRosenbergCTU the class war has been based on a measurement error! The real class enemy is the RMA and restricted land supply – updated again
21 Mar 2015 Leave a comment
in applied welfare economics, comparative institutional analysis, Marxist economics, politics - Australia, politics - New Zealand, politics - USA, poverty and inequality, urban economics Tags: Class war, Generation Rent, housing affordability, housing prices, land use regulation, RMA, Thomas Picketty, top 1%, wage stagnation
The other day, I replied to a rant by Bill Rosenberg about the decline in labour share of national income and its implications for income inequality and the great wage stagnation. The labour share of national income has dropped by at least 5% in most countries including New Zealand.
New data from the USA has found that the entire declining the value of the share of labour of national income is due to home ownership:
…the net capital share has increased since 1948, but when disaggregated this increase comes entirely from the housing sector: the contribution to net capital income from all other sectors has been zero or slightly negative, as the fall and rise have offset each other.
The capital share is rising because of the increased value of housing in countries with widespread home ownership. The concentration of capital ownership and wealth in the top 1% was a misplaced concern based on measurement error.
https://twitter.com/EconBizFin/status/581047721836060672
Piketty assumed the returns to capital were increasing across the entire economy. Rognlie found the trend to be almost entirely isolated to the housing sector. His 23 page long conference paper at the Brookings Institution started as a comment on a blog post on Marginal Revolution.
When Rognlie adjusted for the rapid depreciation inherent to investments in capital such as computer software, most of the rest of the increase in the capital share in recent decades in the USA and six other countries has came in housing.
A single sector such as housing is not the force that is shaping past and future of inequality as Piketty and others such as Bill Rosenberg in New Zealand have assumed. They attributed a growing share of income going to capital across the board as Tyler Cowan explains.
In the simplest version of the Piketty model, wealth grows more quickly than does the economy as a whole and thus the picture changes. The relative losers are no longer low earners but rather anyone who is not a capitalist. Any disparity is due not to their shortcomings in labour markets but rather to their lack of a high initial endowment.
The main driver of inequality is the tendency of returns on capital to exceed the rate of economic growth and company shares, businesses and other capital are owned by a narrow section of the community, and in particular by the top 1% of income earners. Trends in housing prices and the comings and goings of intangible capital is not part of that story.
Investment and depreciation of software and other intellectual property is not well handed, or even well measured in current national accounting systems as Edward Prescott has shown in a long research programme dating back 10 years. Intangible capital produced and owned by businesses is known to be big part of all investment in the economy but nearly all of it is recorded as an expense and therefore most is not part of GDP as currently measured.
Source: Edward C. Prescott and Ellen R. McGrattan (2014)
Prescott estimated the value of intangible capital to be equal to about 60% of that of tangible capital in the US economy. Incorrect treatment of investment in intangible capital seriously underestimates investment, output, fluctuations in labour productivity and movements in the capital shares. The graph above shows that the recently introduced intellectual property classification in the US national accounts is both large and volatile relative to equipment and structures investments over the last 40 years. The graph below shows that including intangible capital completely changes the predictions of real business cycle models about trend US labour productivity in the 1990s.
Labor Productivity, for the Model, With and Without Intangible Investment (Real, Detrended) 1990-2003
Source: McGrattan and Prescott, 2005, “Expensed and Sweat Equity,” Research Department Working Paper 636, Federal Reserve Bank of Minneapolis.
This depreciation adjustment for software investment is important because you can’t eat depreciation, as a shrewd observer noted. The rapid depreciation of software is depreciation – it cannot be redistributed from the top 1% to the downtrodden workers as some sort of income. Others have also earlier argued that Piketty’s claims rest on the recent increase in the price of housing.
The main reason for increases in the price of housing in New Zealand and elsewhere is restrictions on the supply of land by local councils. They are the real class enemy.
The metropolitan urban limit in Auckland increases land prices by 9 fold just inside that limit. As Tim Taylor said today:
The rise in capital income as a result of a long-term rise in land and housing prices across the high-income countries is a phenomenon that isn’t easily crammed into the usual disputes over whether capital owners are exploiting wage-earners.
The role of the housing sector and restrictions on land supply driving up housing prices in recent decades in shaping the future of inequality is perhaps underplayed given the many discussions of Generation Rent.
Housing affordability is a real crisis in New Zealand and many other countries with the younger generation no longer able to buy a house. They are condemned to decades of renting a house. They may never be able to afford a house on one income and perhaps two ordinary comes.
The future of inequality is between those who can and cannot afford a dream and a right for their parents and grandparents, which was to buy a house and pay the mortgage off within a couple of decades.
Young people used to buy a house shortly after leaving university and paid it off by their middle age when I was in my 20s and 30s. Back then, which was not all that long ago, ordinary workers could aspire to take out a mortgage and buy a house in the suburbs.
Unless there is a major deregulation of the supply of land in the big cities, home ownership for most in the community will really be a dream, rather than a dream of aspiration achieved by most by their 30s, if not often earlier through working and saving. The grandchildren of the baby boomers will become and perhaps already are Generation Rent.
There is no housing bubble in US cities with a flexible land supply
21 Mar 2015 Leave a comment
in applied price theory, economics of regulation, environmental economics, politics - New Zealand, politics - USA, urban economics Tags: land supply, land use regulation, RMA, supply and demand, zoning
In areas with a readily available supply of land on which to construct new homes—either because of geography or few land-use restrictions—builders have been sensitive to increases in local demand and existing-home prices. When existing houses rise in price relative to the cost of new homes, prospective buyers are willing and able to buy new units.
Supply conditions determine how house price and construction react to shifting demand. When housing demand rises—perhaps due to rising incomes, lower mortgage interest rates or easier credit standards—the outward shift in demand produces sharply higher house prices with a small increase in the supply of newly built units in areas with less-plentiful land. By comparison, when there is a more-plentiful land supply, the amount of housing is more supply sensitive and a rise in demand results in a less-pronounced rise in house prices and a greater increase of newly constructed homes.
As a result, house prices rise less in these supply-sensitive areas during booms and they fall less in downturns. Similarly, prices swing more and homebuilding varies less in regions with less-sensitive housing supply.
The fall and rise and fall of inflation in New Zealand
20 Mar 2015 Leave a comment
in economic history, inflation targeting, macroeconomics, monetary economics, politics - New Zealand
After the high inflation rates in the 70s and 80s, inflation disappeared by the end of the century. There is the occasional spike in the 2000s but now inflation is effectively zero. Measurement error in the consumer price index for increases in product quality and new goods means an inflation rate of about 2% rounds down the inflation rate to zero.
Source: Reserve Bank of New Zealand.
Utopia, you are standing in it! 
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