Sep 17, 2013 •
I really, really hate 15 on 14 rugby. Three years ago, I wrote a venting post when in the space of five All Black tests we had seen 3 yellow cards and 1 red. On Saturday night in the test match between the All Blacks and South Africa, we saw that quant...
Sep 02, 2013 •
You know, the more I think on it, the more dissatisfied I am with this thought exercise. If only because Seamus has seen fit to call it a “very simple model of the New Zealand housing market”. It realy isn’t . It’s simply a fictional market with certain highly abstract asserted properties. No more realistic or useful than the various maths exercises from my own university level economics classes.
Plainly the exercise does not remotely resemble the New Zealand Housing market. Why, then, should we have any particular faith in our ability to extrapolate from the though exercise to what will happen in the real-world economy.
Perhaps a better approach to arguing against the policy on economic grounds would be to identify other places where it has been implemented and talk about the impacts which have resulted. Potentially tricky to isolate the impacts of the policy from other confounding factors, but if it can be done, there’s the advantage of being able to present some empirical evidence against it.
Alternatively, perhaps we might drop the thought exercise entirely as extraneous and talk specifically about how we expect foreign buyers will react to future restrictions on their activities, consequences for investment decisions and the like.
Aug 09, 2013 •
Matt and Paul have both covered the subsidy to Rio Tinto that facilitated a new contract between RT and Meridian Power. There is not a lot to say about the actual policy; Matt's "Urg" pretty much sums it up. But a few points about the politics of this ...
Aug 04, 2013 •
What is it about housing policy that leads to people forgetting basic economic principles? Following on from the extraordinary Labour Party policy that Matt and I jumped on at the start of the week, we had this blog post from Susan Guthrie, and this p...
Jul 30, 2013 •
Jun 28, 2013 •
Eric posted yesterday on Ed Glaeser's upcoming Condliffe Lecture at the University of Canterbury. Some of you have if the talk will be videoed, given that you are not based on Christchurch. Absent any technical hitches, the talk will be posted on ...
May 16, 2013 •
Imagine a country where shoes cannot be imported and furthermore the elasticity of supply of shoes is very low. Imagine that the government in this country subsidises shoes. The person on the street who doesn't understand tax incidence might think that...
May 09, 2013 •
My What If lecture on using Economics to analyse ODI cricket is now up on YouTube. In it I give an "Economics in 4 lessons" overview, and then used the same graphs to talk about cricket. Watching the playback, I wish I had sped through the intro to Eco...
May 07, 2013 •
May 07, 2013 •
In the comments on my post containing the open-letter to the Labour
Party’s two Davids a couple of weeks ago, John Small and I got into a
discussion about the morality of a government policy that would wipe value from
a private company (in this case, suggested changes to the electricity market
that would reduce the profits of privately owned electricity companies). John
wasn’t sure why I raised the issue of morality; this is worth post on its own.
- Is the cost imposed directly on individuals or on corporations? Takings from individuals require a higher threshold of benefit than takings from corporations. I don’t here mean to that corporations are somehow separate from the individuals who own them, or that their owners have lesser rights than other citizens; this is simply recognising the fact that company owners have the opportunity to diversify risk in their shareholdings, and hence to diversify the implications of government policy changes. A policy that forced lower electricity prices might wipe value from electricity companies, but add value to electricity buying companies as well as final consumers. If such a policy were efficiency increasing, there is no reason for it to impose significant costs on any diversified shareholder.
- Is the policy one that appropriates resources directly or one that changes the value of current assets? A direct takings, such as when the government uses compulsory purchase to acquire land for a highway, is a more serious use of government power than one that imposes costs indirectly through revaluations of assets, simply because a direct takings has the potential to impose far greater costs to an individual if their personal valuation of the asset is greatly in excess of its market value.
- Is the policy one that is designed to improve efficiency or to bring about social redistribution? In my view, the hurdle has to set very high before one can justify a direct or indirect takings to fund redistribution. This is not to say that social redistribution is not warranted, but rather the moral case for redistribution should be grounded in a transparent and honest policy that seeks to share the burden broadly rather than hiding the costs. Financing redistribution through indirect takings smacks too much of offering the other kid’s bat for my taste.