Monday, March 31, 2014

The F word

There is little doubt that one of the most troublesome words in the entire English language is the word “fair” and its inverse “unfair”. Unfortunately it is also one of the most popular words being slipped out at regular intervals by those who feel they are hard done by both generally and on numerous specific occasions.

Even the Economist has written on the topic. Rent seekers who dislike removal of their protection from competition intone with it regularly. Invariably it is a thin and poor disguise for simple envy or lack of cognitive capacity.

Here is a true life example found recently in an actual letter of complaint to a travel company:

"It  took us nine hours to fly home from Jamaica to England . It took the  Americans only three hours to get home. This seems unfair."

When finding oneself tempted to use the F word, stop re-think motives, try for the word which describes accurately and truthfully what you want to say and then ask yourself if you still wish to say it. You may be surprised.

Sunday, March 30, 2014

People with learning difficulties–still failing trade 101

It is said that the hardest lesson to understand and learn in all of economics is why free trade benefits all of society. We have been consistently failing to learn this thoroughly and in numbers for many centuries – and bearing the cost accordingly.

The most obvious example of this failure in modern times can be seen in the Corn Laws debate prior to the reform of that legislation in 1846.

Its current manifestation may be seen in protests about the idea of a Pan Pacific Free Trade Agreement. Just how tough it is to learn and understand is evidenced by the very considerable number of extremely intelligent people from all walks of life – all of whom have benefited from free trade – who fail miserably to understand it.

The economists' job it seems, is never done.

Friday, March 21, 2014

Do try a little scientific reasoning now and again….

Don Boudreaux explains exactly why some logical thought would be a  good idea…

This famous Sidney Harris cartoon (below) captures what is wrong – what is deeply unscientific – about far-too-much modern economics.  The miracle assumed by the unscientific ‘scientific’ modern economist is that government will act (1) apolitically, (2) without any of the human imperfections, myopia, and psychological quirks that (are assumed to) give rise to the market imperfections that allegedly justify government intervention, and (3) with more information and wisdom than is discovered and used in markets.

All the fabulous ballistics(a term that I understand was used by


the late Jack Hirshleifer) that lead up to the miracle and that describe matters following the miracle might well be the flawless products of unquestionable brilliance.  But it is simply, deeply, and inexcusably unscientific for economists (or any one, for that matter) to simply assume that government will perform as the social-engineering theory requires it to perform. 

Put differently, despite more than a half-century of scholarship in public-choice economics, too many economists mysteriously regard warnings about government failing to act ‘perfectly’ as being unworthy or, at least, only of secondary or tertiary significance.  It’s unscientific – deeply so.


Thursday, March 13, 2014

Blowing hot and cold–climate change

The latest Economist 8th – 14th March explains the many and varied attempts by climate scientists to “explain” the decade long slow down in global warming. The Economist is generally a climate change “enthusiast” so no “denier” slander here please.

Amongst the ironies uncovered is the explanation which rests on the fact that pollution (mother of all sins) comes in handy to deflect sunlight – so - a little more pollution this week please?

More seriously, the slow down – which is not in doubt – has occurred over a period during which carbon emissions  have increased throwing further doubt on the link between the two. Showing reliable correlation between  warming and carbon (issues around sequence and other inconsistencies) let alone causal links is challenge enough without this  relationship emerging.

Something over two thirds of the climate change policy response has rested for its validity on reducing carbon emissions – an easy religion to sell but pointless if it doesn’t  get you to heaven.

The most robust conclusion is that our understanding of climate change is up there with our knowledge of why the chicken crossed the road.

Thursday, March 6, 2014

Local Govt subsidises its own incompetence

In a classic example of why sticking to core business is what local government ought to do – as opposed to playing wannabe commercial investors and developers - the Dunedin City Council finds itself subsidising its own development oddities.

The Council “owns” and developed a complex called Wall Street – a retail complex with offices – a risky little number with the apparently whizz bang design features of the day. Grand.

Seemingly this “asset” has less lettable space than it could have, due to its design, and thus to get the tenant it wants the Council is about to embark on a $2.3m upgrade of the building next door which it owns 49% of.

So the ratepayer invests in a development which is sufficiently unworkable as to require what is effectively a $2.3m subsidy from the Council to the tenant. Grand.

Needless to say there are those who don’t completely see the joke. Other local businesses and property owners for example who compete against the Council for tenants and run their businesses in such a way as maintain the jobs they provide in Dunedin much in the way the Council claims it is doing.

What local businesses do not have is a $35,000 annual grant per worker from the Council.

In a final surprise, one Councillor – formerly an ACT MP where the role of government is well understood -  is muttering about disclosure and information rather than arguing that local government get out of areas it has neither expertise nor legitimate business in and focus on its own not inconsiderable challenges in its core business.