Wednesday, August 26, 2015

Regulatory design–at least get that roughly right

The current OSH bill debate shows that even if one agrees that regulation is the way to deal comprehensively with OSH matters it is worth paying attention to a few fundamentals of regulatory design:

  1. Do focus on the outcome you want, not a heap of “inputs” you hope will fix things. Almost anyone is going to beat an MP at picking the best things to do;
  2. Focussing on outcomes tends to avoid picking worm farms, big worms with legs farms, “obvious” risks like operating a mini golf course while “missing” killer risks;
  3. Inspectors of inputs, persons wielding clipboards and ticking boxes are no panacea and often find it as hard to get buy in as a Parking Warden finds feeling the love.

Once the “input” is ticked people have no incentive to keep trying. Outcome based regulation which says “we don't care how you get there but by God you better make it or we will hang you” allows at least two productive things to happen:

  1. There is good reason to keep on trying, innovating, training and doing absolutely whatever to get safe. Insurers know that too and pressurise policy holders; and,
  2. Where amorphous and intangible factors like a “culture of safety and good occupational health” are critical – as in this case – there is an incentive to build, develop, grow and maintain such a culture. Ticking a box marked “culture” never did anything.

It does require two things governments can be good at when they want to be – setting clear standards and enforcing them. Best will in the world governments can never be the best at picking winners.

Monday, August 17, 2015

The “left”…. more caring than thou… no one has a monopoly on compassion


Greg Mankiw, in a recent NYT book review notes that Arthur Brooks 2006 book “Who Really Cares”  shows how in the U.S., media headlines notwithstanding,  households headed by conservatives give, on average, 30 percent more dollars to charity than households headed by liberals, even though their incomes on average are 6 percent lower. They are also more likely to be blood donors.

So why do so many people view liberals as more compassionate than conservatives? The problem, in Brooks' view, is that conservative policy arguments, while cogent if fully explained and digested, are too extended to be useful in a political dynamic dominated by first impressions based on 30-second sound bites.

For example, take the proposal to increase the minimum wage. Conservatives have many reasons to believe that it is the wrong way to help the working poor.

First, when the cost of hiring unskilled workers rises, businesses hire fewer of them.

Second, because some of the costs of a higher minimum wage are passed on to consumers in the form of higher prices, it hurts those who buy these goods and services, like meals at fast-food restaurants. The economist Thomas MaCurdy of Stanford University reports that this price effect “is more regressive than a typical state sales tax.”

Third, the minimum wage is not well targeted to those living in poverty. Of workers affected by an increase in the minimum wage, more than half belong to families making more than $35,000 a year, and almost a quarter belong to families making more than $75,000 a year. If we were evaluating a government spending program to combat poverty, no one would be satisfied if so many of the program’s beneficiaries were already living well above the poverty line (about $24,000 for a family of four).

Fourth, there is a better way to help the working poor: the earned-income tax credit. This income supplement is well targeted to families living in poverty, it does not raise the prices of goods and services produced by low-wage workers and it does not discourage firms from hiring these workers. By incentivizing work, it increases the number of people enjoying earned success.

All of the above holds for NZ.

Arguments like these are persuasive and are hardly the ravings of red necked idiocy. But they do not fit neatly on a bumper sticker. This stuff appeals only to policy wonks, who represent a tiny fraction of the electorate.

“It’s time to give America a raise.”  is how President Obama explained why he wants to increase the minimum wage.

Such a great sound bite plays well on the evening news. Of course, it does not rebut any of the arguments against a higher minimum wage, but it carries a clear implication: The president’s political opponents don’t think America deserves a raise. They are the mean, greedy types and it’s their fault we have poverty..

The NZ media are full of this sort of “easy sell, lazy write” material…. the costs of producing this stuff is low so supply is high.

Wednesday, August 5, 2015

A close to perfect ODI result

New Zealand won by 10 wickets (with 46 balls remaining)
Played at Harare Sports Club
4 August 2015 (50-over match)
 Zimbabwe innings (50 overs maximum)RMB4s6sSR
View dismissalH Masakadzac Latham b McClenaghan01213000.00
View dismissalCJ Chibhabhast †Ronchi b Sodhi4281446095.45
View dismissalCR Ervineb Elliott1235272044.44
View dismissalRW Chakabvalbw b Sodhi21160033.33
View dismissalE Chigumbura*c Taylor b Elliott5571071.42
View dismissalSC Williamsrun out (Guptill)2664450057.77
Sikandar Razanot out1001259554105.26
View dismissalAG Cremerc McCullum b Sodhi514190026.31
View dismissalP Utseyac †Ronchi b McCullum056000.00
View dismissalT Panyangararun out (Elliott/†Ronchi)3354394084.61
Extras(lb 1, w 8, nb 1)10
 Total(9 wickets; 50 overs; 207 mins)235(4.70 runs per over)
 MJ Henry824505.622651(3w)
View wicketNL McCullum1003813.803411(2w)
View wicketMJ McClenaghan1015515.503260(1nb, 3w)
View wicketsGD Elliott602724.501920
View wicketsIS Sodhi1003833.803540
 KS Williamson603105.162002
 New Zealand innings (target: 236 runs from 50 overs)RMB4s6sSR
MJ Guptillnot out11616913811184.05
TWM Lathamnot out1101691167294.82
Extras(lb 1, w 9)10
 Total(0 wickets; 42.2 overs; 169 mins)236(5.57 runs per over)
 CB Mpofu713705.282660
 T Panyangara603005.002021
 SC Williams5.203606.751330(1w)
 AG Cremer1006006.002522(1w)
 P Utseya1004604.602930(1w)
 Sikandar Raza201708.50310(2w)
 H Masakadza20904.50610


Toss - Zimbabwe, who chose to bat
Series - 3-match series level 1-1
Players of the match - MJ Guptill (New Zealand) and TWM Latham (New Zealand)
Umpires - RK Illingworth (England) and TJ MatibiriTV umpire - L RusereMatch referee - DC Boon (Australia)Reserve umpire - O Chirombe