Offsetting Behaviour

Optimal airports

2013-06-19T13:29:00.001+12:00

A million dollars a meter to extend Wellington's runway.

The airport announced in May that it would be seeking resource consent to extend the airport by 300m at a cost of $300 million to attract long-haul flights to the Wellington region.

The costs of the runway extension are reasonably well known. But what about the benefits?

All passengers wanting to get to Wellington will enjoy a slight increase in safety. If they value this, they'll be willing to pay more for flights to Wellington. The airport should then be able to extract slightly higher landing fees.

Passengers from overseas wanting to get to Wellington will enjoy a slight decrease in expected travel time as fewer of them will need to connect in Auckland (or Christchurch) to get to Wellington. Again, if they value this, they'll be willing to pay more for flights to Wellington. The airport should then be able to extract higher landing fees from those international flights.

If the change results in increased passenger arrivals in Wellington, then Wellington may benefit from increased tourist traffic. As always, we would need to be careful in estimating such benefits. First, spending by itself isn't a benefit; increased profits accruing to Wellington businesses are. Measures of "economic impact" that take total expenditures as a benefit are rather misguided. Wellington Council might be justified in putting a bit of money into the airport extension, funded by increased levies on businesses most likely to benefit from increased tourist and conventioneer flows: restaurants near tourist spots, hotels and the like.

There's little case for central government getting involved except where the extension results in a net increase in travel to New Zealand as a whole rather than just travel to Wellington. At least some of the benefit to Wellington will be a cost to Auckland and Christchurch in terms of travelers who would otherwise have enjoyed a layover in one of those cities before continuing on. And so any case for central funding would have to be based on net increases in tourist flows to New Zealand as a whole weighted by the likelihood that those travelers use Wellington as a base for more extensive travel. Central government might watch that any business case for Wellington Council funding not be based on trade diversion from Auckland and Christchurch.

Bottom line: if this were really a good idea, Wellington Airport should be able to fund the bulk of it via a bond issue that would be paid by increased landing fees consequent to the extension. If the main benefit is from increased arrivals from large jets, then set differential landing fees such that those enjoying the benefits are the ones bearing the costs.

Wellington Council could maybe throw in a bit, but should be pretty careful because it's awfully easy for interested parties to put together a business case based on wishful thinking or based on assuming private internalisable benefits are social. Wellington Airport suggests benefits including:

Reduced travel time and cost for those in Wellington

Makes travelers willing to bear greater landing fees, so can be fully internalised by the airport.

Better exposure to international student market

Possible, and harder for the airport to internalise. Note that much of this would be diversion from other NZ schools rather than a net increase in international student numbers. Wellington might not care about this, but it weakens the case for central government funding.

Regional tourism benefits

Possible, and also harder to internalise. You can imagine mechanisms like local tourism operators paying for inclusion in a brochure handed out to incoming tourists, but that's pretty imperfect.

Better international freight options

Should be fully internalised via landing fees.

Increased local property values

Um, no. This is one of the big rules in cost-benefit: you CANNOT count BOTH the increased benefits from an amenity AND the resulting increase in local asset values. That's double-counting.

Easier for Wellington-based firms to work internationally.

This would be partially internalised via landing fees paid by those firms, parking fees at the airport, and taxicab slotting fees, but only partially.

Reducing fares to Oz by allowing consolidation onto larger planes

This should be fully internalisable via landing fees.

Benefits to central NZ from increased tourism

Again, be careful to assess things based on net likely increases in total tourism.

It's rather harder for me to see a case for central government assistance, especially where many of the benefits to the Wellington region will be diversion from other parts of the country rather than net increases. Maybe there's a case based on expected national tourism risk from a spectacular Wellington crash, the risk of which could perhaps be lessened by an airport extension - or at least the linked article says so. But were I to be making a list of big lowish (but rising probability) costly risky things that could hit Wellington and for which the government seems inadequately prepared, well...

Morning roundup

2013-06-19T07:00:00.000+12:00

A compilation of bits from 'round the traps.

First, NZ:

Nolan over at TVHE has been on a roll lately. I particularly endorse his critique of the Labour/Green manufacturing inquiry and his critique of Key's trying to push RBNZ beyond its mandate and capacity. Both of these have saved my having to add anything.
Brennan McDonald chalks the Labour/Green manufacturing policy up to rent-seeking: the parties wanting Ministerial rents and playing to public biases to get it, and manufacturers running normal rent-seeking. I'd amend slightly: if voters are better at detecting dissembling than at understanding economic policy, then we'd expect MPs to share their base's biases.

Everywhere else:

Mark White on the dangers of Nudge policies.
Jessica Irvine reports on 43 recommendations from the former head of the Oz Productivity Commission for boosting Australian productivity.

Note that NZ is well ahead of Oz on numbers 1, 2, 3, 5 (though Labour wants to re-implement it), 7 (although the taxi camera regs and dispatching rules here work to similar effect), 8, 9, 11, 19, 21, 22 (barring RONS), 23, 24, 27 (though Labour/Green would reverse), 30 (if we believe that the RIS is more than a tick-box), 34-35 are underway, 36 (though Labour/Green would reverse), 37, 42, and 43. I'm not sure we're worse than Oz on the others. Stupid tyranny of distance and inefficiency of scale.

Chris Bertram on the dangers of the surveillance state.
The Church of Rationality walks us through the econometrics of bicycle helmet mandates. As is often the case, the standard for statistical evidence in med journals, the BMJ included, is pretty bad. If you're testing for the effects of cycle helmet laws, you probably shouldn't correct for cycling-related injuries.
Alex at Marginal Revolution on the Oocyte Cartel.

Local rent creation: alcohol edition

2013-06-18T09:43:00.001+12:00

I'm not sure that Wellington Council, and the other local bodies, are setting out to create rents for property owners in soon-to-be-designated "fun" districts, but that's what they're soon to achieve.

The alcohol reform legislation pushed alcohol regulation back to local bodies; local busybodies have consequently gotten busy lobbying local councils to restrict hours of operation and number of licencees. This was pretty predictable. Industry has an easier time pointing out problems with proposed regulations to central government than fighting all the local low-opportunity-cost types at all the various local Councils.

Dominic over at The Ladder (HT: @EpicBeer , see also TVHE) absolutely nails the economics of the latest round of local proposals. Wellington Council is considering a local alcohol policy that would designate a nightlife zone with 3 am closing times while setting earlier closing times elsewhere in town. Dominic's substantial points:

Courtenay Place, the proposed designated nightlife zone, is only the current nightlife hotspot. Cities evolve and so does nightlife; when one district starts stagnating, a new one emerges. The zoning would lock the current pattern in place forever. In fact, Courtenay Place is on the downturn:
The trouble is that nightlife districts have a life cycle. They don’t spring up and stay interesting and youthful forever. They stagnate and get superseded by other districts. That stagnation happened about ten years ago in Courtenay Place. It's now a big brewery-controlled, noisy, cigarette smoke-filled (that's right) ghetto. The trouble is that no-one has told the Council or the Hospitality Association. Courtenay Place has become a model for everything that can go wrong in a nightlife district. Do I need to make the case here? I hope not.
We've seen the same movement around Christchurch, even pre-earthquake. The Strip was the place when we'd moved here, but was on the downturn when the quakes hit. And since the quakes, Riccarton, Papanui, Sydenham and Woolston have picked up. They wouldn't have if Christchurch had the kind of regulation that Wellington is proposing. And if you imagine that a Council couldn't be daft enough to continue enforcing a nightlife-zone after an earthquake demolished the nightlife zone, you haven't been following post-Quake Christchurch closely enough.

The nightlife-zoned areas will, by virtue of regulatory protection, get substantial rents. These will be capitalised into the price of properties in that district.
But the Council, who seem to think the scenes in Courtenay Place late on Fridays and Saturdays represent “vibrancy”, and the Hospitality Association, led by individuals who, I believe, own businesses in Courtenay Place, are planning a regime that will penalise anyone trying to establish a business anywhere else – businesses that might give discerning consumers an alternative to the chaos on Courtenay Place. It may not be what the Council intended, but it’s what’s called an unintended consequence. It’s what happens when you draw lines on a map and create differences between the two sides.

Of course not all the results will penalise businesses outside the strip. If you’re a Courtenay Place property owner learning that your tenants have privileges with respect to liquor licensing, you’re going to put their rent up. I look forward to hearing the Hospitality Association complaining about sky-rocketing rents in the street in about a year’s time.
Dominic is absolutely correct here. If we've learned anything from Public Choice, it should be that we really really really shouldn't go about conferring rents in this way. Current owners will get a one-off bump in property values, but then will only be earning normal returns on that capital value. And they will scream if you ever try deregulating it.

Christchurch is considering the same kind of lunacy in its local alcohol policy deliberations: they want to push all the nightlife into the now-deserted downtown. In doing so they will severely punish everyone who got off their arses in the last couple of years and helped make Christchurch less awful by getting new venues going in new areas.

Admiral Akbar Tullock screams at you, "IT'S A TRANSITIONAL-GAINS TRAP!!" It's happened before: just look at New Jersey and Manitoba.

Please listen to Admiral Tullock. Before it's too late.

Dey Turk Er Land!

2013-06-16T07:00:00.000+12:00

I sometimes point out to my Economics & Current Policy Issues class just how little land in New Zealand is taken up by all the things folks like to worry about.

It's pretty common to hear worries about how we're going to run out of land. Back of the envelope, I'd reckoned that if Christchurch burned through a Kate Valley every year instead of every 30 years, and even if they decided to put it all on prime dairy land instead of out in the scrub, the cost of buying land for landfill for Christchurch would still be about $2 per person per year. And so exhortations to recycle in order to save our land seem a bit overwrought.**

Luke Malpass points out just how much room we here have:

If someone asked you how much of New Zealand was built upon, what would your guess be? 5% or 10%? More? Less? And to what extent would this affect your views on urban development and expansion?

There is a widespread view that too much of New Zealand is being built upon: along with cows, the main thing we are growing are houses, and that not only are there too many houses but they are also eating into valuable farmland and nature.

There are many reasons for this view, but at a popular level the main reason might be that growth and development happen in areas where people tend to move or travel. People also tend to go where other people are and then complain about there being ‘too many people’. Many folk see new development and extrapolate out to development they cannot see, which often does not exist.

A look at the numbers bears that out: less than 1% of New Zealand is built up, including landfill and highways. Clearly New Zealand is not filling up. Compared to other countries in Europe, New Zealand has very few people and very little land built upon. About 9% of the United Kingdom is built up and 15% of the Netherlands. Even the United States, with more than 300 million people, has only 5% built on land.

Of course, not all of New Zealand can be developed, but the notion that there is cause for concern at this point in time (or in the next few hundred years) is untrue.

There is absolutely no absolute shortage of land in New Zealand. There is a shortage of land on which city councils will allow development, but that's a regulatory phenomenon, not a fact of the physical world. As land gets bid away from agriculture into housing, the price of agricultural land rises. That makes it more expensive to turn the next bit of farmland into a subdivision and makes infill densification incrementally more cost-effective.

* Dey Turk Er... (explained)

** I rather like Steve Landsburg's suggestion that we not turn these sorts of things into moral crusades.

Tony's Plan

2013-06-15T07:00:00.000+12:00

BNZ Chief Economist Tony Alexander has a few recommendations to fix the housing market. Let's take them in turn. My comments are the secondary bullets.

Initiate a large builder training programme targeting not just youth but low skilled migrants. "Yes, the migrant gates would need to be opened. Just the signalling of strong intention to boost builder numbers would make investors think twice about their capital gain assumptions," he says.
- Not a bad idea, but I'd expect expansion in builder training to come with increased demand for new construction; it could be that there are hold-ups in the training schemes with which I'm unfamiliar though.
- I would also note that there is a current massive demand pull for Christchurch. It will be difficult to build Auckland out & up at the same time as we rebuild Christchurch.

Ban councils from imposing any development fees and allow developers to install their own infrastructure.
- A bit further than I'd have gone, but I'll take this over the status quo. We do need to learn from America's municipal utility districts.

Create an SOE whose sole purpose is to undercut existing building materials suppliers through bulk purchases from offshore, nodal warehousing and distribution from just three or four locations in the country, with a separate agency responsible for monitoring the quality of materials sourced.
- I can believe that we have substantial inefficiencies of scale in building supply. But there are so few barriers to anybody who wants to start shipping in container loads of building supplies from abroad, I'm a bit puzzled why we think that inefficiencies would persist once building started ramping up. On the other hand, we have seen substantial materials cost inflation in Christchurch. Count me as skeptical that this one passes cost-benefit. We'd need to pretty clearly state the market failure Tony thinks here is operating and why this is the best way of solving it. I'm reminded of my undergrad macro prof who thought it would be a good idea to have a government-run set of gas stations that used US reference point pricing.

Initiate a new large state house building programme relying largely on the to be created new carpenters etc. Constrain new state houses to more efficient building systems including containerised modular housing (this doesn’t involve shipping containers), central and screwed in foundations, etc. Ban house sales to non-residents (even new houses given the ease with which special developments could arise targeting solely folk offshore and soaking up construction sector resources).
- State housing is really a second-best kind of solution. Where the private sector is forbidden by Councils from expanding supply, I can see an argument for it. But otherwise, surely it makes better sense to allow more building and give poor people money. I'm reminded of the difficulties involved in Housing New Zealand's divesting itself of some $1m+ state houses in Auckland.

Impose a tax on all houses owned by Kiwis offshore with the aim of encouraging them to sell them.
- I'm rather sure that recent numbers have shown few houses are being purchased by people who have no intention of coming here. And recall too that there exists a rental market. For this to screw anything up, it has to be the case that supply constraints remain pretty binding AND that none of these overseas owners rent out the houses that they're not occupying.

Put in place a capital gains tax on second properties and farmland and immediately payable stamp duty for all second house purchases.
- Seamus has carefully provided the many reasons that CGT won't much help. And the Oz productivity commission just recommended the abolition of their stamp duty. Come on.

Rezone all land within 10-20 kilometres of existing city boundaries as residential.

I'm cool with this, so long as we're not then taxing owners of agricultural land as though Council had provided subdivision-density infrastructure to paddocks.

Update: Thinking more on the SOE plan, if Alexander thinks the thing would be profitable, surely the Bank of New Zealand could simply announce some business plan competition where BNZ would provide financing for the best business plan aimed at improving materials supply and distribution.

Bloody Friday

2013-06-14T13:30:00.000+12:00

Saturday mornings, I cook pancakes. While cooking pancakes, I listen to Duncan Smith and Susan Murray's Country Life programme on Radio New Zealand (as do all good Kiwis). It's often a wonderful celebration of rural entrepreneurship.

I had never heard of Bloody Friday. And so I last week learned something new.

Friday, 9 June, 1978: 300 farmers released 1300 ewes onto the streets of Invercargill, herded them through the streets, then slaughtered them right there to the surprise of onlookers.

The Meatworkers' Union had made it impossible for the farmers to get their stock to slaughter. Sheep were starving in the paddocks because the feed had run out; the farmers had planned on getting their stock to market rather earlier.

Country Life interviewed Syd Slee about it. You can listen here. I especially liked the part where the police van showed up. The protesters expected they were going to be arrested. Listen in to hear what happened instead.

I was reminded of this interview when Jaime Lee-Ross's private member's bill was drawn from the ballot. His bill makes it easier for employers to hire replacement workers in case of strike. Here's Farrar on the bill; here's Cresswell.

I support the bill, and especially if we could have it apply retrospectively to 1978 when it would have done the most good. I'm a bit puzzled about the point given that New Zealand doesn't really have closed shop any longer - we don't lose that many days to strike action any longer. 2011 had the lowest number of stoppages since they started counting in 1986; I can't find more recent numbers quickly. And the Bill will do a great job of mobilising Labour's base to get out the vote. It the game worth the candle?

Faint hope

2013-06-14T11:05:00.000+12:00

Reason's Nick Gillespie explains what it'll take to curb the American surveillance state given that both Democrats and Republicans are totally cool with surveillance whenever their team's guy is in the White House:

More to the point, though, the virtually unyielding preference for partisanship over principle explains why regardless of which party controls the government, the surveillance state continues to grow. It’s totally different, don’t you see, when my guy is running the show!

That same dynamic also helps to explain what is arguably the single-most important political trend over the past 40, 50, or even 70 years: the rise in the percentage of voters who flatly refuse to identify with either the Republican or Democratic Party. In 2012, more voters—38 percent—called themselves independent than admitted to being Democrat (32 percent) or Republican (24 percent).
And it points to the only place from where actual relief from an ever-bigger, ever-more-intrusive surveillance state is going to come: oddball, ad hoc coalitions formed not by party apparatchiks but by rogue elements that somehow sneak into power and are buoyed by the plurality of Americans who refuse to be cowed by party politics. It is characters such as Sens. Bernie Sanders (I-VT), Rand Paul (R-KY.), Ron Wyden (D-OR), Mark Udall (D-CO.) and Reps. Justin Amash (R-MI.), Thomas Massie (R-KY.), and Jason Chaffetz (R-UT) who are lobbying for more government transparency, accountability, and restraint.

This crew has virtually nothing in common other than an inspiring streak of ideological independence that mirrors the plurality of American voters. (Paul, who has co-sponsored legislation with Wyden, did not even thank the Republican Party on election night in 2012, choosing instead to thank the “Tea Party.”) They will doubtless find themselves on different sides of the barricades when it comes to questions of taxes, regulation, and spending. But it is impossible to imagine any of them shifting their positions on ubiquitous surveillance of Americans or kill lists or torture simply based on which party controls the White House or Congress. Which, sad to say, is a relief in the current political climate. And the reason their efforts deserve not just our sincere thanks but our vocal support.

Yeah, I put maybe 25% chance on that panning out. Those odds drop to 5% if it doesn't come in the wake of the current and ongoing NSA revelations.

My normal line here is to recommend emigration. But where could you go? If anything, being outside of the NSA / Five Eyes arrangement could make things worse rather than better.

A loyal reader who should know about these things rather strongly insists that NZ's leaving that partnership would make it much easier for NSA to snoop on Kiwis. I expect that he's right. Our pulling out of that arrangement would likely result (my guess, not his) in a snooping box being installed somewhere along the line after the termination ends of the undersea cables that connect us to the world. NZ has direct connections only to Sydney and Hawaii.

Here's Tech Liberty's submission on the Telcommunications (Interception Capability & Security) Bill. I really hope that the Select Committee moves to fix things.

You have got to be freaking kidding me

2013-06-12T10:28:00.002+12:00

So New Zealand put in mandatory bicycle helmet laws a few years back. Every study on this kind of law winds up showing strongly negative effects on the number of people who choose to cycle. And so it wasn't surprising that school-kids flipped over to using scooters instead. Scooters have existed for a long time, but I never much saw kids riding them until they mandated bike helmets. I'm not sure I trust my observational ocular least squares here, but it would be fun to study.*

Our five year old got his first scooter about a month ago. He rides it every morning from the parking lot near his sister's daycare over to Ilam School; I walk with him as my office is next door. Then I get to borrow it for the day for runs across campus. It's great.

And, predictably, when somebody sees kids having fun, we have to get a freaking movement to ban it.

Safekids director Ann Weaver said requiring children to wear a helmet would reduce the risk of serious head injuries.

"We do want children to go out and have fun and learn and develop and take risks but we want them to do that safely and the issue is, once you damage your brain you can't get it back. There's only one chance."

A Safe2Scoot campaign will be rolled out in August, providing a template safety policy for schools and urging them to introduce a "no helmet, no scooter" rule.

The call has been supported by research conducted by Waikato University social science student, Trish Wolfaardt.

Her report - Scootering on: an investigation of children's use of scooters for transport and recreation - recommended amending the cycle helmet legislation to include "all wheeled recreational devices, irrespective of the age of the rider".

It also recommended introducing a minimum age for scootering to school.

"Wearing protective gear will not exempt children from injury, but it will minimise the harm," the report said.

WHAT THE HELL IS WRONG WITH YOU PEOPLE?!? Absolutely nothing stops Ann Weaver from bundling her kid up in a helmet and padding if she wants to. The DSM really screwed up by failing to include this particular kind of impulse to ban things in their new catalogue of mental illnesses.

At least MoT and the Police have been sane so far:

Ministry of Transport land transport safety manager Leo Mortimer said it was unlikely that legislation would be changed.

"In the same way that we have not considered compulsory helmets for skateboarders.

"Scooter riders must comply with all the rules applying to other road users, however, unlike cyclists, they don't need to wear a helmet or use a light at night."
...Waikato acting road policing manager Inspector Rob Lindsay said there had been an obvious increase in children using scooters but it hadn't become a safety issue.

Meanwhile, in Canada, some half-wit's suggested mandatory helmets for playing soccer. SOCCER. Where the biggest injuries are from people hurting themselves while pretending to have hurt themselves. Andrew Coyne re-tweeted a few dozen submissions of the things folks my age got up to when we were kids. I don't endorse each and every one of these, but I sure as hell prefer the world where these things are POSSIBLE to the one where we force kids to wear helmets when riding scooters and playing soccer. Here are some of the most fun ones from the list. Note that Monte Solberg, who has a particularly interesting submission, is a retired Member of Parliament.

First, the sad state of the current world:

@acoyne @sungriwkowskyc You should have seen the looks I got when I forgot my son's helmet when his class went curling. I was Bad Mom.
— Erin Chrusch (@erinchrusch) June 11, 2013

I can't believe they're making them wear helmets for curling. It's whisky that should be mandatory for curling, not helmets. For those 16 and up.

@chingychinge @acoyne don't forget that snowball throwing is prohibited at most if not all elem schools now
— Paula Roy (@paulajroy) June 11, 2013

We had massive snowball wars in elementary school. The school dumped all the town's collected road snow in the school yard. We dug tunnels all the way through them, hauled dozens and dozens of buckets of water from the school to the tunnels, and iced the down-tunnels. There were pop-up spots throughout. Then, snowball wars with Viet-Cong tunnels.

@acoyne My school banned all playground games involving balls or other projectiles - no tetherball, hopscotch, hackeysack... :(
— Nat M. (@NatticusMaximus) June 11, 2013

@acoyne my elementary school tore down monkey bars while we screamed in terror watching from the classroom...also banned slapshots
— Mitch Jackson (@Mitch_Jackson_) June 11, 2013

This is the world Ann Weaver is helping to bring into being. I moved here to get away from people like her.

But now for the better ones:

@acoyne My daughter, as part of her Queens Scout @ 13 yrs old, did a 2-night camp in a December blizzard 1.6 km from the nearest adult.
— Joanne Cook (@johalifax) June 11, 2013

@acoyne We had some demolished cars near our house with shattered windows. Our parents encouraged us to play in them. Wait...that WAS bad...
— Kristi Colleen (@KristiColleen) June 11, 2013

NO it wasn't bad. Parts cars out in the pasture were hella-awesome.

@acoyne my parents & grandparents encouraged us around 5-7 to build own sail boats out of scrap to "sail" on the lake - happiest memories :)
— Robert Cooper (@RobACooper) June 11, 2013

We built rafts at my Grandparents' place out of old rotten plywood and inner tubes, sailed on the puddled meltwater (that's maybe 4 foot deep, being Canada)

@acoyne Running the booms on the Ottawa River (10 yrs old). Do recall my Dad telling me to avoid loose logs, but chained border ok!
— Burnt Butter(@burnt_butter) June 11, 2013

@acoyne we used to play murderball. Whipping partially deflated volleyballs at opponents in a school gym. We always aimed at the face. #80's
— Danielle (@DanieMontreal) June 11, 2013

@acoyne I grew up in rural Ontario where anything went; no holds barred. Seriously. Well, except murder ball. That lasted onlycouple weeks
— Vance Duke (@glayson76) June 11, 2013

Some of the folks from Kenora in our halls of residence in undergrad talked about how they used to hunt each other in the bush with pellet guns, and then pick the pellets out of each others' backs.

@acoyne my friends and I built two tree-houses. The first collapsed while we were inside. My dad just gave me proper lumber for second try
— Sébastien Perth (@sebastienperth) June 11, 2013

@acoyne we used to whip cattails at each other and jump off boathouses into snow banks during Ontario winters. Darwin declares us fit!!!
— Tom Stewart (@lancasterperch) June 11, 2013

@acoyne in winter we used to hook a tow rope on the back of a snowmobile and with small plasic skis go snow sking at 50kms/hr.
— Mark Ball (@Rangiferi) June 11, 2013

Dad would hook our toboggan up to the back of the skidoo. Did the same thing with the horse except slower.

@acoyne my fave was "king of the hill." Get to top of snowplow-created hill beside school parking lot, push everyone else off. Then, hold on
— Francis Doyle (@franciswthwolvs) June 11, 2013

@acoyne in gym class we played tackle basketball - no equipment - gym teacher thought it was a character building exercise
— George Browne (@GCBrowne) June 11, 2013

.@acoyne I missed the beginning of this convo but fwiw we used to play tackle duck-duck-goose.Which is exactly what it sounds like.
— David Mader (@DavidMader) June 11, 2013

@acoyne we also strapped life jackets to our BMX bikes and built a ramp to jump them into the river.
— LeMule (@TimLeMule) June 11, 2013

@acoyne My phys. ed. teacher would turn off all the lights in the gym, plug in a strobe light, and let us run around screaming for 20 mins.
— Emma Loop (@LoopEmma) June 11, 2013

@acoyne also briefly caught my jacket on fire lighting fireworks with hairspray bottle. And shot pellet guns at each other's backs.
— Mark Cluett (@Cluett) June 11, 2013

Bet he's from around Kenora.

@acoyne Filling model airplanes with lighter fluid and seeing how far they would "fly" after lighting them was quite popular as I recall.
— sjglass (@UrquhartMP) June 11, 2013

I remember soaking hard snowballs with petrol and seeing whether we could light them.

@acoyne @apalanca We used to put each other in used earthmover tires and roll them downhill. Bonus points if you hit the wall.
— 1967ers (@1967ers) June 11, 2013

Tractor tires, but yeah.

@acoyne We invented a game called DodgeBrick. Suffice to say it lasted three quarters of a lunch hour, and got two of us suspended.
— Justin Bumstead (@JBumstead87) June 11, 2013

Um... think I agree with the teachers on this one.

.@acoyne We used to deliberately toboggan into trees and let the momentum from the impact throw us further down the hill.
— Rob (@leaningcowboy) June 11, 2013

@acoyne Our version of murderball was one guy whipping a tennis ball at the rest of us who willingly lined up against a wall. In winter.
— Ryan Wright (@WrightRyan) June 11, 2013

@acoyne 2L bottles, fill with water, ripped up tin foil balls and Drano in that order. Cap it, shake, toss and run. Called them Drano Bombs.
— Bryan Regehr (@b_regehr) June 11, 2013

That'd be a felony these days. Think I'm kidding?

And here's Monte Solberg:

@acoyne I've been missing the fun. We used to put a handful of wheat down the barrels of our pellet guns and shoot each other in the legs.
— Monte Solberg (@montesolberg) June 11, 2013

@acoyne Once we threw glass pop bottles in the air and would run under them to see how close we could get without getting hit. Four stitches
— Monte Solberg (@montesolberg) June 11, 2013

Again: I'm not saying that the kids should be trying each and every one of these things. But I sure prefer the world where it's possible than one where none of them are. New Zealand is still mostly outside of the asylum on this stuff. But outfits like SafeKids are trying to end it. We shouldn't let them. There has to be ONE place in the world that doesn't succumb to the madness.

Jason Sorens's Coalition for Fun: needed now more than ever.

Update: Final word goes to Steve Sheere, restoring my faith in New Zealand.

@ericcrampton My kids school banned helmets for scooters. Logic is it leads more & more pads etc which leads to irresponsible scooter riding
— steve sheere (@ssheere01) June 11, 2013

* As ACC is reporting scooter accident claim numbers have been rising, there's at least data that could allow for this kind of test. If there's US data on scooter and bicycle injuries that we could use as proxy for rider numbers, then this could be rather fun.

I concur

2013-06-12T09:23:00.002+12:00

After noting that Turkey's alcohol restrictions around bar and off-licence closing hours are pretty obviously religiously motivated, Bill Kaye-Blake makes a few observations about alcohol and policy:

Once you start working through the various economic analyses and the associated social and medical literature, a few things become clear:

people drink booze because they like to, or because it makes things less bad. Either way, it makes them happier than the baseline

alcohol is a ‘problem’ for a minority of people and/or on occasion. A few people are dipsos; the average adult occasionally gets blotto. Making the problem out to be more than that is disingenuous

price is a stupid way to deal with the externalities. First, by definition addicts are insensitive to price. Secondly, the behavioural response of binge drinkers to increased prices is to cut out the moderate drinking sessions, not the harmful ones

the research that shows otherwise is flawed. Crampton’s done the heavy lifting, so go see his work, but I’ll back him up. Poor assumptions, begging the questions, faulty parameters — embarrassing, really.

Just because the alcohol activists in New Zealand aren’t banner-waving members of the CWTU doesn’t make their desire to impose their preferences on the rest of the population any better. We can see it clearly on the other side of the world. Let’s be clear about it at home, too.

I'll only dissent only very slightly by way of clarification. Addicts are only relatively insensitive to price. They still respond to price, just less so than moderate drinkers. And so price-based policies have greater marginal effect on moderate drinkers than on heavy drinkers.

Meanwhile, and as expected, New Zealand's anti-alcohol brigade is using the very large weapon given them in the alcohol reform legislation to push for local teetotalitarianism.

These 32 hours have 20 falsifiable forecasts

2013-06-12T07:00:00.000+12:00

Phillip Metaxas and Andrew Leigh sat through 32 hours of Australian talking-head TV.* In all that talking, they were able to find only 20 falsifiable forecasts from Australian pundits. The rest were so qualified that they were unfalsifiable.

They suggest that talk show hosts demand falsifiable predictions:

A nice start would be for Insiders host Barrie Cassidy to insist on ‘falsifiable predictions’ in his final segment, rather than the current ‘observations or predictions’ from the pundits. While such an innovation would be helpful, assessing whether a prediction has proven true or false is likely to provoke objections from the pundits involved. As Gardner (2010) notes, when predictions go awry, pundits often invoke an array of excuses to exonerate themselves. Such excuses include the ‘I was almost right’ defence, and the ‘wait and see’ defence. In our analysis, had David Marr and Lenore Taylor been incorrect about public opinion changing on the mining tax, they could easily have invoked the ‘wait and see’ option to defend themselves.

For this reason, we advocate a Tetlock-style experiment involving Australia’s leading political pundits. Such an experiment substantially removes the ability of pundits to invoke the common defence mechanisms when their predictions go astray. An appropriate study would require our pundits to make falsifiable predictions about the political world in the future. Predictions could cover a range of topics such as the party likely to win the next federal election, the next leaders of each party, and the passage of key legislation. There would be a sufficient number of questions to ensure that lucky hits do not skew the results. We need more evidence than our analysis could provide to properly separate flukes from prescience. Furthermore, an anonymous survey like Tetlock’s would help determine whether our pundits as a group are worth the airtime they are afforded. An open survey could also give us the ability to rank our political pundits based on their predictive powers.

I'd love to see a talk show partner up with one of the betting markets to refine the opposing pundits' claims into a single falsifiable test prior to the show. Launch the contract at the start of the show, unless it's a contract that already exists, like "Who will win the next election", then have them argue about the appropriate price for the contract while the audience submits bids and asks. Let the ticker move over the course of the show, then insist that both of them put, say, $1000 on it at the conclusion of the debate if their argued price differs from the market price.

This would be really easy for things like "Who will win the next election?" or "Will Julia Gillard lead Labor into the next election?". And it isn't that much harder for combinatorials like "Labor would win more (less) seats under Gillard than under Rudd".

There would be nothing banning such things in Australia or New Zealand. There are political betting markets in both places, even if Senator Xenophon keeps trying to ban them in Oz. The constraint seems more likely to be that viewers aren't really all that interested in getting falsifiable predictions and accurate odds. Theatre and that cherished fantasies never ever be shown to be wrong - that's where it's at.

* Ok, they read transcripts.

Bad incentives

2013-06-11T15:31:00.000+12:00

Radio NZ this morning reported that Justice Minister Judith Collins is allocating $8.3m seized under the Proceeds of Crime legislation to drug enforcement activities and to addiction treatment.

It could be worse. In the US, individual police departments seizing assets get to keep a cut. Where police are rational and maximising, this encourages departments to shift to activities that can be profit centres rather than focus on crime-reduction activities that would yield only social benefits to the community.*

Here's Radley Balko with John Stossel on asset forfeiture. How bad can it get? Balko's been documenting cases where police departments have been demanding that bail money be paid in cash, then seize the cash from the family of an arrested person. Here's more and more. And more.

The NZ police seem to be good and honest people, but they're human too. Why make it be in their interest to do bad things?

Civil asset forfeiture is a thoroughly inside-the-asylum policy. We should know better. If Collins is determined to run civil asset forfeiture, it has to be set up such that there's zero link between the amount seized and police budgets.

* And don't get cute arguing that if the subsidy winds up being large enough, the police can wind up doing more of both. Hit the Balko links. American police are committing crimes so that they can seize assets. Here's the Institute for Justice:

Where do they all go?

2013-06-11T13:31:00.000+12:00

Neal Caren's put together a beautiful little infographic showing the flow of graduates from various US majors into different occupations, using data from the last two waves of the American Community Survey.

So we can see that of the 173,849 graduates in Economics:

37,043 became accountants and auditors
32,303 became financial managers
23,872 became chief executives
36,842 became managers
43,789 became lawyers

So just under 14% of the kids graduating in economics became CEOs. Now there were 160,706 people identified as chief executives in the dataset. So 14% of econ grads became just under 15% of all CEOs. Accountants were also overrepresented among CEOs. General business majors were underrepresented among CEOs; they were more likely to be retail salespersons or first-line supervisors of non-retail sales workers than to hit the head office.

Alas, the chart isn't great for major-selection purposes. We can't see the proportion from each major reporting unemployment, for example. But it can help with Avenue Q's question. What can you do with a B.A. in English? By plurality: go on to teach at elementary and middle schools.

HT: Fab Rojas

Creating the climate

2013-06-10T10:56:00.003+12:00

The University of Otago continues lobbying for fat taxes.

At Otago University's Waistline seminar yesterday, where politicians were challenged on ideas like a 20 per cent tax on sugary fizzy drinks, much of the attention was on big-picture regulatory policies, as weight-loss schemes directed at individuals are often not very effective.
...
Targeting teenage girls might be ideal, "but unfortunately teenagers aren't that receptive" to nutritional and physical activity interventions.

So the population-wide measures, like taxes on sugary drinks, were most likely to make a difference.

Several other researchers threw in traffic-light labelling - to mark foods as healthy or unhealthy - as an important part of combating a food "environment" which promotes obesity.

Professor Robert Beaglehole called for a national strategy on obesity reduction - which National MP Paul Hutchison said the Government would release in months - and for a social movement, as with tobacco control, to create the climate for controls on the food industry. [emphasis added]

"Obesity (here) is a public health disaster ... It is a tragedy at the personal, family and social levels. It's a pandemic."

They want to create the climate for controls on the food industry. I suppose that the study on the social costs of obesity could have been part of that.

Beaglehole won the 2010 Public Health Association award; the PHA highlighted his work chairing the SmokeFree Coalition.

Previously:

HT: ed.co.nz

Make your list

2013-06-07T10:09:00.002+12:00

So it turns out that the NSA has been scooping up rather a bit of information about ~~Version~~ Verizon customers in the States. It hasn't been entirely a secret prior to now; it would be a bit surprising if the other phone companies didn't have other similar systems in place.

JD Tuccille notes that Americans travelling within America, but within 100 miles of the border, are getting stopped at checkpoints on the interstate for citizenship checks.

A couple of months ago, when Alex Tabarrok complained of his son's school being turned into a police camp, I noted some of the differences between American schools and the ones here, concluding:

You can choose to live like this too. Sure, New Zealand is getting worse, and it's definitely worse than some parts of the US if marijuana freedom is an important part of your bundle of liberties. But NZ is starting from a much better spot than the US, and it seems to be getting worse slower than other places.

Things aren't bad enough to leave yet? Fine. Freedom's a value, but so too are other things like distance from family and wealth differentials and access to Ethiopean restaurants. But write down today some bright-line rules that you think should trigger your future exit; it's easy to acclimatize to gradual changes for the worse.

If you really want to live free, write down your list of things that would actually be sufficient to trigger your emigration, then think about the places you might go that offer the best deal on the bundle of freedoms that matters most to you.

If you're instead happy getting consumption benefits from ranting about the deterioration of freedom in America, or from imagining that you'll be able to change things there, carry on.

Here in New Zealand, we should be especially vigilant against importing American spy regs. It's awfully tempting for some folks in Wellington to be seen to be team players by signing onto things the Americans want. I hope we're especially careful with the Telecommunications Interception Capability & Security Bill. New Zealand can become relatively more attractive simply by standing still.

Update: Emigration won't help you against this one. It might make things worse.

The National Security Agency has obtained direct access to the systems of Google, Facebook, Apple and other US internet giants, according to a top secret document obtained by the Guardian.

The NSA access is part of a previously undisclosed program called PRISM, which allows them to collect material including search history, the content of emails, file transfers and live chats, the document says.

The Guardian has verified the authenticity of the document, a 41-slide Powerpoint presentation – classified as Top Secret with no distribution to foreign allies – which was apparently used to train intelligence operatives on the capabilities of the program. The document claims "collection directly from the servers" of major US service providers.

Although the presentation claims the program is run with the assistance of the companies, all those who responded to a Guardian request for comment on Thursday denied any knowledge of any such program. ...

The PRISM program allows the NSA, the world's largest surveillance organisation, to obtain targeted communications without having to request them from the service providers and without having to obtain individual court orders.

With this program, the NSA is able to reach directly into the servers of the participating companies and obtain both stored communications as well as perform real-time collection on targeted users.

The presentation claims PRISM was introduced to overcome what the NSA regarded as shortcomings of Fisa warrants in tracking suspected foreign terrorists. It noted that the US has a "home field advantage" due to housing much of the internet's architecture. But the presentation claimed "Fisa constraints restricted our 'home field advantage'" because Fisa required individual warrants and confirmations that both the sender and receiver of a communication were outside the US.

I expect we instead need a Bruce Schneier guide on secure internet use.

Is there some Chinese version of Google I can flip everything over to? If somebody's going to be sniffing through all my email, family photos, chat sessions and the like, I'd sooner it be them. At least they're honest about it.

Two unrelated stories

2013-06-07T07:00:00.000+12:00

Item the First: The WHO seeks a comprehensive ban on tobacco advertising in the Western Pacific region that includes New Zealand.*

Before Item the Second, recall anti-tobacco campaigner Jack Banzhaf's 1991 dismissal of slippery slope arguments:

"They use the 'slippery slope' argument. 'My God, if they can do this to smokers today they can do this to people who eat Haagen-Dazs ice cream or whatever.'"

Item the Second: The University of Otago's Janet Hoek wants New Zealand to implement plain packaging for soft drinks. The anti-tobacco industry used to warn that there was no slippery slope from anti-tobacco proposals to other products; tobacco just wasn't like other commodities. Hoek writes:

Tobacco is a very unambiguous product because it is uniquely harmful - some foods are closely analogous to tobacco as they offer no nutritional benefit and the research evidence suggests changes in food supply, particularly the widespread availability of inexpensive, palatable, energy dense food have contributed to, if not at least partly caused, the rising prevalence of obesity.

Hoek warns about a different kind of slippery slope: she says the food industry has been adopting tobacco-industry style tactics to delay government regulation.

* I think it's inframarginal for NZ.

Christchurch Housing

2013-06-06T14:48:00.002+12:00

I'd missed the Ministry of Business, Innovation and Employment's summary report on Christchurch housing when it came out a couple of months ago.*

The highlights:

Total housing stock dropped by a net 11,500, or 6.2% of the ex ante housing stock, from 2010Q4 to 2012Q4.

The number of private rentals as measured by tenancy bond remained constant at 39,000 during 2011 and 2012; the prior trend had increases of 1500 per year prior to 2010.
Demand for rentals would have increased sharply with destruction of owner-occupied homes, temporary moves by those getting repairs, and incoming construction workers. The largest drops were in tenancies of 2 to 3 bedroom homes.

House prices in Christchurch are well above their prior 2007 peak, though Auckland's prices have ramped up by even more. But Christchurch rental prices have increased by more than Auckland. From August 2010 through February 2013, the average Christchurch weekly rent measured by new bonds lodged** increased by 31%, from $293 to $384. Auckland rental prices increased by 13% over the same period.

While average weekly rents remain higher in Auckland and in Wellington, the 2012 Household Income Survey has household income in Auckland at $94k, Wellington at $93k, and Canterbury at $82k.

Rental accommodation at the bottom end of the market have been particularly hit. MBIE notes that MSD reckons $180/week about what beneficiaries can pay in rent; the proportion of private new bonds lodged in that range has halved since the quake.

I'm following up with MBIE for a bit more data on the overall distribution.

Social housing units, whether provided privately as bedsits and boarding houses or publicly as Council housing or Housing NZ units, have also dropped substantially. Housing NZ was down 6% as of December 2012; I understand that the government pushed pretty hard to get the Housing NZ units sorted despite some thorny insurance issues. Christchurch Council is down 17%. The low-income tenants here served would not have an easy time finding alternative accommodation. They're being outbid for private rentals by incoming construction workers and by people seeking temporary accommodation during earthquake repairs.

I note that measures that could increase supply at the lower end of the market, like making it legal for private homeowners to build secondary flats into their homes, would result in fewer vulnerable tenants being displaced.

Holiday parks, which sometimes provide overflow temporary accommodation rather than just catering to tourists, are also overflowing.

I note that Council staff came close to shutting down the South Brighton holiday park when its toilet block failed an engineering code assessment; they backed down when it hit the press and instead are letting it be strengthened.

The report also warns of a huge increase in accommodation demand set to come in 2014-2016 when an estimated 15,000-25,000 construction workers will be looking for housing at the same time as tens of thousands of home repairs create demand for short-term accommodation.

There's no way that allowing secondary flats within peoples' houses would come close to meeting the demand that's yet to come. But neither is there any reasonable reason to continue banning one of the easiest ways of getting quick temporary accommodation to market.

It will be interesting to see what will happen in 2014-2016.

* I'd linked the report here, but hadn't gone through it in depth.

** This will provide a better indicator of current market prices than would a measure of all existing rents: it shows what prices are faced by those coming to market.

Social Costs and HPV

2013-06-05T11:06:00.000+12:00

I've seen the light.*

Here's the New York Times on recent findings about HPV.

In the 1980s, only a small number of throat cancers were linked to HPV infection. Historically, patients who developed the disease were in their 70s and were heavy smokers and drinkers.

Now, about 70 percent of all throat cancers are caused by HPV, up from roughly 15 percent three decades ago. Patients are now more frequently middle-aged husbands and fathers who are economically well off, nonsmokers and not particularly heavy drinkers. Men are three times more likely to be diagnosed than women with HPV-related throat cancer.

In short, 70% of throat cancer is caused by HPV transmitted during oral sex. And we know that when private actions impose costs on others through the public health system, there's a prima facie case for government intervention.

Let's run the drill. What are the social costs of risky sex? And why haven't we taxed it yet?

First, any risky act undertaken with imperfect knowledge about possible consequences cannot, by assumption, yield any benefit for the person bearing the risk. It's all market failure. We will consequently assume that hazardous oral sex of this sort is not pleasurable for anyone involved, so there are no offsetting benefits that must be counted when we go about regulating and taxing. Recall that sex addiction is very real and that there is no known safe level of sex; every sex addict began with a single sex act. There's no possible reason that anybody could be engaging in risky sex other than irrationality or addiction, given that we've assumed that there's zero benefit from doing it. Why else would somebody do something that has zero benefit?

And we also know that oral sex is like a gateway drug: I'm sure that the Dunedin Longitudinal Survey people could really easily show that teenagers engaging in oral sex were more likely to go on to try other sex acts at younger ages and with more partners than those who showed more restraint. I bet they're also more likely to try marijuana.**

So what then are the costs? Well, let's apply sex attributable fractions to a whole host of disorders. 70% of throat cancers are due to HPV, which is by definition a consequence of undertaking a risky sex act. And there's all the other STD costs. Add up all the treatment costs, add up all the costs of premature mortality, double-count the costs of productivity losses, add in some estimates of intangible costs falling on friends and families of those suffering. Then add in all of the costs that men and women incur in finding partners for engaging in sexual activity: all the costs of attractive clothing, the opportunity costs of time spent trying to attract a partner, the direct costs of buying drinks for a potential partner, subscription fees at dating websites... it's all pure loss because dangerous sex has no offsetting benefit by our assumption at page 173 in the appendix to the report. Pretty clearly, the social costs of oral sex exceed the excise tax revenues. And that by itself of evidence of market failure.***

So why haven't we taxed oral sex? Well, it would be almost impossible to enforce. In a perfect world, the panopticon would see and tax all. But we're not there. Instead, we have only imperfect regulatory instruments. What should we then do?

For starters, we need studies by the University of Otago's School of Public Health demonstrating how not only movies and television glorify oral sex, but also how social media affects things. Doesn't Durex have a Twitter account? It's also worth noting the timing on the HPV rise here. I blame Desperate Housewives:

Bree: Excuse me. Did you lose something?
Orson: No. I just thought... for you.
Bree: Oh, um. I don't do that.
Orson: Why not?
Bree: I'm a republican.
Orson: I'm a libertarian. I believe in minimizing the role of the state and maximizing individual rights.
Bree: But Orson?!
Orson: Trust me. I know what I'm doing.

Is it any surprise that the libertarians would be the ones again to blame?

Otago could also recruit a dozen people via Facebook and interview them about whether drinking makes them more likely to consider oral sex. If it does, then anti-alcohol and anti-oral-sex policies could be complementary. And if people are more likely to smoke after sex, then that also increases the benefits of anti-sex policies. We also need to think about how alcohol advertising also promotes sex: Woodstock commercials could lead young men to have sex with their friends' mothers. It's so obvious that we need a trifecta of policies to simultaneously address alcohol, tobacco and oral sex because of their costs to the public health system. Actually, that misses one: I'm pretty sure that this all somehow makes fat taxes even more important, I just haven't figured out how yet. But I'm sure that Otago's public health people will figure it out.

Now a couple of people on Twitter last night, likely secretly in the pockets of Big Sex, suggested that all of this might be misguided. There's a vaccine for HPV that removes the HPV-risk of oral sex while maintaining the supposed benefits. But, that's cheating. Just like it is cheating to use e-cigarettes to get a nicotine hit while avoiding lung cancer. If we cannot use e-cigarettes as part of anti-smoking policy, we can't use the HPV vaccine a way of avoiding the social costs of oral sex. Deep down, it's the sin that's the problem. If people could enjoy sinful hedons without consequence, where would we be? We have to teach them to avoid the sin, not to mitigate sin's consequence.

* No I haven't. Everything in this post, except for **** below, is simply applying consistently the methods used in the bogus shonky cost of illness studies used to justify alcohol and tobacco regulation.

** And if Ole Rogeborg wants to claim that they haven't proven causality and that much of it is due to underlying type, remember that because Dunedin refuses to share their data with anybody, we just have to take Dunedin at their word even if Ole has some fancy simulations.

*** Especially as there is no excise tax that here applies. Note that we shouldn't count GST revenues from professional transactions of this sort as offsetting things because the money would be spent on other GST-applicable transactions in the alternative.****

**** This is about the only part that isn't tongue-in-cheek. GST really wouldn't and shouldn't count in this case. Everything else here is rubbish.

Against capital gains taxes

2013-06-05T10:08:00.002+12:00

The OECD having recommended that NZ adopt a capital gains tax, it's worth reviewing the case against them.

First, here's the OECD:

New Zealand belongs to a group of five OECD countries with particularly high pre-tax capital-income inequality (Figure 13). As much of this income, especially at the top levels, takes the form of capital gains, the lack of a capital gains tax in New Zealand exacerbates inequality (by reducing the redistributive power of taxation). It also reinforces a bias toward speculative housing investments and undermines housing affordability, as argued in the 2011 Survey.

The OECD report also seems to reckon that capital gains taxes, along with other taxes and changes to Superannuation, could help debt issues when Superannuation starts getting rather expensive.

Where to begin.

First, the OECD is entirely right that NZ should be moving to increase the age of superannuation eligibility. The Productivity Commission said so, anybody economically sensible has said so, and even Labour's in favour of it. The only thing that seems to be holding it back is that Key had promised in 2008 not to do it and didn't change his mind in the last election.

Second, the OECD could be right about land taxes. As part of a revenue-neutral shift away from income taxation, it would be a really nice move. My only concern, and it is the one that would keep me from pushing the button for that particular tax shift, is that equilibrium overall tax rates are likely to wind up much higher as consequence. Open up another margin for taxation and the government will wind up getting bigger over time. Even if it's revenue neutral now, it won't be the next time a Labour/Green finance minister decides to go after the 'rich pricks' by reinstituting a 39% top marginal tax rate while keeping the land tax.

But on capital gains, well, we disagree.

First, it's hard to make the case that the absence of a capital gains tax distorts investment towards housing. Maybe you could argue that we've a distortion such that firms have incentive to avoid distributing revenues as dividends and that individuals have incentive to hold shares in firms that follow such strategies rather than interest-bearing assets, but that doesn't make a case for a housing-specific distortion - especially as the IRD has been getting more vigilant about individuals flipping houses. Buying a house, doing it up, and re-selling it at a profit will draw income tax: the gain is taxable income from your labour in fixing and marketing the house. I can't see how we get a distortion towards housing rather than towards a broad set of appreciating capital assets. We certainly have problems around housing affordability. The first order problem is Councils' restrictions on the supply of zoned land. Sort that one out, and a lot of the second order problems, like inefficiencies of scale in construction, also start going away.

Second, capital income is already taxed when it is spent: we have a 15% GST. The more we are able to shift from income to consumption taxes, with offsetting transfers to those on lower income if you like, the better.

Third, as Seamus pointed out two years ago, we need to compare the relative efficiencies of the different available tax instruments. Taxes on capital income are more distortionary than taxes on labour income, and even worse when capital gain taxes tend not to be inflation-indexed; real tax rates on capital income then easily wind up being higher than taxes on labour income. And, there's a bit of a mess in deciding how to treat realised versus unrealised gains - you're basically there choosing among rather bad consequences. Read Seamus's whole post.

Fourth, the story required for the absence of a capital-gains tax to distort choices between productive investments and some kind of unproductive investment (basically, purchasing some asset that appreciates in value over time) is especially convoluted (another Seamus post...read the whole thing....).

Fifth, Seamus noted that while you can hang a case for a capital-gains tax on an argument Samuelson made rather a while back, Samuelson's argument shows that you need a capital-gains tax to avoid the problem of distorted choices among assets whose payoffs are more than 25 years into the future; nearer-term payouts aren't affected by that kind of distortion. Seamus also hit on a couple of other potential objections.

Want to increase the redistributive potential of the tax system? Increase the GST while increasing income-based transfers to the poor. Why muck up incentives to make capital investments?

Signalling and education

2013-06-04T16:26:00.000+12:00

U Vic's student magazine asked me for comment on signalling and degree inflation; Wilbur Townsend and Nick Cross's story is now out.

I agree with Nick that there has been degree inflation in New Zealand; most folks around the traps suggest the big push happened in the 1990s. It's largely leveled off since then. Or, at least at Canterbury, I've not seen much evidence of it since I've been here. It could pick up again once the full effects of the various Universities' new taught masters programmes start coming through.

Here they channel Bryan Caplan:

Why would people get a tertiary education if it doesn’t add value? We believe it is about sending a signal to potential employers. The ‘signalling model of education’ holds that the wage premium from having a tertiary degree comes from the signal of a person’s abilities relative to others. It’s based on the observation that most formal tertiary education is taught by professors with little experience outside the ivory tower, and that most courses are concerned with academic theory and not tailored to specific occupations. Why would these be any use in the real world? Research into the ‘transfer of learning’ suggests that education does little to actually improve intelligence or critical-thinking skills in the long run. Consider the way you approach your own education. Most of us spend weeks cramming for our final exams, but aren’t at all worried if we forget much of the material the second the exam is finished. Most of us rejoice when a class is cancelled because it means we have less to learn. But there is no proportionate reduction in fees for the cancelled class—shouldn’t we be outraged? If education is about building human capital, why isn’t our focus on accumulating as much knowledge as possible? If it’s about signalling to employers, we can understand that the most important thing to come out of our education is the piece of paper at the other end.

It's also been fun seeing a bit of evidence of degree inflation in the data. In the main US work on political knowledge, income matters far less than education in predicting political knowledge. But, here in New Zealand, they both seem to matter. A lot of very successful people here got their start when all you needed was a high school degree, and so household income is the better proxy for intelligence for that cohort. The main bout of degree inflation in America happened decades earlier.

Here's what I sent Nick, which he of course needed to truncate to leave room for others:

“Degree inflation is real, but signalling isn’t everything that’s going on in education. The signalling model says that the value of education mostly comes from the little piece of paper certifying not that the graduate has learned anything but rather that the graduate is the kind of person who is able to put up with a few years of grinding pointless work without quitting, can complete assignments on time, and is smart enough to have made it through. While it would be easy to provide cheaper signals of intelligence, there isn’t a lower-cost way of signalling the ability to put up with years of grind-your-way-through assignments. So it isn’t implausible that much of what goes on at University is providing that signal. But that can hardly be everything: there are wide differences in salary for graduates with different degrees, and at least some of that is due to the specific things taught in those degrees.”

“At least at Canterbury in Economics over the last decade, I have not seen great evidence of degree inflation. In a degree-inflation model, we would have a higher proportion of students progressing from the Bachelors to the Honours degree, and then more moving on from the Honours degree to a Masters, but little change in where the graduates wound up. But about the same proportion of our majoring students go on to pursue an Honours degree now as was the case a decade ago, we haven’t really changed the standards for entering Honours, and our Honours students place as well at Treasury, the Reserve Bank, the bureaus, and the trading banks as they ever have. I expect that this will have changed in a decade’s time: a lot of places are repackaging Honours degrees as Masters. If employers only pierce the credentialing veil imperfectly, then we could wind up with Masters being the new Honours. While we have substantial degree inflation in the overall population as compared to, say, fifty years ago, I don’t think there’s been much change over the last decade. When I got here, it took an Honours degree to land a decent entry position at Treasury; that’s still the case now.”

“The problem with the signalling equilibrium is that anyone not pursuing a University degree is lumped in with everyone who would not be able to complete one if they tried. And so employers infer something about an applicant’s likely abilities from that he hasn’t gone to University. The only real way of solving the problem would be to reduce the number of funded places at University while providing ample scholarships to students of very high ability but limited means, but it’s not immediately clear that this is better than what we currently have. It’s not crazy to think that New Zealand could be better off if, say, a quarter of the students currently coming to University for business degrees went instead to the polytechs for vocational training. I’ve not seen any conclusive case for or against it, but it’s not immediately implausible.”

The introduction forms a bit of a depressing assessment of New Zealand's intellectual environment.

Canterbury University economist Eric Crampton is the closest thing New Zealand has to a ‘public intellectual’. He blogs at offsettingbehaviour.blogspot.com, and regularly appears in New Zealand media to bring an economic perspective to issues such as alcohol regulation, breakfast in schools and the Christchurch earthquake recovery.

I'm not sure that's entirely accurate. Or, rather, the NZ Herald last year reckoned there were at least a couple dozen of us.

The provocative conclusion, for a student magazine, I'm sure will draw interesting letters to the editor.

Knowable, but not known to me

2013-05-31T11:30:00.001+12:00

In the futile hope that maybe, just maybe, folks' views about welfare policy might just stand to be informed by data, here are a few testable hypotheses I've seen floating around. They posit things that are knowable, and I'm sure data exists to resolve things. Let's walk through a few of them.

First, how do poor people use money? I tend to say we ought to just give money to poor people if we want to make poor people better off. Other folks think that they'll just waste it on booze and cigarettes rather than helping their kids. I don't discount that that's also possible; it's an empirical question.

@ericcrampton Is there any research on how people on low incomes spend their money, and what changes when get more cash per week?
— Jackson James Wood (@_jjw_) May 28, 2013

Now why does this matter? If you think that parents will waste money given them, you might prefer in-kind benefits provided directly to the children of poor parents rather than cash transfers. School breakfast programmes can fall into that category, despite that they're rather ineffective and largely go towards feeding kids who would have been fed anyway. I think that some of the support for wrecking the GST by exempting merit goods also comes from this kind of view, though I think this rather misguided: vouchers for merit goods could be a rather less ruinous way of achieving the desired end.

So, the test. Get household consumption survey data, look for some shock to benefit payments, and check the effects on different consumption categories. If extra money going to poor households disproportionately increases consumption of lotto tickets and booze, then the paternalists who want to make sure that money given to the poor is used for particular things are right in wishing for more in-kind benefits; if not, then the paternalists should back down on such assertions.

I can't imagine that this empirical test has not been done by somebody somewhere; I just don't know the results. I also don't expect that it will change many minds. Paternalists will want paternalism for its own sake, and anti-paternalists won't mind that poor people enjoy some consumption goods. I'm one of the anti-paternalists, but if the data showed little benefits to kids of cash transfers to families intended for kids, I'd shift towards preferring rather more in-kind benefits to kids. Any readers able to point to relevant NZ studies are welcome to do so in the comments.

Second, "can't feed 'em, don't breed 'em". Twitter and the NZ blogs have a bunch of folks yelling at each other about whether the main problem in child poverty stems from poor people's unwillingness to engage the prudential constraint or whether it's bad luck. Those on the right note that if poor people stopped having kids they couldn't afford, then child poverty would be less of an issue. People on the left instead remind those on the right that birth control can fail and that people in good financial circumstances can fall on hard times for reasons outside of their control and after they've set their family size.

So, a test. Start with DPB numbers. What is the current fertility rate of women receiving the Domestic Purposes Benefit, and how does it compare to the fertility rate of women of similar age and marital status who are not receiving government support for the raising of children? If the fertility rate among women on the Domestic Purposes Benefit is roughly what we would expect given known rates of contraception failure, then score a point for the left. If women on government support are instead choosing to have more children while in poverty, then score a point for the right. I would bet that the data shows rather more childbearing than would be expected from contraception failure alone, but less than the fertility rates among similar-aged women not on the DPB, but I've not seen the data.

Again, I'd be surprised if this kind of data didn't exist somewhere. I expect that the data could actually potentially make some difference here, though it depends which way it goes. If current rates of childbearing by women in poverty are consistent with failure rates of reliable and available birth control methods, I don't think many on the right would shift to demanding abstinence and abortion. But if current rates of childbearing by women in poverty are consistent with deliberate choice to bring more children into poor households, I expect that most on the left would shift to a fairness argument about that those in poverty shouldn't be constrained against choosing to have more children. And then there'd be the obvious counterargument about how it's a bit perverse that richer households deciding to have fewer children because of the costs are compelled to subsidise the fertility decisions of those happy to raise a kid in very bad circumstances; those on the right then might wish to advocate for that reliable birth control be a precondition of welfare receipt. Those are values-based arguments I can't adjudicate, though I expect that if, for many, the point of social insurance is to insure against bad outcomes, and if there were reasonable evidence of that many on the DPB were choosing to have many more children, there could be reasonable support for that birth control be among the conditions of welfare receipt.

A second test: what is the elasticity of childbearing among the poor to changes in benefit rates? Those on the right worry about paying women to have children they can't afford and think that paying more to benefit existing poor kids does a lot to bring more poor children into the world; those on the left think that the elasticity is pretty low and that we need to focus on the potential first-order benefits of higher transfers to existing poor children. I don't know if this elasticity is known, but it's definitely knowable. Find some shock to the generosity of payments to poor children and see whether it has any effect on subsequent fertility decisions. If little to no effect, score a point for the left; if things are reasonably elastic, score one for the right.*

Again, those with data or studies that might help resolve the second question are welcome to provide pointers in the comments.

If this stuff turns out to be in the "knowable, but not known to anybody" category rather than just "not known to me", file this under "future honours projects".

* I'm on some orthogonal dimension where I reckon it's good that more kids be brought into existence conditional on their enjoying their existence, even if they are poor. I worry instead about net effects when higher income people forbear from having their third child because of the income effects of the taxes taken from them to subsidise the bringing-into-being of a lower income person's third child. And then we get into the empirical question of relative elasticities and some rather thorny questions about trade-offs.

Shirking air traffic controllers

2013-05-30T07:00:00.000+12:00

It sure sounds like it would improve safety. Everybody knows that being an air traffic controller can be pretty stressful. All those planes up there, have to keep them from bumping into each other. So it just makes sense that you'd want to provide stress leave for those controllers who are obviously suffering, right? What could go wrong?

Doug Allen, currently visiting at Canterbury's Economics department as Erskine Fellow, points me to this classic 1982 piece in the American Economic Review.

The Federal Employees' Compensation Act (FECA), which provides income insurance for government workers injured or disabled on the job, changed in 1974. Employees with at least one dependent would receive 75% of their base salary as tax-free compensation if out on leave. Because air traffic controllers earned a lot, their net take-home pay was higher if they were out on disability. On-the-job stress is pretty hard to disprove.

FECA amendments in 1974 let employees submit evidence from their private clinical psychologists as evidence of disability; prior to that, the government selected the doctor. And, unlike things like "leg cut off" where most doctors would agree, it's harder to verify whether any doctor's diagnosis of stress is all that valid. So Staten and Umbeck predicted that we'd see the most action post-FECA change in claims for non-verifiable things like stress.

They also note that OWCP examiners, who check the veracity of claims, were told to check for specific indicators of on-the-job stress. Deterioration in job performance over time counts. And everybody's monitoring air traffic controller performance all the time, making sure that planes don't get too close together.

So what happens? After the rule change, a bunch of air traffic controllers figure out that they can earn more by demonstrating on-the-job stress, choose times of the day when it's safest to breach minimum separation between aircraft so there aren't actual collisions, and encourage planes to get just close enough to each other to trigger their near mid-air collision sensors. Controllers with more experience have much stronger incentive to do it, as the compensation is based on the employee's salary, and there's a reasonably steep salary progression. Before the law change, inexperienced staff and those with more than 10 years' service (actual burnout) reported the most 'system errors' (violation of separation rules). After the law change, those with 5-10 years' service started experiencing the most system errors.

They conclude:

The steady increase in controller compensation awards and retirements during the 1970's has been cited recently as evidence of stress in the occupation. However, it seems clear that this is in large part a product of making compensation and retirement less costly to obtain. Concern has also been expressed over the relation between job pressures placed on controllers and aviation safety. If one is willing to take reported System Errors as a measure of workforce efficiency, it is clear that measured efficiency deteriorated following the FECA amendments, but not because of traffic increases or equipment failures. We have argued that in attempting to formalize the criteria for adjudicating controller psychological claims, OWCP created an incentive for controllers to demonstrate deteriorating performance.

We have attempted in this paper to constrain theory of shirking behavior to generate refutable propositions. The methods described in the paper can be employed in the investigation of any type of contract. However, the nature of the FECA provisions and the air traffic control profession provided the elements essential for demonstrating the effectiveness of this approach. That we chose air traffic controllers in particular is, of course, no reflection on the integrity of the profession. The maximization postulate upon which micro theory relies leaves no profession exempt from marginal responses to gains from shirking. We offer this study as a demonstration that economics as a behavioral science can provide useful insights into behavioral patterns likely to result from incentives to shirk.

In later work, they show that air traffic controllers became a lot more likely to do this kind of thing after finding a doctor who's willing to certify stuff as being stress-related.

Regulations should always pay some heed to that people respond to incentives.

More on the censorship bill

2013-05-29T11:29:00.001+12:00

So Parliament is debating legislation that would let the government put you in jail for longer for possessing objectionable materials. You'd think this would mean that they have some authoritative list of what's banned and that they'd keep it up to date so that if standards change over time, you couldn't be hauled in for something that was objectionable in 1960 but would be considered tame today.

Well, no.

I'd noted a few problems here. No Right Turn lists a few more; he also points to one list of banned books. If you do a full text search, "Marijuana" shows up 33 times in the list of 1310 books. Six books about growing psilocybin mushrooms are also prohibited. A bunch of books about lesbians are prohibited; it's hard to tell whether those books are banned because they include depictions of children, other currently prohibited content, or whether somebody in the 1960s reckoned lesbianism was objectionable per se. A lot seem to be hangovers from days of yore.*

On that list is "Fanny Hill". I'd noted that one previously and emailed the Censor's Office about it. Here's the state of play.

Dear Eric

Thank you for your emails.

The 1981 decision of the Indecent Publications Tribunal classified a paperback edition of Fanny Hill as Indecent, meaning its current classification (under the Films, Videos, and Publications Classification Act 1993) is Objectionable. You are correct in your reading of the Gazette entry, that this decision applies to the illustrated edition which contains sexual photographs and in the words of the Tribunal ‘appears to be little relationship between the text and the photographs’. This classification decision remains in force. The Gazette entry is the extent of the information we have on record for the Tribunal’s classification decision.

The 1965 decision classifying a paperback edition of the book Fanny Hill: The Memoirs of a Woman of Pleasure as restricted to those aged 18 and over also remains in force.

The Classification Office is not undertaking a project of reclassifying historical decisions. Should a person wish to have classification decisions such as these revisited, they would need to apply for a reconsideration of the decision under section 42 of the FVPC Act.

A classification decision on a publication, by either the Indecent Publications Tribunal or the Office of Film and Literature Classification, applies to identical versions of the publication. For example, it would be in breach of the classification to import, possess, or distribute the banned version of the book (as classified in 1981), including possession or distribution online. The Classification Office is not responsible for enforcing the classification law – this is done by enforcement agencies such as Police, Customs and the Department of Internal Affairs. We encourage people to contact us if they’re uncertain about the legal status of a publication they wish to access.

I hope this information is of use to you – please feel free to contact me if you have any further questions.

So the Censor's Office has prohibited one photographically illustrated edition of Fanny Hill. But, it does not know which one, except that the photographs have the models in period costume and that the photographs have little relationship to the text. Maybe there is only one edition published prior to 1982 that fits that description. Maybe there are dozens. You can get up to 10 years in jail, under Judith Collins's bill, if you have the wrong one.

An illustrated Fanny Hill, even if it contains no photographs of children, could be considered to meet the new Section 132B(2) definition of "describing, depicting, or otherwise deal[ing] with sexual conduct with or by children, or young persons, or both". The text describes a girl in her mid-teens. And while the text itself is not forbidden, an illustrated version could be: Japanese comic books are banned for depictions. Repeat offences under this provision carry the presumption of imprisonment and up to 10 years in jail.

And just look at Section 124A(1).

A person of or over the age of 16 years is liable to imprisonment for a term not exceeding 3 years if he or she intentionally exposes a person under the age of 16 years (the young person) to indecent material (whether written, spoken, visual, or otherwise, alone or in combination) in communicating in any manner, directly or indirectly, with the young person.

The preamble says that this is to prevent adults from sexually grooming children. I'm no lawyer, but it looks like it also can throw you in jail for 3 years if you're 16 and show something to your 15-year-old friend.

The Select Committee has a lot of work to do on this one.

* Here's Censor R.S.V. Simpson's decision from 1972 on the book "Portrait of a Lesbian", by Samantha Golden. It's currently listed as a collectible by Amazon.

The first-named 11 books [including Golden's] can be grouped together. There are some minor differences of quality among these books. What they share is the intention of exploiting morbid sexual interest through the fictional portrayal of various forms of sexual activity.

They demonstrate in their grossly exaggerated incidents, their exclusion of any experience that is not sexual, their reduction of human relationships to the juxtaposition of organs and their crude, repetitive language, the worst kind of commercial pornography. No book in this group has any element that would require qualification of the view the Tribunal takes of them as blatantly indecent.

The Tribunal classifies these books as indecent.

There are plenty of things on the current list of banned books that simply should not be there. They're relics of a time when homosexuality was illegal. Increasing the penalties for possessing works classified as Objectionable has to go hand-in-hand with a purging from the list of works that should not be there.

Breakfasts

2013-05-29T10:05:00.000+12:00

John Key's announced a fairly small-scale breakfast-in-schools programme: they're expanding the current 2-day per week KidsCan programme in decile 1-4 schools with a 5-day version.

Recall that decile 1-4 schools are the same cohort that was included in the Mhurchu et al randomised control trial that found low uptake and little benefit. I summarised the literature here. When NBR reprinted it, it drew a lot of angry comments. Heck, even suggesting on Radio NZ that the Mhurchu et al piece showed fairly small effects can get you called a dickhead on twitter. The government had to do something in this space; this was something. It will be very popular.

The programme is not set to cost very much. I do not expect that it will achieve much, but it will achieve little at less expense than would Hone Harawira's plan that would also be likely to achieve little but at much greater expense. So it has that going for it.

Seamus wonders whether the government will roll out the programme in such a way as to facilitate testing of effects. It would be great if they did. And, it wouldn't be hard either. Randomly assign decile 1-4 schools to phase into the programme at different times and survey kids all the way through so that you could check whether the programme were doing much. Even better if they varied delivery as part of the trial to see whether different implementation techniques were more or less effective in encouraging hungry kids to take part, then put out some best practice guidelines in a few years' time.

If a genie gave me wishes, one of them would be: "Where the government can roll out some new scheme in such a way as to allow for effect evaluation at relatively low cost, it do so by default." I'd also like a pony, and infinite more wishes.

It is forbidden except where it is compulsory

2013-05-29T09:33:00.001+12:00

It's illegal to run a cartel in most western countries. Government have great big agencies whose whole job is to look out for price-fixing, other forms of collusion, or mergers that do more to promote monopoly than to enhance efficiency. I'm an antitrust skeptic, but I know that isn't a majority position in economics.

Canada is no exception on antitrust vigilance. And, it looks as though things have been getting tighter. Where I'd previously understood Canadian competition law as weighing equally producer and consumer surplus and allowing activities that reduced consumer surplus if they were sufficiently efficiency-augmenting, it looks now like they're putting more weight on effects on competition per se.

Here's one summary of Canadian cartel regulation. Cartels are illegal. Arrangements with competitors to control supply, allocate territories, or fix production, are punishable as an indictable offence with up to a 14 year prison sentence and up to a $25m fine.

So cartels are pretty illegal.

Except where they are compulsory.

A group of Manitoba fishermen formed a voluntary co-op and tried to sell their fish to a processing plant in Chicago. What happened next? [HT: Mom]

Court was told that the WWM co-op, which represents about 300 fishers in the areas of Duck Bay, Lundar, Ashern and Lake Winnipegosis, had obtained a licence in December 2010 to sell fish to the U.S. independent of the Freshwater Fish Marketing Corp. so long as it wasn’t competing with the monopoly for customers.

The co-op found a customer in Chicago, a fish processing plant, but unknown to the co-op, the processing plant was then re-selling the co-op’s fish to another customer in New York, which happened to be an existing customer of the Freshwater Fish Marketing Corp.

Court was told that the co-op was instructed to stop selling to the Chicago processor but continued to do so and its license was subsequently revoked in June 2011.

The co-op decided to continue selling to the Chicago processor, which resulted in one of its shipments being seized in July 2011.

Stevenson and the co-op were originally charged with three counts of selling without a licence but the other two charges were stayed once they pleaded guilty to the one charge.

They got $2000 fines for trying to break the government-enforced cartel.

Look back at the anti-cartel legislation.

Section 45 - conspiracy

Section 45 provides that:

every person commits an offence who, with a competitor of that person with respect to a product, conspires, agrees or arranges:

to fix, maintain, increase or control the price for the supply of the product;

to allocate sales, territories, customers or markets for the production or supply of the product; or

to fix, maintain, control, prevent, lessen or eliminate the production or supply of the product; and

every person who commits an offence under the above-mentioned subsection is guilty of an indictable offence and liable on conviction to imprisonment for a term not exceeding 14 years or to a fine not exceeding C$25 million, or to both.

Section 45 is a criminal offence and, as such, to obtain a conviction, the prosecution has the burden of proof to establish the offence ‘beyond a reasonable doubt’.

So one part of the government throws people in jail for forming cartels while the other part of government fines people for not being in the cartel.

Canada, you're schizophrenic. Seek therapy.

Objectionable publications [Updated]

2013-05-28T10:45:00.000+12:00

Two years ago, the New Zealand Police tried to have banned a few issues of NORML's "High Times" magazine. As I had a short piece in one of the relevant issues critiquing the ludicrous New Zealand Drug Harm Index, I would have been a contributor to a banned publication, had the Censor's Office decided to give the police what they'd wanted.

Individuals knowingly in possession of objectionable materials can receive up to five years in prison.

Among the books banned by the New Zealand Censor as Objectionable (or under classifications brought over from prior censorship tribunals, including "indecent", "unconditional indecent") are:

A Guide to Growing Marijuana in Cool Climates
Indoor Marijuana Horticulture
Indoor Marijuana Cultivation
Inside Linda Lovelace (available from Amazon here)

You can search the Register of Classification Decisions; alas, they run everything through a back end that precludes direct linking to decisions.

The Office has been reviewing some of its old classifications; "Bloody Mama", which had been banned by the Indecent Publications Tribunal in 1971, is now listed as "unrestricted". I expect that if you were in possession of something that was banned in 1971 and has not been revisited, you might ask that it be re-examined; I don't know the extent of the legal risks.

The banned book list includes a lot of titles that indicate they would be of interest to the homosexual community, to the S&M community, to growers of marijuana, and books whose titles suggest incest or paedophilia.

If you search on "Fanny Hill", a 1748 book (Wikipedia), you'll find a film classified R18 (1984), a book classified Indecent 18 (1965), an audio recording deemed not indecent (1975), a book deemed indecent (1981), and various others ranging from R16 to indecent. ~~I have absolutely no clue whether, in New Zealand, it is legal or illegal for me to go to Project Gutenberg and download the text of Fanny Hill.~~ Drilling to the Gazette decision, it looks like a specific edition of the text was banned because of accompanying photographs; there is no indication of that the pictures were of minors.* The 1965 decision restricted possession to those over the age of 18; I expect that that is the decision that continues to hold for the text.

Booksellers NZ writes:

There are approximately 1300 titles which are ‘objectionable’ (banned) in New Zealand. Approximately 1225 were classified as indecent by the Indecent Publications Tribunal (IPT) in the period 1963-1994. The remainder are decisions of the Office of Film and Literature Classification (OFLC).

Unless a more recent decision has been made on any title, a classification decision is still in force. For example a book banned by the IPT in 1963 will still be banned, unless the edition is sufficiently different to constitute a new publication.

Most books which have been ‘banned’ deal with weapons and drug manufacture and other criminal acts, dog fighting and the sexual exploitation of children and young persons. It is likely a number of older titles if they were classified today, under current legislation, would still be classified as ‘objectionable’. This is because of the activities that these books support.

A couple of months ago, Ronald Clark was jailed for downloading Japanese anime cartoons. Now Clark was hardly a harmless guy: the Daily Mail reports he had prior convictions for indecently assaulting a teenaged boy. And maybe a guy like that should have a ban on possessing manga as part of his post-release conditions if the psychologists reckoned, for this individual, that they were more complement than substitute for actually hurting kids. But it seems a bit 'inside the asylum' that you can be arrested for bringing Japanese comic books into the country, despite that absolutely nobody was harmed in their production.

Why bring this up?

The Government is increasing the penalties for being in possession of objectionable publications. Nobody's going to defend those who produce child pornography. And even those who view those produced images or films do harm by increasing demand for those products; some argue that viewing such films or pictures adds additional harm by re-victimising the subject even where the subject never knows it's happened.** But not all people convicted as being in possession of objectionable materials are either producers or consumers of actual child pornography.

Here's The Press:

Most than 400 people had been convicted of the offence of having objectionable material between 2004 and 2011, most of which where sexual images of children.

Of these, only 33 per cent were jailed. ''That is totally unacceptable and I think we need to deal with it and this is what this bill is all about,'' Ms Collins said.

''I'm telling the judges that we're changing the law so that they can get tougher and of course they are bound by sentencing guidelines.''

Now here is the Bill. Everything in the General Policy Statement talks about the evils of child pornography.

A key purpose of this Bill is to implement the Government's post-election action plan to increase penalties for producing, trading, or possessing child pornography. The Government's objective is to ensure that sentences for child pornography offences reflect the seriousness of the offending and send a strong message that the exploitation and abuse of children will not be tolerated.

To achieve that key purpose, and otherwise improve objectionable publications and indecency legislation, this Bill—

increases maximum penalties for possession, import, export, supply, distribution, and making of objectionable publications – which include child pornography publications:

That's all well and good, but "which include" is a bit broad. Looking further into the preamble, we find:

Clause 6 amends section 131A, which relates to offences of possession of objectionable publications, knowing or having reasonable cause to believe that the publications are objectionable. The current maximum available penalty for an offence against section 131A(1) committed by an individual is imprisonment for a term not exceeding 5 years, or a fine not exceeding $50,000. The amendment increases that maximum available term of imprisonment from 5 years to 10 years.

Clause 7 inserts a new section 132B, which contains a presumption of imprisonment for certain repeat offenders. New section 132B applies (new section 132B(1)) only to an offender who—

has been convicted of and is to be sentenced in respect of a specified publications offence committed after the commencement of new section 132B (the repeat offence); and

before the conviction for the repeat offence was entered, had been convicted of 1 or more specified publications offences committed before or after that commencement.

A specified publications offence (new section 132B(2)) is one against a provision specified in section 132A(1)(a) to (e) if the publication that was the subject of the offence does (to any extent) any or all of the following things (specified in section 132A(2)(a) to (c)):

promotes or supports, or tends to promote or support, the exploitation of children, or young persons, or both, for sexual purposes:

describes, depicts, or otherwise deals with sexual conduct with or by children, or young persons, or both:

exploits the nudity of children, or young persons, or both.

Again, look at the "any or all". This looks to include Japanese comic books if the judge thinks that reading manga promotes child exploitation. And it might include 1748's Fanny Hill, ~~depending on which decision of the Censorship Office you want to run with~~ if you have an illustrated edition.*

I'm no lawyer, but this doesn't look like the "Outside of the Asylum" kind of legislation for which I thought we here aimed. Hopefully the Select Committee will fix things so you can't get 10 years in jail for looking at comic books. And gawd help you if there are any instructions for growing marijuana somewhere in the comic's text.

* UPDATE: It is impossible for me to link here to the Gazette decision of 5 February 1981, but the text suggests that it was a specific issue of Fanny Hill that included a series of photographs that was banned. There is no indication in the decision that the photographs were of children. Here is the text:

A sample copy of Fanny Hill was imported commercially and seized at Auckland in September 1980. As the importer has disputed forfeiture the Customs Department has referred the publication to the Tribunal for classification, prior to the commencement of condemnation proceedings pursuant to the Customs Act 1966.
Fanny Hill is a paperback publication, supposedly based on the original classic by John Cleland. Samples of these writings have been selected from the original book, and used in conjunction with a series of photographs which place considerable emphasis on sexual activities, to give an impression that the paperback is an accurate precis of the original classic. In fact, there appears to be little relationship between the text and the photographs, even though the photographer has dressed his models in period costume. In view of the nature of the publication, there is a distinct lack of honesty of purpose. Accordingly, though the original classic is not indecent, we classify this edition of Fanny Hill as indecent.

So the original .txt should not be viewed as indecent. Wouldn't it be nice if the database search said as much!

Update 2: The Censor's Office has confirmed that the one illustrated edition is the one that is banned. However, the Censor's Office also does not know which edition that is. The only thing they know about it is what is in the Gazette. So if you have some pre-1982 illustrated version of Fanny Hill, it may or may not be the one deemed objectionable by the Censor in 1981. If it is, then you can go to jail for a decade. If it isn't, enjoy!

** It being impossible to discuss the pros and cons of such a view without risking being fired, I will abstain.