Friday, 21 November 2014

Academic decline

I knew that the numbers of academics at U Canterbury had dropped. I didn't know that it was this bad. The Tertiary Education Union reports on the numbers:
Based on the change in proportion of FTC academic staff in 2014 compared to 2012 (column 3 of Table 3), the University of Canterbury was shifting academic staff at between two and six times the rate of the other universities, and on average 4.5 times the rate of the other universities. Substituting the change over the average employment of the period (column 2 Table 3), the University of Canterbury was shifting staff faster than all universities, as much as 32 times faster than AUT and on average 9.2 times faster than all other universities.
The TEU also notes that it isn't just the earthquakes but rather a re-focusing within the University: the proportion of full-time continuing administrative staff is up 16%. The number of administrators per academic has increased substantially as the number of academics has dropped.

They report also that the ratio of full-time continuing academic staff to all staff has dropped substantially since 2012: if my algebra isn't wrong and their numbers are right, it's about 40% of what it was.

Their figures look at the change since 2012. I know that the Economics Department was shedding staff very shortly after the September 2010 earthquakes: we lost two to Waikato really quickly. Those early shifts won't be in the TEU figures.

Kudos to the TEU for putting this out. As I understand things, they represent both academic and administrative staff; I never joined partially because of worries that they did a bit more to protect the general staff against restructuring than they did to emphasise the academic side. That they're now noting the decline in academic staff as proportion of staff is significant.

Saturday, 15 November 2014

Eagle vs Whale

Whaleoil took aim at my former colleague John Gibson.

John received a Marsden grant for some work looking at the elasticity of soda consumption to soft drink taxes. When I saw that John had received the grant, I knew he had to be up to something really interesting, so I dropped him a note asking about it. He told me that a lot of current estimates of the effects of taxes on consumption are confounded by that we use data on total spending as a proxy for consumption, and where consumers can substitute down a price/quality ladder with an excise hike, total consumption may be rather more inelastic than we might have estimated from data based on a consumer's change in spending after a tax: what can look like a drop in spending after a tax hike could be a maintenance of ex ante consumption at a lower price point. Interesting stuff indeed. I hadn't blogged on it yet due to the busy. I wish I had hit it earlier now that I see Whale went after John.

I supposed Whale guessed from the project title that this would be another publicly funded attack on consumer freedom. John's project isn't that, as John later explained in a "right of reply" post. Good on Whale for posting it.

Friday, 14 November 2014

Police lobbying

Wellington Council's under fire for having consulted with bars when they were setting the Local Alcohol Policy.
Police are calling foul over a deal they say was struck between Wellington City Council and Hospitality NZ to allow the capital's bars to stay open later.
Internal council emails - obtained through court records this week - show many of the final details of the city's local alcohol plan were hammered out in a closed meeting with bar owners before it was opened to public submissions.
They also show the council and Mayor Celia Wade-Brown were in regular contact with local Hospitality NZ president Jeremy Smith, including consulting him on strategies for avoiding Government-imposed closing times.
The council has said it treated all "stakeholders" equally, and it also held meetings with police before the policy went out for public submissions.
It is understood police are upset about the industry's involvement in forming the proposed rules. During a hearing on the policy last week, a police lawyer said the council pushed a "deal" with the hospitality industry before the public had their say.
So do the Police reckon that nobody should be consulted in developing Local Alcohol Policies? Let's look back to Dunedin:
Much of the Dunedin City Council's plan seems to stem from the police, which proposed a range of bans from midnight including that on liquor shots.
Wellington's process seemed pretty inclusive.

Greg O'Connor notes that the move to local alcohol policies would enable more local lobbying from the Hospitality Association; I disagree with him on the net effect here. On alcohol, you have producer lobbies, bars, the Hospitality Association, retailers (supermarkets and bottle shops), local anti-alcohol activists, national health lobbyists, national anti-alcohol activists, local doctors, local police and the national police structure.

When policy is set nationally, the big producers can focus on one place: Wellington. It downweights the influence both of local pubs and retailers and of local anti-alcohol activists, but increases the influence of national-level lobby groups both for and against. It's harder for both local bars and for local activists to front at select committee hearings.

When it's set locally, it's harder for the large national lobby groups to hit all the different local policies; they'd instead only bother with the big cities or smaller ones that might form test-cases, unless they have unlimited resources to present at each local body. That downweights the producer lobbies, increases the influence of local retailers and bars, increases the influence of local anti-alcohol activists, reduces the influence of national health lobbyists except to the extent that they are called as police expert witnesses, increases the influence of local doctors and local police, and increases the influence of national police relative to national producer lobbies as the national-level policing lobby will back up their local officers.

On net, I think that tips things in favour of the pro-restriction side rather than the anti-restriction side. On evidence, that most Councils have pushed for earlier closing times than the national default also suggests that the antis have gained rather than lost influence.

That Wellington has considered things other than just what Police want doesn't really change that.

Disclosure: I was expert witness for the Hospitality Association on the effects of bar closing times.

Neighbourhood externalities

Adam Gurri provides a moral challenge to Paretean welfare economics.
All this only works if you think one preference is just as good as another, and maximizing preferences is a wonderful goal for a moral philosophy. I, for one, think that this is a terrible goal for morality, especially taken in isolation.
My favorite example of this model’s utter failure to provide a sufficient moral compass comes from the play A Raisin in the Sun. In it, an African-American family seeks to move to a predominantly white, affluent suburban neighborhood. You can probably guess where this is going: the people who already lived there did not want this family as their neighbors. From an economics point of view, the family was imposing an externality on their racist neighbors. What’s more, the real historical phenomenon of “white flight” in such cases actually reduced demand for housing in the neighborhoods that were being fled. As a result, the housing prices fell in the neighborhoods that African-Americans moved into, making the existence of a formally-defined externality undeniable.
I challenge the committed Pigovian to explain to me how this is anything other than a clear-cut externality, and how they can avoid the conclusion that their model would have them impose a tax on the African-American family. Moreover, libertarians aren’t in a much better position, morally. In A Raisin in the Sun, we get to see an actual Coasian bargain in action—-the white neighbors pool their resources to offer to buy out the African-American family from the house. Without spoiling the plot, I can’t say that the fact that this is a voluntary bargain inclines me to believe that the preference of the bargainers are on equal moral footing.
The philosophy of maximizing preferences does not distinguish between the family seeking the opportunity to rise above their circumstances and the racists who hate them.
While I'm more than happy to condemn the racist neighbours, I don't think the example provides that strong a case against standard economics.

The baseline is liberal: the African-American family is able to buy the house. The neighbours haven't been able to appeal to some notion of "neighbourhood character" to ban them from moving next door. Despite potentially high transactions costs, the neighbours were able to buy them out, indicating that their actual willingness to pay to be horrible racists was pretty high.

Gurri suggests that the main policy conclusion would be "tax the African-American" family; Coase reminds us that Pigovean externality-taxation solutions are not the only way of enabling Paretean welfare economics, and that the direction of the externality is always a bit up for debate. We could equally note the substantial negative externality the racists place on the incoming family and tax them for it. And in this case the Coasean solution obtained without any policy imposition: the neighbours bought out the incoming family.

I haven't read the play, but based only on the snippet above, I'd have written a Sylvester McMonkey McBean style conclusion: the outgoing family would tell their friends about these crazy racists who are willing to buy you out, at a premium, if you buy a house in their neighbourhood. Eventually, the entrepreneurs would drain the racists of any continued ability to pay for racism.

And while I'll agree with Gurri that any of us coming from particular philosophical perspectives will have sets of preferences that they view as better than others' preferences, having something other than a Paretean set-up for policy requires picking winners among competing values. Even leaving aside the substantial problems Cowen points to in his chapter on non-Paretean welfare standards, we have another simpler, but important, issue. In the play, the neighbours had to demonstrate a real willingness to pay for racism.

In the alternative, in which we move away from Paretean welfare economics, we need some voting apparatus to overturn willingness-to-pay and choice as basis for assessing whether a move has improved welfare. And racism is cheaper at the ballot-box than it is in the real world. It is far easier to imagine neighbourhoods being willing to vote for measures that would ban particular types of people from being able to buy houses, or lodging objections on notified consents, than it is to imagine their actually being willing to buy those people out. If actual willingness to pay is less than the amount necessary to change the outcome, then the externality is not Pareto-relevant.

I'd written on psychic externalities a few years ago:
I'm reminded of Jennifer Roback's work showing how southern racists were able to achieve at the ballot box segregation outcomes they were unable to achieve in the market. To recap: racist southern whites wanted segregated streetcars. But it was too expensive for the streetcar companies to run segregated cars: the increased ticket revenues from white racists didn't compensate sufficiently for lost black custom and, especially, increased running costs. White racists effectively weren't willing to pay enough for tickets to segregated streetcars, so the market didn't provide them. But casting a racist ballot is individually costless. And so streetcar segregation was mandated through regulation.

When I see folks going to the ballot box to enforce their preferences over other peoples' activities, my general presumption is that transactions costs isn't what's keeping meddlers from seeking less coercive options. The ballot box is just cheaper when a majority has weakly meddlesome preferences, regardless of efficiency.
Where illiberal preferences are weakly but broadly held, overturning the results of voluntary choice through use of a non-Paretean framework risks intervening to address externalities that are not Pareto-relevant, with greater illiberalism as result. If, on the other hand, illiberal preferences were very strongly held among a very well-heeled minority, results could flip.

Thursday, 13 November 2014

Closing time

The University of Otago's public health department has been pretty prominent in pushing for tighter alcohol regulations in New Zealand. But it's a little surprising that the University there would let that group near anything that might matter, like student enrolment figures.

Here's The Wireless on Dunedin's proposed Local Alcohol Policy.
However, [unlike the Students' Association] the University of Otago supports all the council's suggestions. It goes further in places, including to suggest that all alcohol sales in Dunedin should end at 2am.
Much of the Dunedin City Council's plan seems to stem from the police, which proposed a range of bans from midnight including that on liquor shots.
But all this has spurred a big reaction from local bar owners, who believe bars will be driven out of business, especially the student haunts. About three-quarters of the nearly 4300 submissions are against the alcohol plan - more than in any other city so far.
Only about 13 per cent of submitters support it.
Inner-city bar owner Richard Newcombe said that is because the council hasn’t done its homework.
The contrast with Wellington is interesting: here, Council has proposed a 5 am closing time - an hour later than the default 4 am time that obtains in the absence of a specified local closing time. I love that I've moved to one of New Zealand's more liberal cities, even if my bedtime tends to be much earlier than either of those times.

In Dunedin, it looks like the Police are pushing most of the restrictions, and that Council just gave the Police what they asked for. The Police also have objected to Wellington Council's more liberal regime. I served as expert witness for the Hospitality Association in Wellington, reviewing and assessing the literature around the effects of pub closing times; I'll blog more on that when Wellington's LAP decision comes out.

It will be interesting to watch whether the LAPs have any effect on student numbers across the different Universities.

Wednesday, 12 November 2014

Mandatory voting remains a bad idea

Andrew Coyne thinks voting should be mandatory in Canada*; Dylan Matthews makes a similar argument for America.

The best argument for compulsory voting, Coyne's, is that it could shift politicians away from campaigns based on getting out the vote: if everyone has to vote, then GOTV matters less, as does playing to the party's base.

While that's one notch in favour of compulsory voting, there are a few considerations against it that might give us pause.

Blood donation is almost entirely a public good. Were we to implement a mandatory blood donation regime, we would have to couple it with a tick-box allowing "donors" to indicate that their blood probably shouldn't be used or at least should undergo heavier screening: a Hepatitis B patient's blood probably shouldn't enter into general circulation.

But nobody seems to worry much about the quality of a compelled vote. They should.

Jason Brennan makes a pretty convincing argument that while none of us have a positive duty to vote, those choosing to vote have a duty to vote well: to weigh seriously whether the policies offered up by the different parties would achieve the ends that the voter wishes and that the trade-offs are worthwhile, in the voter's estimation. While few voters meet that duty, things are even worse among current non-voters: non-voters, on average, aren't made up of rational calculators and conscientious objectors like me; most non-voters instead have little political knowledge and little intention of acquiring any. And forcing them to vote does not encourage them to acquire more information.

I'll offer instead a compromise position: make voting compulsory, but also implement a simple quiz at the ballot box. Voters would need to be able to match parties with their main supported policies. They'd also be quizzed on a few basics, like which parties formed the prior government, whether crime rates increased or decreased over the prior administration, whether income inequality has been increasing or decreasing, whether most climate scientists agree that the planet has been warming, and order-of-magnitude level quizzes on the composition of the budget. The quiz questions would vary election to election but would hit on the baseline matters necessary for understanding the policy issues at stake in that year's election. Everyone's vote counts for at least 1, but we could award bonus votes for voting well. Everyone would have the opportunity to vote well: Elections NZ would put up the 50-or-so quiz questions and their answers; each voter might get a random draw of 10 at the ballot box. Those compelled to vote but unable to vote well would have less opportunity to do harm to their own interests with their vote. I won't go all the way to nudge-based voting, but we could at least avoid some harm with this version.

Think of the incentive effects. GOTV campaigns would be focused on informing supporters about basic facts so that the party's supporters' votes might count for more.

I could support compulsory voting if it came with this kind of mechanism. Or we could keep things voluntary.


* And see his prior similar argument here.

An end-run around film parallel imports?

I've been annoyed about New Zealand's film classification regime for a while. I hadn't considered the copyright and licensing angle on it.

Recall that New Zealand generally runs a free parallel importation regime. If some brand wishes to enter into restrictive licensing arrangements for retail distribution, the New Zealand government generally sees no reason that it should go about enforcing those deals where they restrict Kiwis' access to imports. So if some retailer is the only officially licensed supplier of a brand of shoes, The Warehouse can still import a container load of them for sale in their stores. The producer can punish the wholesaler who sold the the shoes to The Warehouse, but there's no recourse in the New Zealand courts. Parallel importation is legal. There is a carve-out in which you cannot parallel import films for nine months after the films' first release anywhere in the world, to give some time for the theatres to have a go, but otherwise things are open. Here's MED's FAQ.

Now recall further that the folks with local distribution rights are mightily annoyed with parallel importation. And the film distribution companies that sell rights to Netflix prefer being able to engage in pretty serious geographical market segmentation. Where Kiwis can pretend to be American through use of ISP global modes, or Hola!, or any of the various other VPN arrangements, geographic market segmentation breaks down.

New Zealand's censorship regime then gives an end-run around parallel importation: you can't legally import a film that hasn't been classified here and you can't distribute one that doesn't have the New Zealand film classification. Having the US one isn't good enough. Where some NZ ISPs advertise a global mode that facilitates subscribing to Netflix, the Censor's Office reckons they're complicit in helping the importation of films that haven't been rated. I would have thought that 122 (3)(b) and 122 (4)(b) meant that ISPs couldn't be liable, but I'm not a lawyer.

And so it's all rather interesting that The Film and Video Labelling Body has weighed in on the Censor's Office's legal run against Slingshot and Orcon.
The Film and Video Labelling Body, an incorporated society whose members include the likes of Sony, Universal, Paramount, Spark and The Warehouse, does most of the legwork involved in issuing labels to non-R-rated films.

Operations manager Sharon Rhodes said it expressed concern to the Office of Film and Literature Classification about online services bypassing the New Zealand labelling system early this year, but had not specifically mentioned Slingshot or GlobalMode.

Spark, which launched online television service Lightbox in September, had raised concerns with the labelling body last year, she said. "I brought it up at our annual meeting in May and members were pleased to see it was something we were looking into."

Rhodes said she agreed with the chief censor's view that Slingshot had breached the Films, Videos and Publications Classification Act by offering GlobalMode as a means for New Zealanders to access services such as Netflix.
The cleanest solution? Fix the law so that a New Zealand classification is no longer required. Require instead that films carry the rating of any country's classification office from some list of countries whose classification decisions generally seem to make sense, or that tend to correlate strongly with New Zealand's prior decisions. It makes no kind of sense that a small country should re-classify every movie for the New Zealand market; we should be relying on others' work here.