Wednesday , October 27 2021
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Articles by Eric Crampton

Core business for a central bank

2 days ago

Inflation hit 2.2% in the most recent quarter. Not the annual rate – the rate for the quarter. Arguably, Reserve Banks shouldn’t be making statements about inflation outside of the scheduled monetary policy schedule. But it seemed a bit odd that the Bank put out a release on establishing the Māori Bankers Rōpū to coincide with the release of the inflation statistics. 
They came out within minutes of each other, as though the Bank were saying "Yes, the CPI numbers are out today, but here’s what we’re really interested in." Today the Bank released its Climate Change report.New Zealand has an Emissions Trading Scheme that caps net emissions.
The ETS is nowhere mentioned in the report. The Executive Summary tells us that "Climate Change is part of our core business". It simultaneously tells

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The Frank Tay Scholarship

2 days ago

Frank was retiring as I joined the Economics Department at Canterbury in 2003. He’d still visit the Department for seminars and to catch up with colleagues. His article in the inaugural issue of NZ Economics Papers set the tone for the next several decades of excellence at Canterbury: professional training in economics requires at least an Honours qualification, with appropriate rigor all the way through. Alfred Guender had an excellent interview with Frank a few years back. He’s since launched a memorial scholarship, to support post-graduate study. Details below, from the email Alfred sent through to me. A few months ago I sent a letter to friends, former colleagues, and former
students of Frank Tay to inform them about a fund-raising effort to establish a
scholarship in his name for a

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Held to ransom by the unvaccinated

9 days ago

It is not a pleasant calculus.New Zealand apparently really only has 186 fully staffed ICU beds. The rest is potential surge capacity with staff who’ve had only short bootcamp training. Vaccinated people can still catch Covid, but they’re very unlikely to wind up in ICU. Alberta’s population is a bit smaller than New Zealand’s: 4.4m to our 5.1m. They put up all their vaccine outcome stats, from their very large ongoing outbreak.Just look at the numbers here. Let’s imagine everyone were fully vaccinated. First off, if that happened, the number of vaccinated people winding up in ICU would drop considerably, because fewer vaccinated people would catch Covid, because there would be fewer cases around transmitting it. But even if you held cases constant, you’d have ICU admission rates, even

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Morning roundup

10 days ago

The morning’s worthies:Dileepa Fonseca still on target on Covid testing. Supply shortages in construction as far as the eye can see (Newsroom, $). All of the Covid messes are running up against a sector that geared up for the amount of construction that had been allowed (not much) and that has to expand as Auckland allows more growth and as the NPS-UD starts kicking in (though there is much yet to do in enabling growth – see the last bullet). Employer vaccine mandates remain a legal mess that needs to be sorted out (Newsroom, $). Can an employer mandate vaccination? "It depends" isn’t good enough.Me, in the Stuff papers, on the interim report of the latest local government review. This one’s a slow burn: it’s got well over a year to go. But they’re asking some good questions. I’ll be in

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No accountability in Covid-land

14 days ago

Dileepa Fonseca has more on the latest installment of the Rako saga.I know I’ve been going on about this since last December. But it really matters. If you can’t get accurate test results quickly back to people in a pandemic, you’re always going to be well behind the curve. Contact tracing is a mess of too-little capacity. Pinning down cases quickly makes that job easier. Fast results, and especially if collection is unobtrusive, reduces test hesitancy. If you have to self-isolate for days on waiting for a result, and getting a test is inconvenient and a bit painful, you’ll be less likely to go do it for a sniffle than if you just have to drool in a spoon and get results same day (or overnight if it was later in the day). And the government has absolutely messed this up. Rako had offered

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Morning roundup

14 days ago

Ok. It’s down to one Chrome sheet. The worthies!Wokeness as Saddam statues. Great story on how Saddam Hussein might not have even wanted all those statues of him, but lower-level officials would ramp themselves up in demonstrating allegiance. The mechanism does go back a distance; Mark Twain described a similar one back in Connecticut Yankee.Months ago, we’d called for just giving residence to everyone who’s been here since the March 2020 lockdown. The government’s alternative misses a few who should have received residence, including people who had to flip to short-term visas while here. The Government’s big emission plan is more than a little disappointing. Remember how Rod Carr said it wasn’t his job to think about whether any of his measures passed any kind of cost-benefit, because

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Sellotape IT systems and covid testing

14 days ago

I’d struggled to understand why the government would be blocking Rako’s access to the Covid test tracking system. Surely, even if they hated Rako, they’d want to get results reported in for their own tracking purposes. Dileepa Fonseka has a potential explanation. The IT systems, like most government IT systems, are a disaster.The Government is struggling to meet its existing border worker testing obligations, allegedly thanks to IT systems “held together by sellotape”.There have been growing calls for border workers to be tested more frequently than once a week in response to the more infectious Delta strain of Covid-19. Yet a recent move to saliva testing has highlighted a significant IT issue standing in the way of more frequent testing….The problem was exposed during the saliva

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Morning roundup

15 days ago

There are 5 different Chrome windows, each chocka. I can’t do every bit justice. So, a roundup while I try closing maybe 2 of them.Superb news. Finally. The government is starting to be a bit more flexible about safe alternatives to MIQ. I like how Australia still thinks big. Here’s Stephen Kirchner making the case for a large increase in immigration.There’s a claim that carbon farming, via forest sequestration, starts being costly after a century. I’m still not convinced. If carbon prices are high enough that people can’t cut down trees at that point, they may be high enough to warrant digging a giant hole, sticking the cut trees into the hole, covering it up, sticking a pipe in for methane recovery, and replanting it. Maybe there’s some price range where carbon isn’t valuable enough to

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Google and the provision of public goods

15 days ago

Anything that makes the Android operating system more valuable to users is good for Google. More people taking up the Android platform means more people in the Google universe, using their apps, seeing the ads that they sell. They have rather decent inventive to do awesome things for the platform.Yesterday, about 2.55pm, I got a push notification on my phone. It made a sound I’d never heard before. I looked over and it noted that there’d been an earthquake, estimated magnitude 5.6, about 100 kilometers away off shore. I’m going from memory here as I didn’t screenshot it. By the time I remembered that Google had added earthquake warning functionality into the Android OS, and remembered David Hood’s skepticism about it, the room started shaking. Somewhere between 3 and 10 seconds. I should

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Contact details

15 days ago

It seemed really obvious, really early, that robust privacy protections were needed around Covid sign-ins. If even some people expect, entirely unreasonably, that there’s any chance that police could subpoena that data, then it needs to be bright-line illegal for anyone to hand that data over to police. The government can insist all it wants that the police wouldn’t do that, but people who don’t inherently trust police to do the right thing would rightly insist on stronger protection than that, and especially when Australian police have been up to dodgy stuff.The people who you most need to be checking in for contact tracing are the ones who are nervous about the thing, because they may be in the cohorts you’re going to have a hard time tracking down otherwise.Newsroom’s Sam Sachdeva says

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Further, on taking tests

16 days ago

On Monday, I managed to get a submission in on the Government’s awful proposal to give itself the power to requisition tests and testing materials. Was a bit of a rush job, but it’s a bit of a rushed legislative process. I hadn’t known about it much before a hasty blog post on it on Friday. The submission alludes to a few problems in giving the Ministry of Health authority to set quality standards for testing, which the legislation also does, in addition to letting the Ministry take Rako’s tests. My column at Newsroom, written after the submission, also goes through the problems. Currently gated. [Update: ungated]A snippet:If the Government wanted more testing capacity, it could have contracted for that capacity. And it still could. But over the past year, the ministry has repeatedly

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Taking tests

20 days ago

The least-bad potential explanation for what the government is up to, in its rushed legislation that would give it the power to expropriate Rako Science’s testing setup, runs as follows.Suppose that, as Director General of Health, or the Minister of Health (who knows where this came from), you finally FINALLY figured out that most of your advisors on saliva-based testing are, in fact, utter idiots. They have led you astray for almost a year. All that stuff about saliva PCR testing not being that reliable was wrong, even if DG Health announced it as truth from the podium of truth. It’s just that your idiot advisors couldn’t figure out how to make it work themselves so spent the past year trash-talking it. And suppose you also figured out that there really only is one game in town if you

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The cost of xenophobia

September 2, 2021

Radio New Zealand has been tallying the numbers on health workers stuck in our immigration system. New Zealand relies heavily on foreign medical specialists.Expressions of interest from skilled migrants for residence visas have been paused since March last year.Hundreds of doctors and nurses are among those waiting for news.The association said the current approach created frustration and angst. It raised concerns about the residence delays in June, writing to the Immigration Minister Kris Faafoi.But its executive director, Sarah Dalton, said there had been "zero response"."Overseas doctors caught up in this delay say the uncertainty makes it difficult," she said "They feel they can’t buy a house, settle their families, or put down roots, and are being forced to reconsider their futures

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Test test test

September 2, 2021

This week’s Newsroom column made the case for freeing up rapid antigen testing for use at essential workplaces during outbreaks and Level 3/4 restrictions. There’s something like half a million essential workers and perhaps a hundred thousand in Auckland. The government maintains no register of them, and it would be impossible to run daily testing of a hundred thousand essential workers during Level 4 through current testing systems anyway. The PCR swab regime has been buckling under demand and is providing very slow results. Saliva-based PCR testing is far better and far more scalable, but may not be able to get to a hundred thousand tests a day – and may not be cost-effective for broad surveillance testing in lower-risk essential workplaces.Rapid antigen tests give results in about

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Afternoon roundup

August 27, 2021

It’s been a busy week of lockdown. On Monday, we released my report looking at cap-and-trade solutions for freshwater quality. Yesterday, Matt and I sent in our submission on the Commerce Commission’s inquiry into supermarket competition. Don’t think the computer’s shut down this week. The browser tabs….It’s a shame that rapid antigen tests are illegal in NZ. They aren’t nearly as accurate as PCR. But when people are waiting six days for a test result and, in some cases, trying to run at-home isolation from the rest of the family during that period, having rapid antigen testing as a complement would be really good. RNZ reported on nurses living with close contacts being told to turn up for work even where those contacts’ results hadn’t come in yet. We could have had rapid antigen tests

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Lockdown accountability

August 22, 2021

Newsroom provides an excellent we-told-you-so this morning. Here’s Jo Moir:While the source of the Delta outbreak that plummeted New Zealand into a Level 4 lockdown is all but confirmed, how it got into the community is a work in progress.Investigations are now homing in on a public walkway that shares the same airspace as the exercise area at the Crowne Plaza managed isolation facility.In July Newsroom raised the issue of the public thoroughfare, which is the only access to a busy office block in downtown Auckland and requires passing directly beside the exercise yard via an un-roofed walkway.The photo shows the obvious problem. The ‘outdoor’ area is anything but. It’s enclosed on so many sides that you’d probably not be able to run it as an outdoor smoking area if you were a pub:

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Police safety

August 19, 2021

The police union regularly asks to be armed. A few years ago, I included a chapter on our unarmed constabulary in a piece arguing that New Zealand really is the Outside of the Asylum. Policing in New Zealand is, all things considered, safe – even without firearms. Auckland University of Technology criminologist John Buttle tallied the figures for 2008–09, a high point in assaults against police. He found police reported being assaulted 2,481 times that year – out of 1,221,823 incidents attended by police. In the 123 years from 1886 to 2009, 29 officers were killed by a criminal act in the line of duty.If loss of life at work is a measure of how dangerous an occupation is, then policing comes quite far down the list of hazardous jobs. This raises the distinct possibility that it is more

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Vaccines for children

August 19, 2021

Good news! Cabinet has decided to end its prohibition on vaccinating children aged twelve and up. From 1 September, parents will no longer be banned from protecting their children against Covid. At least if their children are at least 12 years old. The Prime Minister framed it at the press conference as a difficult decision, because they’re talking about other people’s children.But they’ve shown absolutely no similar concern about banning parents from vaccinating their children. I could understand her framing it as she did if she were talking about mandating vaccination for children. And I can see a very good case for mandating vaccination. But that isn’t what she was talking about. She was talking about removing a prohibition that currently prevents parents from getting their kids

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MIQ’s Aristocracy of Pull

August 18, 2021

This week’s column at Newsroom went through the problems in allocating MIQ spaces by political pull. Unfortunately, Newsroom’s version strips out the links; the version on our site has them. A snippet:The surest way to a space in MIQ, for the past sixteen months, has been political influence. Those with political influence get spaces. Those without it are forced into a broken room booking system. Getting a room through that broken system seems to be a full-time job all on its own: some would-be travellers have even hired people to sit at a computer and hit the refresh button, all day long, on their behalf.But for those with political pull, things are a bit easier.Last August, in the leadup to an election, the Provincial Growth Fund considered horse racing tracks to be vitally important

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Dunedin lessons for the Christchurch Stadium

August 17, 2021

Newsroom put up a superb piece last week on all of the messes that Dunedin got itself into by spending stupid amounts of money on a stadium. I knew it was bad but hadn’t known it was this bad. It was "Let’s divert money from the CCO that runs the local lines company, deferring maintenance and leading to outages" bad. The judgment reads: “Aurora accepts it failed to exercise the skill, diligence, prudence and foresight to be reasonably expected.”Between 2010 and 2016, Aurora failed, “without adequate justication”, to spend $37 million of forecast expenditure replacing and renewing assets. This led to a significant proportion of network assets “being at or near the end of their lives”, the judgment said.The timing of this scandalous neglect was no coincidence, says whistleblower Richard

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Lunches

August 17, 2021

Well, we’re very likely to be heading into another lockdown on the basis of a community case in Auckland.Back in July, we found that the government had blown a pile of the emergency Covid money on the free school lunch programme. The free school lunches programme draws on special Covid recovery funds for another two and a half years, despite Treasury’s misgivings about depleting the emergency money reserved against a resurgence of the virus.The Covid-19 Relief and Recovery fund (CRRF) is a $50 billion pot of money that was established in the early days of the pandemic to respond to the health emergency and its economic fallout.It’s been tapped for a wide range of Covid-19 related expenses, but the Government has also used it for a range of increasingly tangential "Covid recovery"

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Dosed

August 15, 2021

Driving home from Palmerston North last night around 6pm, a man was waiving a Covid-19 Vaccination Centre banner on the median of the road outside of the Onslow Medical Centre. We rolled down the window. They had end-day extra doses and wanted to get them into arms.So the cats had to wait an extra half-hour for their dinners, and we got dosed. All went very smoothly. On checking in, I offered my NHI number but they didn’t need it – they pulled it from name and date of birth.About five minutes later Susan and I got jabbed. They wouldn’t jab the kids, unfortunately. While MedSafe has approved the vaccine for those aged 12+, there is currently no way in New Zealand for a 13-year-old to be vaccinated. And the 11-year-old certainly isn’t allowed, though I’d have very happily given her my

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Covid costs and quarantine costs

August 13, 2021

I don’t like New Zealand’s film subsidy regime and generally view it to be a good thing when an international film company chooses someone else’s subsidy regime instead.But it looks like Amazon’s shifting Lord of the Rings production to the UK isn’t just about the subsidy war. However, a crew member, who asked to remain anonymous, told Stuff they understood New Zealand’s Covid-19 border restrictions and the requirement that international cast and crew spend 14 days in managed isolation upon arrival was part of the problem….The crew member told Stuff that while there was “a general feeling of surprise” over the decision, some saw the Amazon project leaving New Zealand as an opportunity, because Amazon was holding up some of Auckland’s prime studio space for a year before season two was

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Vaccination class

August 11, 2021

If, as the Skegg report suggests:A Delta outbreak is not unlikely before the vaccine rollout completes;Border restrictions will start easing when the adult vaccination programme reaches completion, but under an aggressive containment model that will push hard to knock out any outbreaks that we do get; and,"The
degree of community protection will be increased if eligibility for vaccination is
extended to people between 12 and 16 years of age"then why aren’t we aggressively pushing vaccination for 12-16 year olds before the end of the school year? MedSafe approved it for that group back in June. Government’s said nothing about where those kids sit in the rollout. Right now, kids are in classrooms. They will be until December. Classrooms are risky: tightly packed enclosed spaces with poor

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Afternoon roundup

August 9, 2021

The afternoon’s closing of the browser tabs:Tons of port workers have been avoiding getting vaccinated. In principle this should have been simple: have public health nurses drive out to the sites and administer it. But it’s not been compulsory, antivax stuff has been influential among those workers, and they’re probably (and rightly) pissed off with the regular nasal swab test requirements that could have been replaced by saliva testing over seven months ago – which would feed into a strong ‘not gonna do whatcha told me’ attitude. More results are out on the effectiveness of the Illinois protocol saliva tests – the one that the government doesn’t want to use. And, just for fun, a plague ship berthed at Taranaki, where port worker vaccination rates are low. Let’s hope we keep getting

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Reader mailbag: electricity edition

August 8, 2021

An informed reader provided a heads-up about problems in a recent daft Dom Post piece on power markets. Our reader writes:What
a great idea! Let’s set up a government agency to pay existing suppliers of
electricity what the agency believes to be their SRMC plus depreciated historic
construction costs and to sell power to all retailers at what it pays. It’s
such a good idea, why not apply this in other markets and have government
agencies determine all prices? What could go wrong?Max
Bradford’s main role was to force the separation of retailing electricity and
generation from owning lines. He had nothing to do with designing the market in
the 1990s. The Ministers during the time the market was designed were John
Luxton and Doug Kidd. The market started operating on 1 October 1996.

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Something always allocates

August 4, 2021

Scarcity is a fact of the world. When demand for something scarce exceeds the supply of it, something has to allocate scarce resources across competing uses. The nice thing about using the price system to allocate scarce resources is that it provides incentives on all sides. On the demand side, it encourages those whose effective demand is relatively low to find other ways of meeting their needs. On the supply side, it encourages more production of scarce things that are highly valued. If your main objection to all of that is that poorer people can be outbid for those resources, the main way we have of handling that in modern liberal democratic states is by taking money from richer people and giving it to poorer people.  New Zealand’s MIQ system does not work that way. Capacity in the

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Economists on immigration

August 2, 2021

What would help boost wages in Australia? An Australian panel of economists evaluated some options. Boosting productivity growth and business investment are supported. The rest of the options are not. And less than 10% of surveyed economists support cutting immigration as a way to increase wages. Michael Keane of The University of NSW said the idea that population growth and increased labour supply were constraining wage growth was “so naive as to not really be worthy of comment”.Consultant Rana Roy said only a “cultivated amnesia” could ignore the near-uninterrupted growth in real wages in US, industrialised Europe and Australia amid record inbound immigration in the decades after the second world war.Gabriela D’Souza of the Committee for Economic Development of Australia said the idea

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Broken bookings

August 1, 2021

Cameron Conradie has been keeping a close eye on how the MIQ booking system works, or doesn’t. MIQ doesn’t have nearly enough spaces to meet demand, and has been running well below capacity because the booking system doesn’t work. Despite the reduction in operational capacity by 500 rooms, based on available data, the average occupancy for April was 67.4% (note a number of day’s data were not published), 57.1% for May, 67.1% for June and 71.1% for the first half (1-15) of July. This is taking occupied rooms against the advertised operational capacity.By taking rooms actually occupied against full advertised operational capacity, and assuming a 14 day turn-around, I calculate that more than 13000 vouchers were not used/not issued since the beginning of this year. Each of those unused rooms

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Give them residence

July 30, 2021

Apologise, then make it right.Oliver Hartwich makes the case for granting residence to those non-residents who have been in New Zealand through last March’s lockdown and who have stuck with us since then. A few days ago, the Otaki Medical Centre posted about one of their doctors on Facebook: “We’re disappointed to have lost Dr Richards back to the UK after being unable to secure him and his family residency due to a Government freeze in place with COVID-19,” the GP practice wrote.“Here is an amazing doctor, who cares about our community and wanted to make NZ home. Sadly – after months of fighting – we have had to close the practice to new patients.”Dr Richards is one of many migrants affected by the government’s restrictive and inflexible residence policies. According to a Newshub report,

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