He’s got a little list

17/04/2013 § 1 Comment

Nothing to say this morning and no time to say it. Instead, here’s some light entertainment opera to help you through your Hump Day. Gilbert and Sullivan, updated and Down Under.

Oh, and it probably needs a hashtag: #firstworldproblems.

Let’s get the taxes right

13/03/2013 § 6 Comments

The ‘fury’ at the suggestion of applying fringe benefit taxes (FBT) to carparks is utterly misplaced. The only proof I need of this is that ‘Unionists and business groups have joined forces in a rare alliance to lash out at the new tax’. What better indication that this new tax is being applied even-handedly?

It’s about time, too. I have to pay, every day, to park my car in a commercial parking lot. Part of my salary — my compensation for the time I’m in the office — goes to paying for that carpark. People who don’t have to pay for their carparks are getting tax-free benefits, and that’s not cricket.

I can only hope that the Government doesn’t lose the courage of its convictions. This effort should be extended to all the little perks and compensations given people in lieu of money.

Take those cellphones and laptop computers that employees get for free. Sure, during the week they might need a cellphone to keep in touch with the office or with clients. But after hours? That cellphone is still in use, receiving texts about completely personal dinner parties, making calls about entirely private gossip. And the laptops? They are getting into Facespace and Youtelly not just during office hours but also on the weekends.

The technology is there to shut down this rort of the tax system. All that’s needed is an app to disable devices outside of business hours. Then, those electronic toys would be completely tax-compliant. If the international IT cabal won’t do it, the Government needs to step in and take its rightful share.

The Government can’t stop there, either. From my office, I can see any number of buildings with stunning views of the Wellington harbour. The sun sparkling on the early-morning ripples, the picturesque hills — those views aren’t available to everyone. Some workers are clearly receiving much more of these benefits from their offices than others. It’s about time the Treasury sorted out some non-market valuation studies of the amenity value of offices and made sure that those perks are properly taxed.

In fact, it isn’t just the views and the sunshine. Some workers get more floor space, larger desks, nicer office coffee. What we really need is a ‘defined office package excess’ (DOPE) tax. The Government can set minimum standards for office workers, and any provision of amenities in excess of that minimum gets taxed. Once the process is in place for the Auckland and Wellington CBDs, it can be rolled out to other localities and other types of workplaces.

The most egregious evasion of taxes on benefits, though, is going to require collaborative intervention by economists and psychologists to tax properly. It is my understanding that some workers are receiving an additional benefit beyond their wages and salaries, cellphones, nice office surroundings, and the like. A tax system can be properly calibrated only if it contains a PFT — a Personal Fulfilment Tax.

Crowdsourcing translations

05/09/2012 § Leave a comment

Thousands of United States citizens live in New Zealand. Some have lived here for many years, decades, even. We have learned to understand the New Zild accent, or, should I say, the many accents of Godzone.

Nor are we disloyal to our country of origin. For many reasons, we choose to live here, but we are certainly willing to lend a hand to the folks back home in times of need.

Like, y’know, when you’re trying to understand the PM.

I get it, really, I do. The consonants are a bit mushy, the vowels are different, the delivery can be a bit clipped. But it’s not that difficult and you do get used to it.

Let me point out, too, that this is the internet age. We can all connect up and share our collective wisdom/capabilities. There are wikis for all sorts of things, and crowdsourcing ideas and financing is The Next Big Thing.

So, Madame Department of State, let me make a humble suggestion. Next time the wind gets in your microphone and you’re tempted to say that a New Zealand speaker is [inaudible] or [garbled], let us have a crack. Just post the audio or video and your draft transcript, and we’ll collectively work out a decent translation.

We’ll get you sorted. You’ll be sweet as.

Male success strategies

24/08/2012 § Leave a comment

With an increasing part of my work involving simulation modelling (I have a paper with Chris Schilling at the upcoming NZARES Conference), I’ve been paying more attention to the complexity/evolution literature. Origin of Wealth (Beinhocker, 2007) was a good introduction, but I’ve also just been browsing the lit and the web to pick up bits and pieces.

Then, the National Review publishes this mash letter. The American Prospect takes it down from a political perspective, but I can’t help thinking of it in evolutionary terms. Well, they started it, with their ‘conventional biological wisdom’. I don’t care about the candidates; I’m more interested in why this journo would write such a piece. I mean, admiring that someone is an alpha-male-ne-plus-ultra is, to me, the equivalent of admitting defeat. You’re admitting, ‘hey, he’s bigger and stronger than I am, and he’s going to get all the food and mates and I’m cool with that.’

That got me thinking about this journo’s own evolutionary strategy — what’s his angle? Searching around, I stumbled across this fabulous summary of male strategies from the lab of Dr Barry Sinervo at UC Santa Cruz. I ended up on the Wikipedia page for the common side-blotched lizard, which has a rock-paper-scissors arrangement. It has three kinds of males; each one has a strategy that dominates one other and is dominated by the third. The three types can be distinguished by their throat colours, leading Wikipedia to explain the strategies:

[They] can be summarized as “orange beats blue, blue beats yellow, and yellow beats orange”.

According to Dr Sinervo and Wikipedia, the proportions of lizard types are relatively steady over time, suggesting that each strategy is effective.

This takes me back to Kevin Williamson at the National Review. Maybe he’s got a strategy for survival, after all. He’s pumping up the big, testerone-laden orange-throated lizard, talking smack about the blue lizard. All the while, he’s got his own strategy: sneak in while no one’s paying attention.

You’ve got to watch out for those yellow lizards.

Let’s get health costs under control

01/08/2012 § 1 Comment

Cancer Society chief executive Dalton Kelly berated New Zealanders yesterday, telling them to take control of their personal behaviours to control the country’s health costs. Obesity, smoking, drinking, tanning — these behaviours are leading to cancer, heart disease, diabetes, and other costly diseases. We are all bearing the costs for the choices that a few people are making. As Kelly points out, these aren’t paid for by a magic money tree. They are covered by taxes on you and me.

But I think that Kelly doesn’t really have the courage of his convictions, or perhaps he doesn’t understand the extent of the problem. What we really need to do is get to the root of the problem. We need a radical solution to control future health care costs, and we need to focus on the source of the problem.

There is one choice that thousands of Kiwis selfishly make that burdens the rest of us. They knowingly saddle us with future costs — costs they themselves aren’t willing to bear. They need to stop, for the good of the community, the country, and the budget.

They need to stop having children.

Not all children, mind you. Some children are fine. They will grow to be strong, healthy adults who contribute more in taxes than they suck out of the system in health costs. Their taxes can be used for worthwhile projects like new stadia and roads of national significance.

But some Kiwis, knowing that they have weak genetics, knowing that grandpa had gout or great-grandma had high cholesterol, knowing about the weeks in hospital or months in hospice, still insist on reproducing. They produce weak-gened children who contribute to this country’s metastasising health system.

You know who you are. For the good of the country, you must stop.

200 economists walk into a bar…

22/06/2012 § 2 Comments

…but called it a conference so they could expense the drinks.

The classical economists said the drunkenness was the fault of the bar owner, because his supply had created their demand.

The Keynesians were depressed, and argued that the bar should offer free drinks in order to stimulate their consumption.

The Austrians declared that those still standing clearly had better drinking techniques than those who had fallen over.

The behaviouralists observed that people were using an unknown heuristic to link ‘bars’ with ‘drinking’ (and that it required further research).

The libertarians independently decided the optimal approach was to internalise as many externalities as their budget constraints allowed.

And Ben Bernanke told those assembled that a punch bowl may have been appropriate in a sake bar, but he certainly couldn’t provide one in the current circumstances.

The New Zealand Association of Economists is meeting 27-29 June in Palmerston North. I hope to see you there. If not, please check out the conference website and the papers deposited there.

Soundtrack for the budget

24/05/2012 § 2 Comments

I’m traveling today, so no post of any substance. However, I found myself thinking about this song on the way to the airport. It seemed appropriate for another zero budget day. Oh, and mildly NSFW — I guess I’m losing my ‘G’ rating.

Markets in Easter candy

05/04/2012 § Leave a comment

Easter is almost upon us, reminding me of my early lessons in endowments, preferences, and Pareto optimisation. I’m talking, of course, about trading Easter candy.

Now, parents have an impossible task. They can either give every child exactly the same endowment of candy (jelly beans, chocolate eggs, marshmallow chicks, etc.), or they can attempt to equalise the satisfaction of the children by matching endowments to known preferences.

I come from a big family. Easter morning, our baskets of candy would be waiting for us, delivered overnight by the Easter bunny. In a small family, it is possible to spend more time giving each child what they want. In a big family, everybody just needs to get in line and accept what they get.

So, we all had pretty much the same baskets. As a result, once the chocolate bunnies were eaten, we were each left with candy we didn’t particularly like. There was scope for Pareto improvement — each one of us could be better off and no one worse off by engaging in free trade. I was the only one who liked black jelly beans, so that was my ace in the hole. I was pretty much the monopsony buyer of black jelly beans. On the other hand, I don’t particularly care for marshmallow chicks, so I was happy to get rid of them. Also, as an older child, I had a bit of an advantage over my less experienced siblings.

Of course, candy is candy, even if it isn’t the best. Each piece still has a minimum sugar value. This sugar value functioned as a reserve price in the barter process.

What did I learn from all this?

  • heterogeneity of preferences can be a strong driver of trade
  • failures in initial endowments can be corrected through open markets
  • information is powerful — use it to your advantage
  • the trade price is indeterminate, so try to find your partner’s reserve price.

When I say that trades were Pareto improving, that’s a technical term. It doesn’t mean there weren’t arguments and even tears. But that’s all part of the information discovery process, right? And, as much as everyone was better off, I have to admit that I might have been a bit betterer off. What can I say? That’s what big brothers do.

Post-millennial Masters of the Universe

16/03/2012 § Leave a comment

They don’t make the Masters of the Universe like they used to. Y’know, the kind who’d kick ass and take names, who’d run down punk kids under the freeway, who didn’t whine about their feelings.

Now, they want not just money and power, but also ‘moral fiber’ and ‘culture’. Otherwise, they will stamp their feet and leave.

This is the best response. Darth Vader writes:

TODAY is my last day at the Empire.

After almost 12 years, first as a summer intern, then in the Death Star and now in London, I believe I have worked here long enough to understand the trajectory of its culture, its people and its massive, genocidal space machines. And I can honestly say that the environment now is as toxic and destructive as I have ever seen it.

I find myself longing for Leona ‘Only the little people pay taxes’ Helmsley.

(h/t Brad Delong)

Draghi’s Task Explained

07/02/2012 § Leave a comment

Setting: The European Central Bank

Story: Mario Draghi has finished telling an advisor his view of the current situation. The advisor replies, to the tune of “Pharaoh’s Dreams Explained” from Joseph and the Amazing Technicolour Dreamcoat (with apologies to Webber and Rice).

*

ADVISOR: Several years of economic boom we had

Stocks went up and housing didn’t look too bad

The pundit class, they said en masse

That moderation’s boss.

After that, the future didn’t look so bright

Greece’s debt collapsed completely overnight

And no one knew exactly who

Would have to bear the loss.

So, Draghi, there is no doubt

What this crisis is about

That the thing you really need to tackle

A common euro is a kind of shackle.

And I’m sure you did discuss

What you need in all this fuss

Is a plan to counteract the sinking

Based on robust economic thinking.

But what this plan could be I just don’t know….

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