Saturday, February 11, 2006

Unemployment rate

People are understandably skeptical about the reported unemployment rate. The rate is produced by the Household Labour Survey which interviews 15,000 households. Each quarter, an eighth of the total sample is replaced by new households. A couple of years ago our household was required to be part of the survey, so I have experienced the questioning firsthand.

The following is the official definition of an employed person;

Employed: All persons in the working-age population who during the reference week worked for one hour or more for pay or profit in the context of an employee/employer relationship or self-employment; or worked without pay for one hour or more in work which contributed directly to the operation of a farm, business or professional practice owned or operated by a relative; or had a job but were not at work due to: own illness or injury, personal or family responsibilities, bad weather or mechanical breakdown, direct involvement in an industrial dispute, or leave or holiday.

An unemployed person;
Unemployed: All persons in the working-age population who during the reference week were without a paid job, available for work and had either actively sought work in the past four weeks ending with the reference week, or had a new job to start within the next four weeks.

These two groups combined make up the Labour Force. The unemployment rate is the number of unemployed persons expressed as a percentage of the labour force.

Note then, people not actively seeking work are not counted as unemployed; people with family responsibilities doing unpaid housework and childcare, people attending educational institutions, retired, permanently unable to work due to physical or mental disabilities are not counted as unemployed.

So, we have this seeming conundrum between twelve percent of the working-age population being on a benefit when the unemployment rate is only 3.7 percent.

But it can be seen from the above that in countries with less generous benefit systems there will be fewer people in the group that is not counted eg without the DPB there would be fewer people not counted because they have family responsibilities.

So, although the HLFS is used in other countries we compare ourselves to, because social security systems vary so much, we are still comparing apples with oranges. Claiming to have the lowest unemployment rate in the OECD begs qualification.

Satellite spies

The British government has instructed council- tax inspectors to use satellite photography to find out if people have added extensions or developments to their properties, thereby adding value which should be taxed at a higher rate.

How low will they go......or high, as the case may be.

Water on the brain

Is there a better example of irrationality than the craze for bottled water?

The Earth Policy Institute of Washington says;

The global consumption of bottled water reached 154 billion liters (41 billion gallons) in 2004, up 57 percent from the 98 billion liters consumed five years earlier. Even in areas where tap water is safe to drink, demand for bottled water is increasing—producing unnecessary garbage and consuming vast quantities of energy. Although in the industrial world bottled water is often no healthier than tap water, it can cost up to 10,000 times more. At as much as $2.50 per liter ($10 per gallon), bottled water costs more than gasoline.

Friday, February 10, 2006

Can you teach an old horse new tricks?

No, like this.

Heading in the wrong direction

Roger Kerr, NZBR, assesses economic growth, freedom and outlook in this article;

"New Zealand greatly improved its rankings for economic freedom as a result of reforms that were implemented 10-15 years ago. Since then governments have lost their way. The 2006 rankings, just published by the Heritage Foundation in conjunction with the Wall Street Journal, saw New Zealand fall from 5th equal position in 2005 to 9th equal with Australia. Both government spending and taxation are continuing to surge. By 2010 government taxes and levies are projected to be $14,400 per capita, nearly 70 percent higher than the 2000 level of $8,500. A very large proportion – around 60% – of the ‘growth dividend’ is being appropriated by the government."

...and Super sanity

By contrast, here is what the Scotsman is saying about old-age pensions. Unfortunately the full article is premium content but you get the gist.

What is the truth about your pension?

THE vast majority of the population will find it virtually impossible to save enough money to maintain an average standard of living in retirement, The Scotsman can reveal.

Millions of people face old age on the breadline because plugging the pensions "black hole" is simply unaffordable - a fact that will have a hugely detrimental, direct...

Brash back to welfare

Good on Don Brash for putting the focus back on welfare.

National are pledging to "put some flesh" on the bones of welfare policy by 2008. Does that mean their 2005 policy was a bit thin? To be honest I wasn't paying that much attention. Once they dropped the idea of time-limits I lost interest.

Super silliness

A survey shows 88 percent of Kiwis believe the state should provide for their retirement. The capacity of the human mind to fly in the face of fact never ceases to surprise. But politics is about exploiting such shortcomings. Population projections show our 65+ group growing by 73 percent by 2051 - that's an extra 1,325,000. The workforce on the other hand will increase by a mere 7 percent. And 0-14 year-olds will decrease. Do the maths. State super is unsustainable, with or without the Cullen fund.

(And on the subject of shuffling off this mortal coil, did anyone see the final episode of Six Feet Under last night? What an eerie ending.)

Thursday, February 09, 2006

Good News

From the good news files;

From the Adam Smith Institute's We Told You So department comes the news that serious violent crime has fallen by over a fifth since the UK's pub licensing laws were liberalised. Police in cities, seaside resorts and market towns alike are reporting dramatic falls in alcohol-fuelled assaults since the new laws came in.

Of course, the anti-liberalization lobby had claimed that such crime would rise. And that people would drink a lot more, thanks to the later opening hours. That has not happened either – brewers report only a tiny increase in sales.

In fact, a lot of the argument over the liberalization plan was simply uninformed. Scotland dropped its strict 10pm closing regime in the late 1970s, and in some places the pubs were permitted to stay open round the clock. Suddenly, Scotland's pubs changed from being grim male drinking dens into relaxed bar-restaurants where families are welcome. Alcohol-related crime fell – with staggered closing times, the police were no longer stretched too thinly to control the crowds streaming out of the pubs – and alcohol-related disease and accidents fell too.

The benefits were so clear that the Scottish political economist Douglas Mason advocated exactly the same liberalisation for England in his ASI report Time to Call Time. It prompted Mrs Thatcher's government into bringing in a degree of liberalization, and now Tony Blair has taken things a step further. It was always obvious to anyone who had studied Mason's report that more flexible pub opening hours would bring a general improvement. Why did it take the politicians so long?

Think-tank expands its operation to include NZ

The Australian think-tank, the Centre for Independent Studies has announced the establishment of a NZ arm. It will initially focus on tax and welfare reform.

Blinkered bureaucrats

Professor David Fergusson is in the news for reporting findings about the incidence of partner violence. Fergusson should be commended for his work, which has been extremely wide-ranging over the years. But what do we do with it?

Look at this report from a recent select committee hearing. Here is an excerpt;

"Recently we heard evidence from Professor David Fergusson, from the Christchurch School of Medicine, and Associate Professor Richie Poulton, from the Dunedin Multidisciplinary Health and Development Research Unit, on our inquiry into factors contributing to poor outcomes for children........On the use of their studies by policy makers the two professors commented that there was a need for the rich data to be used effectively by policy makers. Too often they experience difficulty in getting policy makers to listen to their findings. It appeared to them that policy people in the ministries were politically astute gatekeepers, who accepted pieces of work from the studies if they fitted the current policy paradigm and discard the rest."

Sexual differences in moral judgments

Ronald Bailey describes how MRI testing reveals men enjoy retribution more than women.

This kind of information about how men and women tend to differ in their moral judgments (or feelings of righteousness) will certainly be of interest to, say, lawyers when they select jury members.

Welfare American-style (2)

Brief history. In 1996 President Clinton scrapped AFDC, Aid to Families with Dependent Children (think DPB) and replaced it with TANF (Temporary Assistance for Needy Families). The big difference was a moral one. People were now expected to find work or get involved in some activity in return for the assistance they received.

The legislation was passed at a federal level. Federal funding going to states to provide welfare was then controlled or limited according to the application of these new rules. That's how the local bureaucrats were incentivised.

The results were that by the end of the nineties caseloads had dropped nationally by 60 percent. But because the targets has been reached the pressure went off and the TANF caseloads have become static once more.

Now Congress has re-authorised the reforms with its latest budget. States are required to move 45 percent of the new caseload levels into work within the next year. The second wave begins.

What have we done over the same period? Fiddled.

Wednesday, February 08, 2006


Diver, Robert Hewitt , has been found alive after spending 72 hours in the water. Fantastic. Here's hoping he makes a full recovery.

Welfare reform reduces teenage pregnancy

Unlike Tariana Turia, I do not think teenage pregnancy is a good thing.

This is a link to some research which is back in the US news today. Incidentally, Paul Offner passed away last year, although you wouldn't know it from the news release.

Employment slowing

Just released from Statistics NZ comes the December 2005 quarterly employment survey.

Of note is total paid hours worked has hardly changed in the past year. First time this has happened since 1998.

But the growth in hourly earnings has increased by 5.4 percent. (Not mentioned in the press release is growth in the public sector earnings was higher at 6.7 percent -what's that about inflation Mr Cullen?)

So employers are paying out more for the same amount of production.

And Sue Bradford wants, on top of the extra weeks holiday that kicks in this year, a further rise in the youth and minimum pay rates. (I notice Peter Dunne, the new champion of business is going to vote to send her bill to select committee.)

Add to this Treasury's prediction that thousands of jobs will be lost this year and the Green's campaign looks reckless.

UPDATE The Maori Party have also come out in support of raising the minimum wage. If anyone can understand what Pita Sharples is inferring with his reference to WFF in this release, let me know.

Heard on radio....

useful acronyms;

Single-income, no boyfriend and desperate.

Single-income, two children, oppressive mortgage.

And word meanings according to children:

Benign - that's what you are after you been eight.

Artificial Insemination - when the farmer does it to the bull instead of the cow.


New research from Finland examines the contribution of lone parenthood and economic difficulties to smoking. 15 percent of married mothers smoked compared to 26 percent of lone mothers.

Smoking really is a catch 22. It causes economic difficulties which then cause one to smoke more which worsens the economic difficulties....

(As an aside, the Janice "don't blame me" Pou case is good money after bad and according to a report I heard yesterday, it's being funded by legal aid.)

Young Nats Notice

The Young Nats have also noticed the new Working for Families ad and issued this press release.

"Most young people will recognise what this policy means for them: the burden of a high tax rate so others can benefit from Labour's election bribes."

They should be talking to the Old Nats whose policy is to retain the WFF programme.

Tuesday, February 07, 2006

Modern day welfare

My eleven year-old is bent over his guitar working on Joe Walsh's riff from "Life in the Fast Lane". He does this constantly but quietly while the TV is on. A Working for Families ad comes on. Family scene plays out. "If your family is struggling there might be extra money available." Son looks up, and says, in passing, "Don't look like their struggling. She's got an ipod."

He's got a point.

At its birth, government controlled income redistribution was about getting money to the aged with no family to rely; to the most destitute with no prospects of working; and to soldiers maimed by war.

Haven't we come a long way.

Council demands ice lolly

A Palmerston North video store owner who has been selling wrapped icecream for more than 12 years is angry that he has to pay about $200 for a health licence.

"It would be different if it was new legislation," said Graeme Foster of Video Ezy. "It's just a revenue-gathering exercise."

It appears that the licence fee covers the cost of sending around an inspector who checks the temperature of the fridge. Seems to me that if you have a fridge mantaining hundreds of dollars worth of icecream you are going to make sure it is kept in saleable nick.

Charity Hospitals

Remind me what the public health system is for - "free" healthcare for all? Rationing is today's reality and charity hospitals are no longer a thing of the past.

Canterbury Charity Hospital came to my attention when down south during the break. They have just launched a fundraising campaign to raise a dollar for every man, woman and child in Canterbury. They rely on volunteer staff. This year they aim to provide 700 operations to those who can't afford to go private and can't get into the public system.

RMA rort

Received in my letterbox yesterday was a scare-mongering letter. It asked me to picture my local environment, "in 10 years with high density housing, much less bush and fewer native birds."

A couple of Bays away a developer wants to divide a section into two lots which are apparently under the square meterage allowed in the council district plan - by about an eighth.

The owners of a neighbouring property have decided to try and enlist the support of hundreds of homes in the local vicinity by partially completing a standard submission on the application for resource consent, placing it in residential letterboxes and asking the resident to complete the form and send it to the council (or return it to them for forwarding). They have of course filled in the part requesting the council decline the consent.

This sort of thing irks me no end. The complainants are alerting all similar types (environmental zealots with no regard for property rights) for miles around. Using bold headings like, "It's your lifestyle at stake," they will elicit many submissions from people who would otherwise take no interest in this development.

This is a typical example of how the RMA is abused.

Monday, February 06, 2006

Neither Left nor Right

This is from the Adam Smith Institute; a further description of American's right-left dilemma.

"Along with Gallup, exit polls suggest that .... there are large numbers of unrepresented Americans who just hate government pushing them around. About 17m of those who voted for John Kerry did not think the government should do more to solve the country's problems. And 28m Bush voters support either gay marriage or civil unions. That's 45m people with broadly libertarian views. But, says Boaz, you'd never know it from watching TV, or listening to elected politicians."

There are New Zealanders who voted Labour but didn't want more economic intervention and redistribution by the government and people who voted National but are supportive of Maori property rights and civil unions. ACT should be their alternative. But being small rules us out in many minds. So they vote for the lesser of two evils.

ACT has to effectively show people that when they vote Labour they get what they don't want and ditto with National. Voters are more motivated by what they don't want than what they do. (The strong upsurge in National's polling was a vote against Helen Clark and Labour.)

It's a big ask but it can't be avoided. That's why it is vital ACT declares itself economically and socially liberal and then conducts itself accordingly. Some people will leave but others will join. The gamble is that the second group will be much bigger. The time is ripe for taking that risk.

Beware the benevolent state

Thanks to Will Wilkinson of the Cato Institute for this review of Happiness Is ... Higher Taxes; Is one man’s productivity another man’s pollution?

It's not a book I wanted to read and now I don't need to.

Richard Layard, a member of the House of Lords, is the author. Here are some excerpts from the review;

The political moral of Layard’s story is that we are duty-bound to contrive a more Swedish America (and Britain), a point the prescient Labour Party economist was pressing years before he chanced upon the exciting “new science” of happiness....

Layard is no isolated crackpot. Like public health activists of the mind, a new wave of paternalists, including a spate of prominent psychologists and economists, draw on the latest research on happiness to argue that the state must “encourage” us to buy smaller houses, travel by train, and get out of the office—for our own good........

Because your gain in position and happiness must be someone else’s loss, Layard lumps upward income mobility together with classic “negative externalities” such as toxic sludge dumped in a stream or the roar of jets taking off from a nearby airport. Economic success is, by Layard’s reckoning, “pollution.” The solution to pollution? In a nutshell: Tax everybody until they spend less time at work and more time on vacation.......

Far more troubling than Layard’s specific bad arguments for astronomical tax rates is the very idea of his book: that the job of the state is to discover what will make us happy and then make sure we do it.

We have any number of "crackpots" in this country who would heartily endorse this prescription for society.

Brash expresses himself

A Herald report says;

This year he will push even harder his well-worn line that New Zealand has to become more prosperous than Australia if it is to survive.

"I had swallowed the Government line that we had been doing relatively well relative to Australia, but that of course is crap."

Now that last word is an unusual choice for Don. Somebody complained when I used it
(as a respresentative of ACT) on a Tax Freedom Day protest banner.

Unfortunately there is no other polite word that conveys the same feeling. It won't hurt Don Brash to throw off some stuffiness.

Sunday, February 05, 2006


In a previous post I linked to a tribute to John Cowperthwaite. The following excerpt also got me thinking (no conclusions mind you.)

(Marian Tupy) asked him to name the one reform that he was most proud of. "I abolished the collection of statistics," he replied. Sir John believed that statistics are dangerous, because they enable social engineers of all stripes to justify state intervention in the economy.

Here we are on the eve of another official five-yearly Census, which produces arguably our largest and most reliable collection of statistical information. This is a very tricky area for anybody who relies heavily on statistics to produce social research. Rather than justify more state intervention my research is intended to build a case against it.

But arguing that this end justifies the means, ie forcing people to provide information about themselves and their families, their income, religious beliefs etc under threat of prosecution, doesn't sit easy.

Statistics NZ spends a great deal of our money on TV and radio trying to "educate" us about why the information is needed. If it's any consolation, some people will be using the collated information to remonstrate about the level of government intervention we have to tolerate.

Forgotten truisms

"A man’s liberties are none the less aggressed upon because those who coerce him do so in the belief that he will be benefited." Herbert Spencer - (1820-1903) British author, economist, philosopher

"The greatest tyrannies are always perpetrated in the name of the noblest causes." Thomas Paine, (1737-1809)

Thank goodness for that

Rod Oram, writing in today's Sunday Star Times says, "Brash's prescription of less tax, spending and regulation shows no advance in his economic thinking for 25 years." Thank goodness for that.

As Roger Kerr has said, economics is not a matter of passing fashions.