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Insights 27: 26 July 2019
Eric Crampton explains on Stuff why an unaffordable housing market is holding all of New Zealand back
 
New research note - When the facts change: How the ICCC saved New Zealand from a policy disaster
 
Auckland event (supported by the Initiative): Jonathan Haidt - Moral Psychology in an Age of Outrage (tickets for purchase)

Boris, a Cicero reincarnate
Dr Oliver Hartwich | Executive Director | oliver.hartwich@nzinitiative.org.nz
He famously claimed his chances of becoming Prime Minister were “about as good as the chances of finding Elvis on Mars, or my being reincarnated as an olive”.

It probably means Boris Johnson will be a pizza topping in his next life.

In the meantime, Johnson’s job as Theresa May’s successor will be dominated by sorting out Britain’s Brexit mess.

Delivering Brexit would be difficult for any politician. It is even harder for Johnson because despite his 10 years in high offices, he is remarkably inexperienced.

Johnson was Mayor of London for eight years and Foreign Secretary for two. As Mayor, he was infamous for delegating the day-to-day running of the city to his deputies. As Foreign Secretary, he was powerless since international relations were taken care of by the Prime Minister and the Brexit Secretary.

In both cases, Johnson did what he does best: give speeches, entertain and be outrageous.

That is not to say he is the buffoon as he is often portrayed. Far from it.

Johnson studied classics at Oxford and made a TV documentary on ancient Rome for the BBC. He wrote an acclaimed biography of Winston Churchill. His columns for the Daily Telegraph are among the wittiest writings in British journalism.

All this would make Johnson a great intellectual – part historian, part journalist. But he was flawed in these disciplines, too. He practised fake news before the term was invented. It even got him sacked from The Times.

It is an ancient question whether intellectuals can be good politicians. If Johnson, the columnist, wrote about himself, he might draw a comparison with Marcus Tullius Cicero. Or rather, he would claim Cicero was a Johnson-like figure in ancient Rome.

Indeed, Cicero was good with words, both written and spoken – almost on par with Boris. He was charismatic and influential. He rarely developed new philosophical ideas but mainly translated ancient Greek philosophy into Latin. It impressed his followers.

As a politician, Cicero was flexible to the point of being opportunistic. He sided, fell out, and sided again with Caesar. It was a bit like Johnson’s relationship with his own party. He later accepted praise for Caesar’s assassination even when he had nothing to do with it. Cicero, that is, not Johnson.

It did not end well, though. Despite his brilliance, Cicero was put on a death list and brutally murdered.

Perhaps he was reincarnated as an olive. Or as Boris Johnson.

We all want safer roads
Dr Patrick Carvalho | Research Fellow | patrick.carvalho@nzinitiative.org.nz
The government has released its Road to Zero consultation document, laying out a Vision Zero approach aiming for “no one is killed or seriously injured in road crashes”.

A zero-road toll pledge may be a good soundbite, but not a good policy prescription.

While we all want safer roads, an inconvenient truth is that not all crashes are preventable and, sadly, sometimes human mistakes do cost lives.

Until autonomous driving frees us from human errors, misjudgments and infringements, the only certain way to prevent deadly crashes is to ban driving altogether – which, of course, is absurd.

So extending an olive branch to reality, Road to Zero proposes a 40 percent reduction in deaths and serious injuries by 2030, as “zero deaths and serious injuries on our roads may not be achievable in the next ten to 20 years”.

That is a more sensible and achievable goal worth pursuing.

Unfortunately, the document does not formalise a way to compute the inevitable trade-offs between road safety, policy action alternatives, and mobility costs.

As it stands, to reach the 2030 target under Vision Zero, anything goes no matter the relative costs – or more importantly, who bears the cost.

That means New Zealanders inadvertently might be signing up for massive speed limit downgrades, a booming infringement ticket industry, and expensive car safety upgrades.

When government data released last month showed nine out of 10 open roads have speed limits above the recommended, there were prompt calls to reduce top speeds across the board.

Never mind in many cases, a cost-effective alternative would be much-needed improvements in the quality of road infrastructure. (Switzerland, for instance, has a third of deadly crashes per capita than New Zealand, while maintaining 120 km/h speed limits on its motorways.)

But a chain is only strong as its weakest link. It is one thing to have grand Vision Zero goals, another to commit public resources to fund them.

Under the proposed framework, in any policy combination involving, say, infrastructure upgrades and lower speed limits, the latter is likely to prevail – with lots of speed cameras to enforce it as well.

To avoid this scenario, let us hope the government’s final decision on the road safety strategy conducts proper cost-benefit analyses when weighing the pros and cons of each policy option – including the costs and benefits of safe, timely and reliable road mobility.

Job application
Matt Burgess | Research Fellow | matt.burgess@nzinitiative.org.nz
Dear Minister of Finance,

I am writing to apply for the position of Lead Economic Advisor to the Government, a position held by The Treasury since the 1940s.

Please find enclosed my CV with references.

I feel I can really add value in this role. I am a fast learner, a team player, and I have strong skills in Microsoft Excel with more than 18 months of experience.

I can also tell the difference between fundamental economic concepts such as GDP and inflation. Or wages and productivity.

Or efficiency and financial stability. Something Treasury and the Reserve Bank are having trouble with.

In a joint paper, “Safeguarding the future of our financial system,” these institutions propose to replace the efficiency objective in the Reserve Bank Act with a legislated goal to “protect and enhance” financial stability.

That objective makes more financial stability always better. Taken to its logical conclusion, that objective will shut down the economy, an outcome that would be avoided only if officials arbitrarily disregard their new legislated objective.

But officials see no efficiency consequences in this. They say efficiency is, and I quote, “just a theoretical concept”.

Well, yes. And the foundation of welfare economics, the basis for all cost-benefit analysis, and an idea that dominates the first 10 minutes of Econ 101.

It has also been a core principle of the Reserve Bank Act for 30 years.

Which reminds me, Minister, I am also capable of basic reasoning, willing to disagree with the Reserve Bank, and I cost $100 million less than the Treasury.

Minister, I really feel this Lead Economic Advisor to the government role is a good fit.

Of course, the job will be busy. After all, Treasury has more than 300 staff and there’s only one of me.

But I can do what the small army advising you apparently cannot – recognise the importance of independent, competent oversight of a financial regulator.

I just ask that you keep these officials working on financial stability well away from border security, road safety and export promotion since consistent application of their ideas on financial stability would eliminate tourists, road vehicles and domestic consumption.

Minister, in the unlikely event my skills in learning, teamwork and spreadsheets do not convince you to replace your Lead Economic Advisor, please pass on my regards to Treasury and a request that they start doing their job.
 
Yours etc.
 
On The Record
 
All Things Considered
  • Video of the week: Jonathan Haidt on why social media is bad for Gen Z.
     
  • "When they can hide him no longer - danger will strike".
     
  • Tom Switzer in conversation with Conrad Black and Simon Heffer on Boris.
     
  • Has Boris’ old boss boarded his plane to Buenos Aires yet? He promised to do so in 2016.
     
  • Most recurring word on each countries Wikipedia page.
     
  • Reduce, reuse, rescoot? A look at e-scooters' long-term sustainability.
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