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Insights 4: 14 February 2020
On Breakfast, Eric Crampton discusses if film subsidies are a fair and sensible use of taxpayers money.
On this week's podcast, Research fellow Briar Lipson discusses why New Zealandís education standards are slipping.
Submission: Better protections for contractors

Contracting is not a "problem" that needs "solving"
Roger Partridge | Chairman |
Counting by the number of times the phrases “gig economy” and “future of work” are mentioned by the news media, you could be forgiven for thinking full-time employment was a thing of the past.

Yet last year the Productivity Commission reported the so-called gig economy was both small and showed no signs of rapid growth, either in New Zealand or in the 30 other countries for which data was available.
The Commission’s findings provide useful context for assessing the Ministry of Business, Innovation and Employments Better Protections for Contractors discussion paper. Released in November last year – and with submissions due today – the discussion paper proposes no fewer than eleven “options” for regulating the status of contracting.
But before MBIE goes looking for solutions, it needs to ask whether there is a problem that needs solving. Unfortunately, problem identification is the discussion paper’s Achilles’ heel. In the opening “Message from the Minister,” Workplace relations and Safety Minister Iain Lees-Galloway claims the deregulation of the labour market in New Zealand in the 1990s resulted in both structural problems and increased inequality.
Both claims are unfounded. As we showed in our 2019 report, Work in Progress: Why Fair Pay Agreements would be bad for labour, since the early 1990s New Zealand’s labour markets have been working very well. Wage growth has been tracking productivity growth. We have high levels of labour market participation and low levels of unemployment. And over the last 30 years we have had one of the highest levels of job growth in the OECD.
MBIE’s discussion paper is no doubt correct when it identifies instances of exploitation by unscrupulous employers treating their workers as contractors when the law requires them to be treated as employees.
But there is no evidence presented that this is a systemic problem requiring wholesale changes to the status of contracting. The problem of workers not receiving their entitlements is a problem of enforcement. It is not a problem that requires contractors to be reclassified as employees (or into some hybrid, halfway house as suggested in one of the “options”).
The government must also be mindful that non-standard forms of work such as contracting emerge in response to real needs of both employers and workers. When our labour markets appear to be working well, the government must resist the urge to find solution to problems that do not exist.

You can read our submission on the Better protections for contractors discussion paper here.

What do you get when you cross opinion with news?
Nathan Smith | Chief Editor |
Journalism and opinion are supposed to be clearly separated, but that difference is shrinking – and perhaps disappearing.
Objective reporting is like utopia, it cannot really exist. A journalist does not know all the right questions to ask, cannot step fully outside their worldview, cuts and slices an interview to better fit the narrative and will never talk to every side of the story (there are always more than two sides).
So, in a way, labelling one set of articles “opinion” and others “reporting” helps a newspaper sell the central message: that its news is as close to the truth as possible. If opinion pieces are removed, it would not take long for readers to wonder why the news sounds suspiciously subjective.
Newspapers created a dedicated opinion section to reinforce this illusion. When a reader flips to this commentary, they subtly accept that the news section must have been objective. This is a neat cognitive trick of comparison: since there are two types, they cannot both be the same.
Maybe this structure could have survived into the 21st century, but the internet changed everything. Today, media companies do not compete against other media directly – they are now in the time business. News is an information technology – always has been – and its competitors are all the other information activities people might choose to pursue.
Transitioning online made sense for newspapers because the internet is the perfect tool for delivering information. It removes much of the friction and entry costs of printing, postal services, fixed deadlines and the rest. Yet it was precisely this friction that gave media a market advantage by making it difficult for normal people to join in the fun.
Today, everyone has a social network account through which they read about events in real-time. No middleman required. Legacy media has struggled to stay alive and relevant.
While everyone is entitled to their digital opinion, not all opinions are equal. And since everyone can have an opinion, everything begins to look like an opinion – including news. But it is worse than that. The noise of the online space means journalists are shouting louder to get their signal to the public.
The result is an erosion of the illusion that separates opinion from news, and the very group of people who are supposed to be responsible for at least trying to be objective (even if they can’t ever fully achieve it) have found themselves operating in a completely new world with entirely different economic incentives.
It is hard to know if these fresh incentives attract a certain kind of journalist more suited to writing opinionated stories (to get the eyeballs), or if journalists are reacting to the pressure by imitating everyone else. Whatever the case, the illusion of objective news is critical for media to maintain.
If it is lost, the existential vacuum would make for a terrifying wooshing sound.

Tinder economy
Joel Hernandez | Policy Analyst |
Depending on your own experience with dating apps, you might be surprised to learn that success in the online dating market is not distributed equally.

So, this Valentine’s Day, spare a thought for those struggling to find love among the insidious and “unjust” inequality on apps like Tinder or Bumble. But it exposes the limits of policymaking: there will always be areas of human life with natural imbalances which no government can perfectly fix.

Tinder is a simple app. Users swipe right on other users’ photos to signal their eagerness to date and hopefully receive a return “like” from their prospect. However, if there’s no chemistry then swiping left is the equivalent to faking a call from your mother to escape an admirer at the bar. 

Based on one rough estimate by the anonymous economist who goes by the pseudonym ‘Worst-Online Dater,’ the Tinder economy is more unequal than 95.1% of the world’s countries based on the Gini coefficient – a standard measure of inequality.

Ok, so you’re not Brad Pitt, but you’re at least a “6” on the hotness scale. You should be fine, right? Not really. The top 20% most attractive men are competing for the top 78% of all women while a whopping 80% of men compete for the bottom 22% of women.

A potential reason for this inequality is that men are 6.2 times more likely to swipe right compared to females. In other words, men are less discriminating than women – who knew?

A man of average attractiveness is expected to be “liked” by a miniscule one in 115 women on Tinder, only a 0.87% success rate. If these sound like poor odds, they are.

Many keen male Tinder users have probably had a sneaking suspicion about this reality for many years. They’ll be somewhat relieved to know there is data confirming this and, ironically, that they’re not alone with their concerns. About 80% of guys are stuck on the same unsuccessful boat.

If this were any other part of the economy, men would be clamouring for some form of government assistance. A subsidised gym membership perhaps or maybe even plastic surgery for those most in need?

In fairness to online dating, many Gen-Xer’s and Millennials likely know at least one couple that met on Tinder and some of us might even know a Tinder baby.

This Valentine’s Day, if online dating isn’t your thing, you could always do it the old-fashioned way and go to a bar or party and try meet someone there, I guess.

Then again, one out of 115 is better than nothing right?
On The Record
All Things Considered
  • Graph of the week: The impact of migration on trade
  • Hans-Werner Sinn - How to Fight Climate Change: economic and technical challenges.
  • Progressive education works – but only for those who need the system the least.
  • Back to the Future – billionaire Peter Thiel reviews NYT columnist Ross Douthat’s new book.
  • More and better handwashing at airports could significantly slow the spread of coronavirus.
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