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Insights 4: 19 February 2021
Newsroom: Eric Crampton says obvious and inexpensive ways of tightening the border have not been implemented.
Podcast: Matt Burgess provides an update on the Climate Change Commission's draft emissions report.
NZ Herald: Oliver Hartwich on the government's proposed New Zealand history curriculum.

Building better borders
Dr Eric Crampton | Chief Economist |
Daily testing for everyone involved in the border system was always ideal, though it took rather some time for the government to come around to that view.

It looks like daily Covid testing will soon be part of the border regimen. It will substantially reduce risk, and that can enable more Kiwis to come home.

In May last year, daily testing would have been impossible. The capacity was not yet there. And even if daily swab tests were possible, test fatigue would quickly set in. It would be surprising if test fatigue were not setting in at the ports already, even though swab testing there is far from daily.

By August, the University of Illinois had started on-campus testing using the saliva PCR test it had developed to provide accurate and fast results at low cost. From that point on, it was feasible to adopt the system here.

This week, Newsroom reported that Rako Science has been providing saliva-based PCR testing using the Illinois protocol for private firms.

With the system up and running, it will be impossible for the Ministry of Health to pretend it does not exist. The government cannot fob it off with a usual list of reasons that things that work abroad cannot be done in New Zealand.

When something is already being done, it is harder to pretend it is impossible. It is possible to add saliva PCR testing for every single person in the border system, and for it quickly to scale up to daily testing.

Once that is in place, things get interesting.

Daily testing in MIQ makes transmission within MIQ far less likely. Infected people quickly shuttled to Jet Park are far less likely to infect others. Hotels were never designed as MIQ facilities. But they are much less risky if cases are caught before people become infectious.

If the swab tests prove redundant once daily saliva testing is in place, one bottleneck in the MIQ system will ease. The system strains for want of nurses at the government’s going pay rates. But saliva collection does not require nurses.

All of it makes it easier, and safer, to scale up capacity in the MIQ system.

The mass vaccination that can restore normal international travel is still at least half a year away.

Letting more Kiwis come home sooner matters.

The three-headed monster to replace the failed RMA
Dr Bryce Wilkinson | Senior Fellow |
In Greek mythology, Hercules was tasked with slaying Hydra, a gigantic and deadly water snake. Hydra had multiple heads. Two heads grew for each one cut off.

Last week, the government announced its plan and timetable for slaying the gargantuan Resource Management Act 1991. It plans to outperform Hydra. Three monstrous new Acts will replace one.

One aims in part to ensure “positive" environmental outcomes, and set limits and targets for the “natural and built” environment. The second will mandate spatial plans dictating restrictions on space at least 30 years ahead. A third will apparently empower enforced ‘managed retreat’ from feared sea-level rise.

The ‘environment’ is to be defined so broadly as to encompass every aspect of our social, economic, and cultural lives, including of course our health and safety.

Everything in our homes, our relationships with family members, friends and neighbours are part of ‘the environment’. The Minister for the Environment is the minister of everything.

Whose views about whether an outcome is positive or negative will prevail? Not yours or mine. The common person will still be disenfranchised by the thicket of legal and planning technicalities and complexity. Only those who have, or can afford to hire, specialised expertise will be able to navigate the system. Planners will ‘adjudicate’ disagreements by imposing their own value judgements.

Vanquished is mainstream environmental economics. It does not have a problem with diverse views. Its concern is that people are confronted with the cost to the community of providing what they want, be it more or less pollution or new housing.

In most situations, private property rights achieve that. Outcomes are not dictated; they emerge case by case from private negotiations. Such outcomes are less politicised.

Paternalists take the opposite approach. They seek to dictate “for their own good” what others can do. Personal autonomy for adults is not valued. The proposed open-ended state power to mandate ‘positive’ outcomes for an all-compassing ‘environment’ is an extreme case.

Paternalists inherently reject the need to balance benefits and costs, as perceived by those affected. Unsurprisingly, no meaningful net benefit test for the mandated outcomes has been signalled.

In short, the government’s revitalised Hydra represents paternalism on a scale that is towards the limits of what might be imagined in a peaceful democracy. It will also fail.

Mastering the art of Democracy
Dr Oliver Hartwich | Executive Director |
A couple of weeks ago, in this place, I wrote about my humbling experience playing the new politics simulation Democracy 4. Running a country successfully and getting re-elected were near impossible tasks, I concluded.

Shortly after we published Insights, Twitter user @brijo247 sent this helpful hint:

“I’m yet to master Democracy 4, and as @oliverhartwich writes, it can be difficult. But my free tip for D3 is to slash superannuation, add a winter fuel subsidy and pump up tech spending. Works a treat.”

Intrigued, I returned to my laptop. These were not the policy choices I would have made. But hey, if the purpose is to get re-elected, who cares if my decisions make any sense?

Once again, I chose Australia as my political battleground. But this time, I did not mean to run it well. All I wanted was to stay in power.

For a start, I established that winter fuel subsidy. Then I showered the country with tech grants. However, I didn’t touch pensions because pensioners are voters too.

As it turned out, Australians warmed to me. Encouraged, I continued my spending spree. No initiative was too insignificant not to enjoy some extra dosh – even causes I did not care about in the least.

The budget deficit increased, but that was only the beginning.

People like their handouts, but they do not like paying for them. So I cut taxes. Well, I abolished them. No income tax, no corporate tax, no sales tax – all gone.

With revenues of about A$10 billion left, I now had to fund A$110 billion of expenditure. My quantitative easing programme came in handy.

While my economic advisors were in despair and ratings agencies downgraded the country to BBB, my popularity soared.

Next up was political management. Where I previously selected my cabinet for competence, I now went by loyalty alone. Big difference.

I also discovered the art of the media stunt. I ate breakfast in a builder’s café. I fought judo with the special forces. I got filmed feeding a baby lamb. I wasted no time on policy.

The election campaign was fun, too. I spread optimism and promised everything. I had no intention of keeping any of that. So what?

Democracy 4 was impressed with me. I unlocked the ‘Subsidy Sam’, ‘Successful Liar’ and ‘Spotlight Junkie’ achievements.

Better still, voters re-elected me twice. By the third term, my popularity was as stratospheric as the country was bankrupt.

I had turned into a born-again Hugo Chávez – and mastered the game of Democracy.

For a public choice-trained economist, it was not all too surprising. Just very depressing.

On The Record
Our podcasts this week If you would like to listen to our latest podcasts, please subscribe to The New Zealand Initiative podcast on iTunesSpotify or The Podcast App.
All Things Considered
  • Tweet of the week, from Tel Aviv. Get a shot, take a shot. Israel rolls out vaccination in style.
  • Strong suburbs: Enabling streets to control their own development
  • Australia’s news media and digital platforms bargaining code is great politics but questionable economics
  • Hockey has a gigantic goalie problem
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