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Insights 38: 14 October 2022
Newsroom: Eric Crampton on latest statistics on child poverty in New Zealand
Podcast: James Kierstead and Salvatore Barbones on if Australian universities can reform
NZ Herald: Matthew Birchall on Auckland's rail woes and asks why it's in such a parlous state

Locals know best
Dr Matthew Birchall | Research Fellow |
It might not have been a vote of no-confidence in local government, but it was far from an enthusiastic endorsement of the status quo.

In 2019, 42% of eligible local voters cast a ballot. This year, the proportion dropped to 36%.

Those who did turn up turfed out incumbent mayors in Wellington and Dunedin. In Auckland and Christchurch, where the mayors did not stand for re-election, voters opted for change.

While New Zealand does not have the sort of polling data to enable pundits to draw strong conclusions from local election results, the apparent consensus is probably correct: voters want basic services delivered well and are fed up with dysfunction.

But the fault does not just lie with local authorities.

Later this month, the Review into the Future for Local Government will publish its draft report. If the Review team has done its job well, it will embolden localism.

The idea that local communities know best has deep philosophical and historical roots in New Zealand, and it has an enduring practical appeal. What is more, localism makes for good economics.

Take housing. Councils do not currently receive enough of the benefits that accompany new housing and development. While central government takes the lion’s share of tax that comes with population growth, local government instead has to scramble to pay for new infrastructure.

Is it little wonder that local councils then resort to zoning rules and planning restrictions to block new projects?

A framework that incentivised growth would apportion the costs and benefits between central and local government in a more equitable manner. It would also enable councils to demonstrate real competence.

Special Economic Zones (SEZs) can likewise deliver greater prosperity. Economist Shamubeel Eaqub has documented how many of the problems afflicting New Zealand’s smallest provinces are magnified by government policies that prioritize national rather than regional interests. If local authorities were instead able to set their own regulatory settings, then regions would be better placed to serve local needs.

Making it possible for local government to work well can make more sense than continued centralisation. And it just might encourage greater engagement with local democracy.

Nobody seems happy with the status quo – and they shouldn’t be. That’s why the timing of the draft Review into the Future for Local Government could not be better.

Let’s hope it reinvigorates localism.

Is the market economy making us less selfish?
Dr James Kierstead | Research Fellow |
If there’s one objection that proponents of the free market are familiar with, it’s that capitalism is anti-social. From Adam Smith to Gordon Gekko – so the objection goes – liberal and neo-liberal economists have been doing little else but reciting a mantra of ‘Greed is good.’
It was with this argument in mind that I found some recent research on markets and pro-sociality so intriguing. The research is reported in Joe Henrich’s excellent 2020 book The Weirdest People in the World. (The WEIRD people in the title are the inhabitants of Western, Educated, Industrialized, Rich and Democratic societies, not free-market economists).
Henrich and his collaborators played a series of games with people from 27 different societies around the world, from modern Americans to hunter-gatherers in Tanzania. One of the games (called ‘the Ultimatum Game’) randomly pairs two strangers and gives one of them a sum of money – $100, say.
The person with the money is asked to offer some to the stranger he’s been paired with. If the stranger accepts his offer ($30, say), they both get to keep the money (with the offerer keeping $70). If the stranger refuses the offer, though, they both go away with nothing.
How much would you offer? WEIRD people offer an average of $48, apparently because they’ve internalized a norm of fairness and expect that lower offers will be rejected (which they often are). What about the other societies in Henrich’s survey?
What Henrich’s team found was that the less integrated people were into markets, the less they offered in games like the Ultimatum Game. In other words, markets seem to make people more generous, not less.
Why might this be? Henrich suggests that in market societies, an individual’s success will depend to a significant degree on a reputation for fair dealing, even with people they’ve never met before. Markets, for Henrich, thus encourage ‘impersonal pro-sociality.’
Impersonal pro-sociality, Henrich is quick to add, isn’t the only way humans can be generous. Hunter-gatherers, in fact, score much more highly on ‘inter-personal pro-sociality,’ in which individuals cooperate more readily with relatives and friends.
All the same, fairness to strangers is nothing to sniff at, and thanks to research by Henrich and many others its association with market societies seems increasingly secure. In 1792 Tom Paine declared that commerce was ‘a pacific system, operating to cordialize mankind.’ It now looks increasingly likely that he was right. 

Potemkin learning
Dr Dennis Wesselbaum | Adjunct Fellow |
If you lecture in the theatre and no student is there to hear it, did anybody learn? Welcome to teaching at universities in 2022.

To paraphrase from a famous movie: “Gentlemen, you can’t learn in here! This is the lecture room!”

Five of 160 students attended my Wednesday lecture last week. The lecture theatre had room for 500. Social distancing was simple.

The 50-minute video of this lecture has an average view time of 25 minutes, which is very efficient: double the speed of the video and learn twice as fast.

Only 24 students watched the video within two days. One week later, it had 59 views. Most will (re)view the videos within the last days before the final test.

But I’m not sure we should call this “learning”.

The average score on the last test was a C: by far the worst outcome in my nine years of teaching. While a few students argued that the test was too hard, last year’s version included two harder questions. And last year’s class averaged a B.

In case you wondered: lecture attendance last year was way above 50%.

Before COVID-19, attendance in my class was 60-70%, last year it was above 50%, but this year it is only about 20% (all very smart students).

And it isn’t just my class. This drop in engagement can be seen almost everywhere: every field, University, and country is affected.

How did we get here?

Since 2020, lecturers have done their utmost to make sure students could continue their studies despite COVID-19. We are now all Zoom experts.

Universities and schools have instilled a habit of online “learning” over the last two years. I don’t think open-book online exams are as challenging as closed-book paper-based exams, so grades did not fall, despite the drop in engagement.

Recordings give a false sense of security: “I’ll watch it later”, but “later” never comes. Further, even in my days, students had jobs, did charitable work, and enjoyed social life. These are not arguments for recording lectures.

New technologies can complement lectures. Lecturers should make recordings available to students with accessibility issues or disabilities. But students need in-person lectures. They help students stay on track and provide social engagement that can’t be found on Khan Academy.

Some have suggested that as universities look for cost savings, they could use AI. If universities are easier to run without students, imagine how much easier it would be without academics!

On The Record
Initiative Activities:   
All Things Considered
  • Graph of the week: Less than 30% of Kiwis are at least "somewhat" confident that the Reserve Bank can do its one big job (Figure 23)
  • Sex and the Academy
  • Marshmallows, and the merits of a clean GST
  • Three Waters and One Mountain of Debt
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