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Insights 42: 4 November 2016
The Inequality Paradox: Why inequality matters even though it has barely changed
 
Report launch and panel discussion Monday 21 November
 
Dr Eric Crampton: Credit where credit is due

The end of the campaign, not the end of the world
Dr Oliver Hartwich | Executive Director | oliver.hartwich@nzinitiative.org.nz
Have we ever witnessed a stranger US election campaign? What started off looking like a bad joke has now become a possibility: Reality TV star and self-proclaimed business genius Donald Trump becoming the 45th US President.

Of course, even the most recent, tighter opinion polls make it appear more likely that Hillary Clinton will be handed the keys to the White House, not least thanks to the US electoral system. Yet it is astonishing that after a Trump campaign characterised by insults, broken taboos and sexism, Clinton’s opponent still has a chance of beating her.

After all the strange twists and turns of the campaign, it is impossible to predict the outcome of next week’s election with great confidence. Instead, I would like to offer just three small observations on the election.

First, it is remarkable how volatile opinion polls have been throughout the campaign. From a nationwide Clinton lead of +12 percentage points a fortnight ago to a minuscule Trump lead this week, the swings are extreme. This suggests two things: that many voters are genuinely undecided or rather unconvinced; and that we should take polls with a grain of salt. It is also hard to assess how many Trump supporters are too shy to tell pollsters of their true voting intentions.

Second, the polarisation of US politics has never been worse than it is today. That a candidate of one of the main parties may not even accept the eventual election is unprecedented. That a candidate threatens to imprison his rival if elected is unheard of as well. These are more than the side-effects of a nasty election campaign. They are a stake to the heart of America’s identity.

Third, there is some consolation at least. Whoever will be the next US President, he or she will be bound by constitutional checks and balances. The US is still a democracy with a finely balanced distribution of power between the Presidential executive, Congress and the Supreme Court. Clinton already knows how this machinery works, and Trump would find out soon enough.

Next week, we will see the end of an ugly, unprecedented election campaign – and a good thing too. But regardless of the outcome, it will not be the end of the world. America is strong enough to survive this election. But the wounds of the election campaign will take years to heal and will make the life of the next US President a living hell, whoever it may be.


When size matters – the world’s largest recreational abalone fishery
Dr Randall Bess | Research Fellow | randall.bess@nzinitiative.org.nz
While recently in northern California researching the management of recreational fisheries, I recalled the common phrase, “Size isn’t important, unless you’re a fisherman.”

This phrase came to mind in relation to the red abalone fishery, which is the most common and largest of seven abalone species along the northern California coastline.

What really stands out in this fishery is the recent breakthrough in the way it is being managed. The California Department of Fish and Wildlife (the Department) is collaborating with local abalone divers and The Nature Conservancy (TNC) to improve the fishery.

This breakthrough is largely driven by the Department having limited funds for collecting data on red abalone. The Department could utilise data outside that collected every three years at specific sections of the coastline. It makes sense to use local knowledge to improve data collection.

This fishery also stands out because of the size of red abalone. The world’s record is 12.33 inches (313 mm), and the minimum legal size is 7 inches (178 mm).

It is also the world’s largest recreational-only abalone fishery, with around 30,000 people harvesting 250,000 abalone each year.

The Department is collaborating with local divers and TNC to design a cost-effective method to expand the geographic scope of data collection. This method must also minimise potential harm to abalone, as they are susceptible to haemorrhaging when disturbed, especially if removed from rocks.

This local diver-led programme is testing a small-scale data collection programme to measure the length of red abalone to help estimate the sustainability of the current fishing pressure.

They have developed a measuring device. When in use, the length of the red abalone is imprinted onto a white plastic strip. A diver can record the length of numerous abalone on one strip in a relatively short period of time and without any harm done to the abalone. The data is then provided to the Department for analysis. 

Their collaborative efforts may well have an application in New Zealand. It is possible their measuring device might be improved with some Kiwi ingenuity, such as the laser device for measuring legal-size paua recently invented by a Year 13 student.

The red abalone fishery will feature in the fisheries project’s next report, which will be released in early 2017. For now, a more detailed story on this fishery is featured in the November issue of New Zealand Fishing News.


Is reality optional in academia?
Dr Bryce Wilkinson | Senior Fellow | bryce.wilkinson@nzinitiative.org.nz
In an NBR article last week I wrote about scams in the form of public misinformation about economic inequality in New Zealand. The first one I mentioned was the assertion that inequality here has risen faster than in any other country “in recent years”.  

Dr Mike Joy, a senior lecturer in Environmental Science/Ecology at Massey University, has since managed to top that assertion. In an article in the DomPost on 28 October he states unequivocally that: 

“The divide between the rich and the poor, despite “trickle down”, is growing faster in New Zealand than in any other developed country.”

More decades ago than I wish to recall a pop group called the Brothers Four had a rather sweet song about the pleasures of being an upside-down sloth.  Two of its lines read:

The world is such a cheerful place when viewed from upside-down
It makes a rise of every fall, a smile of every frown


Its relevance? Well, perhaps Dr Joy was standing on his head when viewing the Ministry of Social Development’s charts comparing income inequality trends in New Zealand with those in developed countries.

Specifically, a chart in its 2016 Overview report shows a rising income inequality trend for the USA and a declining one for New Zealand since the mid-1990s. One would have to view it from upside down to draw the opposite conclusion. Or perhaps Dr Joy does not consider the USA to be a developed country? 

A second chart, in its Incomes report contrasts a broadly flat income inequality trend for New Zealand with a rising trend for member countries of the OECD on average. Dr Joy really does have things upside down.

What about his dismissive “trickle down” reference? People who oppose economic growth probably don’t want to believe its benefits can be broadly distributed.

Well, New Zealand experienced a period of rapid economic growth from 1992 and MSD’s charts show it was broadly shared across a range of income groups. 

An inconvenient outcome for the anti-growth fraternity no doubt, but to be expected since income inequality did not rise.

As Dr Eric Crampton pointed out here Dr Joy’s ignorance of such findings appears to be matched by his ignorance of economics, including the economics of externalities.

Personally, I think the public deserves better from the academics it helps to fund. No doubt some of their students and colleagues feel the same way. 
 
On The Record
 
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