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Insights 42: 9 November 2018
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Listen: Dr Eric Crampton discusses on Radio NZ our research on fresh water

Towards Trump 2020
Dr Oliver Hartwich | Executive Director | oliver.hartwich@nzinitiative.org.nz
Few outcomes of the US midterm elections could have been predicted with certainty. Except that President Trump would call the result a “tremendous success” no matter what. And he did just that.

If losing control of the House of Representatives is such a tremendous success, one might wonder what keeping it would have been.

Semantics aside, the President has a point. From his perspective, it could have been a lot worse.

It is true that a Democrat-controlled House will make governing harder for the President. The Democrats will have new tools at their disposal to investigate Trump and his cabinet. They will also stop or slow legislation and be reluctant to authorise the President’s pet projects.

Then again, governing against the House is not a new experience for Trump. To a degree, he had similar issues with his own party over the past two years. Otherwise he would have made more progress on issues such as Obamacare or immigration.

What probably matters more to Trump is expanding the majority in the Senate. Also a Senate in which some of his fiercest critics from the GOP are no longer members. Senate votes on, say, new judicial appointments should go much more smoothly for the President – and cement his legacy.

In his post-election news conference, Trump surprised everyone with the announcement that he and Vice President Mike Pence would run again in the 2020 election. He was clearly encouraged by the midterms result to declare his bid.

In key states, the Democrats fared worse than they had hoped. They must be disappointed their rising star Beto O’Rourke failed to unseat Texas Senator Ted Cruz. Even more frustrating would have been losing their Florida Senator Bill Nelson to his challenger, outgoing Governor Rick Scott.

Swings against Presidents are common in midterm elections, but the swing against Trump was weaker than against, say, Barack Obama in 2010.

There is no reason to believe that this week’s result would weaken Trump’s chances for the 2020 election. They are unchanged, and political prediction markets stayed calm. On PredictIt, a Trump victory remained priced at around 42 percent.

It is an election result that changes little. Governing America will be just as difficult as it was before. Trump’s rhetoric remains grandiose and aggressive. And we are likely to see a second Trump/Pence term.

That’s why Trump called it a “tremendous success”.

Education under the x-ray
Jenesa Jeram | Research Fellow | jenesa.jeram@nzinitiative.org.nz
When you break a bone, being told that an X-ray confirms the break is little relief. You already know there is a problem, but what you really want to know is how to fix it.

Last week, Unicef released a study that found New Zealand has one of the most unequal education systems in the world.

The report included measures on Early Childhood Education attendance and the size of the gap in reading scores. Gaps in educational achievement were driven by parental occupation, migration background, gender, and differences between schools.

The finding will not be a surprise to anyone following education issues closely. What is surprising is that in the accompanying commentary on how to fix the problem, looking at what is happening in schools was not front and centre.

Unicef NZ executive director Vivien Maidaborn says, “[the report is] like an x-ray. It can show us what is broken, but it doesn't explain the reason it ended up that way.”

That did not stop experts and commentators quickly blaming poverty and unconscious bias as the cause of the gap. Many of the suggested policy solutions for closing the gap then focused on alleviating poverty and racism.

That is like your doctor confirming you indeed have a broken bone, but the bigger problem is that you need to quit smoking.

Let’s go back to the x-ray.

The Unicef report only focuses on one bone in the system: inequality.

Inequality in average educational achievement can obscure the real gains and improvements some students are making. There is a lot we still need to know about the health of individual schools, teachers and students. We need to know the variation between students who share the same socioeconomic backgrounds.

The New Zealand Initiative has developed a model that controls for a student’s socioeconomic background (and other factors that might contribute to education outcomes) to estimate the value a school adds to its students.

Imagine growing up poor in New Zealand and being told that until poverty is addressed and teachers are less racist, you have no hope of bettering your life or achieving the same as your peers.

Some schools can and do improve the prospects of their students, and the Initiative believes these schools deserve more credit and their practices should be better understood.

If Unicef gave us an x-ray of a bone in the education system, The New Zealand Initiative will be producing a full body MRI.

Better horses
Dr Eric Crampton | Chief Economist | eric.crampton@nzinitiative.org.nz
Winston Peters’ tax credit for pretty horses fights the wrong battle when it comes to improving New Zealand’s bloodstock.

New Zealand has no obvious problem with ugly horses. Maybe farmers keep the ugly horses hidden so townies out for a drive don’t see them, but it seems unlikely.

I have yet to see an ugly horse here. They’re all beautiful in their own way.

But we do seem to have, dare I say it, cowardly horses. Every time Guy Fawkes Day comes around, we hear calls for banning fireworks because they worry the horses.

It wasn’t always this way.

Rudyard Kipling’s classic “Her Majesty’s Servants” tells the story of camp animals that served the British Army in India and Afghanistan. The troop-horse took pride in its bravery, telling the other animals it was trained to lie down to let its master fire across its back.

New Zealand sent more than 10,000 horses to serve in the Great War. The army selected its horses for their bravery rather than beauty. Cavalry was then on the wane, so fewer horses might have had to serve as shield for their riders. But they faced bullets, poison gas, and artillery.

Only four returned home. The remaining survivors were either sold to foreign interests or shot.

A generation of New Zealand’s bravest horses was wiped out. The most cowardly horses stayed home, and today’s pathetic stock are their descendants.

New Zealand does not need tax credits to make the country’s horses more attractive. Who can really judge that anyway? What we need instead are tax credits to build a braver bloodstock.

My modest proposal would require that every horse in the country attend boot camp, along with their owners, to re-instil the lost martial equine spirit. The worst performing horses would be gelded on the spot, preventing their contaminating future generations. The best performing horses could attract Winston’s tax credit. That tax credit would follow through to those horses’ descendants, but only if bred to other similarly creditable stock.

And the best-of-the-best could be drafted to make Winston’s proposed Police Flying Squad a mounted unit.

Kiwi horses would come to welcome Guy Fawkes Day fireworks as reminder of the comradery they shared with each other in boot camp.

And my proposal is no more ridiculous than tax credits for engineering beautiful horses.
 
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