Wednesday, 25 January 2017

The Kiwi Option

If a silo in Kansas is not remote or private enough, there is another option. In the first seven days after Donald Trump’s election, 13,401 Americans registered with New Zealand’s immigration authorities, the first official step toward seeking residency—more than seventeen times the usual rate. The New Zealand Herald reported the surge beneath the headline “trump apocalypse.”

In fact, the influx had begun well before Trump’s victory. In the first ten months of 2016, foreigners bought nearly fourteen hundred square miles of land in New Zealand, more than quadruple what they bought in the same period the previous year, according to the government. American buyers were second only to Australians. The U.S. government does not keep a tally of Americans who own second or third homes overseas. Much as Switzerland once drew Americans with the promise of secrecy, and Uruguay tempted them with private banks, New Zealand offers security and distance. In the past six years, nearly a thousand foreigners have acquired residency there under programs that mandate certain types of investment of at least a million dollars.

Jack Matthews, an American who is the chairman of MediaWorks, a large New Zealand broadcaster, told me, “I think, in the back of people’s minds, frankly, is that, if the world really goes to shit, New Zealand is a First World country, completely self-sufficient, if necessary—energy, water, food. Life would deteriorate, but it would not collapse.” As someone who views American politics from a distance, he said, “The difference between New Zealand and the U.S., to a large extent, is that people who disagree with each other can still talk to each other about it here. It’s a tiny little place, and there’s no anonymity. People have to actually have a degree of civility.”
New Zealand could be an important part of any billionaire's apocalypse insurance portfolio, but they shouldn't put too many eggs in one basket.

If there were a zombie apocalypse that started anywhere other than New Zealand, it's hard to imagine a safer place to hide out than New Zealand. Zombies wouldn't be able to cross the oceans to get here. We'd probably need to have the coast guard watching out for derelict zombie ships running aground here, but that would be about it. Under most standard zombie scenarios anyway.

If they're worried about nuclear war, New Zealand won't be on anybody's 'let's bomb these jerks first' list, although it could be a useful demonstration project that might not draw retaliation in the same way that bombing other places might. North Korea could demonstrate their ability to hit the US by hitting us, and it's plausible that nobody would hit them back for it. Pretty low likelihood though. But if there were anything big, we'd be doomed by the ice age that followed. Maybe some folks in Rotorua would make it through, with greenhouses powered by pipes going down into the volcano.

For other apocalypses, your best defence is to be in a really wealthy place. Not just 'per capita' wealthy: New Zealand does well on 'per capita' wealthy. But rather substantial masses of resources ready to be thrown at bad things. A California earthquake, when it comes, will be terrible - but it's a rich state in a rich country. It'll sort. If an Auckland volcano blew, that would be distinctly not good. And while small places on the fringe of the world are great bolt-holes against terrorism, they're not so hot if the entire international trade apparatus falls over in a new round of nationalist protectionism. Bigger places can do near-autarky better than smaller places.

But it will be great for New Zealand to have some of these folks make the place home. Peter Thiel now has a New Zealand bolt-hole (he's been a fan for a while); I wonder what it'll do for New Zealand tech startups access to venture capital. Most of NZ Twitter (and Toby Manhire) doesn't seem impressed that Thiel's been granted citizenship; I think it's awesome. He's one of the world's most interesting people. You don't have to agree with somebody on every issue to think that it's excellent that he's moved here. And his early backing of Seasteading is particularly awesome.

Here's Tyler Cowen's talk with Thiel from a couple years ago.

HT on the New Yorker piece: Tricia Wood


Tuesday, 24 January 2017

I smell burnt toast!

One way to help shore up public support for Brexit when there's been a bit of post-referendum second-thoughts: vigilant enforcement of the stupidest possible Eurocrat regulations. Remind Britons why they want to leave.

And the Eurocrats have come up with a doozey. Chris Snowdon points to the coming EU campaign against baked potatoes.
Pubs and restaurants could soon be fined for serving well-done items such as triple-cooked chips or thin and crispy pizza under a second phase of the Government's crackdown on burnt food.

Following the launch of a major public awareness campaign yesterday to help people reduce "cancer-causing" acrylamide in food, the Daily Telegraph can reveal that food safety watchdogs are planning to extend the warning to every food-serving business in Britain.

Under a new European Union food hygiene directive, due to be adopted in the UK by the the end of 2017, pubs and restaurants will be told to take reasonable steps to reduce acrylamide in food or face enforcement measures.
Everything that's tasty or good in life may cause cancer. Everything then is a question of relative risk. What's the relative risk of burnt toast? Here's David Spiegelhalter at Cambridge's Winton Centre for Risk and Evidence Communication:
So, for example, adults with the highest consumption of acrylamide could consume 160 times as much and still only be at a level that toxicologists think unlikely to cause increased tumours in mice (that’s essentially what the ‘margin of exposure’ means).

This all seems rather reassuring, and may explain why it’s been so difficult to observe any effect of acrylamide in diet. But, for cancer, toxicology committees demand a rather arbitrary margin of exposure of 10,000 before considering the chemical essentially acceptable. That’s 33 times higher than the current margin for average adults in the UK — making acrylamide fall short of this very stringent safety standard, and this is the basis for the FSA’s campaign.
So the EU wants to impose fines on pubs serving tasty chips because of something that would be unlikely to cause tumours in animals at 160 times the current highest human consumption of the stuff.

Brussels is full of Vogons. I'm not sure that Briton's home-grown Vogons will be much better post-Brexit, but at least they'll be rid of the ones from Brussels.

* Fortunately, just smelling burnt toast doesn't cause cancer yet, but it may be a sign of other things. Here's your Canadian Heritage minute.

Pre-school investments

James Heckman publishes new papers faster than I can read papers. And so I can't pretend to be on top of all of the work he's been doing on early childhood education. But there has been a lot of it over the past several years.

I was pretty excited about the whole line of work when he started it. Investments in early childhood education looked to yield huge benefits, especially for children from disadvantaged backgrounds. NPR provides a decent summary of that work in an interview with Heckman in December:
If you got 13 percent back on your investments every year, you'd be pretty happy, right? Remember, the S&P 500, historically, has averaged about 7 percent when adjusted for inflation.

What if the investment is in children, and the return on investment not only makes economic sense but results in richer, fuller, healthier lives for the entire family?

That's the crux of a new paper out Monday, The Life-Cycle Benefits of an Influential Early Childhood Program, co-authored by Nobel laureate James Heckman, a professor of economics at the University of Chicago and the director of the Center for the Economics of Human Development.
The new paper looks again at the Abecedarian Project, and finds returns that last through to the long-term. It sounds like the kind of thing that would make sense under the New Zealand government's investment approach. But I have a couple of worries.

Every time we see great results like the ones Heckman demonstrates, they're from really small-scale, really resource intensive programmes like Abecedarian or Perry.

And the couple of studies I've seen looking at what happens with larger roll-outs don't suggest that these things scale well.

Michael Baker, Jonathan Gruber and Kevin Milligan found that a universal childcare programme in Quebec yielded a huge increase in use of childcare, but worsening of outcomes for kids. NBER provides a summary here.

And an evaluation of Tennessee's pre-K programme, rolled out to 18,000 lower income kids across the state, showed temporary gains followed by worse outcomes than those for kids who didn't participate. This one was focused on providing high quality care to a large group of deprived kids, rather than being a universal roll-out like Quebec's. The programme only included 4 year olds, and so could be critiqued as not having the very early intervention that the Heckman-style interventions recommend, but it should give pause that the effect wound up being negative.

I don't know if these things don't scale well because you quickly run out of teachers that match the quality of those involved in Abecedarian and Perry, or if larger scale programmes in general disappoint. But it does suggest we need to be careful in monitoring roll-outs of things that looked good in smaller scale trials.

And I worry too about what happens if it turns out that the thing really can only work in really small and focused interventions. You then wind up setting eligibility criteria to focus on the groups in most need, and really pissing off the people who are just outside the eligibility threshold. Like, "You mean if I'd had more CYFs notifications my kids would be eligible for this fantastic pre-school programme but because I was a better parent than my crazy neighbour she gets the programme and I don't?!" The usual answer on the left to that kind of concern is to demand that it be universal, but look again at the results in Quebec.

I don't pretend to have any good answers here, just worries. I wonder if anybody's used IDI data to see what happened after New Zealand shifted to 20-hours free daycare.

FWIW, both our kids were in pre-school from about 3 months old, when Susan returned to work. So our revealed preference was to rely on professional childcare.

Monday, 23 January 2017

Kiwisaver and net wealth - again

David Law and Grant Scobie continue to look at Kiwisaver's effects on net wealth. In line with prior work by Scobie and coauthors, they find that it didn't do anything to increase net wealth. Instead, it just diverts other savings.
The objective of this paper is to analyse the extent to which membership of KiwiSaver has been associated with greater accumulations of net wealth. The paper utilises two linked sources of data which cover the period 2002–2010: Statistics New Zealand’s Survey of Family, Income and Employment and Inland Revenue Department administrative data on KiwiSaver membership. Two approaches are employed: difference-indifferences (where the outcomes of interest are changes in net wealth) and various panel regression techniques. Results appear consistent with earlier evaluations of KiwiSaver. Neither approach suggests KiwiSaver membership has been associated with any positive effect on net wealth accumulation.
I'd commented here on the 2014 Treasury working paper version of the paper, now published in NZ Economic Papers. Whatever problem Kiwisaver is meant to be solving, it doesn't seem to be doing much.


Friday, 20 January 2017

Risky Teens and the maternal gaze

Christian Jarrett at the British Psychological Society's Research Digest blog reports that kids take fewer risk when mum's watching:
João Moreira and his colleagues scanned the brains of 23 15-year-olds (9 girls) while they played a risk-based game that involved going through a set of 26 traffic lights as quickly as possible and deciding at each set whether to accelerate or brake as the lights turned amber. Accelerating saved time usually, but also carried the risk of a crash which would lead to a greater delay than braking. The teens played the game twice: once in the presence of their mother who was located in the scan control room, and the other time in the presence of an unfamiliar female professor who was described as an expert in adolescent driving behaviour (some played the game with mum present first, others with the stranger present first).

There was a tendency for the teens to take fewer risks when their mum was present, as compared with the professor, but this difference didn’t reach statistical significance. However, at a neural level there were statistically significant differences between the conditions: when mum was present, the teens’ brains showed more reward-related brain activity after making safe decisions and less reward-related brain activity after making risky decisions. Mum’s supervision seemed to make caution a more pleasurable approach, at least at a neural level.
The researchers interpreted their findings as suggesting there is something unique about the influence of a parent (or a mother, at least) on the way a teenager’s brain processes risk, which could have practical implications. For example risk-prevention educational programmes for teenagers, which often struggle to make a difference, might be more likely to be effective if parents are directly involved.
I have a simpler explanation. If Mum sees that the kids are driving like hoons in a simulation even when she's watching, she won't give them the car keys next time they ask. Because the kids know that whatever happens in the game affects Mum's behaviour out-of-game, fun risk-taking is less rewarding. It isn't that Mum being there makes them different people or that they're better learning how to behave, it's just fear of out-of-game sanction.

Or at least that'd be my prior on it, if I were inclined to draw any conclusion whatsoever from a study scanning the brains of 9 teenage girls.

Thursday, 19 January 2017

De-risking: another cost of AML

Steve Liddle points to an underappreciated cost of New Zealand's Anti-Money Laundering regime: difficulties in international remittances.
For the past nine months I’ve been working with a group supporting Somali-New Zealanders as they attempt to re-establish a low-cost channel for remittances into the Horn of Africa and South Sudan.

Despite hiring an anti-money laundering advisor, satisfying all security requirements for registering a financial service company and meeting all government and Companies Office regulations, no New Zealand bank is willing to send refugees’ money offshore.

The security requirements the banks impose on us include “getting to know your customer” vetting systems, maximum money limits, regular transaction checking and oversight. Despite this, all six banks approached refused to handle remittances, simply citing a US-instigated sanctions list or so-called “de-risking” policies.
Get your AML compliance wrong, and you could be up for fines or losing your banking license. The stakes are high, and that means the small earnings they'd get by facilitating international remittances isn't worth it.
Despite the New Zealand Reserve Bank’s declaration two years ago that trading banks here “were not justified in blanket de-risking”, they continue to do so. Acknowledging “varying degrees of risk for banks” and the call in our legislation for “measured risk management”, the Reserve Bank made it clear that money remitters should be judged on their merits. It urged banks to do due diligence on remitters to enable money transfers to continue.

Yet it seems that New Zealand banks are unwilling to risk the steep fines imposed by anti-money laundering and terrorist financing legislation and fall back on a blanket policy of refusing to handle any remittances to countries deemed high risk.

While in the past Pacific Island remittances were subject to the highest number of blocks, the situation is now eased and for the last three years New Zealand refugees from the Sub-Sahara, Horn of Africa and the Middle East are most affected.
Case by case checking is expensive relative to either what banks can earn on these small transactions, or relative to the penalties for getting things wrong.
Neither governments nor banks seem prepared to acknowledge the unintended consequences. Of course no responsible country wants to aid the financing of terrorism. But measures designed to prevent money laundering and starve terrorists of funding have also encouraged illegal money trafficking now beyond any accounting – of either amounts or the identities of recipients.
It looks like Liddle's group jumped through a pile of hoops trying to prove that their remittances were neither money laundering nor terrorism, but it wasn't enough. That shouldn't be surprising to anybody who followed the saga leading to AML regs killing iPredict.

As I understand things, banks stopped providing platforms for companies doing international remittance work as the AML regs came in. Kiwibank was about the last to move, as it took them longer to come into AML compliance than the other banks. For a while the remittance companies banked through them, but that lifeline ended when Kiwibank got its regulatory affairs in order.

There's be a reasonable business for someone using Bitcoin to facilitate all this stuff, but I'd be surprised if anyone getting big enough in it didn't quickly find themselves subject to AML for the "turning dollars into bitcoin" part of the transaction.

Wednesday, 18 January 2017

Manitoba poultry predicaments

Supply management in Canada continues to be a reason Manitobans can't have nice things. This time, specialty free-range chicken. From the Winnipeg Free Press:
With the introduction of the new ASQP [Annual Specialty Quota Program] — meant to increase the availability of speciality products such as organic chicken, pasture raised, Silkie, and kosher — exemption permits traditionally held by chicken farmers have been cancelled by the supply management board.
Farmers who had been producing 60,000 kilograms of chicken a year, for example, will have to scale back by half or pay fees, Veldhuis explained.
"Some of those people are participants in the St. Norbert Farmers’ Market and they’re either having to pay more to produce the same amount and the tariff is about 25 per cent that they’re being asked to pay," Veldhuis said. "So I think most of them just won’t produce it.
Here in New Zealand, if you want to grow and sell a chicken, you grow and sell a chicken. In Manitoba, you need to have quota. Small-scale producers who previously operated under exemption permits can't any more.
Erin Crampton, owner of Crampton’s Market (1765 Waverley St.), believes the new quota program will increase the cost of Manitoban chicken her store carries by about 20 per cent, if it’s available.
The seasonal market in Waverley West carries fresh, sustainable, antibiotic-free chicken raised in Manitoba and organic chicken from Ontario. Crampton said if the quota program is implemented as is, there is a good chance the market would no longer receive fresh roasting chicken on a weekly basis or carry frozen chicken pieces from producers in Manitoba.
"We would probably have to bring in products from Ontario if we were wanting to sell sustainably raised chicken," Crampton said. "The cornerstone of our business is local food first so it would be absolutely heartbreaking."
Crampton is hoping the MCP will review the ASQP and hold further consultation with existing producers in an effort to maintain mid-level production.
"Unfortunately, (Manitoba Chicken Producers) didn’t collaborate with those existing producers to ask them what they needed to have the industry grow," Crampton said.
"There’s a huge trickle down effect and it’s so important for people to let the government and the Manitoba Chicken Producers know that they didn’t get it quite right, and maybe go back to the table and have a chat with the people who are affected."  
According to Crampton, who is a former member of the Manitoba Farm Products Marketing Council, there is room in the market for specialty, small-scale, and large-scale producers alike.
"We think there’s enough space for everyone and (large scale producers) need to share a little more," she said.
Read the whole thing, and be thankful you live in a sane place like New Zealand rather than over in the inside of the asylum.