Friday's Top 10: Eric Crampton on the Trans-Pacific Partnership, GM food, GST, ivory, organ donors, plus Dilbert x4, Clarke & Dawe and more

Friday's Top 10: Eric Crampton on the Trans-Pacific Partnership, GM food, GST, ivory, organ donors, plus Dilbert x4, Clarke & Dawe and more

Today's Top 10 is a guest post from Eric Crampton, who is a Senior Lecturer in Economics at the University of Canterbury. He blogs at the ever-popular Offsetting Behaviour.

As always, we welcome your additions in the comments below or via email to

And if you're interested in contributing the occasional Top 10 yourself, contact

See all previous Top 10s here.

1. Number One on today’s list: the leaked draft copyright chapter of the Trans-Pacific Partnership negotiations.
American negotiators, as rather well forecast, are aiming for pretty stringent copyright extensions. American technology website Techdirt builds on the NZ Creative Freedom Foundation’s prior warnings, writing:

What the country's TPP negotiators are effectively doing here is to surrender key rights that belong to all New Zealanders, for the sake of some minor, and probably temporary, financial gains for a single industry with powerful lobbyists. That's a terrible bargain for the country's future. If these concessions are made, it will not only impoverish artists and the general public, who will suddenly be prevented from using and building on vast swathes of the digital past, it will also make it far harder to set up 21st-century companies that are based on creativity, not cows.

I’m less pessimistic. While American demands were pretty well known, the draft document suggests pretty broad opposition within the TPP to the sorts of provisions that have raised concerns here.

On many of the more restrictive proposals, America enjoys support only from either Australia or Japan. New Zealand’s negotiators reportedly stand alone with the United States on one measure: forfeiture of assets deemed proceeds of copyright infringement. I wonder whether Kim DotCom’s mansion is looking attractive.

It’s worth riding the negotiations out to see whether we might yet wind up with a deal worth having, so long as we’re happy to walk away if it isn’t.

2. Worried about genetically-modified foods?
Maybe worry a little bit less.

Forbes reports on new work published in Nature Biotechnology showing that microRNA from GMO plants cannot really pass into people - results from a paper published last year suggesting otherwise failed to be replicated in the new work.

Highlighting the importance of the new study by Dickenson et al., Nature Biotechnology editors wrote an extraordinary opinion piece underscoring the importance of not falling for ‘single study syndrome’ as anti-GMO alarmists are wont to do. “When an initial report prompts this level of concern and involves a considerable investment of time, effort and resources from both researchers and regulators in evaluating its findings and understanding its implications, then a carefully controlled and executed replication study clearly warrants publication,” the editors wrote.

Earlier this year, Food Standards Australia New Zealand were pretty heavily criticised for not having jumped to respond to the scare stories around microRNA; we should perhaps thank them for being a bit more level-headed.

3. GST on everything?
Lance Wiggs puts up what seems the most sensible way of imposing GST on lower-valued imports, if you want to: leave it up to customers to report and to comply.

The big change here will creating the burden for individuals of collating receipts and paying GST where it is not collected by the seller. (Businesses already do this). However the nice thing is that electronic purchases do create a lovely electronic track record, and tools such as bank online systems and Pocketsmith will help.  

But the easy parts are for businesses to start paying GST on everything, for Customs to release all goods before GST invoices are paid and for big foreign sellers to collect GST at source. Those simple moves will capture the lions share of the tax, and the IRD can take a soft line on individual compliance for lessor cases.

I still worry that some foreign retailers would prefer to drop the New Zealand market than to have to deal with IRD.

While it’s true that saving the 15% GST might affect some shoppers’ decisions to purchase from abroad rather than domestically, the price gap is usually well in excess of the GST difference.

Where domestic retail markets tend to be dominated by a small number of competitors, discouraging consumer imports by adding paperwork or tax filing requirements makes New Zealand markets all the less competitive.

4. Bryce Wilkinson critiques Treasury’s “living standards” framework.

Even if the Treasury could assess outcomes along the five proposed dimensions with worthwhile accuracy, no overall advice would be possible without some over-riding criterion, usually drawn from welfare economics, for assessing trade-offs.

The absence of such a criterion seems to be a black hole in the framework. If so, any Treasury recommendation drawn from contending policy options is formally arbitrary. That makes purposeful decision-making impossible.

In the best case, Treasury’s incorporation of sustainability, equity, social capital and risk management alongside economic growth in its policy analysis drives out less rigorous applications of the same criteria by others. In the worst case, Ministries can use the framework to highlight how their pet projects do a great job on a couple of the criteria and, in the absence of some way of weighing the criteria against each other, leave Ministers with little rigorous basis for choosing among competing projects.

5. Economics is all wrong because of rational expectations? Not if the alternative assumptions are even worse!
Here’s Simon Wren-Lewis:

Most of the references I make to rational expectations in posts are in the context of the history of macroeconomic thought. I suspect the problem some people have is that they associate rational expectations with the New Classical critique of Keynesian economics, and therefore think rational expectations must be anti-Keynesian. This confuses who fought wars with the weapons they used. I see it quite differently. Before rational expectations, mainstream Keynesian theory that incorporated the Phillips curve depended on a rather fragile story of why economic booms (downturns) could occur, which was that workers kept under (over) estimating inflation. New Keynesian theories based on rational expectations are more compelling, and can include the fact that information is both costly and incomplete.

... rational expectations will remain the starting point for macro analysis, because it is better than the only practical alternative.

The choice really matters. An economy where agents form their expectations in a naive adaptive way is like an elaborate machine which takes no account of what policymakers are doing. In reality the economy appears more intelligent than this: policy is difficult because people in the economy take actions which anticipate what policymakers might do. This makes designing good policy difficult, but the concept of rational expectations has allowed macroeconomists to tackle this problem. To throw all that away by abandoning rational expectations would not improve macroeconomics, it would impoverish it.

6. My rational expectation on hearing of this boondoggle was to wonder why on earth governments claiming to care about reducing the incentive to poach elephants for their ivory would want to boost ivory prices.
NZ’s expert on illegal trade in animal parts Brendan Moyle had similar thoughts.

Will the US destruction of its paltry ivory stocks make a difference to any of this? It seems unlikely. Chinese incomes aren’t going to be slowed by this. The guy shooting elephants on the savannahs won’t even be aware of it. Kenya did another big destruction effort in 2011. Poaching kept going up afterwards.

There are two risks though attached to these gestures. The first is it signals that ivory is becoming even more scarce. The signal may not be what the US intends. By signalling to criminal organisations ivory is becoming scarcer, the race to accumulate more in stockpiles may accelerate. I don’t know. It seems like an important question though to have settled before making these gestures.

The second risk is well, the ban could be the wrong strategy. Something devised to counter the black market of the 1980s may in fact, be redundant. A regulated trade may be the way forward.

7. We move from trade in ivory to buying kidneys.
New Zealand has some of the world’s worst organ donor rates. Maybe we should consider paying donors. HuffingtonPost reports on American research:

In the study, researchers found that assuming a payment of $10,000 and an increase of kidneys available for transplantation by 5 percent, a strategy of paying living donors would save the health system $340 over the lifetime of each patient, compared with the current organ donation system. The study was published today (Oct. 24) in the Clinical Journal of the American Society of Nephrology.

The savings come from lower costs and improved health outcomes over the recipient's life. "Transplant has a higher upfront cost, but the yearly maintenance cost is lower than dialysis," said study author Lianne Barnieh, a researcher at the University of Calgary.

A 5-percent increase in donations would mean an additional 5 kidneys transplanted yearly for every 100 transplants currently performed, and would improve patients' net health by gaining 0.11 quality-adjusted life years on average over a patient's lifetime.

The problem is at least as bad in New Zealand.

8. If the last one made you squeamish, you might blame your genes.

Heredity seems to explain a substantial portion of individuals’ ideological preferences.

...a new international study shows that our genes can explain up to 60 percent of our political actions: our political commitment, who we vote for and what ideology we support.

The findings come from a gigantic study of 12,000 pairs of twins. The study turns upside down the prevalent scientific understanding of what influences our voting behaviour, according to one of the Danish researchers behind the study.

The reporting here overstates the novelty somewhat: research on heredity and policy preferences goes back a ways.

If our political preferences are pretty strongly influenced by our genetic background, we should all somewhat weaken our confidence in our own beliefs.

9. Economists complain a lot about policies that seem pretty ineffective or even counterproductive.
But, when we take proper account of just how badly voters understand policy, we wind up not only grateful that policy isn’t even worse, but also with a powerful argument in favour of limited government.

Ilya Somin leads off a Cato Unbound forum on his new book, Democracy and Political Ignorance.

Democracy is supposed to be rule of the people, by the people, and for the people. But in order to rule effectively, the people need political knowledge. If they know little or nothing about government, it becomes difficult to hold political leaders accountable for their performance. Unfortunately, public knowledge about politics is disturbingly low. In addition, the public also often does a poor job of evaluating the political information they do know. This state of affairs has persisted despite rising education levels, increased availability of information thanks to modern technology, and even rising IQ scores. It is mostly the result of rational behavior, not stupidity. Such widespread and persistent political ignorance and irrationality strengthens the case for limiting and decentralizing the power of government.

Every year, I have great fun showing my undergraduate students the evidence around Americans’ political ignorance. I wait until after they’ve had a good laugh at the Americans’ expense before showing them the New Zealand data suggesting things here are no better.

10. Want to help poor people in distant lands?
Why not give them money? The Economist reports on development assistance giving cash to poor families, with and without strings attached. The conditional transfers sometimes did better in improving outcomes, but straight cash transfers without any conditions also worked rather well.

When Give Directly’s founder, Michael Faye, went to traditional aid donors with his free-money idea, he remembers, “They thought I was smoking crack.” Silicon Valley, though, liked the proposal - perhaps because Give Directly is a bit like a technology start-up challenging traditional ways of doing things (in this case, aid). Google contributed $2.4m; Facebook, $600,000.

It’s too rare that programmes meant to help the poor by providing free school breakfasts or other in-kind assistance are evaluated against an alternative that simply gives families the same cash equivalent.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.


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#1.   There are no valid reasons for the TPP documents to be secret.  If it was all good, there would be no need for secrecy.

#2   "GMO plants cannot really pass into people"  Well maybe.  But modern aircraft arn't really unsafe.  But when they do --  it's catastophic.

What's your point?
Yes, there's plenty of incontrovertible empirical evidence that the results are disastrous when modern aircraft fail. 
But we haven't seen fit to ban all aircraft travel.   Or living in earthquake-prone countries, or near volcanoes, or in places where tornadoes and hurricanes happen.
The evidence of catastrophic results of GM is (at best) far weaker than for any of that.

"The evidence of catastrophic results of GM is (at best) far weaker than for any of that."

In places where it DOES occur, it has be found to far more serious than projected.
What is worse often the occurrence wasn't supposed to be possible (the plane was "supposed" to be safe, there wasn't a need to design a ship to hit large icebergs so that was outside of the projections - justification "it would have sunk anyway"  is false as the expectation of safety allows actions to pass beyond predicted events.  That is also what happen with the Hindenburg Zeppelin (also one of the latest, and safest technological marvels of it's time.)

Sadly with GMO into the food source, it can't be removed.  Just look at the cost of reducing the damage from accidental natural pests such as Yellow Foxtail grass.  Or the costs of those apple moth sprayings.  So against a GMO fault it's going to make the BP oil spill look like a day at the beach

I agree Cowboy..........and one little thing that needs to be taken into consideration is the fact that Zhangs work was not on GMO's.........
. It appears to be poor journalism by Forbes and the link on the Forbes website to Zhangs work wasn't working. 
Zhangs Study
Understanding Zhangs Study
Some biologists views on further study....

"In places where it DOES occur, it has been found to be far more serious than projected."
Where what occurs?  Could you give some examples of catastrophes resulting from GMOs?  How many have died?

One instance that I'm reminded of, as an example, is the release of genetical modified fish (can't remember the species).  They were made sterile so as not to introduce the genes into the wild population.

The hope was better meat recovery for weed removal (improve over existing stocks).

 Result: The females preferred to mate with the bigger more impressive looking fish.  Most eggs were infertile.  Population dived as new fish of that species not born. End result massive increase in weed rate as population shrunk.  Also disease wiped out more percentage of existing stocks (mules were genetically resistant) as the disease was influenced by the weed rate.

How many humans are you going to responsible for killing with your philosophies Ms de Meanour, before you accept that it's above "acceptable" collateral levels.

Then there were the reports in Europe of a few people dying because of consuming a GMO cereal product.

Took them a while to track it down, but it turned out that one of the grains had received introduced fish genetics to help resist a plant predator (a mould or bacteria IIRC).

Result was fish protein sequences turning up in the cereal based product.  A few individuals had severe allergic reaction to the fish proteins, and became plant food.

They never bothered to check for fish in the cereal based product, nor did anyone realise what was happening until much too late .
- -
So tie that with accidiental and unplanned releases and you've disaster waiting to happen.
- -
In one group of folks I'm involved with there's an old adage that is followed by the wise:
"Do not raise up, what you can't put down".

Fix _every_ genetic effect, know how to spot, treat, and fix all the genetic results in the lab and public..... BEFORE you let that genie out of the box.   'cause you won't get any wishes granted once it's wild.

Our Government indemnifies GMO sellers (largely American) from any consequences of any resultant disaster, should any arise.   If they are so safe, why is this neccessary? Should they be the cause of a disaster, why should they not be responsible for their actions?  

If they're so safe, why are the GMO companies not offering huge indemnities and care packages, including personal liabiliity assurances.     simply because they'd not sure they're safe....

#2. plasmid exchange and mutation due adaption of lower food chain organisms.

#3.   Why not simply tax all outwards transfer funds.  Will generate an equal playing field between private and commercial importers.  And as a FTT tax would also reduce the crazy peculative currency trading.

#3 hahaha seriously? Consumers aren't going to self-assess their own GST.
If Lance imports 10 shipments worth $390 each, then he's avoided $585 in GST. It would cost IRD more than that to audit him. It would cost more than that for Lance to hire an accountant to help him file a GST return.
The $400 deminimis exists because the revenue leak is substantially less than the cost of collection.

So why not replace GST with a 5% FTT on every transacation in and out of an account (not internal transfers) collected cheaply and automatically at the banks like RWT. One less piece of paper work for business to do each month. Acts as a stamp duty for purchasers and sellers of property, shares and currency as well. Encourages long term investment over short term speculation or scalping.

Yes yes yes.

because 5 rs later they'd reintroduce GST....

" And as a FTT tax would also reduce the crazy peculative currency trading." 
Not likely with a currency-trading PM and no upper house is it?


Para 1.
"so long as we’re happy to walk away if it isn’t."  Now that sounds good but this Government has shown that it is willing to kowtow to any foreign company.  I agree with KH's first post.  Surely someone in our Parliament is willing to leak it to the  press so that we can really see what is being proposed and then comment.

Take away low interest rates which are casuing asset and commodity bubbles and the "sick" inflation we have is deflatiion.
"We have seen, in the last months, deflationary tensions building up," Laurent Freixe, executive vice president of Nestle SA, the world’s biggest food company, said in an Oct. 17 conference call. "There is no growth in the marketplace, so everyone is fighting for a share of a shrinking pie."
May you live in interesting times....

The "Republicans" are off the planet and Steve Forbes views shows this up extremely well. Truly extremists with "I wish" policies with no foundations.
I dont know whether to hope they win and the disaster they create sends them and the US into the winderness for decades, or lose and the world wont be quite so insane but still in doo doo.

I haven't been out of New Zealand this century so I can't be too pedantic but I find that survey very hard to believe.

I've driven in the UK, North America, South Korea, and a few other places and I find it hard to believe that even Auckland is as bad as many cities I've been in. Pusan, for instance, was a nightmare 20 years ago. I dread to think what it's like now.

The M25 around London less cogested than the Auckland Southern Motorway? Really?

So what Hugh talks about is yet more cars and car miles, or build more roads. 
M25 one of the worlds biggest car parks.
Ive not been back to UK since 98, but my parents were back this year. To do the south half of the m25 to get to the m4 to get them to Wales, took than 2.5 hours. Normal trip to Wales, < 4hrs, taken me 7 before now.

Yeah, I almost missed a flight because I couldn't get off the the M25 turnoff to Heathrow. Had to go a couple of off-ramps further and wend my way back through suburbia.

And getting off UK motorways when the outside lane is chock-a-block with bloody great trucks doing 70mph is no fun either. Half the time you can't see road signs because of the trucks. I imagine sat-nav would be obligatory nowadays.

Considering what I've seen on camera and through friends in other countries....
...I would consider the evidence of my information strong enough to consider whoever reported NZ worst to be wilfully misleading.  Not just wrong, wronger than wrong. Not just reject their report...but every report they might do AND any publisher foolish enough to report it.

Do we have professional hitchhikers in NZ just so people can carpool? 
Are the waiting times in and out of cities over 3 hours?
How much faster is a bicycle at 50% of congestion point, than a car to get to destination (a friend in the UK reports car drivers having road rage because bikes can move so much faster, and that's not even the worst 3 cities).
Last time I checked no city in NZ gets grid-locked.

NZ (and Australia) are late comers in the overpopulation stakes, so by volume we're not doing well but that's because we haven't needed it.

M25 gridlock is hardly new.
This year I thought I would fly from Paris, to save 500 bucks on the trip into Heath Robinson Airport.
(They obviously do not spend their money on facilities at HRW, so must be a great way to tax the travail-err and increase profit marginally, moreso than Paris, but 500 bucks to fly 300k is a bit steep...and that was one way, especially on their own bleedin airline and ours)
So booked a coach to St Pancreas.
Then a train via Eurowed Tunnel to gaye Paris Hilton. (Gotta have perk or two)
Then a train to Generally Charles de-gaul Airport. The gaul you say, ask a POM why??.
There is an old joke about English being the universal language of politics and the Nato Organisation etc, because they can all understand it to a certain extent.
But De Gaul did not like this, when he became El Presidente...
(Though he called England home and a safe haven for a number of years, one of the few free French to do so, as he did a runner).
However,  a certain UK General put him right, said he would have had to learn German instead, if it hadn't been for the POMS, Yanks, Kiwis, Sauf Effricans, Canadians, mostly murdering a common language and killing off Hitlers Youth on his behalf.
Back to the ring rode.
The coach trip was the longest to go a mere 100miles. 4 Accidents gridlocked M25 car park for hours and the suburbs of London was enetered in rush hour.
(Why do they call it rush-hour, we never hardly moved from one hour to the next)..
Just how much money,  gas and work hours are wasted idling around that ring rode, 4 lanes, wide, Ferraris going as fast as a dead dog and trucks parked for free, but no where to pee..???.  Luckily the coach had facilities.
Possibly an economiss can tell me, possibly not.
No wonder there is global warning.
Engine heat alone would do it and the fumes, no need to smoke, nor worry about Fukinshima....there.
Nearly missed the Eurowed Star train, having allowed a fair degree of lee-way for the freeway.
(Petrol and Diesel taxes, more than here....FREE WAY.....not bleedin likely)
The coach ticket though was cheap 10$.
And I took some film of the journey.
Still shots mostly. Nothing moving.
Was able to make Paris by the skin of my teeth and able to spend a lot of pleasure enjoying her charms, if not money saved and time is not precious, thankfully.

Maybe the M25 isn't considered congested as they're using the number of people passing in and out as the "traffic level". :)

Reminds me of the Dr Who episode.

Re the above Escaping liquidity traps article, which is excellent, I wonder if we also have the same problem with the Christchurch rebuild. The expected stimulus has been slower and smaller than expected. Re-insurers have only paid out a 1/4 of the expected figure. The multiple events of the earthquakes and the complications of the shared government EQC and private insurance nature of the industry have been blamed.
But is the real problem our British based planning system, similair to the 1947 Town and Country planning system that is inhibiting the insurance payouts being transferred to building activity. This would also explain why the insurance industry wants to move sum insured payouts.

Hugh interesting comments about Christchurch's political history.
If Tory politicians have been time wasting eunuchs on housing affordabilty then the lefties are wilfully naive on the issue.
I hope you are right that Lianne Dalziel is knowledgeable on the problem and solutions to Christchurch's housing woes. I  reserve judgement...

Hugh so far the Housing Accords have been ineffectual. Maybe Canterbury can do better. If I was Nick Smith or Gerry Brownlee I'd be pushing for this sort of development in Canterbury. But that would be an Accord with the Waimakariri Council not CCC...
The taxi driver I was telling about it yesterday was pretty keen I follow up with some more letters to Brownlee. So if you have any influence maybe you could pass it on.