Tuesday, November 13, 2018

India, Singapore and New Zealand

I have just returned from a few weeks in India. It was my first visit to the subcontinent and it was an amazing experience. India is, to use a hackneyed phrase, a country of contrasts. I saw some of the most beautiful scenery I have seen anywhere (the Thar desert in particular), delved into the histories of what were some of the most advanced civilisations in the world, and met some amazing people from all levels of Indian society. But India is also, to borrow a descriptive term from Mr Trump, a shithole - somewhat literally (in view of the amount of animal and human excrement everywhere) as well as figuratively. Fortunately for Indians, their circumstances are rapidly improving as they have ditched the statism and socialist economics of the post-Independence period to adopt, in recent decades, free markets and deregulation. They have a long way to go but as with every experiment of its type, they are realising the fruits of capitalism. Extreme poverty has reduced from nearly 60% of the population in the 1970s to around 20% today, despite the population roughly doubling over that period. In fact, so successful has been India's economic revolution been that some of its biggest problems today are those associated with advanced economies - traffic congestion, air pollution and the rising cost of housing.

Singapore is a place that I have visited numerous times since the 1980s and over that time I have seen it progress from an ambitious but relatively poor city state to the one of the most prosperous countries in the world. When I first went there, Singapore's GDP per capita was 40% below New Zealand's, its dollar was worth about one-fifth of ours, there were still slum areas outside the central city, and the water wasn't safe to drink. Now its GDP per capita is 25% higher than ours, its dollar is more valuable, the entire island is clean and green and modern, and Singaporeans pride themselves on having drinking water equivalent to Norway's. It is not exactly a paragon of democracy, with the ruling People's Action Party having been in power since self-government was granted by the British in 1959 and two of the three prime ministers since then being Lee Kwan Yew and his son Lee Hsien Loong. However, Singaporeans seem well-satisfied with their political leadership and choose not to concern themselves with politics but rather get on with managing their own (increasingly prosperous) lives.

New Zealanders, by contrast, seem obsessed with politics and expect the government to micro-manage every aspect of their lives and solve every problem that confronts them. We imagine ourselves to be rugged individualists with a can-do attitude, but the reality is that we are like infants in our expectations that Nanny State will take care of us. Indians and Singaporeans alike would regard this dependency as pathetic and unbecoming. The more I travel the world, the more I realise that New Zealanders are complacent and far too self-satisfied. Our economic trajectory is not good - we continue to fall behind comparative nations in income per capita and productivity, as the following graphs show.

The graphs show that the decline in our relative economic position is a long and intractable trend. Our GDP growth has averaged around 2.5% in recent decades, whereas India and China have averaged 7.5% and 9.5% respectively. There is no reason to expect these trends won't continue and the ultimate result is that China will have a higher GDP per capita than New Zealand by about 2040 and India well before the end of this century. Is this what New Zealanders really want?

I wouldn't want to live in India today and while Singapore has its appeal, New Zealand still beats it on lifestyle. But the lifestyle of a nation is in large part a factor of its relative wealth - in other words, shitholes are such because they are poor. What is our lifestyle going to be like when we are one of the poorest countries on Earth, rather than one of the wealthier ones? It is a sobering thought.

Tuesday, October 16, 2018

Off overseas

I'm off to India for the next month so I probably won't be posting much until I get back. I may find the time to provide some impressions of the subcontinent while I am there.

Thursday, October 4, 2018

We don't need your damned 'wellbeing'

New Zealand's socialist-nationalist-environmentalist government is planning on introducing a Wellbeing budget and a Living Standards Framework (LSF) to as the rationale for its policies. The idea is that GDP alone is not a sufficient measure of a country's performance and that rather than focusing on purely economic factors, governments should also measure a range of social, cultural and environmental factors. The more I have learned about this change, the more it worries me.

Our motley coalition government is not the only one to adopt this fancy. Many Western governments, particularly in Europe, are rushing to ascribe wellbeing benefits to their policies. It is hardly surprising that the international movement towards adopting wellbeing measures has occurred during the period of anaemic economic growth since the global financial crisis in 2007 - in an era of subjectivism and relativism, if you don't like the results, you simply change the measures.

The real concern about these measures is that they presuppose government interference in every area of our lives. They assume a left-wing view of the world, i.e. that the government intervention can fix all of society's ills, but you could also argue that they are based on an extreme right-wing, nationalistic view that the collective good of the nation state is of the utmost importance. The measures become a means to entrench these world-views. For example, it is proposed to include the proportion of Maori language speakers in the measures, which is likely to lead to the entrenchment of policies such as compulsory teaching of Maori in schools (which I wrote about in a previous post).

What you don't see in this framework is any reference to individual freedom - unless it is to the pseudo 'freedoms from' discrimination and victimisation. I believe that individual freedom is the sine qua non of personal wellbeing and that any policy framework that ignores this is suspect. Focusing on government-led outcomes rather than individual freedom itself is at best counterproductive and at worst mendacious.

The government often makes matters worse. For example, one of the measures of social wellbeing they are considering is loneliness. Presumably, people like the elderly living alone will be surveyed to see whether they are lonely and the government will develop policies to address excessive loneliness, such as having a social worker call on isolated people once a week. But like all government policies, this is likely to have unanticipated and counterproductive consequences, with friends and relatives feeling they do not have to visit the elderly quite so often because they know a social worker will be regularly calling.

There is an old saying that 'what gets measured gets done'. The corollary of this is that if you can set the measurements, what you want gets done. A government that wants to interfere in every area of our lives will adopt measurements that apply to every area of our lives. Personally, I don't want a government that concerns itself with whether I am lonely or not because I consider this to be none of the government's damned business.

Thursday, September 27, 2018

Capital Gains Tax is double theft

New Zealand's Labour-NZ First-Green coalition government plans to introduce a capital gains tax under the guise of a review of the tax system carried out by its Tax Working Group (TWG). The TWG says it hasn't yet made a decision on the merits of a capital gains tax, but given that it is headed by former Labour finance minister, Michael Cullen, who never saw a tax he didn't like, it seems very likely they will recommend it. 

The idea of a capital gains tax appeals to socialists because it is a manifestation of the envy they feel towards anyone who is wealthier than them. To paraphrase H. L. Mencken, a socialist is someone with the haunting fear that someone, somewhere may be better off than they are. Socialists regard taxation as not just a means to an end (i.e. big government and redistribution of wealth), but an end in itself (i.e. punishing the rich).

A capital gains tax is a particularly insidious form of taxation because it is in effect a form of double theft. Capital gains are the increase in value of an asset and, like all goods, the value increases due to two factors - scarcity or money inflation. In the case of real estate, the obvious target for a capital gains tax, the increase in value is due to both of these factors. Where the insult to injury comes about is that the government drives both of these factors. It is driving scarcity of property because of its draconian planning restrictions and building regulations, and it is driving property inflation because it has been increasing the money supply and directing the extra money through the banks into mortgage lending.

If the value of anything increases due to inflation, there is no net gain to the economy. Inflation merely redistributes wealth (but perhaps not the sort of redistribution that appeals to socialists). So a capital gains tax on property is the government taxing you for an illusory gain that it caused. The same pernicious effect occurs when your wages increase due to inflation and you are pushed into a higher tax bracket so you have to pay more tax without seeing any additional purchasing power from your income.

All taxation is theft, but taxation on an illusory gain that is created by the government is double theft.

Thursday, September 20, 2018

Implicit bias is another political perversion of science

The phenomenon of unconscious or implicit bias training has reached New Zealand. Companies that offer the training make the claim that "scientific research has demonstrated the existence and prevalence of unconscious bias – unconscious beliefs and attitudes that go beyond our conscious perceptions of ourselves and others" and that businesses "need to give people the platform and tools [i.e. their training] to begin to mitigate bias". Some of my clients have purchased this training for their staff so I decided to look into the science behind its claims.

The foundational research for implicit bias was a 1995 study [PDF] undertaken by American psychologists Anthony Greenwald and Mahzarin Banaji. They established the Implicit Association Test (IAT), which purports to show, amongst other things, that white people regard black people as more of a threat than those of their own race. The research has received much criticism in recent years and its conclusions have been challenged in numerous other studies, most notably a 2016 meta-analysis of more than 500 studies over 20 years involving 80,000 people using the IAT, which concluded that:
    1. The correlation between implicit bias and discriminatory behaviour is weaker than previously thought
    2. There is very little evidence that changes in implicit bias have anything to do with changes in a person’s behaviour.
    Interestingly, one of the authors of the meta-study was psychologist Brian Nosek, who worked on the original implicit bias research with Greenwald and Banaji and helped create the IAT. Nosek warns in a recent article in the Chronicle of Higher Education of the "very weak overall" connection between implicit bias and discriminatory behaviour. The researchers concluded that "IAT provides little insight into who will discriminate against whom, and provides no more insight than explicit [i.e. self-admitted] measures of bias."

    The popular Canadian psychologist, Jordan Peterson, also warns that the original study did not control for the less pernicious psychological trait of novelty aversion. This is the tendency of all human beings to prefer that which is familiar. It explains why we prefer the foods, music, clothes and people that we know and that we grew up with, rather than those we don't know. It is also why most people tend to marry within their social, economic and ethnic groups. This trait is universal and applies equally to all races, and in order to control for it when testing for racial bias, researchers would need to use only subjects who were brought up and live amongst equal numbers of people of other races, which they certainly did not do in this case.

    It is clear that this is another area where science has been perverted for political and personal ends. Implicit bias is another pseudo-science act in the political left's playbook, while at the same time becoming a nice little earner for consultants who exploit well-intentioned or politically-fearful business owners and managers. It is notable that, in the Chronicle article linked above, both Greenwald and Banaji resort to the common behaviour of all politically-biased scientists, using both ad hominem attacks (e.g. Greenwald says of the lead author of the meta-study, Hart Blanton, that "He’s not a great scientist") and defamatory generalisations (e.g. Banaji likens IAT doubters to climate-change deniers) when their conclusions are challenged. That is a sure sign that their science has become too politicised and is on shaky ground.

    Tuesday, September 18, 2018

    Yes, the climate changes

    Nobody denies climate change. At least, I have never heard of anyone denying that the climate changes. The debate is about the extent to which the rise in average global temperatures is caused by human emissions of carbon dioxide from the burning of fossil fuels.

    The best estimate of the extent of global warming since 1750 is around 1ºC (e.g. see this recent paper published by the American Meterological Society). However, global temperatures changed continuously before this period as the following graph of the Northern Hemisphere proxy temperature for the past 2,000 years data shows.

    Paleoclimatic temperature data for the last 2,000 years
    Source: https://www.ncdc.noaa.gov/global-warming/last-2000-years
    You can see that temperatures have increased markedly since around 1500 but a significant amount of that warming happened before 1900. If we look at mankind's CO2 emissions, they didn't start increasing significantly until the beginning of the 20th Century and didn't really take off until the 1950s.

    The CO2 emissions curve traces a similar arc to the temperature line in red in the first graph but the increase in global temperatures started well before the rapid increase in the levels of human CO2. In fact, about half of the rise in temperatures predates the rise in CO2 from fossil fuels. So, how much of the global warming is manmade?

    The United Nations Intergovernmental Panel on Climate Change (IPCC), in its 2013 fifth assessment report, states that it is “extremely likely that more than half of the observed increase in global average surface temperature” from 1951 to 2010 was caused by human activity. In other words, up to half of the increase was not due to human activity. This is the consensus of scientists - that mankind's carbon emissions are contributing to, but not wholly responsible for, an increase in global temperatures. It is also the consensus of most people on the so-called 'denier' side of the argument. 

    So what to do about it? And should we do anything at all? Well, it depends on how much of a problem it is going to be. Looking at the first graph again, you can see that we are getting back to about the temperatures that prevailed around 1000AD - the Medieval Warm Period. There is no evidence, notwithstanding all the alarmist news reports about storms and heatwaves, that we have suffered any ill effects from the warming to date at all. We have had no increase in severe storms or heatwaves since 1950. For example, despite all the claims about the extreme weather in the United States recently, the following graphs from the National Oceanic and Atmospheric Administration (NOAA)'s Fourth National Climate Assessment show the frequency of cold spells, heat waves and the intensity of heat waves for the continental United States have mostly decreased since 1900.

    Frequency of cold spells and heat waves and magnitude of
    heat waves in continental USA since 1900

    If you do your own research for almost any part of the world you see the same thing - no increase in severe weather events anywhere (e.g. see this blog post for the figures of tropical cyclones in the South Pacific). If human carbon emissions are causing the climate to go seriously awry, then we aren't seeing much evidence of it. The same is true of the human toll of climate change. This study of deaths from extreme weather [PDF], published in the Journal of American Physicians and Surgeons, includes the following graph that shows we have a small fraction of the deaths in relative and absolute terms now compared to earlier decades.

    Global Death and Death Rates Due to Extreme Weather Events, 1900–2008
    Scientists agree that a doubling of atmospheric CO2, all things being equal, would produce global warming of about 1ºC (see, for example, this paper, which states 'Without any feedbacks, a doubling of CO2...would result in 1°C global warming, which is easy to calculate and is undisputed.'). Some scientists believe that the temperature increase will be as much as 6° or 7° but these estimates are dependent on entirely speculative feedback mechanisms and are not widely accepted in the scientific community. There is little dispute that a small amount of additional 'forcing' of global temperatures will result from feedback mechanisms. Climate scientists Nicholas Lewis and Judith Curry (for whom I have a great deal of respect) estimate the overall increase at 1.64°C. Given the rate of increase of CO2 is around 2ppm per year and we have around 400ppm currently, it will take 200 years to produce this global temperature increase assuming we do not reduce our carbon emissions from current levels at all.

    Of course, all that doesn't mean there are no serious effects of pumping billions of tons of carbon dioxide into the atmosphere year after year, but it also doesn't mean we have to abandon global capitalism because we face imminent doom, as so many climate change activists advocate. Indeed, to do so would be great folly because it is capitalism that provides the technological innovation we need to move to less dependence on the fossil fuels that enable us to live longer and better lives than ever before.

    The challenges are of physics and economics. We use petroleum because it is the most efficient and accessible store of energy we have discovered. Companies like Tesla are pushing the curve in terms of battery life, charge time and weight, but we still have a long way to go before we can refill our car in a minute and drive 1,000 kilometres without stopping. Once the technology is cheap and ubiquitous, we won't need government regulations and carbon taxes to get us into electric cars.

    The United States leads the world in reducing carbon dioxide emissions from fossil fuels. It has done so by moving to fracked natural gas for power generation and in agricultural and industrial production. Natural gas produces less than half the carbon dioxide of coal and two-thirds that of diesel oil. The development of fracking has been a wholly private-sector-led change that was done in spite the efforts of the Obama administration and many state governments to thwart it. Trump has sensibly reversed these policies and fracking has continued to grow to the point where America is now the largest producer of oil and gas in the world.

    New Zealand's coalition government is determined to turn this country into a 'zero carbon' nation by 2050. The effects of this, as I have previously posted, will be to reduce our GDP by up to 22%. New Zealand produces around 0.1% of global CO2 emissions, so nothing we will do will have any direct impact on global warming. It is purely virtue signalling and unfortunately it will have huge impact on the quality of life in this country, all to fix a problem that the evidence shows to be not particularly serious.

    Tuesday, September 11, 2018

    Maori language

    It is Maori Language Week in New Zealand, when the government promotes the speaking of the Maori language. This year it has become a rallying point for those who want to force every child in New Zealand, regardless of ethnic origin, to learn Maori.

    Maori is not a particularly unique or even standardised language. It is very similar to other languages spoken in Eastern Polynesia from whence it came, including Cook Islands Maori and Tahitian, and there were significant variations in the language within New Zealand. Successive New Zealand governments have spent hundreds of millions of taxpayers' dollars promoting the language, including establishing Kohunga Reo ('total immersion' Maori language preschools), Kura Kaupapa Māori (primary and secondary Maori immersion schools), a dedicated Maori language television channel and public advertising campaigns. Despite all this money and effort, Maori language use is declining with only 3.7% of the New Zealand population, and only 21 per cent of the (self-identified) Maori population, having a conversational knowledge of the language.

    Maori themselves appear uninterested in maintaining their own language and young Maori in particular seem far more enamoured with modern African-American culture, such as hip hop music, than their own. There is a revival of interest in Maori but anecdotal evidence suggests this is mostly confined to the non-Maori urban elite, particularly those who work in government (which insists on Maori greetings and prayers at every meeting or event, no matter how minor).

    I object to the call for the Maori language to be made compulsory in schools for two reasons. The first is that it is wrong to force children to learn something that is not of much value to them. Don't get me wrong, I think it is valuable for New Zealand children to learn languages other than English. I studied Latin, French and Spanish and have found all three invaluable - Latin in particular because it is the key to understanding so many other languages and much scientific terminology, and the others because I have travelled to many countries where they are used. I have never needed Maori and have no regrets in not learning it.

    The second reason is that making Maori compulsory will limit our children's choices of other subjects. Any parent who has assisted their child in making elective subject choices knows how difficult it is to find a combination of subjects that the child wants and needs to study, and that fit in with the inevitable scheduling conflicts at any school. Compulsory Maori will mean fewer subject choices, or less time spent on other important subjects. As the opposition ACT Party points out here, New Zealand is not exactly an international leader in our educational standards, with Year 5 students ranked 33rd out of 50 countries (and last out of English-speaking countries) in reading literacy and only 49 per cent of our Year 11 students achieving the international reading benchmark. Anything that further disadvantages our children in international comparisons should be opposed.

    The promoters of Maori language aren't interested, of course, in making our children internationally competitive - they are driven by their ideology. Maori language is a means to an end and that end is the promotion of group identity above all else. Maintaining the language is an important part of maintaining the pretence that there is an exclusive group of New Zealanders who are victims of the 'white, colonial oppression', and the teaching of Maori in schools provides a platform for the indoctrination of children in this philosophy.

    I don't want to see Maori language and culture die or be assimilated into European culture, any more than I want to see that happen to the vibrant native cultures of Mexico that I experienced recently in that country. But forcing New Zealand children to learn a language that is of little use to them is not the answer. Language and culture tend to defy our efforts to control them and, like genes, they evolve to meet the needs of the environment in which they exist. New Zealand's future lies in being a diverse, outward-looking, dynamic society and our education must reflect this. Maori language has a place, but it must be a place that is freely chosen by New Zealanders, not forced upon them.