Sunday, 18 September 2016

Universal Basic Income and Time

Technology is going to change the way we work. In the research group that I work in, we have two Baxter robots. These humanoid robots are designed to effectively replace human workers in low-skill manual tasks, particularly in industrial environments. They’ve already been put in some factories in the US, particularly in small businesses. Earlier this year, researchers at Columbia University showed how a Baxter robot combined with machine learning could iron clothes. I published a paper earlier this year where Baxter could play chess against a human. Every day more applications are being revealed. These robots cost about US$25,000, which sounds like a lot until you consider that it’s roughly one year’s salary for a low-skilled worker. The robot doesn’t need to rest, it doesn’t get sick, it doesn’t need holiday pay, and generally achieves a lower error rate than a bored human doing repetitive tasks all day.

Automation, industrial or otherwise, is treated like the bane of the low-skilled worker. For researchers, simple tasks are the easiest place to start, and the technology already exists to make hundreds of types of jobs redundant – the main barrier is that it’s currently economically unviable to implement. The fear is that introducing this technology will cause mass unemployment and widening inequality. The traditional economic response to this is usually “well people can just upskill”, which is fine as a principle but not practical for many people. Upskilling requires education, education costs time and money, and not everyone has access to the necessary resources or support to “just upskill”. Even when everyone does upskill, there may not be enough jobs for all the upskilled people – just ask the legal industry.

The Universal Basic Income (UBI) seems like an attractive option to help alleviate the pressures on all people as their jobs become more uncertain and insecure. If we can provide every person in the country with a base level of income from the government sufficient for some minimum standard of living, then work is no longer a necessity for survival, but something that we do because we want to. We become more incentivised to find fulfilling work, not just work with sufficient income. Individuals become willing to take larger risks such as starting up small businesses or moving into unpaid education or volunteer work because the UBI safety net can catch them if they fail. Social welfare becomes a lot simpler, and the government doesn’t need to somewhat arbitrarily decide who is deserving of a benefit and who isn’t. I don’t necessarily agree that the UBI is the correct or only answer, but I accept that the UBI is one potential solution to address technological unemployment. However, if we are going to debate the merits of having a UBI we need to consider an important point.

My main concern with a UBI as a solution to technological unemployment is the nature of time. People losing their jobs due to advancements in technology happens gradually and in small pockets of society. In the past, this has been slow enough that humans have generally been able to adapt. When I say slow, I mean over the course of years or decades. Artisan weavers were replaced by mechanised looms, and while some people were hurt by losing their jobs, there was no broader societal upset. More recently, retail cashiers have been replaced by self-service checkouts, but this isn’t necessarily seen as a direct cause of rising unemployment. Most of these changes have been small in scale because technology doesn’t change jobs on a large scale overnight – the human element ensures that technology is introduced slowly and cautiously. Business owners are conservative, and don’t like risking the future of their businesses on some technological fad that might be outdated within six months. Technological unemployment is a continuous process, not discrete.

In most proposals for UBIs, the policy change would have to be instantaneous. One day, everyone is paying a certain level of tax and getting nothing (or a benefit), the next day new legislation kicks in and suddenly everyone is paying a different level of tax and getting a $11,000 a year. This implies that we have to identify some threshold where we say “okay, enough people have lost their jobs to technology, the UBI is needed now.” In the meantime, all the people below that threshold who have already lost their jobs will suffer. Perhaps we’ve already started to see this, with rising homelessness, rising inequality, and rising job volatility. When we apply utilitarian macroeconomics and tax policies, individuals fall through the cracks all too easily. We either have to wait for the problem to worsen and for some tipping point to happen, or bring in the policy too early and encounter unnecessary costs.

So perhaps, if we are going to have a UBI, what we need is unfortunately complicated – a gradual, slow increase of the UBI to match the gradual, slow changes to the labour market. Any policy implementation has to be discrete, putting it at odds with the continuous nature of technological unemployment, but at least making many small steps might be better than making one big step. So rather than jumping straight to $200 a week per person (and bankrupting the government), maybe we need to start at $200 a month or every two months. It’s not enough to live on, but it’s enough to start sending signals to society that the way we think about work and labour is going to change. Make it opt-in too so that people have to actively participate and understand what’s happening in order to benefit. We’d still have to initially keep some forms of social welfare benefits like jobseeker support (unemployment benefit) to help people transition between jobs (perhaps the amounts paid out for benefits can decrease as the UBI level increases). But over time, as technology makes our society more wealthy and prosperous, the UBI can increase sustainably to a level that supports all people in our country. It may feel like small drops in a bucket, but maybe that’s exactly what we need rather than pouring a jug of water into the bucket and watching it overflow.

Some would argue that this is difficult to do because it increases compliance costs, it becomes harder to educate people how this scheme works, and it become susceptible to over-reactions to short-term fluctuations rather than long-term trends. For some reason, when it comes to tax policy or social welfare policy we wait for ages and ages for changes to happen because we don’t want to confuse people by changing it too often. What I’m advocating for is a number of small changes more frequently, rather than one big change and then waiting a long time to revisit it. We already do this with the Official Cash Rate – we recognise that it’s important that for the Reserve Bank to react to the changing macroeconomic environment eight times a year rather than just once a year. Why shouldn’t we also be reacting to the changing labour market in the same way?

Of course, any movement towards a UBI requires a substantial change in how the government raises revenue too, whether that includes a true capital-gains tax on all assets, changing the tax brackets to increase the contributions of the super-rich, and/or creating incentives for multinationals to keep their money in New Zealand and pay tax rather than taking the profits overseas. The government’s expenditures would have to change too, with a hard look at superannuation, tariffs and subsidies, and social welfare more broadly too. But each of these policy changes should stand on its own merits independently, as well as together when considered in context. We can talk about whether a UBI makes sense and how to best implement it first, so that it can become a key plank of a model for how government can support society in uncertain times.

Friday, 26 August 2016

Drivers of the Housing Crisis

The Problem
Humans seek security and safety in shelter, supporting social, psychological, and economic benefits. Those without shelter are left exposed to weather, illness, and exploitation. Humans find value in shelter, and therefore markets exist to buy and sell the homes that provide that shelter.

In a free market economy, the forces of supply and demand dominate. According to Statistics New Zealand data, the number of dwellings in Auckland has increased by 30% in the last 20 years. The Auckland population has increased by 43% in the same time period. The Ministry of Business, Innovation, and Employment estimates that there is now a cumulative shortage of at least 25,000 dwellings in Auckland. Others estimate this to be larger, with the Productivity Commission estimating a shortage of 60,000 homes by 2020. Simply put, there aren’t enough new houses for new people to live in.

As a result, land prices have more than quadrupled over the last 25 years, and house prices (after inflation) have trebled in the same time period. The average house price is set to exceed $1 million in the next 12 months; this has already occurred in North and East Auckland and in some city fringe areas. The property-price-to-median-income ratio in Auckland has reached nine; the rule of thumb is that this ratio should not exceed three (although there are few big cities where this is true).

This exposes Auckland to two key risks:
1. long-term societal imbalance as the gap between homeowners and renters increases due to growing property wealth from capital gains
2. potential sudden burst of the housing bubble with collapsing property prices, impacting the wider economy, and disproportionately affecting the less wealthy

Owning housing has become inaccessible for a large proportion of the population, forcing them to rent while transferring wealth to existing homeowners. This disproportionately affects young people, with economist Shamubeel Eaqub coining the term “Generation Rent”. The high cost of housing keeps families in a cycle of poverty, with housing costs leaving insufficient funds for other basic needs, or in some cases insufficient funds for housing leaving families homeless. Widening inequality and increasing poverty is a key predictor of falling happiness within a society.

The Drivers
Stable pricing is predicated on a balance between supply and demand. Political parties, independent analysts, and media pundits all have differing opinions on whether the cause of the Auckland housing crisis is on the supply-side or the demand-side; in reality, it is likely attributable to both. Here are twelve drivers from both sides – some are from the Auckland Council Chief Economist, some are from the Productivity Commission, and some are from my own analysis.
1. High net migration into Auckland, reflecting New Zealand’s current economic strength relative to Australia and Europe, as well as a booming education sector targeting international students. In 2015, net migration into Auckland was at least 30,000. Note that net migration is both more people coming into Auckland, and fewer people leaving. This is most apparent to/from Australia; a few years ago New Zealand was (net) losing 40,000 people a year to Australia, last year we (net) gained 1,600. More stats available at TransportBlog.
2. Historically low interest rates, both worldwide and in New Zealand, reflecting efforts by central banks to stimulate their economies to avoid the long-term impacts of the Global Financial Crisis. In 2008 the OCR was at 8.25%; now it is at 2%. With low interest rates, people are more incentivised to borrow (and spend). More stats available from the Reserve Bank of New Zealand.
3. Increasing willingness by banks to fund household lending, based on international lending standards viewing mortgages as “safe lending” that are less risky than corporate lending. Household debt is now at over 160% of nominal disposable annual income. It’s set to keep going up as interest rates keep falling. More analysis available from the Reserve Bank of New Zealand.
4. A demographic shift towards smaller households, with smaller family units and an aging population. In 2013, almost half (48%) of all households in Auckland had only one or two people. More stats from Auckland Council.
5. Council constraints on the supply and usage of land in Auckland, leading to artificially low housing density that is inconsistent with density patterns in other large cities internationally. Auckland has a pretty uniform population density of 32 people per hectare beyond 2km out of the city centre; in New York it’s 100 people per hectare at 2km, in Barcelona it’s over 300 – it takes over 20km for population densities there to match Auckland levels. More stats from New York University/NZ Treasury.
6. Vocal opposition to intensification by existing ratepayers (synonymous with homeowners), expressing concerns about compromising standards of living and reducing property values. Councils and governments are (arguably) democratic and dominated by older and wealthier segments of the population. It is largely in their capitalistic self-interests for house prices to rise, increasing their personal wealth. The Productivity Commission has identified this as a “democratic deficit” due to the disproportionate influence of homeowners in local council elections and consultations. More on this from Bernard Hickey (and everyone else talking about NIMBYs).
7. Onerous and uncertain resource management requirements and building consent processes, disincentivising new developments and increasing compliance costs. It can be very risky for new developers, because they can invest millions of dollars into large-scale development, only to be blocked after a few years by rejected consents.
8. Skills and labour shortages in the construction industry, stemming from unattractive low wages and punitive liability rules. New Zealand has maintained a net deficit of construction workers for the last 30 years. More analysis from Statistics New Zealand.
9. Speculative investment, with foreign and domestic investors accounting for 43% of purchases, driven by tax-free treatment of capital gains attracting investors towards New Zealand housing. The exact proportion of foreign vs. domestic (and who counts as foreign and who counts as domestic) is controversial and uncertain. More stats from CoreLogic/Auckland Council (section 3.2.7).
10. Auckland Council’s extremely high debt levels, currently at 275% of revenues (annual borrowing costs are roughly 12% of revenues), negatively impacting the Council’s ability to build the necessary electricity, water, and roading infrastructure to support new dwellings. More stats from Auckland Council.
11. The Productivity Commission estimates that the average floor size of new dwellings has increased by more than 50% since 1989, requiring more land in order to house the same number of people. More stats from Productivity Commission (section 3.3).
12. The “leaky homes” crisis of the late 90s leading to negative perceptions towards the construction industry and causing ongoing costs to affected families and local councils. This has also made policy-makers conservative, erring on the side of caution and stringency when it comes to RMA and related reform.
A major challenge is the inelasticity of housing supply – it takes both a long time and a lot of money to build housing and related infrastructure. This limits the responsiveness of housing supply to comparatively fast changes in housing demand, creating the opportunity for imbalances to snowball into crises. This also creates the potential for overcorrection, due to the slow response of policy outcomes.

The Conclusion
Any policy that only addresses one of these drivers will not resolve the housing crisis. A combination of policies from both central and local government is required in order to rebalance supply and demand, or at least reduce the size of the currently widening gap. Perhaps this has already been happening – there have been a number of actions taken in the last few years, and it will take many more years for the effects of those actions to be seen in the housing market. We can only wait for the market to respond.

Thursday, 28 January 2016

The (Actual) State of the Nation, 2016 Edition

Back in 2014 I was bored enough to fact-check John Key’s speechwriter’s soundbites in his State of the Nation speech. Yesterday he gave his speech for 2016 in central Auckland to the local Chamber of Commerce, complete with police armed with rifles. In his speech, he mentioned Auckland 34 times, Taranaki four times, Gisborne and Blenheim and Canterbury and Wellington once each, and Antarctica as the place where Simon Bridges has currently been banished while John Key takes the credit for announcing good news about the city rail link. He also talked about the flag zero times, because it’s totally not relevant to the state of the nation at the moment. Anyway, rather than continue working on a literature review, I’ve decided to quickly look at the claims made by Key, instead of just taking his word for it.

“Global dairy prices remain low. But over time, they will recover and the New Zealand dairy sector is well-placed to attract growing numbers of middle-class customers in key markets.”
The Fonterra GlobalDairyTrade Price Index dropped to an all-time low of 514 in August 2015, and remains lower than the historical average since 2006 (in the bottom quartile). When the index was at its lowest in 2015, the price of milk solids was half the cost of production. The index did recover slightly, but has since levelled off again. In the supply and demand market, the banks forecasted that production will drop around 5 percent and thus drive prices up. The NZX Dairy Futures has prices trending up for the rest of the year. Is that a good thing for New Zealand farmers? Well it depends on why production is dropping... Price is not everything! At least that’s the optimistic view – Westland Milk Products believes that the global dairy prices will stay weak for at least another six months, blaming high production in Europe. China has been increasing their production as well, and considering they are one of the largest buyers, taking themselves off the global market certainly doesn’t help NZ. Fonterra CEO Theo Spierings last week: “There's definitely going to be pain, more pain”.

 “We remain one of the best places to do business.”
In the 2015 best countries for doing business rankings, New Zealand ranked 2nd (no change) in the World Bank’s rankings, and 2nd (up one) in Forbes’ rankings. Apparently we’re very good at allowing people to start businesses, register property, get credit, and enforce contracts, but not so good at trading across borders, resolving insolvency, and, for some reason, we’re ranked 31st for getting electricity. We were ranked 25th by Bloomberg in 2014, largely due to low scores for labour and material costs and readiness of local consumer base. We also ranked 16th in the World Economic Forum’s global competitiveness rankings.

“Consumer and business confidence is picking up and I sense a feeling of optimism among New Zealanders.”
Both consumer (based on Westpac research) and business (based on ANZ research) confidence had massive drops in the third quarter of 2015, but they both recovered in the lead-up to Christmas. Here are some quotes from the most recent reports: “the proportion of households expecting to be better off financially in a year’s time has fallen to its lowest level in four years“, “The service sector continued to be the most optimistic (32), and agriculture the least (7.5)”, “more households think that economic conditions will soften over the next five years”. Confidence has been increasing recently, but it’s still significantly lower than it was in early 2014.

 “While we've been the Government, the average wage has increased by more than double the rate of inflation.”
Does it feel like your ability to buy things has increased? Wages rising at more than double the rate of inflation should be a boon to consumption. According to Statistics NZ, between 2009 and 2015, average weekly earnings rose from $870 to $1,031 – an 18.5% increase. In the same time period, the cumulative inflation has been about 10.7% according to the Reserve Bank and about 11% according to Statistics NZ. So maybe not “more than double” but more nonetheless. As an aside, the housing part of the Consumer Price Index has risen by 19% in the same time period, and education has risen by a whopping 29.4%, so certain groups of society are being hit harder than others. In the interests of balance, communications reduced by 24% and clothing and footwear, recreation and culture, and household contents and services dropped by 3-5%.

“And New Zealand has the third highest employment rate in the developed world. That's right: Our businesses employ a higher proportion of the working age population than almost any other developed country.”
The OECD says we have the 15th lowest unemployment rate and 7th highest employment rate (out of 36). Not that there’s a huge difference, and comparative rankings probably don’t mean very much when the difference between one position and the next is 0.1%. You could have the lowest unemployment rate in the world but if that rate is 15% then your constituents aren’t going to have a very good time. Being better than “almost any other developed country” sounds great though!

“In terms of the Government's finances, under Bill English's careful management, we achieved our surplus target last year.”
True, although we should all consider where the money magically appeared from, given that only a few months prior Bill English and Treasury were preparing the public for bad news. Also, Treasury predicts a deficit for the next financial year. Apparently the Future Investment Fund (remember the asset sales?) has run out.

“The Government is also investing billions of dollars in upgrading New Zealand's infrastructure, to get the country moving - literally. Since we took office, we've invested [billions of dollars on roads, roads, roads, rail, broadband, Canterbury, schools, hospitals, housing, and other public infrastructure].”
In the interest of not just focusing on the negatives, I’m including this passage where the PM lists about $35.6 billion in spending on infrastructure since National took office and $11.5 billion over the next two years. The numbers are in the budget(s).

My Government is motivated to continue working hard for all New Zealanders.”
This claim could not be verified. Depends on your definition of “all” I guess.

Looking back at my 2014 post, I guess maybe my position on the National government has softened over the last two years. Or maybe I’m more cynical about everything. There were a lot of half-truths in this speech, but that's not really all that surprising is it? This all makes me sound quite anti-National, but honestly I think I'm just anti-everyone at the moment.

Saturday, 7 November 2015

“Go back to where you came from.”

This post originally appeared on The Co-Op, a blog of young(ish) writers of varying ideological and political perspectives.

When I was 9 years old, I went to a friend’s house to play Age of Empires. Some of his extended family happened to be there at the time, and his step-father asked me “where are you from?” Truthfully, I answered “Birkenhead”, the suburb where I lived. His response was “Don’t you be cheeky, where are you actually from?” Confused, I answered “Here?” Suddenly, he held me in a headlock and shouted “you bloody well know what I mean, where are you from?” The sounds of laughter from the rest of the room rang in my ears. I managed to mumble something like “my parents are from Taiwan.” He let go and said “that wasn’t that hard, was it?”

When I was 13 years old, I was a patrol leader at my local scout troop. One of the other scouts was sitting on an empty wooden box and swinging his legs against the sides, creating a lot of noise. I asked him to stop because the constant banging was making me uncomfortable and a little bit anxious. He said “you can’t tell me what to do, this is my country.” I had to go sit somewhere else.

When I was 15 years old, I was sitting in math class at the desk closest to the door. It was open, and a breeze was blowing in. While the class was working on some exercises, I asked the teacher if I could close the door because I was getting a bit cold. He said “If you think it’s too cold maybe you should go back to Asia.” I replied with “I was born here” and shut the door. When I later told a friend that racism was well and alive within our school she told me to “stop being ridiculous”.

I am relatively lucky because I live in comparatively multicultural Auckland, study and work in an environment where immigrants outnumber non-immigrants, and nowadays am largely safe and isolated from these sorts of interactions. Ron Mark’s comments during the first reading of the Shop Trading Hours Amendment Bill brought all the memories rushing back. He told Melissa Lee “if you do not like New Zealand, go back to Korea.” I sat in a laboratory quietly seething, unable to do any work. I don’t like these memories. I don’t like sharing these memories either, but maybe this can demonstrate to some people why the statement to go back to where you came from is offensive. I cannot bear to imagine what life must be like for migrants living in less ethnically tolerant areas of the country.

We cannot simply write this off as more of the same from New Zealand First. This is a party that has been polling between 5 and 9 percent. That’s a sizeable chunk of the electorate that believes in this party. 67% of respondents on a RadioLIVE poll said that Ron Mark’s comments were not racist. Every time any of our elected representatives engage in this kind of rhetoric, it signals to the population that this behaviour is okay. To be clear, that time Maggie Barry told Russel Norman to go back to Australia was just as wrong. But let me also say that just because one side was racist, that doesn’t give the other side free license to say whatever they want. An eye for an eye only makes the world go blind.

For Ron Mark’s NZ First colleagues to back him up only further reiterates that this behaviour is apparently okay. Winston Peters said that any claims of racism were “poppycock”. Barbara Stewart said that the comment was not racist and was “taken out of context” (when his comments were very much in the context of a racist speech targeting public holidays in Korea and India and implying that these other countries have too manypublic holidays; in fact his entire speech was laced with derision and offence). Pita Paraone said “it was said in the heat of the moment as part of the theatre of Parliament.” None of these statements are anywhere near satisfactory for a parliament that seeks to represent an increasingly multicultural nation. The closest we got was Tracey Martin saying “it’s not a statement I would have made.”

I can appreciate that Ron Mark didn’t like being told that New Zealand should “grow up”. That’s possibly a fair point to make (just because other people do it overseas doesn’t necessarily mean we should do it here), but the way he addressed that point was completely wrong. Never mind that the claims made by Ron Mark about public holidays in Korea and India and shops being closed were factually wrong anyway. As Kanwaljit Singh Bakshi said, “Your knowledge is totally zero … on any religious day in India, on a holiday, shops open.” It’s the fact that his approach makes migrants feel unwelcome, that their opinions are not valid, that they should just “shut up and conform” that is deeply problematic.

Ron Mark makes it clear that Lee and Bakshi are not real New Zealanders when he says in his speech “while we know certain people are toeing the National Party line like a little bunch of whipped puppies, back in their world they would never, ever dare stand up and say this.” His use of “back in their world” effectively says that the fact that Lee and Bakshi have been in New Zealand for 27 and 14 years respectively is worth nothing. “Go back to where you came from” is a phrase that has always been loaded with xenophobia, and I really don’t see a context where it could be used to mean anything other than “you’re not welcome because you’re not from here.”

It doesn’t matter to me that Ron Mark was directing his statement at migrants and I was born here. The common racist usually doesn’t take the time to establish my place of birth. His comments to “go back where you came from” were of the same vein as statements directed at me throughout my childhood that made me feel as if I did not belong. The intolerance and xenophobia is an ugly side of New Zealand that degrades the experience of living in this country for many. I’m sick and tired of hearing it from our MPs. They should simply be better.

In my opinion Dame Susan Devoy has been doing a great job in her role as the Race Relations Commissioner in giving some marginalised groups a high-profile voice. Earlier today she said “Kiwis born overseas have a right to a say over the country they call home, where they work, vote, pay taxes and contribute: overseas born Kiwis are not second class citizens who have fewer rights than other New Zealanders… We’re at a crossroads when it comes to race relations, we either get on with each other, and lead the world in race relations: or we take pleasure in prejudice and leave our children with a race relations crisis to deal with, it’s up to us.”

When the current generation of parliamentarians put their prejudice on display as Ron Mark did on Tuesday, it makes me feel like I shouldn’t participate because my voice is not valid. Personally, I would actually quite like the shops to be open over Easter. It would be a lot more convenient, and if someone wants to stay closed for religious reasons they can stay closed. I guess if I don’t like it the way it is now, then I should go back home… to Auckland. I’m grateful to the various people, both in and outside of the House, who have criticised the comments and refused to let it slide. It helps me to feel a bit of hope that one day this type of racism and xenophobia can be eliminated. It strengthens my resolve to stay here and try to make New Zealand a better place.

There was a small ray of humour arising from all of this for me. When the clip of Ron Mark came on the news, my Irish flatmate who moved to New Zealand recently was shocked. “Oh my god. Is that the Prime Minister?” Thankfully, thankfully not.

Sunday, 4 October 2015

The Paralysis of the Security Council in Syria

This post originally appeared on The Co-Op, a blog of young(ish) writers of varying ideological and political perspectives.
In this last week, New Zealand took two opportunities, one by Murray McCully at the Security Council and one by John Key at the General Assembly, to deplore the United Nations Security Council for failing to act in Syria. Between Bashar Al-Assad and ISIS/L, the Situation in Syria has become just as bad as, if not worse than, Rwanda in 1994. Last year, the deputy Secretary-General told the UN that a “failure of political will” led to the “cascade of human tragedy” that left between 500,000 and 1,000,000 Tutsi Rwandans slaughtered and a further two million Rwandans displaced seeking refuge in neighbouring countries. In Syria, more than 300,000 civilians have been killed (of which more than a quarter have been women and children) since 2011, leading to the current refugee crisis of over four million (registered) refugees fleeing to neighbouring countries, and a further six million domestically displaced within Syria.
It’s hard to really comprehend the numbers and the sheer scale of the problem; night after night, the news recites the statistics and we become numb to the reality that a group of people the size of the population of New Zealand is currently trying to find a new home. When it comes to determining why this has happened, the knowledge that this could all have been avoided is crushing. Since the first protests held in March 2011 in the context of the Arab Spring, and the violent response from the government, there have been many opportunities for action. Yet every time real action has been proposed, it has been shut down.
Four Security Council resolutions on Syria have been explicitly vetoed, with many more experiencing the “soft veto” – draft resolutions that never even make it to the debating chamber because permanent members have indicated that they will unconditionally veto. Every time this happens, war crimes and crimes against humanity are implicitly permitted to continue by the global community.
In 2005 the United Nations unanimously adopted the Responsibility to Protect (R2P) doctrine, which argues that sovereignty is not an absolute right, and that aspects of sovereignty are forfeited when states fail to protect (or themselves cause) mass atrocity crimes and severe human rights violations. The kicker was that UN Security Council would be the only body that could authorise military intervention. It did so in Darfur (2006), Libya (2011-2012), Cote D’Ivoire (2011), Yemen (2011), Mali (2012-2013), and Sudan/South Sudan (2011-2013). Yet it remains paralysed in the case of Syria, only managing to agree to stop the Syrian government from using chemical weapons against its own people. The Security Council had and still has a Responsibility to Protect, and it has failed to uphold that responsibility thus far.
Many, many proposals for Security Council reform have been proposed over the decades, driven by frustration over the blocking nature of the veto. The situation has only worsened over time, with reports that the permanent members now meet and discuss resolutions in private, essentially pre-determining the outcome of Security Council sessions and locking out the ten rotating elected members. To be frank, the Security Council is currently imbalanced and does not accurately reflect the true power structures of the world we live in today. A structure that allows for entrenched, self-validating authority and privilege will only cause the divide to widen over time.
What looks like the most promising reform proposal at this stage is to prevent the use of veto in cases of mass atrocities or genocide, which would align with the R2P doctrine and the arguments surrounding the “responsibility not to veto”. The proposal is only a small step towards rebalancing the Security Council, but it is supported by both France and the United Kingdom (which only makes it marginally more likely to happen).
However, this is only a band-aid solution. The Security Council’s inaction in Syria is only a symptom of the widening divide and eternal struggle between the West (US, UK, and France) and the East (Russia and China). In 2013 and 2014, a third of the General Assembly called for Security Council and veto reform in their General Debate speeches. More substantial changes will be required in order to clear the blockage that restricts the flow of political will through the Security Council.
Personally, I would support increased utilisation of UNGA Resolution 377A (“Uniting for Peace), which has unfortunately mostly become an idealised plot device for writers (I’m looking at you, House of Cards). In response to inaction by the Security Council to respond to the Korean War in 1950, a precedent was established that allows a special majority (2/3rds) of the General Assembly to override vetos in the Security Council and have “final responsibility” for restoring international peace and security. Of course, a lot of international relations and politics still limit the ultimate utility of this mechanism, but removing the bottleneck of the Security Council may be what is necessary to salvage the efficacy of the United Nations.
As the Prime Minister said: “We cannot afford to let the council go from an institution with failings to a failed institution.” Business as usual does not cut it. Without reform the Security Council will only descend into irrelevancy (and drag the entire United Nations down with it) until someone believes that they have the mandate to try something different. The uncertainty of that is unsettling, but more importantly in the meantime, the deaths continue.

Monday, 17 August 2015

Why is the TPP being negotiated in secret?

This post originally appeared on The Co-Op, a blog of young(ish) writers of varying ideological and political perspectives.

“You don’t go into a poker game with your cards laid out on the table.” – National MP Chris Bishop (at the AUSA politics week debate, 14 August 2015)

Apart from the obvious issue of comparing trade negotiations with gambling, this response creates an interesting train of thought. The proponents of the TPP have long argued that “international trade agreements are always negotiated in secret”, as if tradition can never be challenged. They argue that this is because negotiators cannot do their jobs effectively if their every move is questioned by the public. They argue that negotiators cannot achieve the best outcome for their respective countries if they reveal too much information. Maybe two months ago I would have agreed with them, but over the last few weeks I thought a little bit more about why those arguments might not hold up.

There are two key flaws with these arguments that rely on traditional models of negotiation. Firstly, international trade negotiations are a vastly different beast to confidential business-to-business negotiations, because so much information is available in the public domain about each of the parties. It is no secret that New Zealand wants better access to sell dairy in currently highly tariffed or subsidised markets. It is no secret that the United States wants to extend intellectual property protection on medical drugs in order to better incentivise pharmaceutical development. It is no secret that Vietnam and Malaysia want to keep their state-owned businesses that provide lower cost services to the majority of their populations.

These negotiation positions and bottom lines are known because we have a multitude of data with which to understand the background and context of each country. Each party to the negotiations is a government that debates in their respective houses publicly about the trials and tribulations facing their countries almost every day. It’s difficult to see how any of the parties to the negotiations could have secret bargaining positions that are unknown to the others. At a broad level, everyone knows what everyone else wants. Everyone knows what the overall goals of each state are, and everyone knows what the bottom lines of each state are. There may be some details left to quibble over, but what a state is willing or not willing to give up is largely known, and therefore not worth trying to keeping secret from the other negotiators. The lack of commonality between the bargaining positions is probably what is causing the negotiations to endlessly go on (they were started in 2009), which leads us to the next point.

The second key flaw is the assumption that there is something to be won over the other parties. When there are so many people in involved, and so many eyes scrutinising any deal, any party is going to know if they’re getting shafted pretty quickly. In traditional models of negotiation, the goal is often to come away with an agreement that is a win for you, even if that means less of a win or a loss for the other party. You can rely on underhanded tactics, from psychological manipulation to lying in order to convince the other party to take a deal that is in your interests and probably not really in theirs.

These tactics are much less likely to work when entire countries are involved. A government that agrees to and signs a deal that is detrimental to their country is likely to get hit with a referendum or voted out, and the legislation required to ratify any agreement would be not passed or later repealed. Government and trade negotiators know this – they have to push very hard not to lose in these negotiations. So there are two endgames here. One is that we follow the traditional model, and everyone pushes for their self-interest in order to “win”. If we follow that strategy, then perhaps withholding information to create an asymmetric situation to hold power makes sense. But with twelve rather diverse parties, it seems increasingly likely that this means that there are areas with no common ground, making it difficult for all parties to win.

The other endgame is that everyone pushes for compromise, in order to achieve the best deal for all parties involved. This utilitarianistic thinking would mean that some parties (probably the bigger ones) take more of a hit than others, in order to create an even and fair agreement that benefits everyone a little bit, rather than benefitting a few parties a lot. This is ultimately what should really be happening if the parties want to be able to pass a deal, because they know that a deal passed with all parties involved is much stronger than a deal passed with only half the parties on board. To do this, the parties have to co-operate, much like an anti-competitive cartel. The parties have to trust each other, and work together to find the solution that optimises towards a good deal for everyone. In this case, it doesn’t actually make sense for negotiators to withhold information from each other, because it makes it harder to achieve that optimal deal if they don’t know what each party wants.

Lastly, there’s one more important point to bring up. It is argued that if the trade agreement is not negotiated in secret, if the public is able to follow the negotiations, then the deal will fall apart. This can be argued ideologically, but to see if this stands up we only have to look at the reality. The fact that chapters of the draft agreement have been leaked has already at least partially compromised the secrecy of the agreement. The fact that the public is talking about the agreement, and that there are rallies and protests in the various countries, means that the secrecy surrounding the agreement has not been effective at preventing the public from scrutinising the deal and challenging their governments. Most importantly, despite the failure to keep the TPP out of public discussion, the negotiations have gone on undeterred. The main asserted harm of losing the secrecy of the negotiations has not eventuated.

I am not necessarily opposed to there being a trade agreement. I am not necessarily opposed to free trade, and like many TPP supporters, I will withhold judgement on the actual deal until we have seen it. But the secrecy surrounding the deal is something that I have issue with, and I am yet to read or see a good reason why that secrecy should continue. If the benefits of secrecy have not accrued, then what is the real reason for keeping the negotiations secret?

Friday, 31 July 2015

Party Vote Demographics: Part III

In this series of blog posts, I’m looking at electorate demographics from the 2013 census, and the relationship with votes for political parties in the 2014 election. This is an important disclaimer, so I will repeat it again: correlation does not imply causation. This post will look at religion, marriage, and some other claims.

“Christians vote Conservative and United Future”
In electorates where there are more people who declare a religious affiliation with …
… Christianity (all denominations) (Anglican, Baptist, Catholic, Christian nfd, Latter-day Saints, Methodist, Pentecostal, Presbyterian, Congregational, Reformed, and Other Christian), fewer people voted for the Greens (r=-0.568)
… Māori Christianity (all denominations) (Rātana, Ringatū, Other Māori Christian), a lot more people voted for InternetMANA (r=+0.829) and the Māori Party (r=+0.844)
… Baptism, more people voted Conservative (r=+0.469) and ACT (r=+0.337)
… Anglicanism, slightly more people voted Conservative (r=+0.150), and fewer people voted for Labour (r=-0.486)
… Catholicism, Latter-Day Saints, Methodists, Pentecostals, and Other Christians, more people voted for Labour (r≈+0.5)
… Judaism, more people voted for ACT (r=+0.426), slightly more people voted for the Civilian Party (r=+0.248), United Future (r=+0.221), and National (r=+0.197), and fewer people voted for NZ First (r=-0.466)
… Buddhism, a lot more people voted for ACT (r=+0.819), and fewer people voted for NZ First (r=-0.597) and ALCP (r=-0.657)
… Hinduism, more people voted for Labour (r=+0.565) and ACT (r=+0.448), and fewer people voted for ALCP (r=-0.574)
… Islam, more people voted for Labour (r=+0.603) and ACT (r=+0.446), and fewer people voted for ALCP (r=-0.587) and NZ First (r=-0.495)
… Spiritualism and New Age religions, slightly more people voted for the Greens (r=+0.146)
… no religion, fewer people voted for Labour (r=-0.313)

Discussion: As the number of non-religious people in New Zealand grows (from 29.6% in 2001 to 41.9% in 2013), the role of religion in politics should be gradually eroding away. However, we do have parties with strong ties to religious groups, such as the Conservative Party (apparently popular in electorates with more Baptists and Anglicans). There appears to be no relationship between United Future and number of religious people in a particular electorate, which is surprising given the party’s roots in the Christian-based Future New Zealand party.

There are probably some overlaps between religion and ethnicity; for example, electorates with more Māori Christianity more strongly supported the Māori Party and InternetMANA, which shouldn’t be too surprising. Religions more common among immigrants, including Buddhism, Hinduism, and Islam, followed similar patterns to correlations for recent immigrants. A few interesting observations can be made of the religious preferences of Labour and Green voting electorates, but I’m inclined to dismiss those correlations as coincidence mainly because I can’t think of any reason why those relationships should exist.

“[Insert political side here] are more likely to be married”
In electorates where more people are…
… married (not separated), more people voted for the Conservatives (r=+0.771), National (r=+0.760), and United Future (r=+0.331), and fewer people voted for InternetMANA (r=-0.505), the Māori Party (r=-0.455), and NZ First (r=-0.236)
… divorced, more people voted for NZ First (r=+0.637), the Conservatives (r=+0.273), and the Māori Party (r=+0.110)
… not (have never been) married or in a civil union, slightly more people voted for the Greens (r=+0.175), fewer people voted for NZ First (r=-0.236), the Conservatives (r=-0.752), and National (r=-0.760)

Discussion: There are claims on both sides; some people think right-wingers are more likely to be in marriages because of the religious connections, others think that left-wingers are more likely to be in marriages because of the family connections, and so on. The correlations suggest that electorates with more married people are more likely to vote right-wing, and that Māori Party and InternetMANA supporting electorates have fewer married people. Electorates with a lot of divorcees voted more for NZ First, and all the single ladies people electorates were marginally in more support of the Greens and very strongly not in support of the Conservatives or National. So maybe there could be some truth in the statement that single people are not right-wingers, until the day that they sign a bit of paper with a significant other so that the state recognises them as legally married, when they suddenly get hit by a wave of neoliberalism and realise that Colin Craig had it right all along. Maybe.

“Smart/Educated (not synonymous) people won’t vote for the Civilian Party”
In electorates where there are more people...
… with Bachelors degrees, more people voted for the Civilian Party (r≈+0.38)
… with Honours degrees, more people voted for the Civilian Party (r≈+0.52)
… with Masters degrees, more people voted for the Civilian Party (r≈+0.42)
… with Doctorate degrees, more people voted for the Civilian Party (r≈+0.52)
… with tertiary education degrees, more people voted for the Greens (r≈+0.7), ACT (r≈+0.5), and United Future (r≈+0.37), and fewer people voted for ALCP (r≈-0.4) and NZ First (r≈-0.57)

Discussion: The argument was that more educated people take politics more seriously and wouldn’t dare to waste their vote on a joke party. The evidence reasonably clearly contradicts this, perhaps suggesting that satire might be relatively high-brow or that more educated people may be more disenfranchised with the political system and don’t care about their vote as much. Electorates with more educated people also voted more for the Greens and ACT, and less for ALCP and NZ First, which could be explained by a larger number of highly educated people living in urban/city areas, and thus capturing similar voting patterns as those discovered based on ethnicity and immigration. I note that education is not necessarily a good proxy for “smart”.

“People who use the internet will vote for the InternetMANA Party”
In electorates where there are more households with…
… access to the internet, there were no relationships with party vote
… access to a fax machine, slightly fewer people voted for InternetMANA (r=-0.160)
… access to a fax machine, a lot more people voted for the Conservatives (r=+0.523) and the National Party (r=+0.602)

Discussion: Okay so maybe no one really said this seriously, but it was fun to check anyway. Keith Ng found this surprising, since he “assume[d] people with fax machines were steampunks, therefore more likely to vote Internet[MANA]”. The reasonably strong relationship between fax machines and Conservative/National was a little surprising, but then again, maybe only old rich people can afford to maintain their fax machines. All that oiling and lubricating required to get those things going. Nothing beats the feeling of slightly warm slightly waxed paper telling you how much more money you’ve made. Toasty.

One important demographic that you might be wondering about is gender. There were no correlations found between number of votes for a political party in an electorate and the number of males/females in an electorate. This is largely due to the fact that we’re dealing at this rather coarse granularity, and all of the electorates have a roughly 49/51 male/female split, meaning that there are few differences between electorates.

You might also wonder why Labour, and to a lesser degree National, do not feature in these statistics a lot. The correlations are good for picking out odd relationships that would not appear if all characteristics were randomly (normally) distributed, which are typically relationships that only exist for a few categories of a demographic. Since Labour and National have relatively broad appeal, they largely attract people from all demographic groups, enough that it makes it statistically difficult to extract a relationship.

That’s it for demographic voting correlations. There were a lot more that could have been discussed, but a lot were quite specific (for example, 60-64 year old females who speak Tagalog) and probably not all that useful to discuss at such a broad level. Interesting? Entirely useless? How you interpret the statistics is ultimately up to you.

Okay, if you wanted some more, there's an appendix with some other pointless(ly fun) correlations.

But wait, there's more! Now you can see the data yourself, and pick your choice of political party and demographic variable - I made a visualisation, available here: andrewtzchendata.pythonanywhere.com (Note that it is a work in progress, so if it is completely broken when you try to look at it, try again in a few minutes).