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Wednesday, July 16, 2003
Friday, July 11, 2003
CORPORATE WELFARE II: No Right Turn respond to my post yesterday defending the government's film subsidies. Unsurprisingly, they object, not to welfare for companies per se, but rather to the recipient of that welfare in this particular case.

Part of the basis for this seems to be a desire to help the poor, not the rich. But the two aren't mutually exclusive, and I don't particularly care if the rich get richer if the poor get richer too.

The other part seems to be the idea that attracting international film-makers won't "build something of lasting value to the New Zealand economy." According to No Right Turn, the film industry "produces no infrastructure, no lasting investment ... It's basically strip-mining." This is a stretch. The more films that are shot here, the higher our profile becomes, the more films are likely to be shot here, the more tourists are likely to be attracted here etc. Moreover, as the example of Weta illustrates, single films can contribute to the growth of enterprises that will survive well after they have gone. And even if they didn't, the fact that benefits are short term doesn't mean they're not benefits. Gift horse. Mouth.
Thursday, July 10, 2003
CORPORATE WELFARE?: It seems that Labour's film subsidies are unpopular with both the left and right. No Right Turn complained last week about the latest "package of corporate welfare", and Rodney Hide's been making similar noises. There are two problems with their analysis. The first is that they only focus on the proposal's costs. The second is that they appear to greatly overestimate them.

The proposal gives a subsidy of 12.5% of film and TV production costs provided at least $50 million is spent within NZ. For a $50 million film, that wouldn't otherwise have come to NZ, that's a government outlay of $6.25 million. But they will also recoup some of this in tax. (It is possible, though unlikely, that they could recoup more in tax than they will pay out.) The wages alone (assuming these make up, say, 30% of the film's budget) should generate about $3 million in tax revenue (20% of 30% of $50 million).

The ultimate figure will depend on a variety of other factors, including:

- additional taxation revenue on 'second round' expenditure (spending by those who receive the initial $50 million), 'third round' expenditure and so on;
- the number of films qualifying for the subsidy would have been produced in NZ anyway (and therefore don't generate extra tax revenue);
- inflationary pressure resulting from increased demand (which would erode the value of the tax revenue);
- compliance costs (e.g. of collecting the taxes) etc.

However, the point is that the costs are unlikely to be anywhere near as high as either No Right Turn or Mr. Hide assume. Once we take into account the overall effect on the economy of the extra investment the proposal should generate, this doesn't seem like such a bad deal after all.

It may be easy politically to label this as welfare for Hollywood fat cats, but if there's one thing I'd trust Labour not to do, it's pander unnecessarily to corporate interests. I don't think this proposal does anything of the sort.
Tuesday, July 08, 2003
WHERE IN THE WORLD IS NZPOLS: It may be vaguely surprising for readers to learn that NZPOLS isn't entirely located in New Zealand at the moment. In fact, I'm currently living in the beautiful, cosmopolitan colonial city of Quito, the capital of Ecuador. I'm here for a couple of months doing fieldwork for my master's thesis (The Political Economy of Dollarization in Ecuador).

So, because I can, I'm going to interrupt the regular broadcasts for a small slice of la vida en Quito. In particular, to relate an odd thing that happened a day or so ago, one of those semi-regular events that makes me thank the gods I have a NZ passport and can leave at any time and return home to our paradaiso casi perfecto.

So a couple of days ago I was in Café Lennon, about 3 minutes from home. It´s a narrow and crumbling café with mismatched chairs and tables which spill out onto the footpath where the streetkids hang out. I ordered a té coca (translated on the English side of the menu as 'cocain tea') but they brought me a café con leche instead that was black and thick enough to suffice.

I sat facing the window, the only customer, when suddenly a police truck rushed by. Then another. The waiter shouted and ran out into the street. He grabbed a table from outside and threw it inside the door where I was sitting. Then he did the same with two chairs. A third police truck came, going a bit more slowly. I couldn't be sure, but it looked oddly like the police were picking up the tables and chairs too and putting them in their trucks. The police were definitely shouting a lot, and the waiter was shouting back, and he and an old man who appeared from somewhere started gathering as many tables and chairs as they could from outside and stacking them up in front of the door as fast as they could, yelling at each other to hurry up. The whole thing took about 30 seconds.

I sat kind of bemused, then once the two guys had brought everything inside, I went to the window and saw the police disappearing around the corner. The back of the last truck was full of furniture. The café to the right still had ten or so tables outside full of gringos and their waiters hadn´t made any moves to get them inside.

The old man counted the furniture and said, "They took two chairs and a table!"

"What's going on?" I asked the younger waiter. He told me to wait, and he and the old man arranged the tables as best they could in the tiny café, then went and stood in the middle of the road, pointing in all directions.

Finally they came back in and the old man announced, "They're bad men. They're robbers."

The younger waiter grabbed a chair (no shortage) and sat down with me. He explained that the café needed an official permit to put tables outside, but that they couldn't afford to pay the bribes that the municipal police demanded to process their application. And so the police come by every so often -- this was the second time that week -- and steal their tables. The café to the right pays the bribes, and so it isn´t touched. Apparently it's the only one in the street -- all the others are subject to table-and-chair raids.

Reminds me of a Spanish lesson I had in Guatemala once. It was immersion Spanish, so all the explanations of meanings and grammar were in Spanish as well -- in fact, my teacher didn't speak any English. He was trying to explain the word ´fear´, which I didn´t know. And the first example he thought of was, "It´s the emotion you feel when you see a police officer".
Monday, July 07, 2003
CORNGATE II: On some levels, the recent discovery of genetically modified corn in Gisborne isn't particuarly interesting. Even assuming you accept that GE is a bad thing, in the long term, some amount of genetic contamination is unavoidable, and this 'scare' simply demonstrates that. At another level however, it illustrates a peculiar paradox that the Greens find themselves in: they need these very scares (which they ultimately want to prevent) in order to maintain public support for their position. This necessitates treading some rather delicate lines.

The Greens want to run with their instincts, and scream about how much damage this discovery will do to the NZ economy. But taking this too far is dangerous. If GE scares like this can do 'huge' damage to our economy, even under a moratorium, then it wouldn't seem we'd have a lot to lose from going the whole (genetically engineered) hog. If we're going to wear the publicity costs of GE 'contamination' regardless, then we might as well try to tap into some of the benefits as well.

As such, the Green's have tried to focus attention on ERMA: claiming that it isn't capable of providing adequate safeguards against genetic 'contamination' (even though in this case, it was well within 'safe' thresholds). But even this path is fraught with peril: saying we shouldn't lift the moratorium because ERMA is incompetent creates the impression that if ERMA were strengthened, it would be okay to open up a bit more. Ultimately, it seems it would actually be in the Green's interests for ERMA to be a little incompetent, and let in enough GE crops to give us all a good scare every now and then, if that meant they could retain the moratorium.

Ah, the joy of politics.
BUYING JUSTICE: Stephen Franks has jumped on the Weekend Herald's 'people shouldn't be able to buy justice' bandwagon. This isn't something I usually have a great deal of time for: it's sensible to take offers of reparation into account in sentencing. But today I thought he had a point.

It wasn't this:

"No one should be able to expect to buy a reduced sentence. Rather, they should know that if they have the means, yet have not offered amends, the sentence will be harsher."

Superficially this seems reasonable, but it doesn't actually avoid the buying justice problem at all: reparations still 'buy' you a lower sentence than you would otherwise get; it's just that under Mr. Franks' preferred scheme you start from a higher baseline. In other words, it's simply a disguised call for tougher sentences. (There are of course valid arguments in favour of tougher sentences, but if you want them, you should argue for them explicitly, not by sleight of hand.)

It was this:

"these offers [should be] enforceable as court orders, and [we should] allow judges to fix a higher sentence to be served if the criminal renege[s] on the offer."

It seems fairly obvious that if reparations are to be taken into account in sentencing, we should at least attempt to guarantee that they're paid. Nonetheless, while Franks' suggestion may ultimately be right, the issues are a little more complex than they first appear. For starters, we don't actually know the number of offers that are reneged on: the figures quoted by the Herald - that 15% of reparations are never paid - include both sums offered by offenders and sums ordered as reparation by the courts. I suspect that the latter, which are already legally enforceable, constitute the larger part of this, so Mr. Franks suggestion may not make a great deal of difference here.

Moreover, while one would think that anything that reduces the percentage of reparations not paid out would still be a welcome change, this isn't necessarily true, if it simultaneously manages to shrink the overall pool of money being offered. Even if offenders would ultimately be able to pay a particular sum, they may be less willing to offer it if they know they can be made legally accountable for failure to meet their obligations (and given an even higher sentence than they would have originally attracted.) If this effect outweighs the that of a reduced default rate, then we might actually be worse off making reparation offers legally enforceable. Whether or not this would be the case depends upon a number of factual assumptions, but they're not completely implausible ones. (I got a bit mathsy and decided to try to demonstrate this more formally below. But it's as much for my own edification as anything else. Feel free to ignore it.)

Addendum: Boring Maths
I assume the following.

(a) The percentage of reparation offers not currently paid is about 10%.
(b) The percentage of offers that would still not be paid even if the offers were legally enforceable is about 2%
(c) The likely reduction in the amount of offers made as a result of their being legally enforceable is about 10%
(d) We value alternative punishments (such as longer jail sentences) for people who don't pay at about 80% of the value of the the reparations.
(e) In about 20% of cases where reparations are offered but not paid, it isn't feasible to impose other sentences (e.g. because the only option for the paticular type of offence in question is a fine anyway).

The value of the alternative punishment/reparation regimes can be approximated by something along the lines of the following equation:

U = R + 0.8A

where R is the amount of reparations paid, and A is a measure of alternative punishment meted out (discounted for the reason given in (d) above.)

Un is the situation where offers are not legally enforceable; Ue is the situation where they are.

The amount of reparations paid, R, is determined by the following equation:

R = Q*(1-d) ; where Q is the total amount of reparations offered and d is the default rate on these offers.

Under scheme n:

Qn = 100, dn = 0.1, and An = 0


Rn = 100*(1-0.1) = 90; and

Un = 90.

Under scheme e:

Qe = 90, de = 0.02, and Ae = 0.8*(Qe*de)


Ue = 90(1-0.02) + 0.8*[0.8*(90*0.02)] = 89.351

As Un > Ue, on this utilitarian style approach, leaving the rights unenforceable would be a better solution. It's tight, and the assumptions that lead to it are far from watertight, but the point is not that Franks is wrong, just that he's not obviously right.

NB: This obviously doesn't take account of distributional concerns. We may think it's better that some victims who get something under scheme e (as opposed to nothing under scheme n) is worth the overall reduction in what the rest get. But this will also depend on how many offenders no longer offer to pay any reparations at all as a result of them becoming legally enforceable.
Sunday, July 06, 2003
THE SAGA CONTINUES: Kiwi Pundit reckons that the Privy Council's preference for upholding individual rights against government meddling, and thus his preference for the Privy Council, isn't about ideology. Instead, he claims it's based on the well-established legal principle that:

"we should be free to act as we please unless the law says otherwise, [which] is not connected with any particular ideology that I am aware of."

While it's a nice try, I don't think he quite manages to extract himself from the charges of hypocrisy I levelled against him previously. Here's why.

Kiwi Pundit's case relies on the truth of two propositions:

(1) that the 'freedom to act' principle (F) isn't based on a particular ideology; and

(2) that Privy Council decisions he likes (because they protect individual rights) are justifiable on the basis of (F) (or, to put it another way, that (F) protects individual rights).

If either is false, then it seems difficult to escape the conclusion that Kiwi Pundit's Privy Council fetish is based on ideological bias. The problem (for him) is that they're mutually exclusive: he can either advance a non-ideological version of (F) that doesn't protect individual rights; or he can protect individual rights by adopting an ideological version of (F); but he can't do both. (The impression that he can arises out of ambiguity in in his use of word 'law'.)

In one sense of course, Kiwi Pundit is right that (F) is not connected with any particular ideology. On this version of the principle, "we should be free to act as we please unless either legislation or the common law says otherwise." However, it is difficult to equate this with the protection of individual rights. If (F) allows judge-made common law to legitimately infringe individual rights, it cannot provide any independent reason why judges should favour rights protection. Any independent preference for rights protection must therefore be based on ideology.

Kiwi Pundit tries to get around this by adopting an alternative form of (F), under which "we should be free to act as we please unless legislation says otherwise." This appears to save (2) because it seems to allow infringements of individual rights only when these have been debated by Parliament. In fact, it doesn't even accomplish this much: the principle that 'we are free to act unless legislation says otherwise' would allow individuals to breach each other's rights where Parliament has not legislated to prevent this. (It would, for example, require the abandonment of tort law, and allow us to negligently injure others without being obliged to pay any damages at all - let alone exemplary ones.)

Moreover, even assuming that this version of (F) can save (2), it can do so only by adopting a particular ideological stance: saying that only Parliament should be able to impair individual freedom creates (surprise) an explicit bias in favour of individual freedom. Kiwi Pundit tries admirably to dress this up as a bias in favour of democracy, claiming that allowing judges to infringe such freedom reduces democratic accountability. But it's not particularly convincing. Parliament can always pass laws to overrule judicial decisions if it wishes, just as it can pass laws to overrule individual rights. The only thing that changes is whether the the default position is more or less libertarian; neither solution is any more or less democratic.
Friday, July 04, 2003
THE ON-GOING SAGA OF THE SUPREME COURT: Kiwi Pundit has an extensive post today on the Privy Council issue. It's worth a read. He agues that we should both:

(1) create a extra judicial layer in between the current High Court and Court of Appeal (instead of a new Supreme Court above the CA); and

(2) at the same time retain appeals to the Privy Council.

The first suggestion is a fair one, which I essentially agree with. For the reasons Kearney sets out, I think it would be preferable to a new Supreme Court, (though I'm willing to wear a new Supreme Court if that's what it comes to). It does however, seem a little inconsistent with two other claims he's made.

(a) That the cost of the Supreme Court is unwarranted. If this is the case, then why is the cost of an extra appellate layer below the Supreme Court any different?

(b) That as a result of introducing an extra layer, we'll end up with law graduates filling the benches of the District Court. Now, I think this suggestion is somewhat absurd to begin with, but if Kiwi Pundit really thinks this, then can he please explain how his proposed new tier will avoid this problem?

The more interesting point is the combination of this proposal with the retention of appeals to the Privy Council. The reason: Kiwi Pundit doesn't trust our Court of Appeal, and wants the security provided by the Privy Council as an added backstop against their bungles.

He rejects my earlier argument that the Court of Appeal's failings are largely due to structural factors, claiming that they are not overworked compared with other appeal courts. I think he's stretching on this one. He argues that the US Supreme Court workload is far higher than suggested by the 79 appeals they disposed of. Fair. But the Court of Appeal's workload is also far higher than the 737 appeals they disposed of: include other orders in the NZ statistics and the numbers double. I specifically excluded such orders from my statistics in order to keep them roughly comparable. He also argues that many Court of Appeal judgments require little more than a short unanimous opinion. Fine. But does this really account for the entire disparity of 658 cases?

Kiwi Pundit does have a point: statistics can be misleading. This suggests that we should perhaps listen to judges who have sat on both the Privy Council and the Court of Appeal, and have stated unequivocally that they think the NZ Court of appeal is overworked, and that this affects the quality of their judgments.

In any event, after reading Kearney's post it becomes clear that his true concern is not the 'quality' of New Zealand judges in any impartial sense, but the fact that Privy Council decisions generally accord better with a particular ideological bias:

"The Privy Council consistently shows a respect for the rights of individuals ... The Court of Appeal ... is less willing to uphold individual rights ... the Supreme Court proposal will accelerate the NZ judicial trend away from individual rights and towards increased government power."

If this is the real reason for favouring the retention of the Privy Council, it begins to seem somewhat hypocritical to accuse Margaret Wilson of stacking a new court with judges of her own ideological persuasion, when all Privy Council defenders are really doing is trying to ensure that it remains stacked with judges of theirs. Dressing one up as 'quality' while dressing the other down as political manipulation is simply disingenuous, and only serves to emphasise why we should bring our highest court home.

Once it is accepted that judges are not simply impartial arbiters, but are in fact engaged in making 'political' decisions, it follows that those decisions should reflect the desires of the people that are affected by them, not those of judges sitting in another country. The judges appointed to our highest appellate court should be broadly acceptable to those across the poltical spectrum, but that political spectrum should be New Zealand's, not Britain's.
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