We’ve been down south, mainly offline for a couple of weeks, fencing, scrub cutting and chasing animals. Back to work now though and back to blogging too.

Upcoming topics:

• Agriculture in a carbon constrained world
• Transformation, productivity, 2025 etc
• and the usual eclectic mix

The Greenhouse Policy Coalition and Business NZ have both managed to make crucial errors in their attempts to play down the massive subsidy from taxpayers to large emitters that is embodied in the National/Maori version of the ETS. And the NZ Business Council for Sustainable Development has said nothing since reporting on 2 November that most Kiwis oppose the plan.

Fortunately, there are a few sane voices out there. Here are four:

Labour members of the Select Committee Considering the Bill:

The process adopted in respect of this bill is the worst that any of us have experienced in our time in Parliament.

…

The Treasury, the Parliamentary Commissioner for the Environment, our independent expert adviser, and the vast majority of submitters are critical of the bill. We uphold their criticisms. The bill significantly dilutes the effectiveness of the ETS, and will have a significant negative impact on the New Zealand economy and environment for many years to come. The bill ought not to proceed.

Simon Terry & Geoff Bertram: Taxpayers 84% Emitters 16%

Rod Oram: A costly exercise in hypocrisy

Brian Fallow: the ETS will cost our children

There has been a view that NZ should not seek to lead on climate change policy, but instead aim at being a “fast follower” so we don’t compromise our economy. I think this is poor economics. Apart from the deniers, we all expect relative prices to change in ways that reflect carbon (and other emission) constraints. The opportunity is to react now, so we have more time to get good at operating in that world.

$3 grand to send 100grams on a 45min round trip in a rocket.

Not a good look, Griffins is getting biscuits made in Fiji.

the analysis of industrial policy needs to focus less on the policy outcomes — which Rodrik argues are inherently unknowable ex ante — and more on getting the policy process right. In Rodrik’s words:

We need to worry about how we design a setting in which private and public actors come together to solve problems in the productive sphere, each side learning about the opportunities and constraints faced by the other, and not about whether the right tool for industrial policy is, say, directed credit or R&D subsidies or whether it is the steel industry that ought to be promoted or the software industry.

Rodrik’s central thesis is that industrial policy is a discovery process—one where firms and the government learn about underlying costs and opportunities and engage in strategic coordination. He is not ignorant of the risks of industry capture. On the contrary, he acknowledges that industrial policy is open to  corruption and rent-seeking. The natural response of (non-corrupt) bureaucrats is to insulate policymaking and implementation from private interests and to shield public officials from close interaction with business people. Rodrik’s argument is that this instinct to keep the private sector at arms-length is diametrically opposed to the need for bureaucrats to engage with business people in order to properly understand impediments to growth.

[From an MED paper released this week as part of the work of the financial markets taskforce. The Rodrik paper is supposed to be here (but it didn't work for me).]

I have long subscribed to the view that a solid grounding in the structure/practices/costs etc of an industry is essential for good policy decisions, so this rings very true. The difficult is that industry policy (whether inter- or intra-) generally has winners and losers. So the “come together” prescription is actually an invitation to a debate between opposing interests.

If policy makers could chair those debates effectively, which would include a clear separation between fact-finding and analysis, this could work very well. Thats a big if. But its worth a shot. And if you are an public official with the requisite bravery, I’d be happy to help.

First, iconic author Witi Ihimaera admits plagiarism, then a few days later he gets a $50,000 award, and now it seems that he’s done it before. As if recidivist plagiarism is not bad enough, the University of Auckland is downplaying the whole thing. At least I don’t work there anymore.

Then there are those orange billboards with the jack-bootprints that have been around town for a while. What a cringe this is: a crowd of people demanding stronger legal rights to smack their kids.

I’ll certainly be voting with my feet tomorrow, by staying well away from these twits.

And for once I’ll forgive the Royal NZ Herald for constantly front-paging violent court news. This story, about the woman jailed for thrashing her son with a hosepipe is directly relevant to anyone considering joining tomorrow’s twits. The sentencing judge said that brutal beatings of children under the guise of chastisement are almost a daily occurrence in South Auckland.

I could go on, about the financial sector and guidelines for reporters, but I gotta get to work.

But first I must congratulate the Feds for finally saying something sensible about climate change. After all these years, they’ve decided that a fart tax might actually be a good idea. Still leaves them free to rail against ETS, but at least its a nice change from the trend of the week.

The photo is a typical street transaction in Cusco, Peru where vendors rent phones by the call, though the ones I saw had their handsets chained to themselves to make theft more difficult.

Meanwhile, the Economist suggests that Iraqis may love mobile more than “freedom”. It seems that people are paying bills by texting the serial numbers of phone cards to each other, turning phone credit into a form of currency and avoiding those risky trips to the bank.

Next up, an oldie but a goodie. When mobile phones were introduced in Kerala, India,

the adoption of mobile phones by fishermen and wholesalers was associated with a dramatic reduction in price dispersion, the complete elimination of waste, and near-perfect adherence to the Law of One Price. Both consumer and producer welfare increased.

And thanks to the nice people at QJE, there is a rare ungated complete paper here.

So what would you expect in the USA? A supersized multichoice combo according to this piece from the NY Times.

But for all the complexity, cellphones American-style do have a certain supersized logic. Americans spend more money each month on their wireless bills than people in any other country. But the money we spend buys a whole lot more talk time and text messages than it does elsewhere. On average, we effectively spend about 5 cents per minute of talk time and about a penny a text message, lower than anywhere else in the developed world.

Why? Well the courts seem to have screwed up badly in dealing with situations where notice was poor. In the case of physical property, ownership rights are clear and well signalled: even if we’re neighbours, the chances of me building my shed/house on your property are very low because the boundaries are very clear and/or quite easy/cheap to ascertain. But if you get a patent registered, and its claims are worded vaguely enough, then I might well infringe inadvertently.

It works OK for chem and pharma because there are formulas that limit the scope of the claim. But its a minefield for patents on software and business methods. Which of course encourages some to craft patent applications in ways that allow them to ambush innovators after they become successful. After the book was published, the Rambus case was finally killed off by the US Supreme Court, so the outlook remains bleak.

There was an impressive line-up of speakers: lots of senior bureaucrats and academics from Europe, and Sir Colin (Pine Tree) Meads (left) as after-dinner speaker. Col said his son had converted to organics a while back and while initially sceptical he’d been very impressed with the results.

Its true that locks are not usually selected for their brains, but neither are NZ sheep farmers noted for their gullibility or willingness to break ranks. So it is surely significant that Colin Meads fronted up to speak at an organic sector conference.

Other bits from the event:

• The organic market in the USA has been experiencing double digit growth (18% in 2008) but it looks like 2009 will break this trend and come in at around 7 – 9%. Still damn good in a market where “flat is the new growth“.
• Compared with conventional methods, organic agriculture sequesters much more carbon in the soil, but the science for measuring it is still deficient
• On average, Swiss farmers get 43,000 Euros/year from the state to provide public goods such as a nice landscape, soil conservation, animal welfare etc
• NZ’s organics industry organisation OANZ was lucky to score 3 years of government funding, which has now been cut.

The size of the pie matters of course, when thinking about how it is shared. So thanks should go to the nice people at Grant Thornton who have compared (pdf) the market performance of groups of companies in NZ and Australia. The sample is biased by being bourse-bound (listed firms) but is still interesting.

Here are the rates of return on assets over the 5 years to September:

Notice that for industries supplying many of the essentials of life in NZ, the rates of return are much higher in NZ than Australia: food, building products, telecommunications, construction materials, airfreight & logistics. Further digging required.