Tobacco Taxes

So, the New Zealand government has voted 118-4 to increase the sin tax on tobacco.  The funny thing is, the move was led by the Maori party, whose supporters contain a disproportionate number of smokers who probably don’t want a tax increase, and supported by the centre-right National party, who campaigned on an anti-nanny state platform.  I’m with Eric on this:

You know who I really feel bad for? The folks who voted National thinking they’d get less nanny-state as consequence. And, worse, the folks who campaigned for them on that basis. Think harder about it next time, guys.

While I know most politicians don’t feel the need to justify the passing of laws, surely there must be some among those 118 who think that there should be some sort of reason.

Do we need to increase tobacco taxes to pay for the costs of smoking on the health system? Nope: smokers pay more than their share. On that basis, we’d decrease the excise tax considerably.

Does ignorance among smokers as to the true health costs of smoking undermine the welfare-maximising tendency of free choice, meaning we need to force people to do what they’d do given full information. Nope. Even if you think ignorance justifies coercion, the fact is that people radically overestimate the health risks of smoking. If we wanted to encourage people to make the decisions they’d make if they were fully informed, we’d subsidize tobacco.

The real reason for increasing the excise tax on tobacco is a combination of arrogant paternalism and bigotry. Turia and Key think they know what’s best for you better than you do yourself and see smokers as disgusting deviants who must be punished. As Joseph Gusfield (writing about alcohol) says:

As his own claim to social respect and honor are diminished, the sober, abstaining citizen seeks for public acts through which he may reaffirm the dominance and prestige of his way of life. Converting the sinner to virtue is one way; law is another.

Anyone in favour of the increase care to offer another explanation?

Constitutional Dilemmas: The Push for Proportional Representation

Luke Malpass of the Centre for Independent Studies gives an interesting talk (based on a forthcoming paper) on proportional representation and the possibility of bicameralism in New Zealand. In my view, bicameralism is the best constitutional reform for New Zealand which has much hope of succeeding. I’m not sure why it isn’t more of a political issue.

The ‘cult’ political following that Proportional Representation electoral systems achieve in Westminster countries means that it is a matter of when not if pressure for comprehensive PR is going to arrive in Australia. New Zealand has it, Scotland has it, and British Prime Minister Gordon Brown is holding a referendum on it in England, the very home of the Westminster system of government.

Curiously perhaps, New Zealand is holding a binding referendum on the future of its Mixed Member Proportional (MMP) electoral system which was modelled on the German electoral system, and early polling indicates its future is far from assured, due to concerns about its efficacy, and widespread lack of public understanding.

CIS NZ Policy Analyst Luke Malpass discusses his research in this area, looking at MMP, how it has operated and what alternatives exist. With an introduction by CIS Research Fellow Dr Oliver Hartwich.

This Week in Moral Panic

A few stories from New Zealand over the past few days:

Cheap smokes!

“I’m bloody horrified, but not surprised at their tactics,” [Maori Party MP Hone Harawira] said. “There’s now overwhelming support from New Zealanders to get rid of tobacco in this country and companies are doing their best to hook as many people as possible now, so they’re lowering prices and upping nicotine and marketing into places like Aranui and Otara.”

“What they are doing is maximising their profit before their demise and they don’t care that they’re killing New Zealanders to achieve it,” he said.

Gangs!

Local government leaders are seeking a law change to allow other councils to follow Whanganui’s lead and ban gang patches.

Whanganui was given the right to pass a bylaw last year banning all gang insignia except tattoos from public places, but other councils wanting to do the same must get their own enabling law through Parliament.

Party pills!

Police and customs officials are worried a party drug linked to the deaths of two teenagers in Britain is now circulating in New Zealand.

It is feared the banned drug mephedrone, also known as M-cat, meow and plant food, is growing in popularity as a substitute for ecstasy. (…)

Although no cases have turned up at hospital emergency departments as yet, potential side effects of the drug range from vomitting, nausea and nose bleeds, right through to hallucinations, fits, paranoia, anxiety and depression.

The long-term side effects are still not known.

Child sexualization!

“It is time to confront the issue of ‘corporate pedophilia’ and the ‘raunch culture’ which is harming the self-esteem, body image and academic performance of our young people,” says Mr McCoskrie.

Gambling!

The findings were clear – every additional pokie machine in a community results in .8 new problem gamblers. Further, there is no evidence that this plateaus.

Graeme Ramsey, Problem Gambling Foundation CEO, says research such as this should inform gambling policy.

Stand by for regulation.

The Key Speech

John Key’s speech to parliament today hardly signalled the commitment to reform he has been talking up. Summaries of the speech here and here, with commentary with which I largely agree here.

There’s unlikely to be much in the way of tax reform.  With only the possibility of a 2.5% increase in GST, probably some minor tinkering with depreciation rules, and no indication of spending cuts, there could only be very minor reductions to income and corporate tax rates.  The rejection of the introduction of new taxes, notably on land, is good, though for public choice rather than public finance reasons. There was some empty rhetoric about welfare reform, but major changes to the god-awful Working for Families were ruled out.

One thing really pissed me off though: the suggestion of unspecified reforms to liquor licensing rules to address the Problem of Binge Drinking. This means that beer is likely to get more expensive and less conveniently available so the government seems like they’re doing something. Not cool, John.

Alan Bollard Doesn’t Understand Economics

Alan Bollard repeats the common claim that the difference in economic performance between Australia and New Zealand is due to Australia’s abundance of natural resources:

Speaking on TVNZ’s Q+A programme yesterday, Alan Bollard said Australia had been “blessed by God sprinkling minerals” and had handled its economy well. He said New Zealand would do better to make the most of the “crumbs that come off the Australian table”.

He said it was up to the Government what its own goals were, but he did not believe catching up with Australia was possible.

I haven’t watched the show, but I’m assuming Bollard is arguing that changes in commodity prices favourable to Australia explains the fact that living standards across the ditch are around a third higher. This is just not true. The 2025 Taskforce (led by Don Brash, who does understand economics) does a good job of summarizing the evidence.

While movements in terms of trade have made Australians richer in recent years, most of its improved performance came well before any significant and sustained changes in commodity prices. Further, New Zealand has fallen in income relative to other OECD countries which should have been hurt by changing commodity prices.

Bollard seems to be stuck in a materialist mindset when it comes to economic performance. While resource endowments do matter, assuming that New Zealand’s relative lack of minerals destines those living here to a permanently lower level of income than Australians is absurd. As the Taksforce points out, many high performing countries such as Taiwan and Ireland are extremely resource-poor. Many extremely poor African countries are also very rich in minerals. People become richer when the institutional environment allows them to cooperate for mutual advantage, not when there are lots of shiny things to take out of the ground.

New Zealand’s economic stagnation has nothing to do with resource endowments or commodity prices and everything to do with poor institutions. Australia’s economic reforms since the 1980s have been much more constant and thoroughgoing than ours, and have not produced the same destructive regime uncertainty.

Tobacco Prohibition

Apparently, almost half of New Zealand want to ban smoking completely:

The 2008 Health and Lifestyles Survey compiled nationwide interviews from the Health Sponsorship Council of 1608 people, including 422 smokers, and has just been published in the NZ Medical Journal.

It found 49.8 per cent of people agreed cigarettes should no longer be sold in New Zealand in 10 years, 30.3 per cent disagreed and 19.9 per cent neither agreed nor disagreed. Of the smokers surveyed, 26.2 per cent agreed and 55.3 per cent disagreed. The study also showed public support for plain, unbranded cigarette packets and fewer tobacco retailers. …

One of the study’s authors, Dr George Thomson, from Otago University, Wellington, called on the Government to take action.

“There’s now a need for politicians to embrace and act on the idea of a foreseeable and planned end to tobacco sales through a predicable timetable by 2020. The public wants more defined action to reduce smoking, and not a series of incremental steps.”

I can’t find much information on the survey from a quick googling, but I strongly suspect they asked the prohibition question in a leading way, with a variety of anti-smoking priming questions beforehand.  The other surveys they’ve conducted don’t seem particularly neutral. My worry is that misleading survey results like this could trigger anavailability cascade which makes people more likely to express support for prohibition.

Of course, I could be completely wrong: maybe half of  New Zealand really is that meddlesome.

In other news, I’ve switched to electronic cigarettes, which are a very good hedonic substitute for smoking, and much, much safer than smoking. (I bought from vapor4life, by the way, who have provided excellent product and service so far.)

If government tobacco policy was aimed at reducing the harm caused by smoking, the government would immediately redirect all tobacco control funding to promoting and subsidising e-cigs. This would be more effective and less harmful than spending money telling smokers they smell and that nobody wants to have sex with them. Unfortunately,healthists seem to think consuming nicotine is sinful. Tobacco control is less about helping people than it is aboutsignalling disapproval of those with different preferences.

I Don’t Think the Word “Land” Means What You Think it Means…

Federated Farmers are unsurprisingly upset at the prospect of a land tax:

Federated Farmers’ Rangitikei-Manawatu president Gordon McKellar said a land-based tax would be “a pretty dumb idea”.

The projected profit for a typical 220 hectare Manawatu beef or sheep farm would be about $21,000 for the next financial year but a land tax on the same property could be as much as $24,000 if buildings were included.

If buildings were included, though, we’d be talking about a property tax rather than a land tax. The rationale is to tax something which we don’t need to worry about discouraging: you can’t make more land.

As I’ve said before, I would be very much in favour of replacing current taxes with land taxes, for both moral and economic reasons. Public choice concerns, as they often do, make things more complicated.

Policing in New Zealand

Reading the online version of my local paper today, I was struck by the differences between New Zealand and the United States. The top story – so I presume it’s on the front-page of the dead tree version – has the headline “Armed police brought in to arrest man in Christchurch.”

This obviously wouldn’t be newsworthy in United States or other countries with highly militarized police forces.  American officers routinely carry pistols and, if TV shows like Cops are any indication, are willing to get them out at every opportunity. Down here, the police don’t carry firearms and the use of the Armed Offenders Squad is relatively rare.

I think this is a major factor in the general professionalism and reasonableness of New Zealand cops. While there are bound to be a few sociopaths in any police force, police brutality and arrogance seem much less common here than in the States.

Compare and contrast:

To my knowledge, no reliable measures of police misconduct exist, but I don’t think this is just denominator-blindness: pointing guns at, tasing, pepper-spraying, or handcuffing people not posing any immediate threat seems to be common practice in the US, but is very rare here.

Guns and tasers give cops a greater sense of authority and dominance. It’s a cliché, but power does corrupt. I challenge anyone to watch video of the Stanford Prison Experiment and maintain that it’s possible to give person power over another without it being abused:

A bunch of normal young guys were randomly assigned to be either prisoners or guards in a mock prison. The experiment was due to run for a week, but had to be called off early after the guards became increasingly cruel – with situations eerily similar to those in Abu Ghraib – and the prisoners increasingly accepted the dominance of the guards. Normal people became either sociopaths or cowering messes depending simply on the roles they were assigned.

There are frequent calls to arm the New Zealand police, especially after an officer is killed or injured on the job, and the use of tasers is becoming more common. Needless to say, I think this is a very bad idea. Arming the police might make them slightly more capable of fighting genuine crime, but it’s almost certain to make them into a group to be feared by innocent New Zealanders.

Opposition to an armed police force isn’t based on nostalgia, as some would claim, but an understanding of human psychology. Citizens should not be afraid of their police, and police should definitely not be pointing guns at citizens without a very good reason for doing so.

New Zealand Might Soon Need Border Angels

Immigration restrictions are about the most harmful policies around. Resulting almost entirely from the bigotry of voters (voters are much nastier than people) and a false Malthusian worldview , they prevent the poor and ambitious from seeking a better life in a freer country, while also depriving the host country of valuable new people.

Given that I think civil disobedience is an important way of limiting government power, I’ve always been a bit disappointed that nobody tries to sneak into New Zealand. Border Angels and others assisting illegal immigrants enter a country safely are putting themselves at great personal risk to do extremely valuable humanitarian work. I’d love to help out with such things, but there are no opportunities to do so on an isolated group of islands.

We do have “overstayers,” the object of inhumane crackdowns and brave resistance in the 1970s and ‘80s, but there’s nothing analogous to leaving water in the desert to help these people, since all they’re trying to do is live their lives and keep under the radar.

This might be about to change.

The government seems to think that more people will attempt to enter New Zealand illegally in the future as technology makes long ocean voyages cheaper. Apparently, the authorities are working on new ways of keeping the riff-raff out as New Zealand becomes increasingly “targeted” by the “global people-smuggling crisis.”

Sounds to me like decent New Zealanders unwilling to keep migrants out (i.e. forcibly prevent people from entering our patch of land to peacefully trade with the locals) need work on new ways of helping new migrants enter and settle in the country despite the inhumanity of government policy.

Democraphobia Goes Mainstream (Sort of)

This op-ed from Tapu Misa contains an odd mix of democraphobia (yay!) and statophilia (boo!). First the good:

The catalyst for the march was the Government daring to ignore the result of the recent ambiguously worded citizens-initiated referendum on the child discipline law.

Which means the Government is clearly undemocratic. “The people are the boss and the Government has to listen to them,” said Craig.

Well, yes and no.

The trouble with the might-is-right, majority rules brand of democracy has always been painfully obvious for those of us accustomed to occupying minority perches.

As Benjamin Franklin put it: “Democracy is two wolves and a lamb voting on what to have for lunch.” In a straight-out numbers game, the lamb always loses.

I couldn’t agree more. She goes on, however, to defend a utopian version of representative democracy:

But representative democracy, as advanced by 18th century British MP Edmund Burke, promotes a higher ideal built on notions of the common good.

Burke felt MPs weren’t just delegates, elected to do their constituents’ every bidding. While “their wishes ought to have great weight”, he argued that an MP’s “unbiased opinion, his mature judgment, his enlightened conscience” ought not to be sacrificed in the process.

“Your representative owes you, not his industry only, but his judgment; and he betrays, instead of serving you, if he sacrifices it to your opinion.”

True to his convictions, Burke backed several unpopular causes during his time in Parliament, knowing that it would probably cost him his seat (which it did), but determined to show “that one man at least had dared to resist the desires of his constituents when his judgment assured him they were wrong”.

He was right. Sometimes, the people can get it badly wrong.

Yes, they can. But so can those representatives they elect to lead. Afterall, they are elected by those same people who sometimes get it badly wrong. Representative democracy does have the capacity to mitigate the effects of moral panics and other short-term fluctuations in preferences. It does this by introducing some inefficiency into the transmission of preferences into policy, however, rather than by electing noble leaders.

There’s simply no justification for the assumption that politicians will be better than the rest of us. Sometimes politicians will make better decisions than the majority; sometimes worse. Representative democracy is still two wolves and a lamb voting on what to have for lunch, but with some slack in decision-making that may occasionally save the lamb when the wolves have only a fleeting craving.

As Crampton has argued, government implies a trade-off between the costs of populist democracy and self-serving politicians. When we give politicians more power in an attempt to reduce the mob-rule nature of democracy, we enable them to take advantage of the rest of us. As long as we have government, we can only ever strike a balance between these problems, never avoid both (unless we can elect wise and benevolent philosopher kings, of course, which seems to be the preferred option of many).

Still, it’s nice to see something other than democratic cheerleading from the MSM. I particularly like Misa’s conclusion:

As the philosopher and writer Ayn Rand observed, “Individual rights are not subject to a public vote; a majority has no right to vote away the rights of a minority; the political function of rights is precisely to protect minorities from oppression by the majority (and the smallest minority on earth is the individual).”

I find her proposed solution (and Rand’s, for that matter) hopelessly utopian, however. As long as we have government, there’s no way to navigate between the problems of mob rule and arbitrary power and have an acceptable degree of freedom.

Sounds like a good reason not to have government to me.

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