goonix

Plastic bags: industry-based solution versus regulation

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Foodstuffs have recently announced that they will voluntarily introduce a 5c charge per plastic bag consumed through their New World and 4 Square supermarkets, with the revenue generated being used for an “environmental initiative” (previous post on the issue here).

Foodstuffs account for over half of all supermarket sales in New Zealand through their New World, 4 Square and Pak ‘n’ Save brands, while supermarkets in general account for 80% of plastic bags. Foodstuffs has got its own warehouses and wide spread distribution chain. Maintaining a warehouse is a challenging task. Visit https://kljconsultingaz.com/choosing-dock-equipment/ for some tip.

This move follows the likes of the Warehouse and Borders who already charge for plastic bags (and North Island Pak ‘n’ Save stores have long charged for plastic bags, albeit for different reasons).

One might assume from this positive action by Foodstuffs that an industry-based solution to the perceived problem of plastic bag over-consumption would negate the need for any regulation. But the thing that jumped out at me from the article was this quote from the Greens Russel Norman:

“What we need now is for the Government to back up Foodstuffs’ good initiative by introducing mandatory product stewardship for plastic bags”

Why would the Government need to mandate anything to do with plastic bags when the industry is clearly finding a solution to the perceived problem? Regulation is costly, not just in terms of resources needed to enact a bill or other measure, but also due to unforeseen outcomes that may arise from such intervention. Regulation should always be a last resort. In this instance I think regulation is blatantly unnecessary.

One might argue that it is due to the threat of regulation that Foodstuffs took this action in the first instance. This may be true, we don’t know. But given the moves made by Foodstuffs and other retailers I think that to now clamour for regulation is just plain silly and unfortunately seems to be a reflection of the Greens approach to everything – regulate!

No matter what the issue, you should always give industry a chance to resolve a perceived problem before intervening.

goonix

Obvious perverse incentive of the week award goes to…

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As rightly pointed out over at Kiwiblog, when you make something free you distort incentives around use of that good or service.

The previous Government introduced a Supergold card, offering concessions and discounts on various goods and services. In all their wisdom, they offer free off-peak travel on certain public transport. One such service was the Fullers Ferry to Waiheke Island.

It has now been reported that pensioners flocking to Waiheke Island have delivered more than $750,000 in Government subsidies to Auckland ferry operator Fullers in the first five months of free travel, with an average of 200 pensioners per day taking in the journey.

Who could possibly have foreseen that response?

Matt Nolan

Raising the drinking age: Not a lifesaver

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Just saw this article courtesy of Greg Mankiw. In the article the authors talk about the impact of rising the drinking age from 18 to 21 in the US. There were two parts – a voluntary lift in some states, and later on a legislated increase for the whole country.

The key bit for me is this (highlighting by me):

The results are striking. Virtually all the life-saving impact of the MLDA21 comes from the few early-adopting states, not from the larger number that resulted from federal pressure. Further, any life-saving effect in those states that first raised the drinking age was only temporary, occurring largely in the first year or two after switching to the MLDA21.

So this isn’t saying that lifting the drinking age is necessarily a bad idea – but that it isn’t necessarily going to save lives either. In the end only the states which did it voluntarily (where it was more of a community effort) had any impact – and even that was only temporary.
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jamesz

Easter surcharge confusion

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When I had breakfast in town over Easter I was charged a 20% surcharge on everything, allegedly because their labour costs are higher over Easter. Now it’s true that they are statutorily required to pay more over the Easter break, so their labour costs are higher; however, the marginal cost of providing a meal is not. The average cost might be, but that could be defrayed over the course of a year if the firm planned to open on Easter. If the marginal cost of the meal is no different then why would you price the meal differently? Read more

Matt Nolan

Cartoon: The company economist

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Another Dilbert cartoon to complement yesterday’s:

Source (Dilbert)

What can I say – the life of a forecaster is packed with situation where you have to tell people what they don’t want to hear.

Then again – given the success of some forecasting, I wonder if a company economist saying this is a contrarian signal.  Is Dilbert’s company just about to experience a pick up in demand 🙂

Matt Nolan

Susan Boyle: Revealing institutional settings

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Like pretty much everyone I enjoyed the performance of Susan Boyle on Britain’s got talent.  I love Les Miserables and she did a great performance of an incredibly difficult song from the show.

However, what stirred me up the most was the behaviour of the crowd and judges.  Both were very dismissive to start with – undoubtably a product of the format of the social situation they were in.  Unlike many commentators, I do not believe that the crowd and judges were strictly representative of “most” of reality.

We could argue that this type of social situation represented an extremely concentrated version of reality – so that the implicit biases and signals used in society were amplified, and therefore easier to spot.  If this is the case, the dismissive nature of the crowd illustrates something quite uncomfortable about all of us.

But I disgress – following the judgments, once Miss Boyle illustrated her talent the behaviour of the crowd changed, and changed remarkably.

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