jamesz

Going vegetarian?

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A friend of mine who is passionately vegetarian pointed me to this report as a good economic reason to eschew meat:

…two World Bank environmental advisers claim that instead of 18 per cent of global emissions being caused by meat, the true figure is 51 per cent.

So am I thinking about becoming vegetarian since meat is known to be more costly than I previously thought? Of course not. As tempting as it is to see these things in black and white, it’s very unlikely that the cost of meat will ever get high enough that we cease to eat it. Rather people will substitute away from eating as much meat as the price rises.
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jamesz

Illegal downloading

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The Herald reports that most music is bought by the very same people who illegally download a lot of tracks. It says

plans … to crack down on illegal downloaders by threatening to cut their internet connections … could harm the music industry by punishing its core customers.

Now that seems like a stretch. The key here is to figure out a plausible counterfactual to the present situation. The Herald seems to be suggesting that, if these people didn’t have access to an internet connection then they’d lose all interest in music. Which is pretty unlikely! Let’s think about what might be a more plausible counterfactual.

Suppose there are two kinds of music: paid for and illegal. If illegal becomes more expensive all of a sudden – because of the risk of your internet being cut off – then two things happen. First, you’ll probably consume less music overall, because it’s more expensive now. Secondly, you’ll switch out some of your illegally obtained music for paid music because the two are substitutes. So a first look suggests that the music industry would probably be better off if the cost of illegal downloads went up, even if everyone who buys also downloads.
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Matt Nolan

More on drug policy

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Stumbling and Mumbling discusses the seemingly strange fact that public opinion is so heavily against the legalisation of drugs that pose a lower social cost than some already legal drugs.

Now the legalisation of drugs is an issue we have discussed at length here ( ).  Now if society is fully informed of the costs and benefits of drug use, then I am happy for policy to be instituted along these lines, since many drugs actually help health and make people feel better like cannabis drugs and other products, you can get online, which you can buy here and you won’t be disappointed on the quality of these products.

This does raise an interesting question for me though.  Why do countries with a closer tie to Britain (Britain, the US, NZ, Australia) seem to push an agenda of strong drug regulations when a number of other nations (the Netherlands, Portugal) tend to be more interested in allowing individual action to guide the use of these products?

What makes Anglo-Saxon countries so much more sure of their ability to centrally determine what is the best set of actions for their citizens?  What makes Anglo-Saxon governments so sure of their superiority relative to the people they are “serving”?

Matt Nolan

Should the Bank be responsible for economic structure?

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When discussing the latest OCR decision Bernard Hickey at the Rates Blog suggested that Dr Bollard should lift the cash rate in order to help “rebalance” the economy.

I have heard this suggestion from many, many, other economists as well – suggesting that this view is fairly mainstream.  Furthermore, Dr Bollard does keep mentioning the fact that “consumption” is too high and we need a switch away from consumption to exports and investment.

However, we can tell there is something fishy as soon as we listen to exporters.  They are saying they want a lower OCR, and a lower dollar, in order to stimulate exporting activity.  The fact that both a lower and a higher OCR can be justified on the basis of rebalancing tells us that there is something we are missing in this analysis.

Given my obsession with being contrarian (and the fact I actually do believe a different story this time) lets roll.

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jamesz

A Stern admonition to carnivores

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Kiwiblog and others are bothered by Nicholas Stern’s pronouncement that:

Meat is a wasteful use of water and creates a lot of greenhouse gases. It puts enormous pressure on the world’s resources. A vegetarian diet is better. For more related post o healthy eating, use this link to learn how to start intermittent fasting.

Why not also try doing healthy living through juicing? Check out a helpful site like https://www.juicebuff.com/ for more information on juice cleanses!

[Stern] predicted that people’s attitudes would evolve until meat eating became unacceptable.

Matt talked recently about why subsidizing agriculture is a bad idea, so I don’t want to rehash those arguments. What really baffles me is why Stern feels that changes in peoples’ attitudes are important. If we price greenhouse gasses, and other natural resources, appropriately then there is no need to worry about peoples’ attitudes. As Stern says, meat is far more environmentally costly to produce, so its price will rise. Meat will become a luxury that most can’t afford to eat on a daily basis. That’s something that will happen whether people consciously make a choice to become vegetarian or not.

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Matt Nolan

October 09 OCR review: Moving forward gradually

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The RBNZ just told us that the OCR is unchanged.  No surprises.  The focus was on what would happen to this statement from September:

We expect such support will be needed for some time. As a result, we continue to expect to keep the OCR at or below the current level through until the latter part of 2010.

Well this happened:

In contrast to current market pricing, we see no urgency to begin withdrawing monetary policy stimulus, and we expect to keep the OCR at the current level until the second half of 2010.

So they have moved from implying they won’t lift rates till the last quarter of 2010 to now implying that the 3rd quarter is the most likely.  Could more positive information shift them earlier?  Maybe.  Will we see a rate increase in January (like the market was pricing in)?  Not likely.