At what cost?

February 11, 2013

Around 10,000 jobs could be created if New Zealand boosted its use of renewable energy.

. . . Chief policy advisor Nathan Argent said key findings show that the clean energy sector could give the country a much needed boost in the economy and create 10,000 jobs.

He said the findings estimate that the geothermal industry could be worth $4 billion per year to the economy by 2030 and the use of bio-energy – rather than importing oil – could save almost $7 billion per year. . .

That’s the good news in a report commissioned by Greenpeace – but there aredoubts over the figures:

Energy News editor Gavin Evans said although the research is good at highlighting what needs to be done, the job creation numbers were not reliable.

Energy analyst, Bryan Leyland was also sceptical about the findings and said they were completely unrealistic.

Jason Krupp at Stuff notes:

. . .  Where the report stumbles is on the financial side, giving no detail on the level of investment required or the economic tradeoffs, making it impossible to judge if the transformation would be worthwhile or simply a pyrrhic environmental victory.

Argent said this was a deliberate choice, with the aim of the report to spark a discussion rather than getting too bogged down in the numbers.

About  which Agnito at The Visible Hand in Economics says:

Which basically means this report tells us nothing….

As a side note, as an economist I would replace “financial side” with “opportunity cost”  as it it’s not just “money” trade offs that need to be considered…social, environmental, and any other metric that will be part of the cost need to be considered. You can’t just look at non-monetary gains on the benefit side and ignore them on the cost side.

Exactly.

It’s not hard to create jobs but creating jobs which justify all the costs is a far more difficult and complex matter.

The report mentions geothermal and bio-energy. Jobs would also be created by the development of hydro or wind generation, which are renewable but they always attract opposition  from people who don’t think the gains outweigh the costs.

The deliberate absence of financial or economic considerations merely confirms the fears of those who are sceptical of green, and often Green, campaigns which concentrate on the environment in isolation without taking into account economic and social concerns.


If we were angels . . .

November 8, 2012

Quote of the day:

If men were angels, no government would be necessary. If angels were to govern men, neither external nor internal controls on government would be necessary. In framing a government which is to be administered by men over men, the great difficulty lies in this: you must first enable the government to control the governed; and in the next place oblige it to control itself. A dependence on the people is, no doubt, the primary control on the government; but experience has taught mankind the necessity of auxiliary precautions. – James Madison (1788)

Madison was the fourth president of the USA.

Hat tip: The Visible Hand in Economics.

 


No jobs are bad jobs

April 21, 2012

The trans-Tasman tide appears to be turning as businesses choose to move from Australia to New Zealand.

That should be cause for celebration, but not for opposition MPs:

. . .  the Labour Party turned up its nose at every kind of new job available, from cigarette-roller to croupier to call centre operator, egged on by most other political parties. 

So we’re back to wanting the nanny state, now, are we?  What a luxury to feel the country is able to pass up gainful employment in legal industries. . .

These are the same MPs who have complained about losing New Zealand jobs to Asia but they can’t have it both ways:

There are complaints that firms are moving over here because we have lower wages than in Australia, and that is causing anger and concern for people that enjoy complaining.

However, these same people are also complaining that the strong NZ dollar against a number of countries (primarily China and the US) is leading us to loss jobs by making labour less competitive – in other words, by making New Zealand labour relatively more expensive, in other words by pushing up peoples real wages.

I wonder what the people doing the jobs think of the MPs’ criticism of their gainful employement?

No jobs are bad jobs and working for a low wage doesn’t have to be a life sentence. Some people might not have the ability and/or will to earn more but low-skilled work still has to be done and many who start in low-paid positions can work their way up to better ones.

Finance Minister Bill English rightly says that the increasing number of Australian companies investing and creating  jobs in New Zealand is good for the economy and will help increase  incomes:

“For the first time  in quite a few years, Australian businesses are seeing competitive  opportunities in New Zealand,” he says. “This reflects a number of  issues, ranging from the exchange rate, lower business costs, an  improving regulatory environment and the positive direction of economic  policy.

“That was conveyed to the New Zealand team of ministers  and officials at the Australian New Zealand Leadership Forum in Sydney  last week, where business leaders said they were encouraged by New  Zealand’s economic policy direction.”

Over the past three years,  the Government has implemented a wide-ranging economic programme to make New Zealand more competitive.

This includes:

  • The  Budget 2010 tax package which increased taxes on consumption and  property speculation, and reduced taxes on work, companies and saving.
  • Improvements to regulation – for example resource management laws, building laws and industrial relations laws.
  • The Government’s multi-billion dollar infrastructure programme, in rail,  roads, electricity transmission and ultra-fast broadband, to make the  economy more productive.
  • A focus on changing the incentives around welfare and work.
  • Reducing government-imposed costs on business – for example, ACC levies on  employers and the self-employed will fall by 22 per cent this year,  reducing total costs to business each year by about $250 million.

“This is a long-term programme that will continue over the next few years to  improve New Zealand’s competitiveness,” Mr English says.

“We need  to encourage companies to invest, and create jobs, including from  countries like Australia. This investment needs to come from businesses  because the Government simply cannot afford to borrow and spend at the  rate of the past decade.

“When capital is invested and management  skills improve, New Zealand companies can sell their products for higher prices in overseas markets. It’s a recipe for higher wages, more  exports and a faster-growing Kiwi economy.

We’d all be better off if our economy supported higher wages, and we’re more likely to get there by having people employed in any jobs, even if they’re low paid, than by having them unemployed.

The more people in work the better it is for them and the economy and a healthier economy supports higher wages.


Rural round-up

April 3, 2011

Current season better than last – Allan Barber blogs:

After what all processors termed a challenging season last year, the mood this season is decidedly more buoyant after a solid first four months when dry weather throughout the country produced good stock flows. Regular rain since early February in the main farming regions has slowed things down a bit, but the onset of autumn and the dairy cow cull will ensure reasonably consistent livestock availability without any likelihood of a seasonal peak.

Showing ’em how – Martin van Beynen reckoned mustering was easy:

I am often asked for advice – as in “How would you like your face smashed in?” – so it was no surprise when Steve Palmer and Kara Lynn sought my help for the autumn muster on their high- country station, Tinline Downs, near Waiau in North Canterbury.

Steve and Kara had heard about my mustering expertise via an article in this newspaper about Lakes Station near Lake Sumner.

In the course of investigating a controversial gate on a paper road, a photographer and I found ourselves in the middle of a muster run by the legendary Ted Phipps, who owns the Lakes Station with Chief Justice Sian Elias.

One of Phipps’ farmhands, a raw young lad, took exception to the position of our vehicle, blaming it for the way some of the sheep were returning through a gate.

This was nonsense, of course, and I attempted to explain that the problem might, in fact, be a lack of dogs or men behind the sadly disjointed mob coming up the road. 

This advice came from the benefit of many years mustering our eight chooks and the flock of sheep – so vast that we knew the name of each individual – on my parents’ 10-acre block.

The advice was taken very much in the spirit in which it was intended, and some very rude language ensued.

Then Phipps arrived, and some more rude language followed, in which the word “townie” was used in a less than favourable way. . .  

The original story which prompted the invitation to muster is here.

NZ wool carpets and rugs launched in US:

New Zealand rugs and carpets using strong wool drawn from Wool Equities Ltd and New Zealand Romney suppliers will be unveiled in prestigious US stores on Friday.

The Just Shorn collection will be launched surrounded by in store displays including wool bales, woolshed doors and videos of New Zealand farmers telling their stories about working with sheep and wool. About 30 rug stores and 85 carpet stores in the luxury IDG chain (part of CCA Global) will feature the collection. . .

Steve and Jane win first East Coast environment award – rivettingKate Taylor posts on the Wyn-Harris’s win:

Congratulations to Steve and Jane Wyn-Harris – the inaugural winners of the East Coast Ballance Farm Environment Awards.

You know, I’m actually looking forward to not typing that ECBFEA phrase for a while! . .

US milk production – shouting down the suply chain – Dr Jon Hauser at X-Cheque blog writes:

If you are into numbers, the trends in demand and supply are a fascinating topic and especially when you apply the concept to the dairy industry. The theory is simple – an increase in demand allows prices to rise, encouraging supply growth. As stocks and supply increase to the point of excess prices fall resulting in a contraction of supply and reset of the supply demand balance. The reality is a long way from simple and that has certainly proved to be the case in our research on the US dairy market. . .

Better communicaton = better in-calf rates – Pasture to Profit writes:

I’ve just seen a simple idea to improve communication between staff on a pasture based spring calving dairyfarm in Dorset, UK. This came to light at the “Realfarmer” discussion group…..a group for Herdsmen & Herd Managers/farm staff on pasture based dairy farms. “Tail Tape Id”…. yes that’s right “Tail Tape Id”! . . .

This is one for the X-files – Anti Dismal writes:

There have been some seriously weird things said about the price of milk recently but this comment in an article from stuff.co.nz has to be the strangest yet:

Dairy market heavyweight Fonterra is artificially inflating the price of milk in New Zealand in a deliberate campaign to lessen competition, says an official complaint to the Commerce Commission.

Now I can not for the life of me see how inflating the price of milk can lesson competition.

We wrote about the milk price investigation here, all very exciting.

However, a new article on the stuff site started with this:

Dairy market heavyweight Fonterra is artificially inflating the price of milk in New Zealand in a deliberate campaign to lessen competition

What?  This is beyond my understanding – I need someone to get in here and explain to me how increasing the wholesale price of milk will lead to a reduction in competitive pressures.

There have been some seriously weird things said about the price of milk recently but this comment in an article from stuff.co.nz has to be the strangest yet:

Dairy market heavyweight Fonterra is artificially inflating the price of milk in New Zealand in a deliberate campaign to lessen competition, says an official complaint to the Commerce Commission.

Now I can not for the life of me see how inflating the price of milk can lesson competition. . .

The Visible Hand in Economics has similar thoughts in a couple more points on milk:

We wrote about the milk price investigation here, all very exciting.

However, a new article on the stuff site started with this:

Dairy market heavyweight Fonterra is artificially inflating the price of milk in New Zealand in a deliberate campaign to lessen competition

What?  This is beyond my understanding – I need someone to get in here and explain to me how increasing the wholesale price of milk will lead to a reduction in competitive pressures. . .

GE – 10,000 years in the making – Jon Morgan writes:

Pamela Ronald is trying to talk around a mouthful of kiwifruit, yoghurt and muesli. She’s eating breakfast at the Intercontinental in Wellington and it’s the only spare time she has in a busy round of media interviews and public meetings before flying to Auckland for a conference.

Between bites she talks about food.

“I’ve just spend a few days with friends in the Bay of Islands. They fed me really well and everything I ate, except the fish, was genetically altered.”

No, it wasn’t a meal of secretly imported food from a country that allows genetic modification. It was food bought in the local supermarket.

“Everything we eat that is farmed is genetically altered,” she explains.

“It is just the result of a long line of 10,000 years of gene manipulation.”

She should know. She is professor of plant pathology at University of California’s Davis research campus. With husband Raoul Adamchak, she has written Tomorrow’s Table on the worlds-colliding idea of integrating genetic engineering with organic farming. . .

Shearing captial’s title takes a serious hit:

Te Kuiti’s quarter-century boast to being the shearing capital of the world took a hit when young Hawke’s Bay-based Far North gun Rowland Smith won the New Zealand Open final in the town’s Cultural Centre last night, without a single local hope in the final field.

For the first time since the event was revived in 1985, there were no Te Kuiti or other King Country shearers in the big final. It is thought also to have been the only time the field did not include Te Kuiti icon David Fagan, who was eliminated in the afternoon’s semi-finals.

Stirring anthem written for vegetables #997 at Will Type for Food:

We are the turnips my friend
We’ll keep on growin’ till the end . . .

(This could be a winner in Southland during Swede season).


Farmers aren’t creaming it

February 22, 2011

It’s not difficult to find out the prices farmers receive for their produce. Unless they sell by private sale the price paid for milk, stock and crops is public information.

What those who criticise us of creaming it when prices are higher overlook is that the price is an indication of gross income only and takes no account of the costs of production and other necessary expenditure.

Many also forget that the price of dairy products or meat in the supermarket aren’t a very good indication of the returns to producers.

“The current high milk prices has many thinking that farmers must be creaming it but we’re not,” says Lachlan McKenzie, Federated Farmers Dairy chairperson.

“If you look at a litre of milk, the farmer’s share expressed as revenue, is about 300 mils.

“Most dairy farmers, myself included, got less than $0.60 for a litre of milk last season. From these 60 cents, we had to pay all the costs of production including, wages, vets, tax as well as paying the mortgage.

“A small number of dairy farmers are paid more for producing “winter milk”. There are a lot of extra costs running a dairy farm through winter but even they get only a small premium on a per litre equivalent.

“So if someone’s making a mint from milk, I’d suggest looking a lot closer at retail margins.

Fonterra’s decision to freeze the price of milk came as a surprise to farmers. I suspect it’s a PR exercise because the damage to the brand of ever rising prices was deemed to be greater than the cost of keeping it down.

The Visible Hand in Economics sounds a note of caution about this move:

Now if that is what they want to do, I’m sure they have good reason.  However, lets all remember one thing:  if Fonterra decides to sell milk in NZ more cheaply than it does overseas it is taking a litre of milk that would have been more highly valued by a non-New Zealander and giving it to a New Zealander.

 That transfers funds from the co-operative – and the farmers who own it – to domestic consumers. That’s okay if it’s done for commercial reasons but what happens when the freeze comes off?

Supermarkets have followed Fonterra’s lead by announcing they won’t raise prices anymore this year but they have the opportunity to offset the impact of that by increasing their mark up on something else.

This hasn’t stopped calls for price controls which Agriculture Minister David Carter, has sensibly resisted.

David Carter says he will not be advocating the subsidising of dairy products, because there is no reason to artificially establish pricing for any of the country’s export products.

Mr Carter says high international prices for export products are good and the benefits will ultimately flow through to all consumers.

High prices for dairy products is keeping the New Zealand dollar high. If it was lower it would increase the cost of imports including fuel, food and medicine and there’d be complaints about that too.

The problem isn’t the high price of the food we produce it’s low incomes and that won’t be solved by sabotaging the exports which are the key to economic recovery.


Did you see the one about . . .

February 13, 2011

100 years ago – Kiwiblog on the background to Ronald Reagan’s tear down this wall speech.

Democracy is not freedom: an Egyptian case study – Not PC on the lack of options for those seeking a better future.

Commitment and the gym – The Visible Hand in Economics on a gym that has a financial disincentive for sloth.

The sock monster – Physics Stops finds that somethings can’t be explained by science.

Sunday Spinelessness: murdering my darlings – At the Atavism David Winter, self confessed  invertebrate evangelist, wages a reluctant war on wasps.

In memory of A.K. Grant – Quote Unquote marks what would have been Grant’s 70th birthday.

I got nothin’ – Monkey with Typewriter says goodbye.


Making a blue

September 28, 2010

When you learn a foreign language it pays to learn and take great care in using false friends. They’re the words which are the same or similar as words in your own language but have very different meanings.

In Spanish for example, embarazada looks and sounds a bit like embarrassed but it means pregnant.

Apropos of embarrassed, that’s how French MP Rachida Dati must have felt after making this blue:

Asked about overseas investment funds profiteering during a period of economic uncertainty, she said:  ‘I see some of them looking for returns of 20 or 25 per cent, at a time when fellatio is almost non-existent.’

In French, fellatio – a sex act performed on a man – is ‘fellation’, which sounds a bit like inflation, which is the same word in French and English. 

Hat Tip: Visible Hand who reckons this is why an education is economics is important.

I’m not disputing the importance of economics, but I think the problem in this instance was language.


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