Friday, December 23, 2011

Why you should be short the Euro

Hans, a middle-aged German tourist on his first visit to Orlando, Florida, finds the red light district and enters a large brothel. The madam asks him to be seated and sends over a young lady to entertain him.

They sit and talk, frolic a little, giggle a bit, drink a bit, and she sits on his lap. He whispers in her ear and she gasps and runs away! Seeing this, the madam sends over a more experienced lady to entertain the gentleman.

They sit and talk, frolic a little, giggle a bit, drink a bit, and she sits on his lap. He whispers in her ear, and she too screams, "No!" and walks quickly away.

The madam is surprised that this ordinary looking man has asked for something so outrageous that her two girls will have nothing to do with him. She decides that only her most experienced lady, Lola, will do. Lola has never said no, and it's not likely anything would surprise her. So the madam sends her over to Hans. The sit and talk, frolic a little, giggle a bit, drink a bit, and she sits on his lap. He whispers in her ear and she screams, "NO WAY, BUDDY!" and smacks him as hard as she can and leaves.

Madam is by now absolutely intrigued, having seen nothing like this in all her years of operating a brothel. She hasn't done the bedroom work herself for a long time, but she's sure she has said yes to everything a man could possibly ask for. She just has to find out what this man wants that has made her girls so angry. Besides she sees a chance to teach her employees a lesson.

So she goes over to Hans and says that she's the best in the house and is available. She sits and talks with him. They frolic, giggle, drink and then she sits in his lap.

Hans leans forwards and whispers in her ear, "Can I pay in Euros?"

HT Victor Hughes

Brent

Thursday, December 22, 2011

KiwiSlaver – I wasn’t too cynical

A basic lesson in economics is the total not just partial costs are important. Coercion and nudge virtually never produces good outcomes. Freedom is always preferable. This independent and objective assessment of the experience with the scheme to date is more than apposite…. the underlying problem is, of course, that it is very likely no political party would sign the death warrant that is reform.

KiwiSaver: An Initial Evaluation of the Impact on Retirement Saving

Published 16 Dec 2011 – N.Z. Treasury

Authors: David Law, Lisa Meehan and Grant M Scobie

Abstract

KiwiSaver is a voluntary savings scheme aimed at increasing the retirement wealth of a target population. A critical element shaping the success of KiwiSaver is the extent to which individuals participate in the scheme, given its voluntary nature; and, having chosen to participate, the extent to which their attitudes and practices toward savings have been modified by their participation. This paper presents the results of an initial evaluation to assess individuals' saving behaviour following the introduction of the KiwiSaver scheme. It is based on the findings of a national survey conducted in 2010.

We find that members adjust their savings portfolio such that only about one third of the contributions they make to their KiwiSaver account represents additional savings. Further, only 22% of respondents report that their expected retirement income would not be sufficient to meet basic living costs. Critically, regression analysis finds no relationship between KiwiSaver membership and any shortfall or excess in respondents' expected retirement income relative to either the amount needed to meet basic needs in retirement or to be comfortable.

Consequently, examination of standard measures of programme efficacy such as target effectiveness and leakage suggests that KiwiSaver has been only modestly successful in reaching the target population and that leakage to the non-target population was high. This implies that the on going cost of the scheme per target member could exceed $13,000 per year. Finally, recognising that KiwiSaver may have had broader objectives not explicitly stated in the Act, the scheme's possible effect on national saving was examined. In the long run the effect on net national saving appears marginal at best.

The full paper can be downloaded here.

Brent

Monday, December 19, 2011

The horror of Govt “stacks on the mill”

A great reminder here from Richard Epstein………

One of the enduring faiths of modern progressive thought is that omniscient policy makers can cancel out the errors of one form of economic intervention by implementing a second.

That lesson was brought home to me when I was a third year student at Yale Law School, whenever discussion turned to the perennial debate over the minimum wage. The charge against the minimum wage was that it had to introduce some measure of unemployment into labour markets by raising wages above the market-clearing price. “Not to worry,” came the confident reply.

The way to handle that imperfection is to raise the level of welfare benefits in order to remove the dislocations created by the minimum wage. If one government program had its rough edges, a second government program could ride to the rescue. Implicit in this argument was the tantalizing, but fatal, assumption of economic abundance: The government has the power to tax, and with that power, has access to a cornucopia of public funds that never runs empty—at least until it does.

This abundance-based argument is not confined solely to the minimum wage, but has been extended to countless programs of state intervention in labour, or indeed, any market. Thus in 1935, American labour law created a system of collective bargaining whereby employees bargain with a single voice. That system allows unions to seek, and often obtain, monopoly profits for their members. That system in turn reduces the number of workers hired by the unionized firms. So what is to be done with the excess workers? They should be shepherded into job-training programs, funded by the public, which would allow them to re-enter the labour force with other jobs.

Brent

Saturday, December 10, 2011

The Incredible Liteness of Occupiers

This is a current ad on Craigslist:

$1 / 15ft² – need roommate for my occupy tent (financial district)

My step father gave me his old tent to use so I can occupy the financial district. I set up a few nights ago but the cops were able to kick me out by using a big german sheapard to scare me. I want a roommate to help set up a new camp and watch my back in case the NAzis with the GERMAN dog come back to kick me out. I also have a video camera we can share in case they harrass us.

I am clean and keep a neat tent. I shave and shower every other week, we can alternate so some one is always in the tent. My girlfriend will bring food so we don’t have to leave. $1.00 rent is due upon our agreement and is due on the first of every month. It is not refundable as your dollar symbolizes your dedication to the tent and our cause.

Cats are OK, but you are not free to contact this poster with services or other commercial interests. For the pointer I thank  David Gonzalez via Tyler Cowan – all spelling errors are the responsibility of the occupier, as is the pricing model adopted for this market.

Brent