Tag Archives: Policy wonk digest

Policy wonk digest – Spain

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One of Madrid’s many excellent street performers, this guy now needs to audition for a licence to do his thing.

  • Vodafone has sponsored one of Madrid’s metro lines, and received naming rights to its central station as a result. What was Sol is now Vodafone Sol and on many maps it is represented only by the Voda logo. I’m sure some historical purists are a bit irked by this but in a world where, like stadia, metro systems are generally highly subsidised, I’m all for them attracting corporate sponsorship like stadia too.
  • Madrid, its plazas and metro are all famous for street performers and buskers, many of whom we have enjoyed immensely. But with high levels of unemployment regulators have become concerned that there will be too many, they will be too average, and too loud. As a result street performers now need to audition for a one year license, they’re required to move spots every two hours and they can’t be within twenty five metres of another performer.
  • The audition video from one music group, who call themselves the Potato Omelete band went viral after they choose to sing their criticisms of the Madrid Mayor’s policies.
  • Unemployment in Spain in horrific. It currently sits at 23.6%, a number that is high by any standard but has recently been celebrated as the lowest since 2011. Young Spaniards we talk to find it totally implausible that we left jobs at home to travel for a year. Here, if you have a job you hang on to it as hard as you can.
  • One strategy firms are using to avoid further redundancies here is to reduce employee’s hours so that they don’t return after their lunch break. It’s like a more drastic version of the ‘nine day fortnight’ some employers in New Zealand used at the peak of the economic crisis.
  • Largely a response to a history of violence from Basque separatist group ETA, Spain has some of the most draconian ant-terror laws in the world. In many countries free speech is illegal if you use it to incite violence. In Spain praising terrorists can land you in jail too. Julen Orbe has recently been convicted for writing an article marking the twenty fifth anniversary of an ETA fighter who died in a car bomb malfunction. This New Republic account of his case, and the issues that surround it, is excellent.

Policy wonk digest – Pakistan

There weren’t as many policy tidbits on offer in Pakistan as we might have liked. Mostly what there seemed to be was an absence of government: Jamil didn’t need a permit to build his house, rickshaws regularly drove straight against the flow of traffic on a one way street. Also many of the political institutions were familiar to us, and so not very noteworthy. British colony brethren, eh. But anyway…

  • Most of the people joining us on the bus between China and Pakistan were crossing without passports. There’s a passport-like document which is easier to obtain which just lets you cross between Pakistan and Xinjiang. Turns out Pakistani passports are some of the most rubbish you can get, anyway, insofar as you can only go to a collection of sub-Saharan African states (plus Vanuatu and Samoa, obviously) without getting a visa.
  • On some sections of highway buses and minivans have to travel in convoy with armed police at front and back. Ostensibly that’s supposed to be about security. But from what we’ve heard it’s more likely because the police get some sweet bribery from the restaurants where they make the convoy gather. Very good corruption.
  • India and Pakistan are not on good terms at all, but there’s has been coordination over responses to recent floods, which have been devastating in the Punjab. That’s very good news.
  • So this isn’t technically a policy issue but it says something about the relationship between India and Pakistan. These are neighbouring countries with a combined population as large as China’s. But there is only one airline that flies directly between them (Pakistan international airlines) and even then it doesn’t go everyday. There are about four flights a week between Pakistani cities and Indian cities. Nuts.
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Policy wonk digest – Kazakhstan

  • The drink driving limit here is zero. You cannot drink any alcohol before you drive. Apparently this is widely observed because getting out of a conviction involves a big bribe. Sometimes people have problems when they have drunk mare’s milk – a traditional beverage – because it’s is fermented and a glass or two can blow the scale.
  • Most cops accept bribes. It’s common to haggle over the amount you need to pay, and to expect the officer to give you change when you pay your bribe with a large note.
  • Kazakhstan has about 500,000 more women than men in its population of 17 million. It’s not clear exactly why this is. It is partly explained by the significantly lower life expectancy of men (~64) than women (~74). But popular culture says that the over-representation of women is also felt at a younger age. Anecdotally, families keep having kids until they have son, and that might have an impact.
  • In 1997 Kazakhstan moved its capital from Almaty, in the south, to Astana, in the north. There’s now a national holiday to celebrate the move to the new capital. Coincidentally it is on the President’s birthday.
  • The President of Kazakhstan, Nursultan Nazarbayev, has been in power since independence in 1991. Before that he was the leader of the communist party in the Kazakh Soviet Socialist Republic. There are no serious challengers.
  • The President recently suggested changing Kazakhstan’s name to Quzaqueli to discourage people getting confused with other ‘stans. Basically the same as North Dakota considering dropping the ‘North’.
  • We’d underestimated how interdependent many of the nations of the Commonwealth of Independent States are. Bound together by a shared language and shared modern history these nine countries allow relatively free trade and immigration.
  • There’s a lot of advertising for the Kazakhstan 2050 Strategy. Its objective is to get Kazakhstan into the world’s 30 wealthiest countries. It’s conspicuously similar to the 2030 strategy, except it’s pushed the deadline out by a couple of decades. This conjures up for me the excellent discussion in the Hollow Men budget episode where they talk vision time frames.

Policy wonk digest: Mao not the red sun in our hearts edition

Fiona’s has just finished a great biography of Mao. It’s a hefty tome. As Fiona read I would ask her “what’s Mao up to?” It was always something dastardly. Here are some highlights.

  • Mao was Maoist in the sense that he was all about Mao. But there’s scant evidence that he was ideological, and he probably wasn’t Maoist in the sense of the particular kind of socialism.
  • Mao’s defence Minister advocated adhering to traditional Chinese ethical codes including do not do to others what you do not want done to yourself. “My principle” Mao said in reply “is exactly the opposite. Do to others precisely what I don’t want done to myself.”
  • In 1957 Mao opened his regime up to criticism. Then he had a list of critics who he could purge in 1958.
  • Mao was an exceptional strategic thinker. For example he was all Frank Underwood about getting nuclear weapons. He threatened Taiwan to draw a response from the US, including a threat that they would use nukes. If they did, the Soviets would be obliged to come to China’s aid. The Soviet’s didn’t want that responsibility, so they helped China develop nuclear technology so it could defend itself.
  • Mao specified how much food the peasants could eat. To start with he calculated what would be required for a level of subsistence. But that didn’t leave enough for his ‘superpower programme’ for which he needed to trade food for weapons from the Soviets. So he changed the calculation. He established what he needed to buy the guns he wanted, and left the rest to the peasants. 38 million starved.
  • During the Great Leap Forward Mao said he wanted to double steel production in a year. Steel furnaces were fueled with grain. Millions starved.
  • Mao also instructed the peasants to contribute to the steel drive. They built backyard furnaces and melted down everything they could. Including the tools they used to harvest food. And the backyard steel was rubbish.
  • At one point China’s overseas development aid reached a whopping 6.3% of GNP (the highest, I suspect, ever recorded anywhere). China was dirt poor, but Mao was determined to be the leader of the socialist world so he gave to all regimes (expect Russia) and expected their loyalty in return. That trend continues today. China gives all sorts of aid, to try and increase its influence. Some of its peasants still starve.

Policy wonk digest – China Round 2

There’s too much of interest to leave to just one policy wonk digest for China. So here’s round two.

Central planning of housing
The government is commissioning residential developments in second tier cities (like Kunming) in an effort to encourage their growth rather than the overpopulation of the first tier cities (like Shanghai). Unfortunately there isn’t demand for the new housing, so cities are left with vast vacant developments and infrastructure that caters to a population far greater than they actually have. They feel a bit empty.

Central planning of central heating
In the north the government control when landlords can switch on central heating (mid November) and when to switch it off again (mid April). The dates are static. They don’t change for the climate conditions of any given year.

Regulating internal migration
Immigration is generally free between Chinese provinces, but access to some public services, notably schooling, requires internal migrants to gain a certain number of ‘points’ like you might for a skilled migrant visa to New Zealand. You get points for a university degree, fluency in English, computer skills etc.

This is intended to check the mass exodus from the countryside to the prosperous cities. It has, to an extent. It’s also meant many migrant workers leave their kids at home, so they can stay in school. And others move their families to the city, but then don’t educate their kids. I’m not wild about people having leave or disadvantage their kids when trying to make their fortune, but I wonder if there is something here as a model for free immigration globally.

Crowd sourcing recycling
Recycling options are hit and miss. But there are enough plastic bottles in the bins to justify small armies of workers fossicking through trash to collect them and sell them on. It’s awkward to say out loud, but this seems to be a pretty reasonable use for the migrant workers who otherwise couldn’t earn a crust.

Certified foreigner hotels.
Hotels in China have to get certified to be able to take foreigners. Best as I can tell this means having the ability to scan our passports and pass them on to police. You would think that’s not too hard. In big cities where we’ve stayed in hostels it hasn’t been a problem. But when you’re on the hunt for China’s obscure last Maoist community things can get more difficult. Last night in Zhengzhou we were saved by an enterprising hotelier who snapped photos of our passports with her smartphone.

Policy wonk digest – China

Outnumbered

  • In Chinese culture some numbers are auspicious, especially the number eight. The government therefore sells street numbers that are especially auspicious, like eighty eight to whomever pays their price rather than the eighty eighth property on the street. This is not a policy that we are especially fond of when trying to find a restaurant that’s supposed to have especially good dumplings.
  • Similarly cell phone SIM cards for numbers with auspicious numbers cost more than ones with negative numbers.

Transforming Chinese cinema

  • In an effort to encourage Chinese culture and fight of the imperialism of Hollywood there is a limit on the number of Western films that can be shown in China. From the advertising we’ve seen, seems like Transformers Four is about the only Hollywood flick on offer at the moment.

An almost familiar housing crisis

  • China is in the middle of a housing crisis. There are a range of contributing factors including demographic change and mass migration to cities.
  • Like New Zealand there is only a small long term rental market and many Chinese are especially driven to own their own property. But, unlike New Zealand a major motivation for this is the inadequate protection of tenants. Laws, or at least their enforcement, massively favour landlords here, enough so to make renting fundamentally unattractive.
  • When I say ‘own property’ that’s not in quite the same sense we understand it at home. What the government gives you is a seventy year ownership right, not a permanent one. It’s effectively a long term lease. This causes problems when, like in New Zealand, Chinese use a mortgage as a way to structure investment, but can’t actually pass on their assets. It must also be harder to liquify as the time limit approaches.

Karaoke and corruption

  • Corruption is a major issue and there’s a lot of talk about how it is holding back economic growth. The government has recently passed laws which prohibits Police accepting gifts in kind (cash payments were already banned). That seems like a pretty sensible idea.
  • The government has gone one step further. Police have also been banned from visiting Karaoke Television bars (KTV). Apparently KTV bars have historically been the place you take the cop you want to ‘entertain’ and have hosted a lot of bribery as a result.
  • Even more inexplicable karaoke regulation, one province banned 37 songs and bureaucrats refused to explain why.

Preferential parking for women

  • A mall in Dalian has created women only parking spaces. They’re painted pink, and extra large, to accommodate what they consider to be womens’ special parking needs.

Crash test dummies

  • In a novel take on safe driving propaganda, there are smashed up cars sitting on pedestals alongside highways. We’re not sure whether they’re from actual crashes or not, nor whether they actually reduce China’s road toll. One bus we traveled on sounded an unpleasant noise whenever the driver went over 80km/h, which was often. Knowing we can get a car to beep when it’s going to fast just further raises my curiosity about another question: why don’t we just build cars that cannot or will not go above the speed limit?

Policy wonk digest: Hong Kong

  • Tap water is generally drinkable in Hong Kong. Where there are problems it isn’t with the city owned infrastructure, but the systems in some aging apartment buildings where the metal piping is degrading into the water supply. The apartment systems aren’t regulated, but, as an alternative, the government offers to certify the health of the water in any given apartment, giving it a grading.
  • Mass rapid transit profitability is commonly measured by the farebox recovery ratio, the percentage of operating costs that are covered by revenue from ticket sales. Most systems have a ratio under 100% and therefore need some kind of subsidy to survive. Not Hong Kong’s MTR. It has a ratio of 186% making it one of the most profitable in the world.
  • The MTR also offers a free $2HKD top up if you swipe your octopus card at machines  dotted around the city. This seemed a strange freebie until I learned that the locations of the free top up machines are in areas where MTR travel isn’t very convenient like between stations or halfway up a massive escalator system. The free top ups are designed to get you to take the MTR nonetheless.
  • Hong Kong is not known for its welfare state. But if you’re on a low income they will help with your travel costs. It’s called the Work Incentive Transport Subsidy Scheme and it’s the very most they’re prepared to do.
  • Hong Kong’s immigration policies must be some of the most liberal in the world. Folks from a staggering 170 countries can get a visa on arrival. 58 countries get the same treatment in New Zealand. An offer of employment seems to be broadly sufficient to get a working visa.
  • Anecdotally, competition for places in good schools means kids are registered for kindergarten before they’re born and go through their first interviews and testing (without their parents present) at about the age of two.

Policy wonk digest: Argentina

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  • There’s a proposal being mooted here to make motorcyclists wear their numberplate on their jacket and helmet. They say that’ll make them feel like prisoners. We saw them campaigning in a very effective (and loud) protest. True we’ve only seen their pamphlet, and not the government spiel. But we’re sympathetic to their cause. They could no longer carry a bag, nor a passenger. And more than that the proposal seems to be a solution looking for a problem.
  • Gay marriage is legal here. Abortion isn’t. In South America, it’s only legal in Uruguay.
  • Central Buenos Aires has massive avenues. Six lanes in either direction is common. I’ve not seen traffic move so freely anywhere else in such a large city.
  • The subte, or metro, here is only open until eleven at night. This seems at odds with Argentine culture where eleven is about time to sit down to dinner and three am is when clubs open up. Apparently there’s some logic about getting people to drinking establishments, but not back, because on the return journey they’re likely to be more disruptive, and grubby things up.
  • Firefighters here, including in the middle of big cities, are volunteers. Their employers are obliged to give them time off whenever there’s a fire.

Juggling on a waterbed – Argentina’s managed exchange rate

Macro economic policy is like this: you’re juggling a whole bunch of balls while jumping up and down on a massive waterbed. It’s even more complicated that the analogy implies and we’re certainly no experts, but this is out take on Argentina’s current circus act.

In New Zealand, Europe and the US we’ve let the exchange rate ball drop and now it rises and falls with the waterbed. This is known as a floating exchange rate. In Argentina the exchange rate ball is still being juggled by government. This is a managed exchange rate. The government announces changes to the exchange rate like the Reserve Bank announces changes to interest rates at home.

To facilitate its managed exchange rate the government needs to offset foreign currency transactions by contributing funds of its own. This can cost a lot so in practice governments restrict citizens’ access to foreign currency. In Argentina if you want to travel overseas you need to make an application and this is not always granted.

The downside of devaluation

Sometimes the government may run out of funds, not be able to offset the foreign currency transactions and will instead choose to devalue the currency. This means accepting the Argentine peso is worth less, and paying pesos for other currencies. Argentina had a significant devaluation in 2002, which is about when the black market for US dollars started up, and the peso has been periodically devalued since.

Devaluation sends negative signals about a currency. If your money in your savings account might lose its value in future you feel less secure about saving. You might even choose to keep US dollars under a mattress rather than put money in the bank. Accessing US dollars to do this, when official access is restricted, is why we could exchange our US dollars for a lot more than the official rate, and enjoy steak for less.

If you’re selling products you’re also worried about devaluation. Supermarkets concerned the money they’re paid might be worth less in future will raise prices to compensate. This causes inflation, one of the bigger balls you juggle in macro-economic policy. Too much is very damaging for an economy. It causes uncertainty and precipitates more devaluation. Vicious cycle.

Climbing out of the cycle

If a floating exchange rate is off the table the only way to really get out of this inflationary cycle is if the government has a credible plan to bring the real value of its currency in line with the rate it’s managing it at. That might mean, for example, contractionary fiscal or monetary policy that encourages savings. These tools aren’t fundamentally different to what other economies, like the United States, have been using when the value of their dollar has decreased on the open market.

The Argentine government’s most recent policy to curb inflation is price controls. Key goods, which in Argentina include certain cuts of steak and yerba, the herbs for the all important mate, now have prices set by the government. Supermarkets like Walmart and Carrefour have been fined $750 million for flouting these regulations.

It seems foreign through our eyes to consider managing an exchange rate, because we long dropped that ball and left it to loll around, but there are reasons to do so. A currency that is too volatile on the open market can be damaging to an economy as everyone has to hedge at significant cost. Or you might want to balance benefits to importers and exporters. The high kiwi dollar is great for us when traveling, but not for farmers back home.

Theory asside you’d have to say Argentina is not managing its exchange rate effectively. The threat of devaluation, and the uncertainty that causes, means there’s dozens of illegal moneychangers on Florida street who offer us nearly half as much again as the official rate for our precious greenbacks. And the Argentinians who pay for our US dollars as mattress stuffers are doing so rather than investing in their own economy.

Policy wonk digest: Bolivia

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  • Bolivia is currently being ruled by its first indigenous President, Evo Morales. Major policy changes, from great to absurd, are being peddled by him.
  • Morales pushed for the new 2008 constitution which recognises thirty six indigenous groups and devolved some powers to them, and generally champions indigenous issues. One young Bolivian we spoke to talked of a renewed sense of pride in indigenous identity. Bolivia’s name was also officially changed to the Plurinational State of Bolivia.
    Today, indigenous language is taught alongside Spanish in schools and you need to pass an exam in it to be admitted to higher education. This draws a sharp contrast with the Peruvian approach to Quechua.
  • Another part of Morales’ agenda is increasing Bolivia’s technological development and independence. As well as plans to mine and process lithium, Bolivia has recently launched its first telecommunications satellite and is pursuing nuclear power. Apparently Iran has offered to help with the latter.
  • To encourage population growth Morales floated the idea of taxing condoms and raising a levy from all women over eighteen who were childless to support women under eighteen with children. The idea was, thankfully, short lived after massive protests.
  • The city of Sucre, in an effort to maintain its colonial charm, has banned neon lights. It also requires all property owners to whitewash their buildings at least once a year.
    In an effort to curb the decline of wild vicuñas there are harsh penalties for killing them. Six years in jail for intentional killing. Two years for hitting one with your car.
  • Taking a leaf out of Medellin’s social investment book, La Paz is currently building the world’s largest system of gondola’s that will scale its staggering terrain and connect poorer hillside communities with the city centre.