Shopping trucks

An unusual aspect of finance in New Zealand is that you’ll occasionally see a “shopping truck” around the place. These pull up at your house, and let you buy various household, electrical, and furniture items immediately.

What I didn’t realise at first is that they do this on credit—often very expensive credit. They prey on the poor by providing the transport and immediacy poorer people often need, at appalling financial cost.

New Zealand’s Commerce Commission has fined two of these companies a total of $171,500:

For example, Goodring has been selling branded hoodies to customers for $159, well in excess of in-store prices, and one Betterlife customer purchased an iPhone 5C for $2,401 to pay off in instalments when these phones typically retail for around $600.

Six companies have been fined so far this year.

Along similar lines, a payday lender, Twenty Fifty Club, has been convicted for failings in their lending practices.

Both of these decisions make me proud to live in a civilised society where unethical lending practices are dealt with, and vulnerable people are protected.

Democracy and experts

Over on the excellent Project Syndicate, Jean Pisani-Ferry outlines a reason not to simply dismiss the rejection of experts by populist movements. He is spot on when he points out that policy experts tend not to pay sufficient attention to the effects of change on individuals or groups within society, as long as benefits accrue in aggregate:

As Ravi Kanbur of Cornell University pointed out long ago, economists (and policymakers) tend to look at issues in the aggregate, to take a medium-term perspective, and to assume that markets work well enough to absorb a large part of adverse shocks. Their perspective clashes with that of people who care more about distributional issues, have different (often shorter) time horizons, and are wary of monopolistic behavior.

Of course, the (perceived) needs of the few versus the benefits accruing to the many is a moral question, not simply an quantitative one.

From a Christian ethical viewpoint, negative effects on the few matter a great deal, if those few are poor or powerless. Think, for example, of the socially progressive concerns reflected in Deuteronomy or the Old Testament prophets.

But even if we can agree on this, who gets to speak for the poor?

At the moment, the progressive elite and economic experts are united in their focus on aggregate effects. One suspects that this is partly because those aggregate effects also provide personal benefits to both groups—because both groups are generally well-educated, and as a result often well-off.

But these aggregate effects often fail to reflect the real negatives faced by many individuals, and indeed many groups within British society. This is especially true of many communities in the North of England and on the fringes of major cities, for people who are not recent immigrants, or for skilled workers.

I have been frustrated to see well-off, well-educated EU supporters projecting their legitimate distress over EU exit onto those poorer people who voted to leave. These comments have often been extraordinarily patronising.

But to me, the vote to leave had at least one real positive. It showed a great benefit of democracy: when an elite (and the Bremainers are part of the elite) can no longer hear and understand the concerns of the very people they devoutly want to speak for and protect, the elite are compelled to listen through the exercise of universal franchise. Many left-wingers have suggested that Parliament could overrule the decision, which is technically true, but betrays a deep-seated inability to hear from others.

Thankfully, democracy can give voice to the voiceless, no matter how unpalatable the message is. And in terms of Christian ethics, that is a valuable part of our society’s structure.

Kenneth Rogoff on Tobin taxes

Ken Rogoff has a great article in The Guardian on financial transaction taxes (FTTs). Sometimes people refer to FTTs as Tobin taxes, after an early advocate. They’ve had a fair bit of airtime from people recently, including Bernie Sanders. Rogoff explains why they might not work as well as people hope, in The overselling of financial transaction taxes:

The fundamental problem with FTTs is that they are distortionary; for example, by driving down stock prices, they make raising capital more expensive for firms. In the long run, this lowers labour productivity and wage levels.

Economic indicators website

One downside of not working at a big financial institution is the lack of data available, at least in an accessible form. The Trading Economics site comes to the rescue:

Trading Economics provides its users with accurate information for 196 countries including historical data for more than 300.000 economic indicators, exchange rates, stock market indexes, government bond yields and commodity prices.

Installing R on my Mac

This guide to installing R was very useful:

…if you have a thick skin and can be somewhat self-sustaining, Homebrew is a superb alternative to setting up your R environment (and other things) on your OS X system.

The Billion Prices Project

This is an amazing MIT project:

The Billion Prices Project is an academic initiative that uses prices collected from hundreds of online retailers around the world on a daily basis to conduct economic research.

As Tim Harford points out, the project arose from Argentina’s official determination to prevent inflation data being reported:

But one economist found a way to publish plausible inflation statistics without being prosecuted. His name is Alberto Cavallo, and he realised that by gathering price data published by online retailers, he could produce a credible estimate of Argentine inflation from the safety of Massachusetts. Cavallo’s estimate averaged more than 20 per cent a year between 2007 and 2011; the official figure was 8 per cent.

So began the Billion Prices Project and its commercial arm PriceStats, both collaborations between Cavallo and fellow MIT economics professor Roberto Rigobon. “Billion Prices” sounds hyperbolic but that is the number of prices collected each week by the project, from hundreds of retailers in more than 60 countries.

Defined benefit pensions

John Towner has posted an excellent article (HT: Moyeen Islam) suggesting that the BHS collapse is a bellweather for the rest of the defined benefit pension world. I agree.

As he points out,

In their inquiry into BHS, Parliament will surely ask tough questions: how did this happen, where was the Regulator, what were the trustees thinking, what were the Scheme Actuary, the auditor and other advisors saying? These are important questions, but I also hope that the inquiry will probe what changes can be made in the pensions industry to avoid this situation being repeated and ensure that the estimate of another 1,000 pension schemes entering the PPF does not become a reality.

The situation with BHS highlights a couple of the ethical challenges around pension funds.

One is that oversight is hard. It seems obvious that investors should not have been able to strip cash from a business with crushing pension liabilities. But it didn’t happen in a vaccuum. Pensions are highly regulated, company boards have obligations beyond their shareholders, and BHS’s financial situation was publicly visible. It doesn’t seem plausible that a trivial solution will prevent similar things happening again (although the suggestions in the article seem sensible steps).

The second is that our society is still unwilling to face up to the ethical challenge of the unaffordability of the previous generation’s pension arrangements. People contributed to defined benefit pensions in good faith, and not unreasonably expect the obligations to them to be met. But demographic changes (and inherently generous final salary arrangements) have meant that the entire defined benefit system needs to change. It’s not clear who should pay, but it is not obvious to me that pension scheme contributors are entitled to be paid out in full by a system they in aggregate constructed on flawed in assumptions. The problem is that very few individuals could have realised how flawed their system was, and so on the flip side it seems unfair to penalise some for the sins of an elite few.

A Christian moral vision for economic life

The challenge of developing a Christian moral vision for economic life has been with the church since its very beginning. Few issues in Christian ethics have generated a literature as massive or as polemical.

Stassen & Gushee, Kingdom Ethics: Following Jesus in Contemporary Context (Downers Grove, IL: IVP Academic, 2003), 409, emphasis mine

Productivity for 2016

I have done a bit of work in the last couple of days to update my personal productivity system. This is partly because I am becoming more part-time: my hours at church will be lower, and I have two other small part-time roles in addition to church. So I need to stay on top of my tasks more efficiently. Here are some of the things I have done: I have worked hard to make my OmniFocus GTD system work better, especially streamlining its contexts and setting up new perspectives for focusing on one part of my life at a time.

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Academic smackdowns #1

From John Stackhouse, Making the Best of It, 208, n. 34: This is just one of many places in which I could signal, as I do now, both my frequent confusion about what Stanley Hauerwas is saying in his many writings, and my likely disagreement with him on some (but by no means all) key points. … Indeed, given Brother Hauerwas's current prominence, I must confess that I find him—despite his oft-praised penchant for the exciting phrase—so frequently obscure, as well as so frequently implausible, that I have focused my attention herein on the more intelligible and provocative work of his mentor, John Howard Yoder.

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