Economy

A recent government report projects huge increases in employment but at least 72 percent of those jobs are to go to immigrants.

I was a bit startled by a report recently released by the Ministry of Business Industry and Employment which forecast an extra 480,000 jobs o

Regrettably, the government’s recent announcements on the public provision for retirement have added to the uncertainty the young face. 

The Government’s announced proposal to raise the age of eligibility for New Zealand Superannuation (NZS) is a real botch job. I’ll leave others to write about the political botch; here the focus is on the policy.

This is a follow up ‘Brentry: How New Zealand Coped’, setting out some of the challenges which face New Zealand today.

The strategic view that Britain needs to be in the EU remains universal among New Zealand strategists. However the Leaves did not vote geopolitically but on domestic considerations including, apparently, resentment of immigration and of the unequal gains from trade. New Zealand has little alternative but to accept the direction the Brits are taking, albeit with regret.

This is based on a note that I prepared for a journalist. It is a lead into the next column which is on ‘Brexit: How New Zealand Might Cope’.

New Zealand has an unusual situation in the world economy. Despite being among the affluent economies, its success is vitally dependent upon the export of some primary products (especially dairy and meat products) whose domestic production is brutally protected in many jurisdictions.

           Ill fares the land, to hastening ills a prey,
           Where wealth accumulates, and men decay:
            Princes and lords may flourish, or may fade—
            A breath can make them, as a breath has made:
            But a bold peasantry, their country’s pride, 
            When once destroyed, can never be supplied.
                        The Deserted Village: Oliver Goldsmith

  This column follows on from ‘Whence Europe; Whither Europe’.

Less than a year before he died, Tony Judt, paralysed from the neck down by motor neuron disease, gave a much-acclaimed two-hour public lecture. Shortly after he extended it to a book, Ill Fares the Land: A Treatise on Our Present Discontents, setting out his commitment to social democracy.

Although completed a decade ago, Tony Judt’s history of postwar Europe presaged some of the challenges that it faces today.

Shortly after the collapse ot the Berlin Wall in 1989, one of our greatest contemporary historians Tony Judt resolved to write a book to sort his thinking out. It took fifteen years, but the resulting Postwar: A History of Europe Since 1945 is an (almost 900-page) extraordinary achievement.

Big data can be used for good and it can be used for evil. Some recent public research illustrates the former but there are doubts about some private uses

It is not generally realised that Statistics New Zealand has a large research database – the Integrated Data Infrastructure (IDI) – containing microdata about people and households from a range of government agencies, SNZ surveys including the 2013 Census, and non-governme

Economists and policy analysts have paid insufficient attention to the distributional consequences of change. Hence the rise of the angries.

In order to get to this column’s conclusion I am going to recall a little of my scholarly journey.

Far too much public commentary on wealth inequality obscures what is actually is going on. 

This column is a grump about the poor quality of public discourse. It is illustrated by the recent outburst over the distribution of wealth in New Zealand and some rather inept public responses to the recent re-publication of some data, where people with little expertise used the opportunity to pursue their political and ideological goals while displaying, to the expert, their incompetence.

What can we learn about health care systems and the US from the muddle that America is getting into over Obamacare?

Donald Trump is not particularly interested in policy. When he promised to replace Obamacare – the current US health system – with something which would be better, he was responding to the conflicting demands of his supporters and certainly did not have a plan. It will be the Republican-dominated Congress which will lead the way with a bill for him to sign.

International comparisons suggest that New Zealand secondary students are not doing well. It may even be that recent policy measures have worsened their performance.

The 2015 results for the  triennial OECD PISA (Programme for International Student Assessment) evaluation were reported just before Christmas so they did not get much coverage. We need to think about them. Many will jump to a conclusion that the current government’s education policy is failing. Certainly the international evidence does not suggest it is succeeding.  

How does a post-truth world work? Some psychological findings may be useful. (The Oxford Dictionary definition of ‘post-truth’ is ‘Relating to or denoting circumstances in which objective facts are less influential in shaping public opinion than appeals to emotion and personal belief’ The Dictionary labelled it the word of the year 2016.)

This columnist is greatly perplexed by how in today’s post-truth world people hold views or which are not true, which may be contradictory but which are held with a tenacity which belies their falsehood. This is sometimes called ‘truthiness’; the views are believed to be true because they confirm beliefs. But that is a label, what is going on?

A recent decision by New Zealand on Air in response to the changing media technologies raises a range of issues about how the platforms are used. 

The announcement by New Zealand on Air that it was changing its mode of funding is a reminder of the current turmoil in the media from the convergence of platforms (delivery systems).

A book about two psychologists who have altered the way we think about the way we think.

For many people, Michael Lewis is best known for his 2010 book The Big Short and the follow-up film, which describes the carryings-on of the financial sector in the American housing market which underlay the Global Financial Crisis.

Your In-tray is piled high.

Dear Bill,

I recall when you first entered Parliament 26 years ago, it was widely thought you were prime-ministerial material. You’ve made it. Congratulations.

Could the alienated grumpies have a greater effect on New Zealand political life?

This was written before John Key announced his resignation. Other than perhaps the tense I think there is no need for revision. 

Unfortunately most analysis on the American elections focuses on who voted but, as Bob Chapman pointed out, the Non-Vote Party plays an important role. This is yet another example of Gilling’s law of how you score shaping the game; in this case pollsters tend to score voters and pay little attention to those who do not vote.

A new book leads to ponderings on our technology strategy. 

Technology is an ambiguous notion. Its most common use in economics arises in the following way.

The laws of thermodynamics mean that there exist production functions which relate inputs to outputs. The most familiar ones have a single output generated by inputs of labour and capital, although there can be other inputs such as land, energy, intermediate goods and imports.

Can Trump wreck the world trading system?

New Zealand is such a small country that it is very easy to be internationally bullied. Much of our diplomatic effort aims to minimise such bullying, but fear of it lurks behind concerns about what a Trump administration might do, not only to us but the rest of the world. Could the US, big enough to be hard to bully, disrupt the world trading system?

The times are a’changing, as recent macroeconomic fashions are being abandoned and old verities are being restated. 

Alan Blinder, an American economist, described as ‘one of the great economic minds of his generation,’ was an economic adviser to President Clinton and was a Vice Chair of the American Federal Reserve (central bank). He is known to many as the co-author of an extremely successful textbook.

The alienated Angries who supported Brexit and Trump are not going to go away.

          If any question why we died,  

          Tell them, because our fathers lied.

While overall income inequality may have been relatively stable over the last two decades, it appears to be increasing in Auckland (and perhaps in our other big urban centres).

This column honours Bob Chapman (1922-2004), professor of Political Studies at the University of Auckland, remembered for his mentoring of many students including Helen Clark. He was an early New Zealand social scientist who did not just study elections but used the results to explore the social development of New Zealand.

A novel about an historical event reminds us of the health redisorganisation of the 1990s, raising issues remaining relevant to today. 

I puzzle at how politicians and advisers can make giant mistakes but are never held accountable. The notion of accountability became fashionable in the neoliberal changes of the 1980s and many people further down in the system now work under tighter surveillance than they did then.

Pretending it can, or that the Reserve Bank of New Zealand can function independently from the rest of the world, could generate a financial crash. 

The very joining of monetary policy and fiscal policy into a single phrase is a criticism of the neoliberal macroeconomics. The reconfiguration under Rogernomics assumed that the two could be administered independently of one another, and gave an authority and power to monetary policy beyond what any reasonable analysis would conclude.

What does the latest Economics Prize in honour of Alfred Nobel tell us about economics as a science?

Alfred Nobel did not endow a prize in economics. In 1968 the Swedish National (i.e. central) Bank founded a ‘Prize in Economic Sciences in Memory of Alfred Nobel’. The award’s announcement is coordinated with the annual Nobel Prize awards.

No, but we need to address poverty. Focusing on poverty targets which are not to be achieved in the time of the government which sets them is wasting energy and opportunity. 

Despite being frequently ignored, Gilling’s Law is one of the most powerful social laws I know. Formulated by Don Gilling, a retired professor of accounting and finance, it states that the way you score the game shapes the way the game is played. A simple illustration is that when they increased the points for a try, rugby games became more attacking in order to score more tries.

A report explains why: small but accumulating biases together on top of adverse early-life social and environmental conditions.

To be frank, this column on criminology is not in an area of my expertise. But in the course of my reading to place economics in a social context – I do that a lot – I came across an old report which I suspect most people who care have not come across earlier either. So this column is really from a journalist telling about a report.

We don’t need to refresh trade policy; we need to rethink how best to engage with the world in the context of increasing globalisation. 

The Government is ‘refreshing’ its international trade strategy. Refresh is a euphemism. It ought to overhaul it. Here are some guidelines; I begin with the overarching framework.

Last week’s report on wellbeing and the household income distribution told us some new things. Are we listening?

Sadly, the latest MSD report The Material Wellbeing of NZ Households, by Bryan Perry, released last week, passed by quickly. It said, broadly, that there is no obviously significant shift in the level of inequality in recent years.

Is it possible to have sensible discussions in public?

Last June there was a kerfuffle in the online magazine Spinoff over attitudes to intellectual activity in New Zealand.

What are the possibilities for the future housing prices? What can we do?

Two eminent but retired Reserve Bankers, Don Brash and Arthur Grimes, have argued that house prices should halve. I am not sure whether they actually mean it or are just vividly pointing out that house prices are about double the sustainable level. I probably use a different method of calculation but have come to a similar assessment.

As the proposed Ministry of Vulnerable Children shows, we do not take prevention seriously.

In 1920, someone wrote in the Maoriland Worker, ‘The politician is like the person who would build an ambulance at the bottom of the cliff, instead of constructing a good fence at the top.’ The image seems to have been coined in a late-nineteenth-century poem by the English temperance activist Joseph Malins.

A Professor of Education challenges universities about their purpose.

What are universities really for? was the topic of a recent lecture by Hugh Lauder, professor of Education and Political Economy at the University of Bath (previously on the Canterbury and VUW faculties).

Free movement of labour is often described as one of the four fundamental economic freedoms. Putting it into practice is somewhat more difficult.

To make the intentions of this column clear, I am generally in favour of migration. I am a descendant of immigrants and live in a country in which virtually everyone admits to a migration heritage and which has one of the highest proportions of foreign-born in the world. I am also very aware that future migration will dramatically change the country I love, especially by the Asian inflow.

Our nearest neighbour, New Caledonia, has a very different political economy. Will it vote for full independence from France in 2018 – also leaving the European Union? 

New Zealand shares a continent with the European Union. Admittedly 93 percent of Zealandia is submerged beneath the Pacific Ocean but at its most north-western are the islands of New Caledonia with a total area about half the size of Canterbury. Technically the country is a department of France and so is the closest part of the EU to us.

In too many areas the government is avoiding taking policy decisions. When it has to its panic measures are knee-jerk and quick-fix 

Just nine years ago, John Key, then leader of the opposition, spoke to the Auckland branch of the New Zealand Contractors Federation about housing affordability which he described then as a ‘crisis [which had] reached dangerous levels in recent years and looks set to get worse.’

The Reserve Bank cannot deliver affordable housing by itself. Its actions have to be coordinated with the government's. Unfortunately the monetarist framework of the Reserve Bank Act obscures this.

The tensions between the Reserve Bank and the Government over housing policy go back to the mistaken economic thinking in the 1989 Reserve Bank Act. Monetarism ruled and it is that underlying monetarist approach which is creating the tensions.

Too much of pop-economics is misleading to the point close to being lying. No wonder there is a widespread rejection of it by the populace. 

Journalists and other populisers get away with an economics which does not quite lie, but is often very misleading. This applies to Brexit, but let’s start off with the TPPA (Trans Pacific Partnership Agreement).

Punitive public policy too often ignores its impact on the children involved. 

My last column described how the punitive measures we had for dealing with debtors were only abolished in 1989. Yet others continue to suffer from oppressive legislation – if they are low enough in social ranking.

Nineteenth-century migrants may have come here to escape oppressive laws, but the laws migrated too. It was late in the twentieth century that we abolished one of the most oppressive ones. Our origins are less humane than we like to pretend. 

Wilkens Micawber was incarcerated in a debtors' prison. It is said that he is modelled on Charles Dickens’ father, who suffered a similar fate. Meanwhile, his twelve-year-old son had to work in a factory. He hated the experience. A debtors’ prison appears in The Pickwick Papers, as well as David Copperfield, and most extensively in Little Dorrit.

It is unclear why anyone is voting for Britain leaving the EU nor, in many cases, why they are voting for remain. What are the possible alternatives? How is Britain or New Zealand to function in an increasingly globalised world?

As I put up this column, the Brits are about to vote on Brexit – whether Britain should withdraw from the European Union. We do not know what the outcome will be, for the opinion surveys are all over the place; in any case turnout may be crucial. In 1975 a similar referendum taken a couple of years after Britain joined went two to one for ‘stay’.

The economics of information shows that whatever happens, the solution our ailing newspapers to the digital revolution will not be a perfect one. 

An important notion in economic analysis is of a ‘public good’ (which may be a service). Not THE public good (a.k.a. the ‘common good’), which is shared and beneficial for all or most members of a given community. A public good in this narrow sense has two key features: it is ‘non-excludable’ and it is ‘non-rivalrous’.

Do you know what a bezzle is? Here is a book which explains the sophisticated financial system. 

The economic columnist I most admire is John Kay, who writes regularly for the Financial Times. He taught at various universities, was director of the independent think tank, Institute for Fiscal Studies, and has held a host of other interesting and important jobs.

A major preoccupation of the budget was preparing for the next major financial crisis. To do so it is reducing government spending relative to GDP. Where do tax cuts fit in? 

Our politics reminds me those weekly serial movies where each week the heroine ends in an impossible situation but next week she miraculously escapes and the action moves on to the next impossible situation.

Power companies attempting to fend off solar power are at risk of following the horse and cart into oblivion

My previous post about the lines company Unison's intention to charge extra to households generating their own power prompted several people to contact me, one of whom directed me to a particular quote:

The government has let the housing market deteriorate with measures which are insufficient, late and ineffective. As a first step we need to identify the underlying problems. 

The Prime Minister’s announcement that there is nothing new about homelessness is both an example of his strengths in reassuring the public that there is never really a problem and the weaknesses of the government’s policy approach..

This is a condensed version of a paper given to a WEA Conference on 14 May, 2016, Available in full at  http://www.eastonbh.ac.nz/2016/05/where-is-adult-education-going/

The initial invitation suggested I talk about the future economy and its relevance to adult education. I explained that the best advice I ever came across is ‘don’t make predictions, especially about the future’. You get a sense of the difficulties if you go back thirty years ago, say, and realise any forecasts of today would have been way off track.

If it necessary to run a budget deficit then it should be spent in the interests of future generations, rather than on increased consumption to be paid for in the future.

It is very easy to demand the government should run, or increase, its budget deficit, that is, it should spend more than its revenue and (one way or another) borrow the difference. Many think that is what Keynes said, but the Keynesian analysis is more subtle than the crudities that the deficit advocates seem to rely upon.

The social worth of a person in no way reflects their income or wealth. To confuse the two notions is to play into the values of the rich. 

My brother, Keith, died in the hospital wing of a Christchurch retirement home recently.

Are we too generous about the civilian rights of non-doms, who do not pay tax on all their incomes? 

Bryan Gould has drawn attention to the dangers we face in New Zealand of foreign political interference by funding contributions to political activity. His apposite example is Chinese money being channeled into the change-the-flag campaign.

Responses to the flag referendum and the TPPA have parallels overseas such as supporting Trump in the US and Brexit in Britain. A sizeable proportion of the population think that the government is not listening to them and doesn’t care about them.

Kiwiblog presents an impressive scatter-diagram which shows that the more an electorate voted for National, the more it voted for a new flag. It seems unlikely that National voters are republican and radical (especially given the views of the leader they endorse).

Are we entering a long period of secular stagnation in which interest rates are low? We cannot foresee all the implications. 

This has not been an easy column to write, and it may not be an easy one to read. Part of the problem is that there is no agreement within the economics profession as how to interpret what is going on.

The story of our national anthems might provide guidance for how to proceed with the flag.

A recent Victoria University graduation ceremony invited everyone to sing The National Anthem. As we lustily, but not tunefully, sang God Defend New Zealand, I avoided the thought that while pedants would point out that New Zealand had two national anthems there are few pedants left in our universities.

The history of New Zealand is speculation on farm land which stokes up debt, with disastrous consequences when the bubble bursts. The New Zealand industry is going through another one. 

During the Great War, farm land prices boomed. When farm product prices collapsed in 1920, farmers walked off their land. It was not that the land prices were too high. Farmers had borrowed to purchase their farms and with lower revenue they could no longer service the debt.

A journalist’s list of the ten most important issues politically facing us did not mention inequality and poverty. Why?

A month ago Fairfax political journalist Tracey Watkins listed the following ten areas to watch out for in the political year:

Spies (especially the review and resulting legislation)

The government is restraining its spending on healthcare – perhaps by over $2 billion a year. Is that what we really want?

A common assumption is that public spending on healthcare rises faster than GDP. There are three reasons behind this assumption.

First, an aging population requires more healthcare. The over-65s consume more healthcare resources than the under65s (and the over-85s even more so).

Most university classes start today... but is university the smart way to go? And which training leads to the best incomes? Two pieces of research can help you make a wise choice... or even change paths

It isn't too late for university students to change their courses for this year; new students are still likely to be able to change their degrees. At most universities, changes are allowed for the first two, even three, weeks of the semester. While it's a nightmare for university staff, it's a chance for students to rethink and adjust given new information from the government.

The short answer is all trade reduces sovereignty to some extent. The TPPA is no exception, but its effect is probably small. 

Allow that we had to give away something, such as increased copyright extensions, for better access for our exports; the real issue for us in the TPPA is that it reduces ‘sovereignty’. To report my conclusion at the beginning: all trade and all trade deals reduce sovereignty to some extent. This has been going on in New Zealand since its first European economic engagement.

A key issue may not be what is in the TPPA, but that by not adopting it we may ruin the other international agreements we are pursuing. 

In the 1960s I was an active member of the Campaign for Nuclear Disarmament. It was a moral crusade with unrealisable objectives such as withdrawal from SEATO (a now defunct treaty), a nuclear-free New Zealand and withdrawal from ANZUS. The dreams of youth can become a reality.

The time is right to be telling the story of New Zealand food production. But what should we say? And are our marketers up to the job?

Is it a perfect storm or are we merely being buffeted by the winds of change? Is this some kind of tipping point? It's an extraordinary moment in time for New Zealand agriculture, with its future economic development at stake. Yet the discussion is more around what shouldn't happen rather than finding a strategy to achieve the prosperity most New Zealanders want.

World Sharemarkets Are Sneezing. What Does That Tell Us About the World Economy?

Before discussing the state of the world economy – especially what is going on in China – it is useful to say something about the importance of the sharemarket (Americans call it ‘stock market’). It is far more important in pop-economics than serious economics.

A book on the history of the Literary Fund raises broad questions of how our bureaucracy works.

I was too closely involved with Elizabeth Caffin’s The Deepening Stream: A History of the New Zealand Literary Fund to review it. But it contributed to my understanding of some general issues; I think I am allowed to use the book to share them with you.

The strange economic assessment of the proposed extension to Wellington Airport’s runway reduces to a plea for subsidies from tax and ratepayers.

I am sometimes asked to assist voluntary groups with a critique of a commissioned economic assessment of a development project. I decline because of the high standard required from me – one which would stand up as evidence to a tribunal.

The Ethnic Future for New Zealand Is Unknown. But It Will Be Diverse and Different 

The promise of increased future ethnic diversity is undoubtedly true, but often the statistical projections are both misleading and obscure the real issues.

A report on social services by the Productivity Commission raises serious problems about the quality of analysis in New Zealand.

There is a widely held perception that the Productivity Commission, which makes recommendations to the government on how to increase productivity, is neoliberal. Partly that is because the commission was set up at the instigation of ACT but that does not mean that its analysis is necessarily neoliberal.

Given a long history of numerous trade agreements, why has the public become especially concerned about the TPP?

At a recent public meeting, a retired Secretary of Foreign Affairs pointed out that although he had been involved in negotiating many free trade agreements, the TPP was the first one about which the public had showed any significant interest.

New Zealand is leading the way in sustainable agriculture, and that presents an opportunity to cash in

Ending world hunger is now considered a realistic goal.

While TPP – any trade deal – compromises sovereignty it does not mean we cannot respond constructively to unsatisfactory aspects such as those involving intellectual property. 

The stupidest thing said about the TPP deal – thus far – is the claim that it does not reduce New Zealand’s sovereignty. Of course it does. Agreeing to it will mean New Zealand will not be able to do things it currently can do. How important this reduction in sovereignty is is a proper matter for assessment for there are gains as well as losses.

The book’s ‘message is as compelling as it is important: the social costs of mental illness are terribly high and the costs of effective treatments are surprisingly low'.  Daniel Kahneman (psychologist and Nobel economics laureate.

In due course this Penguin is likely to become fashionable – like The Sprit Level and Capital in the Twenty First Century – because it touches issues which many people care deeply about while offering some solutions.

Its message is simple.

Travel extends the mind. Here are some of the things I learned from a recent trip to Greece: about the age of the human condition, about how civilisations end with environmental depletion, about the stresses to the current Greek economy and about how trivial are New Zealand news websites. 

There are remnants of wall frescos from the 3500-plus year old Minoan palace of Knossos in Crete – home of the legendary Labyrinth and Minotaur.

The more one is certain about the state of an economy, the more one is likely to be wrong; the more one is certain about the state of an economy, the greater the media coverage. No wonder the public is confused.

I shan’t add to the confusion. In quick summary, the New Zealand’s economic growth seems to be slowing down but we don’t know whether it will go negative and economic activity contract.

* The Australian economy  is in the doldrums.

How Much of New Zealand Has to Be Owned and Controlled by Foreigners?

This year is the fortieth anniversary of the founding of CAFCA – the Campaign Against Foreign Control of Aotearoa – a Christchurch-based, but national, activist organisation.

This was an introduction to a presentation by Stephen Jacobi: "TPP – Where to from Here (And How Did We Get Here Anyway)?" To a NZIIA lecture, 2 September 2015. (Some editing)

It was suggested I first say a few words about the context in which the TPP and other trade negotiations are occurring. At the heart of economic progress is specialisation. That Economics Stage I comparative advantage model that you were taught said that by specialising and trading its surplus a country could be better off.

The flag debate tells us something about the quality of design in New Zealand

I am not going to tell you about the right choice for New Zealand’s flag. That would invalidate the point of the column. Certainly I shall vote for one; much of my response will be an instinctive opinion. What I shall probably miss – what we are currently missing – is expert guidance on the characteristics of a good flag.

Notes for Radio NZ Nights with Brian Crump: 11 August, 2014

The indications are that economic growth is slowing down from the boom rates of the last few years. The slowdown may turn into a contraction – that is, output may fall. There is a view that the contraction began in the middle of 2015. (It is not possible to be sure. All the data is not in and is subject to measurement error.

As the milk price falls, Fonterra needs to react by rethinking its strategy

Agribusiness is different. Long investment cycles, equally long production cycles and environmental perturbations combine to erode resilience. The current milk price debacle is a clear case in point.

Trust Us?

If you think you know what has been going on with the TPP, you have not been following closely enough. However, here are a few matters for clarification.

Why does it occur, when does it work? 

Allow me to share a puzzle. Public sector outsourcing (a.k.a. ‘contracting out’) has been increasing in recent decades. It is not the same as ‘privatisation’ because the government retains the role as a funder but it outsources the task to a private provider – which may be a corporation or non-government organisation.

Fracking has changed the energy outlook, with major geopolitical implications 

About a decade ago, there was much concern about ‘peak oil’ – that the production of oil would peak and then fall off quickly leaving the world’s transport system stranded. The idea is really an extension of the two hundred year old insight of Thomas Malthus that the demand from an increasing population would exhaust food production with resulting starvation  because land was limited.

Treating the Auckland housing bubble as a supply-side problem doesn’t work; neither does blaming some group without a careful analysis of what is happening. What might work?

There are two separate Auckland housing issues which are only loosely linked. The first, dealt with here briefly, is providing sufficient housing in the region.

Whatever the answer, what are we going to do about it?

Steven Joyce, Minister of Economic Development and most other economic things, was hardly helpful when he dismissed talk of an economic recession on a recent TV3

We need to distinguish the sovereign state from the people it governs, and the other political institutions between. 

Things are moving so fast in the financial negotiations between Greece and the Troika (European Central Bank, European Union, and the International Monetary Fund) that there is little point in my trying to comment on them. But there is a structural issue which most commentaries overlook.

Recent publications suggest that the children who live at the bottom in economies with high inequality have reduced life chances.

The grandfather of modern distributional research is Tony Atkinson, a British economist who began in the 1960s a lifetime career studying the British and world income distributions and other related ones.

The following response to three questions (in italics) was published in a prestigious Uruguayan weekly newspaper Brecha. It may be of interest because I am responding to the Latin American economic debate which is slightly different from the New Zealand one (but only slightly). Sorry for the included material necessary for an audience outside New Zealand. Thankyou. Nicola, for checking the translation from Spanish

1. New Zealand had a downward trend in terms of GDP per capita and fell behind several OECD countries in the last quarter of the 20th century. What are the main factors that explain New Zealand's relative lagging after the 1970s?

Those on the left of politics have a choice between defending their past achievements or taking up the challenges which face us. 

The Democratic Left is in disarray throughout the world. It is mainly out of power (but that has been true for most of its history); when it is in power it looks awfully like the other side (which has not always been true in the past). Its problem is much more than inadequate organisation or inferior leadership; the issue is too endemic.

There appears to be something deeply wrong.

Those on the left of politics have a choice between defending hteir past achievements or taking up the challenges which face us. 

The Democratic Left is in disarray throughout the world. It is mainly out of power (but that has been true for most of its history); when it is in power it looks awfully like the other side (which has not always been true in the past). Its problem is much more than inadequate organisation or inferior leadership; the issue is too endemic. There appears to be something deeply wrong.

Should membership of Kiwisaver be compulsory? Research on how humans behaviour, some of it thirty years old, points in that direction.

The current debate over the future of Kiwisaver is largely bereft of developments in economics over the last thirty or so years. Rather the frame has been an approach to human behaviour which we know does not reflect reality.

 

The US senate has given trade promotion authority to the President. What next? Will the TPP agreement be acceptable, and to whom? 

Unfortunately trade negotiations are riddled with acronyms. I have listed the ones used here at the end of the article.

 

Budget 2015 documents were accompanied by a banner heading A plan that's working. An undoubtedly naive economist, originally ignorant as to the presence of the plan, describes his journey in uncovering the nature of the plan.

Did you know we had a plan? And, did you know that it’s working?

Well, entering the Budget lock-up last week I was confronted on the screen greeting us with the banner: A plan that’s working.

The 2015 Budget did not deal with children's poverty  but it did put a down payment. 

This is based on a presentation to a Child Poverty Action Group Post-budget Breakfast.

 

There is a lot of chatter about the government’s budget deficit, but politics aside why does it matter?

Rob Muldoon famously remarked that the typical New Zealander would not know a budget deficit if he or she tripped over it in the street. Knowing a little bit about it I have puzzled as to how one would come across the deficit in the street – perhaps I lack imagination.

 

You may have been surprised at the outcome of the recent British elections, but New Zealand’s experience shows you should not have been surprised that you were surprised

While writing my history of New Zealand, I wondered about whether it would be possible to assess people’s attitudes before there were surveys. Writers often impose their prejudices, without realising they are doing so.

Arts and cultural policy seems to be going backward at the moment. Why? Does it matter? 

In his 1852 inaugural speech as Canterbury’s first superintendent, James Fitzgerald – later to be New Zealand’s first premier – said, ‘There is something to my mind awful in the prospect of the great mass of the community rapidly increasing in wealth and power without that moral refinement which fits them to enjoy the one or that intellectual cultivation which en

Why does the Minister of finance say this is is hardest budget ever? The economy may be doing moderately well, but it is by no means preforming outstandingly.

In 1993 the New Zealand economy began to show signs of an upswing after the seven years of Rogernomics Stagnation. In a public comment I remarked that it seemed to be in the ‘recovery’ phase, which is the economist’s technical term for the stage in the business cycle when the economy leaves the bottom of the business cycle and goes into upswing.

Can an environmentalist focus solely on sustainability or are they drawn into wider issues such has how fairly the material product of the economy is distributed?

Perhaps heightened by the leadership contest in the Green Party, there appears to be a debate going on about where environmentalism fits into the political spectrum. I am not a member of the Green Party (nor any other, for that matter) but I have been struggling with how the environment fits into the general history of New Zealand which I am writing.

While the Reserve Bank may have startled everyone by asking the government to take a fresh look at taxation on investment housing, the recent statement by the Deputy Governor indicates that we are inching towards a more holistic approach to macroeconomic policy. 

The April 15 statement  by Grant Spencer, Deputy Governor of the Reserve Bank and Head of Financial Stability, concluded ‘on the demand side, we consider that greater attention needs to be given to issues relating to the tax treatment of investor hous

Sharp movements in exchange rates often reflect sophisticated specualtion. Is there much we can do about it?

While the near parity of the Australian and New Zealand dollars got a lot of breathless attention recently,  there was little analysis of why it was happening. Explaining the exchange rate depends upon the time horizon.

How come we tolerated such appalling working conditions for so long? (And a tick for crusading journalism.) 

Charles Dickens would be appalled. So would Fredrick Engels who wrote The Condition of the Working Class in England, as would New Zealand’s Sweating Commission of 1890. Even Simon Legree, the slave owner in Harriet Beecher’s Stowe’s Uncle Tom’s Cabin, would be astonished at the working conditions and wages (or lack of) that employers were getting away with.

Are we paying enough attention to bureaucracy? Are the current bureaucratic pressures changing the nature of society -- and are they doing so for the public good?

David Graeber may be best remembered for coining Occupy Wall Street’s ‘We are the 99 percent’.

Perhaps New Zealand’s acceptance of the TPPA will depend upon the outcome of the Northland by-election

Prime Minister John Key shortened his trip to Japan and Korea in order to spend more time campaigning in the Northland by-election. Domestic affairs trumped international ones – for a short time anyway.

The Northland by-election demonstrates we do not have a regional development policy. Should we? What might it look like?

The government’s announcement that it would be upgrading ten one-way bridges in Northland was a response inspired by the forthcoming by-election. Whatever the politics, it well illustrated the feeble state of regional development policy in New Zealand.

The Elimination of Child Poverty Requires a Universal Child Benefit. 

The Growing Up in New Zealand Study at the University of Auckland found that half of the 7000 families in their sample suffered measurable material hardship in their babies‘ first years of life.

The increase of the share of those on top incomes has not been caused by market forces but is the result of their more favourable taxation regimes they have experienced since the early 1990s. 

Policy Quarterly has just published papers from a symposium on distributional inequality held last June. There are really interesting papers by Geoff Bertram, Phillip Morrison, Bill Rosenberg and Simon Chapple et al which you may want to read for yourself.

The inflation policy target has been missed regularly over the past two years, and will be missed for another year. The evidence is that the target has been moved. So by who? And will we be let in on the secret?

About this time last year, there was an overwhelming clamour from market players that New Zealand's interest rates must go up. I admitted at the time I was perplexed as to why, but presumably wiser heads prevailed. And so up went our interest rates.

And I remain perplexed.

Too much of our national media is located in Auckland and democracy suffers.

Probably most people who regularly read Pundit are in the cyberspace equivalent of the ‘beltway’ – the term for those who live in or work in inner Wellington and are intensely interested as to what is going on there, not just in parliament but in policy-making. (OK, OK, they are interested in the gossip too.) Much of what goes on there is not transparent.

 They involve tax rates horrendously high or the minimum incomes so low that ihe UMI is not a viable means of eliminating poverty.

The notion of a universal minimum income has had a long gestation. Some say it originated with a proposal for a ‘social dividend’ by Lady Rhys Williams as far back as 1942 but you can find precursors even to that. The American origin is Milton Friedman’s ‘negative income tax’.

‘Iwi leaders and the Government have agreed on a deadline to sort out Maori interests in fresh water by Waitangi Day 2016.’ (News: 5 February 2015)

Law and economics recognises three distinct aspects of property rights. There is the ability to use the property, the ability to transform it into something else, and the ability to alienate it – that is to transfer the property rights to others.

Policy announcements do not always reflect careful analysis. Too often the unstated political considerations have too much influence. 

I was once involved with a ministry under pressure over the failure as the result of a very unusual accident of a piece of equipment for which it had a vague responsibility. The public wanted something done. The calls were for actions that were onerous, intrusive and would have had little effect.

It is not what Eleanor Catton said about the government, but how we respond to what she said.

Sean Plunket’s intemperate attack on Eleanor Catton is a reminder of just how superficial is tolerance of dissent in New Zealand. I leave others to defend the exact interchange – Danyl McLauchlan was as I normally expect of him.

Jeff Madrick identifies seven bad economic ideas; Alan Blinder is more cautious. What do economists actually believe, and how does it stack up against what we think economics says?

Jeff Madrick, a highly respected American economic journalist, recently published a book, Seven Bad Ideas: How Mainstream Economists Have Damaged America and the World. It was reviewed in the New York Review of Books by Alan Blinder, an even more respected (Prin

What might a non-ideological capital gains tax look like? 

Someone once told me that a test of being a socialist was whether you supported capital gains taxes. I pointed out that the New Zealand Treasury, the Reserve Bank of New Zealand, the IMF and the OECD all supported them.

Do We Need Larger Local Authorities or Ones More in Touch with the Localities?

The Wellington kerfuffle over whether its eight territorial local authorities and the regional council should unite into a single regional entity might at first seem oh-so-Wellington – petty parochialism with small-minded politicians keen to maintain their remuneration. But other regions are struggling with the same problem.

As Borders Fall Are Europeans Losing Their Cultural Identity

Aside from the English Channel, Europe has hardly any significant internal natural borders. Seventy years ago the border between Germany and Poland was settled at the Oder River. At its main crossing point it is no wider than the Waikato at Hamilton, and there is not even a gorge.

The EU remains central to New Zealand’s destiny

Suppose Britain exited the European Union of 28 countries. I am not recommending it; they would probably be worse off economically. Nor am I predicting it, although sometimes politics produces odd outcomes. Rather suppose ‘Brexit’ in order to explore the implications for New Zealand.

The OECD says yes; how do we respond?

A recently released OECD report concludes that economic inequality hurts economic growth, and has particularly done so for New Zealand. Some of our responses were plain bizarre. Either the non-economic commentators had not understood the issue or had not read the report.

How much should the state be involved in determining who are in a marriage relationship?

The recently released Child Poverty Action Group’s (CPAG) report on the Complexities of Relationship in the Welfare System and the Consequences for Children tells some ugly stories. Benefit entitlement can depend upon the relationships between adults.

It is one thing being in Opposition complaining about what has happened in government; it is another thing to have a viable policy. 

It was unfortunate that the first public issue that Andrew Little had to deal with was the Roger Sutton affair. Here was the leader of the Labour Party grumbling yet again. We’ve had six years of such grumbling; an issue comes up, the spokesperson complains it is not going right, and they (it is often unspecified who ‘they’ is) should do something about it.

How New Zealand businesses succeed internationally.

One of life’s pleasure is sitting with a child on one’s lap reading a book to them: attractive – sometimes mysterious – illustrations, humorous – even mischievous – plots, rhythmic sentences and just enough eccentric words without being obscure. E-readers are no substitute. The children’s section in my local bookshop is growing.

How economists think about valuing life when allocating resources for healthcare purposes.

A couple of comments to an earlier column asked questions about the quality of life versus the prolongation of life.

The Secretary of the Treasury appears to have doubts.

In a speech to economics teachers  earlier this month, the Secretary of the Treasury, Gabriel Makhlouf, argued for a different approach to economics from the one which dominates the profession in New Zealand.

We should focus more on introducing and adapting the world’s innovations using a skilled workforce.

Our so called ‘innovation policy’, which is at the heart of the government’s growth strategy – insofar as it has one – seems to be fundamentally flawed.

The case for raising the age of eligibility for NZS; and how we can do it. 

I support raising the age of eligibility for NZS but not, primarily, for reasons of fiscal sustainability. Rather it needs to be increased for equity reasons. Longevity is increasing. When the Old Aged Pension was introduced in 1898, life expectancy at the age of 65 was 13 years; today it is 20 years, and it will continue to rise.

As times goes on the government will spend more on healthcare. That means higher taxes. Is there an alternative?

I was on the Treasury external panel which advised on its last Long Term Fiscal Projections. The great challenges arise from rising demand for government funded services and the aging population.

Every year around 600 New Zealanders are born with a horrible condition because their mothers drank while they were pregnant. 

The terms Fetal Alcohol Spectrum Disorder (FASD) and its more extreme form Fetal Alcohol Syndrome (FAS) have appeared recently in two news items. In a hearing in front of London’s Privy Council the lawyers for Teina Pora and the Crown agreed that Pora suffers from FASD.

Sloppy analysis is dividing us into the deserving and undeserving

Being no expert on domestic violence, I looked at the Glenn inquiry’s The People’s Report to see what it had to say about causes. I had expected a summary of the research literature but there was none. All the report did was tell of people’s (often moving) experiences and what they thought should be done.

Thomas Piketty says economic inequality has been getting greater in the world, and will get greater. What about New Zealand?

Paul Krugman has said "Thomas Piketty has transformed our economic discourse; we’ll never talk about wealth and inequality the same way we used to". Many other eminent economists have said much the same thing.

The EU approach in trade deals is likely to protect the right of states to make public policy

How can foreign investors in New Zealand be sure that we will treat them fairly? If they are not sure perhaps they will not invest here, even though their investment may be valuable to us. (I do not believe all foreign investment is worthwhile, but much is.)

The election demonstrated deep divisions. Will the next three years make them worse or help heal the rift? And where will the pressure points be?

Will we see New Zealanders marching in the streets during the next three years? I don't mean protests in which the police, while behaving perfectly professionally, are smiling benignly in a sort of agreement. I'm wondering whether we'll see civil disturbances. And I'm not the only person pondering such things – probably even John Key is.

If National can adapt to change, why can't Labour? 

Once upon a time National was a party dominated by farmers and their rural base. Its first townie leader, Sid Holland, had to have a farm bought for him in the 1940s, to maintain his status in the party. It was such a country party that there was a view in the 1960s that as New Zealand urbanised National would lose voter share because Labour was so much stronger in the cities.

One of the biggest issues missed during the election campaign was the sustainability of National's economic, environmental and even social policies. So what do you do if the government's not thinking long-term?

Behavioural economics is not a complete theory but it demonstrates that we are not the economic rational being usually assumed in economics theory. One of the most troubling divergences is that we make time-inconsistent decisions so our short run choices do not cohere over the longer term.

If voters can see the commonality between Labour and the Greens, why can't political analysts?

Most political analysis in New Zealand seems trapped in the two-party winner-takes-all world, or perhaps they are numerically challenged by the number which comes after two. Whichever, to discuss the National-Labour divide without mentioning the Greens is almost pointless. (I’ll come to NZ First shortly.)

A softening of the housing market, falling dairy prices and potential weakening of the Chinese economy do not bode well for New Zealand

There were knowing smiles among economists when earlier this year John Key set the election date a couple of months early. He told us it was because there were various international gatherings that the prime minister had to attend. But it also seemed possible that economy growth would be weakening at the end of 2014.

Dealing to dirty dairying is an issue that the three major parties fundamentally agree on. Is a parliamentary accord on protecting our waterways next?

I have said in the past that for the Green Party to broaden their appeal, they would need to engage with the real economy, including a better appreciation of the importance dairy farming to the New Zealand economy. With their recent announcements about protecting rivers and streams, it is clear that the Greens have done just that. I imagine the Greens plan has been sometime in the making.

Changing your business name and branding is a risky proposition. Has Telecom, now known as Spark, made the right choice?

Alas, poor Telecom… it is no more.
The new Spark has risen from the ashes and time will tell whether the branding revamp has had a phoenix effect.