Monthly Archives: November 1997

Fiscal Surplus: Social Deficit:

Even If the Economy is Doing Well, the People May Not Be Listener: 29 November, 1997.

Keywords: Regulation & Taxation; Social Policy;

The table below shows the government’s current spending on employees, goods and services. It does not include spending on transfers such as social security benefits or debt servicing. It includes spending by local government as well as central government. The most important items are health and education, but there is also spending on government administration and advice, on law and order, on the environment, on the arts and so on.

Divided We Stand: An Accord May Not Be Possible, but Progress on Retirement Poli

Listener 15 November 1997.

Keywords: Social Policy;

That 92 percent of voters rejected the proposed Retirement Superannuation Scheme tells us just how out of touch officials are with the public. Instructed to devise the best possible scheme, they chose a privatisation of New Zealand Superannuation akin to ACT’s 1996 election manifesto proposal. Despite a massive advertising campaign, support barely exceeded the ACT election share, indicating just how ill-advised the proposal was.

Capital and Technological Change: Some International Comparisons

From In Stormy Seas, p. 200-208.

Keywords: Growth & Innovation;


Here we use the term (fixed) capital to mean physical items such as land improvements, buildings, plant and equipment. It excludes land, and it excludes inventories (physical stocks). Sometimes physical capital is thought of as `stored labour’ to distinguish it from the ongoing labour which accompanies its use. The term `capital’ is also used for financial assets. In principle these are matched by physical capital after the netting out of liabilities. Financial capital is not a concern of this chapter.

Measuring Poverty: Some Problems

Social Policy Journal of New Zealand, November 1997 (9), p.171-179. (1)

Keywords: Distributional Economics; Social Policy;

While it is easy to be compassionate over the magnitude and situation of the poor, it is not in their interest for researchers to be as equally sentimental in the analysis and measurement of poverty. Estimates which are not developed rigorously may be misleading, and may be so in a way which could be used against the interests of the poor. Where an estimate of the numbers of the poor is overly generous, the resolution of reducing poverty appear excessively expensive, and may delay the facing up to the issues. Wrong assessments of the composition of the poor may result in policy targeting the wrong groups. Thus policies based on faulty data are likely to be inefficient and wasteful, and in the end to be manipulated against the interests of the poor.

Thus it is incumbent on social scientists to scrutinize the work on poverty, to ensure that it is seeking high standards of analytical rigor. A recent paper by Stephens, Waldegrave and Frater (Stephens et al, 1995 – henceforth SWF) provides a useful basis to do this, albeit some of the problems it raises appear elsewhere.

In Stormy Seas: The Post-war New Zealand Economy

Otago University Press, 1997. 343pp.

A detailed look at the New Zealand economy in the twentieth century, and in particular its course since World War II. This is not just a history but a narrative about a problem’, defining, and ‘hopefully contributing to an understanding that will aid to its solutions’.

In Stormy Seas asks pertinent questions about some of our favourite national myths. The intial chapters examine the ongoing debate about the New Zealand economy, looking at such factors as external impact and internal response, the business cycle and growth, and problems of financing investment. Structural transformation, the farm sector, industry and energy, efficiency and flexibility, and ‘the market’ are all explored before the book closes with a discussion of the aftermath of Rogernomics and the decade of greed. (Publisher’s blurb)

The Relevance Of Rogernomics

Chapter 15 of In Stormy Seas: The Post-War New Zealand Economy, p.211-231. (This is a draft which enables the search engine. Please go to source for quotes.)

Keywords: Political Economy & History;

Their outlook, not too carefully reasoned, and no doubtful scornful of scientific thought, makes them incapable of self distrust. Like almost all men of action they have a contempt for theories: yet they are often captured by the first theory that turns up, if it is demonstrated to them with an appearance of logic sufficient to impose upon them. In most cases they do not seem to see difficulties, and they propose simple solutions for the most complex problems with astonishing audacity.[1]

Bernard Ashwin: Secretary to the Nation Building State.

New Zealand Studies, November 1997, p.13-21. This article contains material which informed but is not reported in The Nationbuilders, although there is material in the book which I did not have when I wrote this. This essay was in preparation for an entry in The Dictionary of New Zealand Biography.

Keywords Political Economy & History

Bernard Carl Ashwin (1896-1975), founder on the modern Treasury, was one of New Zealand’s great civil servants, and perhaps the most influential from the 1930s to June 1955, when he retired from Secretary of the Treasury.[1] Keith Sinclair’s biography of Nash has only a handful of brief references, but one says revealingly, `Fraser ruled in very close consultation with the Federation of Labour. The other powers in the land were Walter Nash and Bernard Ashwin.’[2] The assessment is echoed by John Martin `[h]e was clearly one of a small group – Nash, Fraser, and Walsh being the others – who were at the centre of the decision making process.’[3] In Ashwin’s case that `central role’ continued into the early years of the National government.

Deals for the Dealers: How Financiers Were Saved After the Crash

Listener 1 November, 1997.

Keywords: Business & Finance;

The 1987 crash was devastating to the New Zealand financial sector. Debts of many corporations now exceeded the market value of assets, which had been bought at greatly inflated prices (or in the case of financial assets, were valueless when the issuer went bankrupt). Moreover, the financial sector makes it money from financial dealing. The margin charged on any deal is narrow, but when there are plenty during a boom, the pickings are rich. After a crash, deals dry up, and so does the revenue of the financial sector. Many institutions went to the wall, and their workers joined the unemployed from the productive sector. Except for those who specialised in corporate liquidations, the rest took pay cuts, and returns on their investment were low and zero. Some firms just squeaked through.