Calculating Sen’s Real National Income for New Zealand

Keywords: Distributional Economics; Growth & Innovation; Statistics;   I have just realised that we can calculate Amartya Sen’s ‘real income’ measure  for New Zealand for a 30 year period, by combining our Statistics New Zealand estimates of national income with the Ministry of Social Development estimates of household gini coefficients. This note describes how this…
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This was not published: 22 May, 2014.   Keywords: Distributional Economics; Political Economy & History;   Thomas Picketty’s book Capital in the Twenty-First Century ‘has transformed our economic discourse; we’ll never talk about wealth and inequality the same way we used to’. So said Paul Krugman explicitly and ever so many other eminent economists implicitly…
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Government Budgets: the Ceremony and the Reality

Listener: 9 June, 2012. Keywords: Macroeconomics & Money; The ceremony of innocence is drowned; The best lack all conviction, while the worst Are full of passionate intensity Despite the media extravaganza that still surrounds them, government Budgets are no longer the major economic statement of the year. The Government now has so many opportunities at…
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Sectors and Prices: Exportables and the Real Exchange Rate

Some Preparatory Notes: ultimately not used. Keywords: Globalisation & Trade; Macroeconomics & Money; I am not sure you have asked the right person to be on the panel, since the topic is policy; my interests are research. So I thought I would consult an old friend, Cassandra. Fortunately I dont have to channel her; she…
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Health Status and Income Inequality

This version was revised in March 2006.

Keywords: Distributional Economics; Health;

Introduction and Summary

This paper brings together some recent research about the relationship between health status and income inequality. It focuses upon a set of propositions which challenge the conventional wisdom. They are:

1. That in a rich country poverty – low material standard of living – probably does not directly impact on health, but does indirectly through stress which income differences generate.

2. The increase in household inequality in the period of the late 1980s and early 1990s was more due to changes in tax, benefit, and government spending policies than it was due to market liberalisation. However, the market liberalisation increased stress on New Zealanders.

3. There is some evidence that income inequality may be increasing, due to factors such as globalisation and technological change.

4. The most common poor New Zealand household is a couple with children who are of Pakeha ethnicity, who own their home (usually with a mortgage), and who depend upon wages for their main income. There are other groups who have higher incidence of poverty, but because they are smaller they do not involve as many people. This means that effective poverty eradication involves working on a broad front rather than targeting minority groups.

5. Illness does not correlate well with income, unless age is controlled for. The sick in New Zealand are the elderly, although the paper goes on to argue that policies aiming to reduce poor health in the long term need to target those with low incomes and low in the socioeconomic status hierarchy.

What the Tax Debate Is Really About

Paper to a lunch meeting of the Diplomatic Club of Wellington, August 2005, Lunch Meeting.

Keywords: Regulation & Taxation;

Other articles on the 2005 Election Tax Debate

When I offered this topic, I planned to talk about the political-philosophical implications of the New Zealand tax debate in an international context. Since then, the two major parties have released their tax proposals, and I owe my audience a commentary on the differences.

How Representative Of Inflation Are Changes in the CPI?

DRAFT: Comments welcome. (The origins of this paper are evident in the text, but its stimulus was a question arising from the interpretation of a standard textbook on international trade.)
The paper was revised in April 2003.

Keywords: Globalisation & Trade; Macroeconomics & Money;

Over a decade ago I investigated to what extent the CPI could be used to represent the prices of the economy of the whole (GDP), as a part of the study which led eventually to In Stormy Seas. In the process of reducing the vast quantity of material that was produced into the book for publication, the material was left out. (The first draft of the book was about twice as long.)

I must have thought the issue as a methodological curiosum at the time, but since the book’s publication on a number of occasion during public discussions I have wished the material had been publically available. As the next section explains, the section was an illustration of one of the general issues with which In Stormy Seas was concerned, and it is also – as a later section explains – crucial to the understanding how monetary policy works, and how the current management regime may inhibit economic growth.

Economic Globalisation and National Sovereignty (II)

Chapter for the New Zealand Government and Politics 2ed, edited by Raymond Miller (OUP). First Edition Chapter

Keywords: Globalisation & Trade; Governance; Political Economy & History;

In recent years there has been increasing concern that the phenomenon of supranational economic integration, popularly known as economic ‘globalisation’, is undermining the sovereignty of the nation state. In New Zealand, this has been symbolised by international agencies such as the International Monetary Fund (IMF), World Bank, and World Trade Organisation (WTO). This chapter will explore the economic context of the debate.

The G Word: the Benefit Of International Economic Intercourse

Listener 17 February, 2001.

Keywords Globalisation & Trade;

The US-led world economic boom of the 1990s may be ending. The economy in 2001 is likely to be rocky in the US, stagnant in Japan, and the rest of the world could suffer with them. That will generate a loss of confidence, not only in the state of the economy, but in some of the euphoric theories that have been dredged up to justify the over-optimism. Dont panic: monetary-based economies fluctuate – always have, always will. But the long term trends – such as globalisation – will grind remorselessly on, and we still need to think about them rigorously.

Income Distribution and Equity

D. Milne & J. Savage (ed) Reporting Economics: A NZ Guide to Covering the Economy, (JTO, 1999) p.103-110.

Keywords: Distributional Economics;

The morning this section was drafted, I listened to a lead story dealing with a statistical study which showed income inequality had been increasing over the last 15 years. The work was familiar because the results had been first reported three years earlier. The presentation made the New Zealand cricket team look world class. The journalists confused wealth and income, gross income and net income, income levels and income shares, and percent change and percentage point change. Deductions were drawn that simply are not in the data. Given it was one of our top news teams, the inference to any journalist faced with a story about the income distribution is “dont”.

Economic Globalization and National Sovereignty

In R. Miller (ed)New Zealand Government and Politics OUP (2001) p.14-24. Written in August 1999.

Keywords: Globalisation & Trade; Governance;

In recent years there has been increasing concern that a phenomenon of economic globalization, in which the economic processes of production, finance, and exchange in each country are becoming more interdependent between countries, is undermining the sovereignty of the state. In the New Zealand of 1999 this was symbolised by APEC, one of the agencies which promotes this globalisation, albeit a minor one compared to the IMF, World Bank, and WTO (World Trading Organisation), but the government’s focusing on it as a part of its (failed) reelection strategy, because it was hosting the annual APEC conference in September 1999 in Auckland (and numerous preparatory ones before then) gave the organization an undeserved prominence. In particular there was widespread public discussion, much of it reflecting a concern, and some of it generating unrest because APEC (and more fundamentally globalisation) was seen to be against New Zealand’s interests, in contradiction to the government’s expressed belief that it was beneficial. Much of the debate, if it may be called that, from both sides was simplistic and rhetorical, missing the complexities and subtleties of the issue. Rather than provide a yea or nay, this chapter tries to set down the context, first by wading through the narrow economics, but later by opening up the topic to place the economics in the wider context of political economy.

What Has Happened in New Zealand to Income Distribution and Poverty Levels

Social Policy for the 21st Century: Justice and Responsibility Proceedings of the 1999 National Social Policy Conference, 21-23 July, 1999. Social Policy Research Centre Reports and Proceedings, 1999.

Keywords: Distributional Economics; Social Policy;


In a recent article, the London Economist describes the “bad point” of New Zealand’s economic reforms which began in the mid 1980s as “a big increase in inequality.”1 In fact the New Zealand economy has generally had a poor growth performance, higher unemployment, and a worrying current account deficit ever since the reforms (although price levels have been more stable). Table 1 is a comparison between the overall economic performance of the Australian, New Zealand and OECD economies since 1985. There is no doubt the New Zealand economy has done worse. 2 Why this has happened, and why the New Zealand economic performance has been inferior to the Australian one, belongs elsewhere. For this paper, The Economist’s observation emphasizes just how widespread is the view that New Zealand has a more unequal income distribution, as a result of the policy changes of the last one and a half decades. But The Economist comment gives no sense of the magnitude of the increased inequality, nor its causes, which are the focus of this paper.

Chapter 9: The Internationalization Of the New Zealand Economy

A chapter of Globalisation and Welfare State

Keywords:Globalisation & Trade;

The glacial shift to a fully market economy before 1984, was obscured by the draconian wage and price freeze form 1982 to 1984. It is important that it is noticed, for while the transformation after 1984 was faster, extremist, and ideologically driven, it was not a merely a political fashion. The external diversification of the 1970s was impacting back on the domestic economy. Before 1966 the economy had almost a dual structure in which the pastoral export sector and its suppliers were almost independent of the domestic sector. The connection was that the consumers dependent upon the incomes from exporting, were forced by imports, tariffs, and other interventions to give preference to domestically produced goods and services. (This enabled foreign exchange – in effect real incomes – to be transferred to the domestic sector and made average incomes of the two sectors more equal.) (1)

Income Distribution: Part I

A Study of Economic Reform: The Case of New Zealand,, edited Brian Silverstone, Alan Bollard, and Ralph Lattimore, (North Holland Books: 1996) pp.101-138.
Note: This item was so big it is in two parts. Income Distribution: Part II

Keywords: Distributional Economics;


There is a widespread belief that a major consequence of the economic reforms of the 1980s and 1990s was increased economic inequality. As will become evident, this overall conclusion is correct, even if the mechanisms which generate the inequality are somewhat more complex than popular views articulate. We can trace these mechanisms in theory using Diagram 1. The rest of the paper assesses their strength and direction.