Author Archives: Brian Easton

Pop Goes the Bubble? Think Of the Sharemarket As a High Chain Letter.

This entry was posted in Business & Finance, Listener on by .

Listener 9 October, 1999.

Keywords: Business & Finance;

Every time a share is sold, someone else buys it. So the dollars that someone puts into the sharemarket to buy shares equals the amount the ex-shareholders takes out. Suppose there are more people who want to put dollars in than who want to take them out. The potential buyers will have to give an incentive to some shareholders to turn their shares into cash. That inducement is the price of the share going up. So if cash is trying to get into the sharemarket, the prices of shares rise: if cash is trying to get out, they fall. However, in the actual trading the amount of cash that gets in equals the amount that gets out.

Trading Platitudes: Review Of Apec in Focus, by S. McMillan, B. Ramasamy,

This entry was posted in Globalisation & Trade on by .

New Zealand Books, October 1999, p.3-4.

Keywords: Globalisation & Trade;

Malcolm Templeton’s Human Rights and Sporting Contacts and Trevor Richards’ Dancing on our Bones are about the same issue although sometimes the reader might think they were in different countries, so different are their perspectives: Templeton provides a comprehensive account of New Zealand’s fraught relationship with apartheid South Africa in the context of New Zealand’s entire foreign diplomacy; Richards’ account is that of the much vilified, but eventually successful (nowadays even respected), protest movement which he led.

Picking Winners:

This entry was posted in Growth & Innovation, Listener on by .

To enhance economic growth the government needs to stimulate economic change.
Listener 25 September, 1999.

Keywords: Growth & Innovation;

Those who proposed the early 1990s science sector reforms knew little about scientific research or economics. Just as the innkeeper Procrustes required all guests to fit his beds exactly, commercialisation was imposed on all activities. So the DSIR was replaced with a Ministry for Research Science and Technology for policy advice, a Foundation for funding, and commercially oriented Crown Research Institutes as the state research providers. The ideologically driven reforms soon proved cumbersome and inefficient. They are now being reversed, towards where they it would have been, had pragmatism and commonsense been more prominent in the early 1990s.

Global Warning: What Would Bruce Jesson Have Said About Apec?

This entry was posted in Globalisation & Trade, Listener on by .

Listener 11 September 1999

Keywords: Globalisation & Trade;

I wish Bruce Jesson were here, especially as I write this column about APEC. Bruce and I use to discuss our putative writings. Never directly of course, but after a mulling over, one of us would say “I’ve been thinking about writing a column on this issue, and …” Sadly, we dont know what Bruce would have written on the APEC conference, but there are hints in his last major article.

With a Whimper: Put Public Service Back in the Public Service

This entry was posted in Governance, Listener on by .

Listener 28 August, 1999.

Keywords: Governance;

In the opening chapter of Das Kapital, Karl Marx wrote in 1864 how recent developments in economics had “discovered the content” of value theory. His excitement is palpable, for the labour theory of value seemed to underpin his concerns of human alienation in industrial society. Unfortunately the theory does not quite work. Marx struggled with the idea, never completing Volume 3 (the text being put together from Marx’s notes). We all have brilliant ideas, which seem to solve the problems of the universe yet, as time go by, we realise are flawed. Fortunately, like Marx, we are not usually in a position to implement our faulty theories. When we are, things can go desperately wrong.

Income Distribution and Equity

This entry was posted in Distributional Economics on by .

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

This entry was posted in Globalisation & Trade, Governance on by .

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.

The State Steps In: Michael Bassett Makes a Case for Intervention.

This entry was posted in Governance, Growth & Innovation, Listener, Political Economy & History on by .

Listener: 14 August, 1999.

Keywords: Governance; Growth & Innovation; Political Economy & History;

Michael Bassett’s book The State in New Zealand 1840-1984 is an assiduous, if somewhat erratic, compilation of state economic activity in New Zealand, the result of burrowing through masses of archives from government economic departments. The picture he presents, up to 1984 anyway, is that the government of New Zealand actively promoted industrial development. On more than one occasion private initiatives were failing, and the state stepped in to assist a now successful business.

Kulturkampf: Commercialisation Wars Against Arts

This entry was posted in Governance, Listener, Literature and Culture on by .

Listener: 31 July, 1999.

Keywords: Governance; Literature and Culture;

What have the following in common?

* The disappearance of the National Art Gallery;
* National Archives sued by its stakeholders in the High Court;
* The public outcry over the National Library’s proposed reorganisation.
* The National Trust under severe financial pressure;
* Te Papa confused with an amusement arcade;
* Radio New Zealand’s considering privatising its news service;
* The lack of local content on television.
* User charge threats to your local library;
* Victoria University of Wellington selling off a McCahon painting?

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

This entry was posted in Distributional Economics, Social Policy on by .

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;

Introduction

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.

Measuring New Zealand’s Economic Activity

This entry was posted in Growth & Innovation on by .

Report on Measuring New Zealand’s Productivity

Keywords:

Growth & Innovation;

Executive Summary

The Department of Labour commissioned this study to give further consideration of the Diewart and Lawrence output series, reported in Measuring New Zealand’s Productivity (D&L (1999), called here D&L99. This exploration data base raises two issues.

Electric Rhetoric: Sneering Instead Of Thinking

This entry was posted in Business & Finance, Listener, Regulation & Taxation on by .

Listener 17 July 1999

Keywords: Business & Finance; Regulation & Taxation;

Concerned with what he thought was the excessive influence of women in New Zealand poetry, Rex Fairburn, writing to Denis Glover in 1934, described them as the “menstrual school.” It was a silly gibe – an adolescent using words not then mentioned in polite company. The rhetoric was unforgivable, if far too typical of the New Zealand vice of pigeon-holing one’s opponents with a superficial personalised witticism, rather than cogently facing the issue being debated. That is exactly what a recent editorial of The Dominion did when it accused minister of energy, Max Bradford, of a “Return to Muldoonism”.

Rethinking Economic Policy: The Washington Consensus Turns to Custard

This entry was posted in Growth & Innovation, Listener on by .

Listener 3 July, 1999.

Keywords: Growth & Innovation;

Half a decade ago, capitalism appeared to have triumphed over communism (if one is allowed the crudity of these descriptors). When the Berlin Wall fell in 1989, the Eastern European nations of the COMECON pact left the Soviet fold, looking to the West as they transformed their economies and ways of political life. The rest of the Russian Empire broke up in 1993, and they went west too. No longer is a “spectre … haunting Europe – the spectre of communism” (as Karl Marx wrote in 1848).

Institutional Economics

This entry was posted in History of Ideas, Methodology, Philosophy on by .

Extract from The Whimpering of the State. p.123-124.

Keynotes: History of Ideas, Methodology & Philosophy;

In 1931, at the age of 24 [Sutch] went to the Department of Economics at Columbia, at the time the most important in the United States, where it taught the dominant economic paradigm of the times ‘institutionalism’.(1) The neoclassical synthesis (often abbreviated to ‘neoclassical’) a combination of the macroeconomics that Keynes pioneered and the modern theory of markets (including a welfare economics which emphasises their beneficial outcomes), strongly laced with mathematical techniques only becomes important after the Second World War. Institutionalists trace their origin to Thorstein Veblin. Among the best-known are Gunnar Myrdal and John Kenneth Galbraith and Maurice Clarke, who lead inter-war Columbian economics.

The Whimpering Of the State: Policy After MMP

This entry was posted in Business & Finance, Distributional Economics, Education, Governance, Health, History of Ideas, Methodology, Philosophy, Literature and Culture, Macroeconomics & Money, Political Economy & History, Regulation & Taxation, Retirement & Savings, Social Policy on by .


Auckland University Press, 1999. 269pp.

The policy process has changed dramatically following the introduction of MMP. Fascinated by the theatre of politics, we too easily ignore the major changes in policy approaches and outcomes. Today, without an assured parliamentary majority the government has to consult over its policies rather than impose them. Along with the increasing recognition that the policies of the past have failed, the policy blitzkrieg has almost ceased and commercialisation is being shelved.

The Whimpering of the State looks at the first three MMP years with the same lively, broad -ranging and informed approach as Easton’s successful The Commercialisation of New Zealand, which described the winner-takes-all regime before 1996. Again there are case studies: health, education, science, the arts, taxation. retirement policy, and infrastructure. Policy possibilities are explored. Yet, as the title of the book suggests, any releif from the ending of Rogernomics is offset be a realistic pessimism arising from a shrewd analysis of the continuing deficiencies in New Zealand’s political and social structure. Although written for the general public, this book will also be read by politicians, policy analysts and students, and will shape policy thinking in the MMP era. Publisher’s Blurb

Two Styles Of Management

This entry was posted in Governance, Health on by .

From The Whimpering of the State: Policy after MMP (Auckland University Press 1999) p.88-91.

Keywords: Governance; Health

Alan Schick argues that the central theme of the reforms was ‘influenced by two overlapping but distinctive sets of ideas, one derived from the vast literature on managerialism, the other from the frontiers of economics. Managerial reform is grounded on a simple principle: managers cannot be held responsible for results unless they have the freedom to act. The new institutional economics is grounded in a very old idea: people act in their own self-interest.’ In effect, Schick contrasted two approaches (or cultures) to public sector management. He only faintly praises accountability, but warmly describes responsibility as ‘a personal quality that comes from one’s professional ethic, a commitment to do one’s best, a sense of public service’.(1)

Taxation and Public Spending

This entry was posted in Regulation & Taxation on by .

Chapter 6 of The Whimpering of the State. This was published in 1999.

Keywords: Regulation & Taxation; Social Policy;

During the writing of the 1984 Post-Election Briefing, Economic Management, Treasury economists got into a fierce argument over the purpose of taxation. Eventually a senior official, well known for his native wit, stepped into the heated fray and imposed the following opening of the relevant section of the PEB.

“The purpose of any tax regime is to raise revenue. The level of revenue will itself be dictated by the level of government expenditure and the size of the budget deficit that the government is prepared to accept.”[1]

The briefing goes on to discuss how to design a tax regime, making the obvious point that not all taxes are equally effective. Alas, such common sense has not been so evident in the public debate on taxation in the 1990s. The focus has been on taxes, with nary a reference to the government spending it provides, even though – a theme of this book – New Zealanders have a high demand for public spending on retirement incomes, health, education, and a myriad of other activities. Perhaps because taxation is the downside of such spending, those with an agenda of reducing public spending want to emphasise only its disadvantages. This chapter cannot be so irresponsible.

Health Policy

This entry was posted in Health on by .

Chapter 11 of The Whimpering of the State

Keywords: Health;

The chairman of the Health Funding Authority (HFA), Graham Scott, reported that the 1991 health reforms were predicated upon productivity gains in the public hospital sector, which had not occurred. As a result the Crown Health Enterprises (CHEs, now Hospital and Health Services – HHSs) are in permanent financial deficit. In Scott’s convoluted presentation ‘the current deficits in CHEs are not only about inefficiencies and variations in the quality of management but are also an outgrowth of the original efficient pricing policy [whatever that means]. In other words a share of these deficits was made in Wellington, because the policy did not work out as intended. They were inherent in the policy framework that assumed efficiency gains would be allocated to the deficit.’[1] More simply, the policy failed. Scott went on to explain that the failed theory derived from the experiences of corporatisation in other areas of government and in consultants’ reports.