Author Archives: Brian Easton

Capital and Technological Change: Some International Comparisons

This entry was posted in Growth & Innovation on by .

From In Stormy Seas, p. 200-208.

Keywords: Growth & Innovation;

Capital(1)

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

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

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

This entry was posted in Growth & Innovation, History of Ideas, Methodology, Philosophy, Macroeconomics & Money, Political Economy & History, Regulation & Taxation on by .


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

This entry was posted in Political Economy & History on by .

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.

This entry was posted in Political Economy & History on by .

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

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

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.

The Economic Impact Of the Employment Contracts Act

This entry was posted in Labour Studies on by .

Symposium on New Zealand’s Employment Contracts Act 1991, Californian Western International Journal Volume 28, No 1, Fall 1997, p.209-220.

Keywords: Labour Studies;

Introduction

There have been various claims about the economic impact of the New Zealand Employment Contracts Act, 1991 (ECA). For instance in Free to Work: The Liberalisation of New Zealand’s Labour Market, Australian economist Wolfgang Kasper claims that the resulting industrial relations had economic benefits. He concludes “the Employment Contracts Act has substantially enhanced the productivity of labour and capital, output, and employment growth because it has been an essential ingredient in the transformation of New Zealand’s institutional order to greater flexibility and competitiveness”.1

Boom and Bust: Can We Learn from the 1987 Crash?

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

Listener: 18 October, 1997.

Keywords: Business & Finance;

In the weekend after the sharemarket crash of October 1987 I read every book on financial crashes I could find. Unlike too many advisers and commentators I knew this was “it”. Earlier I had written how the relationship between share prices and company earnings (profits), “the P/E ratio”, was well above historical trends. That meant that the return from investing in shares was from capital gains, not from their earning real income from productive assets. (But it was only afterwards I realized that the earnings being reported by many companies was based on the capital gains they were making out of their share trading, so a true P/E ratio was even more exaggerated than I thought.) The market was being driven by blind greed, feeding the fickle bubble of speculation. When the bubble bursts, prices crash. If history warns that collapses followed such booms, reviewing past experiences might tell about the economic fallout, and even how to avoid future disasters.

Ups and Downs: Is the Reserve Bank Managing to Control the Exchange Rate?

This entry was posted in Listener, Macroeconomics & Money on by .

Listener 20 September, 1997.

Keywords: Macroeconomics & Money;

When a decade ago this columnist talked about the Reserve Bank of New Zealand (RBNZ) “quasi-targeting” on the exchange rate, the conventional wisdom said that this was a nonsense. Over the years that quasi-targeting became increasingly explicit, as illustrated by the RBNZ’s Monetary Conditions Index. The MCI, as it is known, combines a short term interest rate and the exchange rate (measured by a trade weighted index – the TWI), to give a quantitative indicator of the RBNZ’s assessment of monetary conditions. The RBNZ even sets a range in which the MCI should hover. As I write the index is meant to be between 775 and 875, although it is likely to be changed with the new monetary policy announcement by the RBNZ, this Thursday (18th).

Crisis What Crisis? The Aging Problem Needs to Be Tackled Soberly.

This entry was posted in Listener, Retirement & Savings, Social Policy on by .

Listener 6 September 1997

Keywords: Social Policy;

One of the safest rules of politics is that any claim there is a crisis is really an excuse to justify a policy. There may be a problem but, typically, converting it into a “crisis” distorts the analysis, resulting in a twisted policy prescription. Sadly, but not surprisingly, this is true for the current superannuation debate.

THE COMMERCIALISATION OF SIN AND REAL ECONOMIC ETHICS

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

Presentation in series “Creation of a New Ethic” St Andrews on the Terrace, Sunday August 24, 1997.   Keywords: History of Ideas, Methodology & Philosophy;   Exactly at the time I was invited to contribute to this series, I was pondering over the notion of the “commercialisation of sin”. The title parallels that of a…
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The Sweet Hereafter: Will You Be Better off Under RSS?

This entry was posted in Listener, Retirement & Savings, Social Policy on by .

Listener 9 August 1997

Keywords: Social Policy;

In this column I assume that the government’s proposed Retirement Savings Scheme (RSS) works the way the government says it will. In which case the RSS is a privatization of the current New Zealand Superannuation (NZS), where instead of the government taking responsibility for the funding, the private sector does, albeit under considerable government regulation.

The Broadcasting Reforms

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

Appendix to Chapter 4 of Commercialisation of New Zealand. An excerpt was published in J. Farnsworth & I. Hutchinson (ed) New Zealand Television: A Reader, 2001, Dunmore Press, p.225-230.

Keywords: Governance; Literature and Culture;

It is very easy to argue that there is something special about some economic commodity such as broadcasting, but to overlook there are other activities which are just as special, such as hard copy periodicals. A good magazine shop sells over 5000 titles. They range from daily newspapers to monthly science journals, from gardening to financial investment. In a big city there will be dozen of competitors also selling titles, as well as specialist shops for ethnic language literature, rock music, obscure political views, to whatever. Alternatively there is subscription by post. This extraordinarily rich supply in response to a myriad of public demands is provided without significant government involvement other than the framework for normal commerce.

The New Zealand Experiment: A Model for World Structural Adjustment? (review)

This entry was posted in Political Economy & History on by .

by Jane Kelsey New Zealand Studies, July 1997, p.37-38

Keywords: Political Economy & History;

Early in The New Zealand Experiment, Jane Kelsey writes about a 1993 colloquium sponsored by the Washington-based Institute of International Economics (IIE). Its convenor, John Williamson, is reported as suggesting that societies have a natural tendency to become sclerotic and their flexibility declines, a reference to Mancur Olson’s The Rise and Decline of Nations: Economic Growth, Stagflation and Social Rigidities.

Baths, Hogwash and Taxes

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

In the search for correlations, are economists forsaking rigorous standards for sloppiness?
Listener 12 July 1997

Keywords: History of Ideas, Methodology & Philosophy; Regulation & Taxation;

Nobel prizewinning physicist Steven Weinberg recently wrote “the existence of a common standard of judgement leads physicists, who are no more saintly than economists, to question their own best work.” He was referring to Alan Guth who, having discovered the universe went through an inflationary phase early in its creation, nevertheless tested his own work to see whether the hypothesis was wrong. As Karl Popper says, be your own sternest critic. Is it fair to imply economists are less rigorous?

The Efficacy Of the Market

This entry was posted in Health, Regulation & Taxation on by .

Extract from Chapter 2, The Commercialisation of New Zealand.

Keywords: Health; Regulation & Taxation;

This is not an economics textbook, so we simply report a substantial body of economic theory as follows. The market may be thought of as a signalling system which coordinates the decisions of the various actors in an economy. It has two key features. First under certain circumstances (key features to be outlined shortly), the price signals reflect the social value of the resources being used or traded. Second the signalling system is self-enforcing, in that the actors have a practical selfinterest in obeying the signals.

SCIENCE POLICY

This entry was posted in Growth & Innovation on by .

Chapter 14 of The Commercialisation of New Zealand   Keywords: Growth & Innovation;   Science interfaces with broad economic policy because it uses public resources and impacts on industrial policy. But even though the science community did not always help itself, Treasury’s approach was fundamentally anti-science. (Chapter 6) There is an instructive article by a…
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