The turmoil in the world economy from Trump’s attack on Iran will delay New Zealand’s economic recovery. Back in 1993 I was perhaps the first to announce that the economy seemed to be in recovery. The notion was seized upon; apparently, the long Rogernomics stagnation was over, and economic growth would soon be booming. That…
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Andrew Sorkin’s new book, 1929: The Greatest Crash in Wall Street History sheds light on how financial markets work. Economists argue over how exactly the Great Depression of the early 1930s occurred. We are pretty much agreed on what happened in New Zealand – our ability to borrow internationally became very limited while the terms…
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Industrial policy is once more on the agenda of many governments. There is a long history of Industrial Policies (IP) aimed at promoting a particular sector of an economy. When Henry VIII abandoned Roman Catholicism, the practice of eating fish on Fridays lapsed. The change devastated the English fishing industry. Edward VI, Henry’s son, reinstated…
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It is more than a four-letter word exercise. In 1986, the government commissioned a review of science policy chaired by ex-Governor General David Beattie. Among the agencies it interviewed was the Treasury, in the course of which Beattie asked whether it had a science plan. The Assistant Secretary of the Treasury spluttered; he was clearly…
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Shane Jones is committed to state-led economic development. New Zealand First and ACT sit further apart on the economics spectrum than do Labour and National. On other parts of the policy spectrum the two are more aligned, but this column’s focus is primarily on economics and, particularly, the economics of NZF. I leave Christopher Luxon’s…
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How successful are Trump’s measures at making America great again? War is destructive. It destroys lives, it destroys loved ones and it destroys economies. The victors’ economies suffer because a conquest is not as valuable as the rhetoric portrays and any gains go to only a select few. Even countries which are not invaded suffer…
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There are politicians who are more than a comms team. Prime Minister Geoffrey Palmer was not doing well in 1990, so he announced his government would halve unemployment. That would have been an impressive achievement – then the unemployment rate was about 5 percent – so much so, it gave the government a temporary boost…
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Canadian Prime Minister Mark Carney outlines an architecture For some decades the United States of America domination of the world has been falling. This is most obvious in economic terms. The US is no longer the world’s largest economy. It is easy to say that China is because of it has larger a population but…
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Why we want the Reserve Bank to operate independently. Minister of Foreign Affairs Winston Peters was wrong to criticise Governor of the Reserve Bank of New Zealand, Anna Breman, for cosigning a statement with 14 other heads of other central banks (plus two from the Bank of International Settlement). The statement expressed support for the…
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Free trade deals can be complicated; so is their analysis. We must celebrate the achievement of a Free Trade Agreement with India, but only the uninformed attribute its success solely to the current Prime Minister, Christopher Luxon, and to Todd McClay, the trade minister. The negotiations took a couple of decades involving many more politicians….
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New Zealand is a small, isolated nation and needs to design itself accordingly. We should avoid uncritically imitating larger nations. Among the news websites I read is a British daily which once a week interviews a local writer on the books they grew up reading and which influenced them. That’s fifty-odd a year; most interviews…
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This column is a response to the complaint that we have poor economic performance because we have summer holidays. It praises them. Summertime, and the living is easy. We used to take our kids to Coes Ford on the Selwyn River near Christchurch for mucking around in the water. Great memories. Apparently, you can’t nowadays….
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The government is still borrowing for consumption. I do not think anyone understands the politics of the spat between Ruth Richardson, who chairs the Taxpayers Union, and Nicola Willis – including those two. The underlying economic issue is analytically clearer. The technical term for it is ‘fiscal consolidation’. It is easiest to understand it by…
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How we connect economically with the world is critical. The British Labour Government is struggling. Partly it is because they were badly prepared in opposition; the Conservative Government was making such a charlie of itself that Labour expected that it would do better and gave little thought as to how it might. But while it…
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The Minister of Finance says it is but, parochialism aside, are we doing anything to ensure it really is? One of the necessary skills of a politician is to hold on to at least two contradictory positions at once. * Consider how, following the report of 72,000 New Zealanders ‘permanently’ leaving the country in the…
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The tensions between different approaches to the economy are surfacing as the election nears. As we head towards next year’s election, the tensions between the coalition partners are becoming increasingly evident. There are always these tensions, even before MMP when there were but two significant parties, but they were hidden within the caucuses. For instance,…
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Pragmatic analysis says maybe we should, but we should also consider nationalisation. We should certainly consider better regulation. An earlier column argued that we should make the government’s net worth – the value of its assets less its liabilities – more prominent in fiscal policy. Net worth is also fundamental when we are discussing whether…
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The pressure to globalise is consolidating towards a global world in which the US is a marginal player. There is a trope (or should I say ‘wishful hope’) by some that globalisation is coming to an end. While it may no longer moving towards a comprehensive integration, there are sites where it continues to expand….
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We should follow the Golden Rule of Fiscal Management and not borrow for consumption in the medium run. Asymmetry is a crucial, but often ignored, feature of credit transactions. You would normally be surprised if a shopkeeper said they would sell you 1kg of apples but not 2kg, even if you offered to pay a…
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Queen Elizabeth II famously asked about the 2008 Global Financial Crisis, ‘Why did no one see it coming?’ In fact, many economists (including yours truly) had pointed out that the financial system probably would crash. But we failed to predict what would precipitate the collapse, how severe it would be and when it would happen….
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