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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What have the 2025 Nobel awards in economics to say to us? One of the economic puzzles of human existence is that for most of it, going back to its beginnings, the material standard of living did not change much. Then, about 200 years ago, it began increasing; in some places more than others but…
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Our current fiscal settings promise that we will eventually face a public debt explosion. A major cause would arise from the aging population. Is there anything we can do? It has long been known that the ageing population would create future fiscal pressure. It was quantified in the first (2006) Treasury long-term fiscal projection and…
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It even happens in New Zealand. Local autonomy suffers. While Donald Trump may be democracy’s greatest political bully, he is not alone. It happens in New Zealand, not only in the offices of politicians and whips dealing with caucus. Cabinet ministers practise it in public, not least towards local government. L ocal governments are legally…
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What the latest Statistics New Zealand GDP figures might be telling us. Statistics New Zealand’s publication of GDP for the June Quarter got a lot of media coverage, some of which bordered on the hysterical. To say the figures demonstrated the country was ‘bankrupt’ is a nonsense. Bankruptcy is about debt. Not a single one…
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Big Corporations Are Not What We Think They Are John Kay has been widely described as ‘one of the greatest economists of our time’. He is well grounded in economic theory and has taught it. He is rich with practical experience, both as a consultant and a corporate director, which he melds shrewdly with the…
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Do we need bigger multipurpose government mega-departments? Restructuring seems to be the fashionable management practice whenever faced with a challenge. (Eminent health economist Alan Maynard’s caaled it ‘redisorganising’ citing Petronius Arbiter in Satyricon: ‘we tend to meet any new situation by reorganising, and what a wonderful method it can be for creating the illusion of…
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What are the economic and political implications if the New Zealand economy stagnates for five and more years? Prime Minister Christopher Luxon told Morning Report that ‘We’ve got the worst recession* we have had in 30 years’. (Observe, he could have said ‘since the Rogernomics Stagnation which finished 30 years ago’, but some things may…
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A physician’s memoir describing a successful research program leads to pondering about research funding strategies. A few years back, I was, in effect, commissioned to review the development possibilities of a local biotech industry, especially one for creating new pharmaceuticals. At the time, it was fashionable in every regional plan – anywhere in the world…
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What can Econ101 tell us about Trump’s tariffs? Before reviewing the economics of tariffs as indirect taxes, here is a brief account of their constitutional role. In particular, in some jurisdictions, including New Zealand, taxes and therefore tariffs are the preserve of Parliament, not that of the executive or kings. England’s civil war is complicated…
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The Government’s Growth Strategy Seems to Have Little Analytic Content. In 1990, the Prime Minister, Geoffrey Palmer, announced that he would halve unemployment – its rate was then more than 7 percent of the labour force. An OIA request turned up no technical papers. Apparently, the PM’s political advisers – jock wankers/politicos – thought the…
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Angus Deaton’s Economics in America challenges the direction that economics has taken. In 2015 Angus Deaton was the sole awardee of the Bank of Sweden’s Prize in Honour of Alfred Nobel, for his contributions in the study of ‘consumption, poverty and welfare’. (It has been relatively rare for this Nobel to recognise poverty or welfare;…
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Winning office is not the same as achieving change. A recent Economist columnist divided politicians and their political advisers into either ‘jock wankers’ or ‘nerd wankers’. It’s a distinction which I use here, but with the less pejorative ‘politicos’ and ‘policy wonks’. In opposition, the politicos are primarily concerned with getting their party elected; in…
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Why is the British Labour Government penalising its poor? We have the spectacle of the Starmer-led British Labour Government taking measures which are making some of the most struggling Brits worse off. It has got to the point where Labour’s parliamentary backbench is revolting and the government has had to make partial concessions – the…
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We should not assume that all adopted innovations are progressive. Jonathon Haidt’s ‘The Anxious Generation’ illustrates that sometimes they require social measures to enhance well being. The Anxious Generation is a book which probably everyone engaging with adolescents should read. Haidt’s thesis is that smartphones replacing flip phones led to a marked deterioration in the…
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What can you do when you have hit your borrowing limit and still want to spend? One option is to cut back on maintenance of your capital – say, to delay repainting the house or keeping the car in tip-top condition. The government does the same. Hence our three water systems leaking, polluting and flooding;…
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Why Government borrowing is limited This column started out to explain how the proposed structural outsourcing of public surgery was partly a consequence of the peculiarities of our fiscal borrowing practices. In summary, the restriction on the government’s debt level means seeking indirect ways to provide the required capital. One way of doing this is…
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Trump may be accelerating the decline of US power. In the 2004 film Downfall (Der Untergang), which portrays Hitler’s last days in a Berlin bunker, he says that if the German people are weak they deserve death. It is a view from philosopher Friedrich Nietzsche who argued that conflicts are won by those with the…
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The Government’s plans to remove the wellbeing provisions in the Public Finance Act represents a reversal of the way society is travelling. I welcomed the Ardern-Robertson’s Government decision to focus on wellbeing in its budgets. It went on to amend the Public Finance Act to require the government to state the wellbeing objectives that will…
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ACT ‘s neoliberals are still trying to sneak in a change to the constitution. When ACT – the Association of Consumers and Taxpayers – was formed, its then party leader, Roger Douglas, with an optimistic exaggeration which marked his time as Minister of Finance, announced that he was sure it would get more than 50%…
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