Category Archives: Retirement & Savings

Market Daze

Can the property companies that run rest homes provide effective care?   Listener: 14 November, 2013   Keywords: Regulation & Taxation; Retirement Policy; Social Policy;   I have had to visit a number of rest homes for the elderly. Such visits can be pretty draining. The one positive is the caring and concerned staff –…
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Future Pressures and Caring for the Elderly

How to live with the Treasury’s Long Term Financial Projections.   Listener: 11 August, 2013.   Keywords: Regulation & Taxation; Retirement Policy; Social Policy;   I was on the external panel advising the team from the Treasury that put together its Long Term Fiscal Projections, required every four years and looking half a century forward. A…
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New Insights into the Experienced Generations

Speech to Launch the Report “New Insights into the Experienced Generation” for the Hope Foundation, 30 July 2009   Keywords: Social Policy; Statistics;   This report represents a further step to our understanding of ourselves as a society. Only a few decades ago we treated all New Zealanders as the same, with the implicit assumption…
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Changing Expectations

MMP has reduced policy extremism, but more consensus politics are needed to solve our big economic questions   Listener: 21 October, 2006.   Keywords: Environment & Resources; Governance;  The rise in personality politics is an unexpected consequence of MMP. Certainly there are other factors, including a change in the US political debate (recall the attacks…
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Coming Of Age: Can the Country Afford for Us to Retire?

Listener: 12 August, 2006.   Keywords: Social Policy;   It may seem absurd to ask the Treasury to project the government’s fiscal position, that is, its tax and spending, out to 2050, but that is what Parliament requires of them in its 2004 Public Finance Act. Given rising longevity, some of the study’s authors may…
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Taxing Spending: Should We Think About Introducing a Progressive Expenditure Tax

Listener: 7 May, 2005.

Keywords: Regulation & Taxation;

I have long been intrigued by Nicholas Kaldor’s proposal for an Expenditure Tax. Instead of taxing income: what one puts into the economy, why not tax expenditure: what one takes out? Should not those on the same income who can live more frugally pay less tax than the profligate? (Can I hear you saying, “Easton, you are a puritan”? I plead guilty, but am also attracted for environmental reasons.) As Kaldor points out, advocates for such a tax have included Thomas Hobbes, John Stuart Mill, Alfred Marshall and Irving Fisher, which shows that supporting it is not a matter of being politically left or right.

Lock into Savings

The retirement debate depends on a disagreement between economists.

Listener : 23 October, 2004.

Keywords: Social Policy;

About 30 years ago economics sharpened its theory of behaviour with the assumption that everyone took economic decisions that gave them the best outcome. We might call this the “neoclassical paradigm”. It simplifies analysis enormously, and was used in policy extensively in the 1980s and 90s. In practice, the paradigm recognises that individuals don’t actually maximise, but it assumes that people are always taking actions that move them closer to the optimum, so the assumption of best outcomes is near enough to be true.

Old Money: if Life Expectancy Is Rising, Should the Age for the Pension Rise, to

Listener 15 November, 2003.

Keywords: Social Policy;

In 1998 our life expectancy at 65 was 17.6 years, so over half those who go onto New Zealand superannuation pass their 80th birthday. In 1898, when the much less generous Old Age Pension was introduced, life expectancy at the 65-year-old age of eligibility was 13 years. Over the century the average life expectancy at 65 has increased by almost five years. Can the state pension be as relatively generous as longevity increases?

The Whimpering Of the State: Policy After MMP


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

Richard Thaler’s Savings Principles

From The Whimpering of the State: Policy after MMP p.75

Keywords History of Ideas, Methodology & Philosophy

People do not behave with the rationalism of the economic theory on which commercialisation was based, especially over their savings. The standard economic theory of individual behaviour is contradicted by the evidence of irrationality (or ‘quasi-rationality’).(1) In practice, as has been attested by numerous studies, the major predictions of economic rationalism fail.(2)

In the Abstract: Will Most Of Us Have an Impoverished Retirement?

Listener June 6, 1998.

Keywords: Social Policy;

I would like to recommend Cornell economics professor Richard Thaler’s The Winner’s Curse: Paradoxes and Anomalies of Economic Life, which describes thirteen general anomalies where the standard economic theory of individual behaviour is contradicted by the evidence. Together they present a serious challenge to the “economic rationalism” which is used to justify so much of recent economic policy. But as important as the book is, many general readers will find it difficult, for it requires a modicum of standard economic theory and/or mathematics to follow some of the intricacies of its arguments. If you can tackle this level of abstraction, do read the book. Or give it to that undergraduate economist nephew who is already obnoxiously telling you how to run your life.

Appendix to Chapter 12: Provision for Retirement

This is an appendix to a chapter of Globalisation and Welfare State The chapter is not written.

Keywords: Social Policy;

Since the 1970s there have been various proposals for state involvement in retirement provision. Each accepts there is a role for voluntary private provision (commonly called the third tier). The differences occur over the treatment of the first and second tiers.

Divided We Stand: An Accord May Not Be Possible, but Progress on Retirement Poli

Listener 15 November 1997.

Keywords: Social Policy;

That 92 percent of voters rejected the proposed Retirement Superannuation Scheme tells us just how out of touch officials are with the public. Instructed to devise the best possible scheme, they chose a privatisation of New Zealand Superannuation akin to ACT’s 1996 election manifesto proposal. Despite a massive advertising campaign, support barely exceeded the ACT election share, indicating just how ill-advised the proposal was.

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

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 Sweet Hereafter: Will You Be Better off Under RSS?

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.