Category Archives: Regulation & Taxation

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.

A Taxing Year: the Election Rhetoric Is Likely to Be About Taxation.

Listener: 30 January, 2005.

Keywords: Regulation & Taxation;

Some decades ago, the political Left retreated from its historic role of engaging with economics to provide a critique of the modern capitalist economy. Nowadays, insofar as it discusses the economy at all, other than in terms of nostalgia – things were better in the past – the focus is on redistribution: how the output of the economy should be shared. It is not an unimportant question, but it is not the whole of economics.

Tax and the Cultural Cringe

Comparing the US and New Zealand tax systems is comparing rotten apples with quality kiwifruit.
Listener: 14 August, 2004.

Keywords: Regulation & Taxation;

Far too much of the New Zealand economic debate is overwhelmed by the colonial cringe, an obsequious respect to overseas economics, with a failure to recognise that New Zealand circumstances are frequently different. Each May, a Business Roundtable press release, dutifully reported in the business pages, announces “Tax Freedom Day”, the day up to which – so it says – everyone is paying taxes to the government and after which all one earns is tax-free. The idea comes from the US right-wing think tank, the Tax Foundation, and is strongly contested in the US as misleading, because it ignores the fact that one also gets benefits from paying those taxes.

Taxing Our Patience

How seriously should we take the argument that higher taxes equal lower growth?

Listener: 9 August, 2003

Keywords: Regulation & Taxation;

New Zealand economics is bedevilled by slavishly imitating inappropriate overseas analyses. A nice example of this colonial cringe is the Business Roundtable’s annual celebration of “Tax Freedom Day”, the day on which they deem that we have paid our taxes with all our subsequent income tax-free. This year it said that it was somewhere between April 23 and May 17. (It has difficulties deciding what are taxes.)

Performance Anxiety: Why Incentive Systems Often Fail

Listener 26 July, 2003.

Keywords: Education: Regulation & Taxation;

In one of his witty essays in The Intellectual in the Marketplace, George Stigler describes a fictional Latin American university whose vice-chancellor aimed to raise the quality of the academic staff by a system of competitive exams. In order to win, the academics gave up teaching, so the system was changed to provide incentives to teach well. A further change had to be made to incorporate research achievement. Each time the ‘contestants’ found ways around the rules, the system was distorted and goals not attained. Eventually the VC moved on, to a position where he is as conservative as his radical reputation allowed, and his old university lapsed back to its traditional ways.

Power Games: the Electricity Crisis Is the Result Of Bad Economics

Listener 31 May, 2003.

Keywords: Regulation & Taxation;

The enthusiasts who reformed the electricity system in the 1990s gave little indication of the possibility of the power shortages the nation now faces. Their premise was that the introduction of market forces would generating efficiency improvements without generating problems. Faced with repeated failures, they have been conspicuously silent, although their reforms were not quite concluded because they favoured privatisation. Almost 60 percent of electricity production is still generated by three government owned companies (Meridian, Genesis, and Might River Power).

The Cost Of Getting Drunk

Submitted as a feature to a national newspaper in May 2003, but it has not been used.

Keywords: Health; Regulation & Taxation;

Suppose you wanted to get drunk. How much would it cost? Perhaps six standard drinks would be more than enough – less if you were a woman. That is 90mls of absolute alcohol (ethanol). A bottle of the cheapest plonk provides 90mls of ethanol for about $6.50. You can get as drunk on beer for as little as $4.50. Some alcopops (Flavoured Alcoholic Beverages or Ready-to-Drinks) are as cheap. Spirits? Specials come at about $4.50 too.

High Spirits: Can We Spend and Tax Our Way to Healthier Drinking?

Listener 28 December, 2002.

Keywords: Health; Regulation & Taxation;

The etching ‘Gin Lane’ by William Hogarth (1697-1764) shows an inebriated woman, ulcers on her legs from under-nourishment, her baby falling from her arms. On the steps below is the skeleton of a man – her fate too. Behind is commerce: the gin shop, the pawn shop and a funeral parlour. Above the arch beside her is written ‘drunk a penny, dead drunk tuppence, straw for free’: there was a kind of host responsibility even in 1750.

Taxing Harm: Modernising Alcohol Excise Duties

Alcohol ‘is an article of human consumption which has a legitimate use accompanied by dangerous possibilities’ The Report of the Royal Commission on Licensing 1946

This is the executive summary of a report commissioned by the Alcohol Advisory Council: The views in this report are the author’s and may not be those of ALAC. The full report is available on The ALAC website

The Borrowers: Don’t Be Too Hasty Condemning So-called Loan Sharks.

Listener 16 November, 2002.

Keywords: Business & Finance; Macroeconomics & Money; Regulation & Taxation;

Tamaloa wants to go back to Samoa for an aiga maliu (family funeral). With no spare cash he needs to borrow. He has no record with any core financial institution, no assets to secure a loan, only the prospect of repaying out of future earnings, which sadly are not as secure as those of the Palangi. No bank will advance him a loan, so he goes to a fringe financial institution, and ends up paying a much higher interest rate.

Economic Reforms: Index

History
Sequencing (December 1983)
Freeze and Thaw
(July 1984)
Ssh …It’s the Big ‘‘D’’ (August 1984)
Confidentially Yours (August 1984)
Devaluation!: Five Turbulent Days in 1984 and Then … (July 1985)

Economic Liberalisation: Where Do People Fit In?
(May 1987)

From Run to Float: the Making of the Rogernomics Exchange Rate Policy (September 1989)
Liberalization Sequencing: The New Zealand Case (December 1989)

Towards A Political Economy of New Zealand: the Tectonics of History (October 1994)
The Wild Bunch?: An Inquiry is Needed to Restore Treasury’s Integrity (August 1996)
The Great Diversification: Ch 9 of Globalization and a Welfare State (December 1997)
The State Steps In: Michael Bassett Makes A Case for Intervention. (August 1999)
Remaking New Zealand and Australian Economic Policy by Shaun Goldfinch (August 2001)
The Treasury and the Nationbuilding State (December 2001)

Evaluation
New Zealand’s Economic Performance This is an Index
Economic and Other Ideas Behind the New Zealand Reforms
(October 1994)
For Whom the Deal Tolls (Of Dogma and Dealers) (August 1996)
The Economic Impact of the Employment Contracts Act (October 1997)
Microeconomic Reform: The New Zealand Experience (February 1998)
Some Macroeconomics of the Employment Contracts Act (November 1998)
View From Abroad: What Do We Know about Economic Growth? (May 1999)
The Model Economist: Bryan Philpott (1921-2000) (August 2000)
Comparison with Australia: New Zealand’s Post-war Economic Growth Performance (August 2002)

The Debate
Waist Deep in the Big Muddy? (February 1991)
Friends in High Places: Rogernomic Policies Have Powerful Allies in Australia (April 1994)
Systemic Failure (December 1995)
Ignoring the Critics (February 1997)
A Permanent Revolution? (March 1997)
In the Dark: The State of Research Into the Economy is An Embarrassment (June 1997)
The New Zealand Experiment: A Model for World Structural Adjustment? (Review) (July 1997)
Out of Tune: Even the Officials Admit the Health Reforms Were Fatally Flawed. (December 1997)
Money for Jams: the Government Response to Roading Reforms is Commercialisation. (January 1998)
Reforms, Risks, and Rogernomics (March 1999)
The London Economist and the New Zealand Economy (December 2000)
Locked Out: of Free Press and Free Economics (May 2001)
A Surplus of Imitation (June 2001)
Government Spending and Growth Rates: A Methodological Debate (January-May 2002)
From Pavlova Paradise Revisited by Austin Mitchell (July 2002)
Manure and the Modern Economy: Has Economic Policy Hardly Changed? (September 2002)
From is This As Good As it Gets? (December 2002)
1999 and All That (January 2004)

Books
The Commercialisation of New Zealand (1997)
In Stormy Seas: the Post-war New Zealand Economy (Chapters 15-16) (1997)
The Whimpering of the State: Policy After MMP (1999)

Tobacco Issues: Index

The Social Costs of Tobacco Use
Up in Smoke (March 1998)
The Social Costs of Tobacco Use and Alcohol Misuse (April 1997)
Up in Smoke, Down the Drain: How Tobacco Use and Alcohol Abuse Cost Us $39b (June 1997)
Economy of Substance: What We Can and Can’t Measure. (April 2001)
International Guidelines for Estimating the Costs of Substance Abuse: (2 ed) (August 2001)

The Regulation of Tobacco Use
Economic Instruments for the Regulation of Licit Drugs (November 1991)
The Economic Regulation of Tobacco Consumption in New Zealand (February 1998)
Eliminating the Tobacco Epidemic the New Zealand Experience (March 2000)

Social and History
The Gulf Between East and West (April 2000)

Future Directions for the Ministry for the Environment

On August 27 I was invited to a breakfast which was one of a series of consultations by the Ministry for the Environment on the issues which faced it. After a lively session we were invited to make submissions. I wrote to the new chief executive, Barry Carbon. Subsequently the MfE published my letter in its report back to participants. Here is what I wrote – a little tidied up.

Keywords: Environment; Regulation & Taxation;

Dear Barry Carbon,

Thankyou for breakfast this morning, and the interesting (and entertaining) session that went with it.

The Economy and Other Issues: What the Election Campaign Didn’t Tell Us.

Listener 24 August, 2002

Keywords History of Ideas, Methodology & Philosophy; Political Economy & History; Regulation & Taxation

The economic debate was noticeably missing from the election campaign, as the public turned its attention to other concerns. This suggests an economic consensus (almost) arising from the economic prosperity over the last three years, plus an increasingly widespread agreement that economic policy is going in the right direction.

The Debt Burden on Students

Revised version of paper to NZUSA Student Debt Summit, July 23, Auckland.

Keywords Education, Regulation & Taxation

Substantial tax reductions for the rich, if they are not to be fiscally irresponsible, require cuts in government spending and the raising taxation on those who are not rich. Thus the generous lowering of income tax on top incomes of the late 1980s required others to take a larger burden – including directly: social security beneficiaries, wage earners, many public servants and government employed professionals, and tertiary students, and indirectly the social wage and those who benefit from it.

Gambling in New Zealand: an Economic Overview

Draft Chapter in Bruce Curtis (ed), Gambling in New Zealand (Dunmore Press, 2002) Chapter 3, p.45-58.

Keywords Regulation & Taxation

While the practice in New Zealand is to define the gambling industry as that which the Department of Internal Affairs is involved with – including casinos, the TAB, gaming machines, the Lotteries Commission and a host of raffles and housie evenings – it is not immediately obvious why the share market or the insurance industry should be excluded.(1) Both involve the purchase of entitlements with uncertain outcomes, and each involves some of the regulatory problems of ensuring the purchase being honestly managed. Moreover, much of the gambling industry uses the terms such as ‘investment’ with the implication that, say, backing a geegee is not very different from investing in GG Corp. However this chapter focuses on the DIA defined industry, perhaps because it is seen as recreational compared to insurance and equity investment, although their regulatory lessons will not be ignored.

Official Channels

Broadcasting will never be just another business, whoever’s in charge.

Listener 14 April, 2001.

Keywords Governance; Taxation & Regulation.

I leave readers to recall nostalgically events from the pictures and anecdotes of Pat Day’s Voice and Vision: A History of Broadcasting (and to add the story of Aunt Daisy and the chimp). This column is about the policy process which underpins it all. There was a minister of broadcasting, and he (they were all hes) and the cabinet made decisions which affected the broadcasting system, what we heard and saw, and our nation’s culture. But there was no ministry of broadcasting, which meant that each minister was faced by a series of conflicting interest groups, which had to be sorted out without any independent advice.

Eliminating the Tobacco Epidemic the New Zealand Experience

Paper to a Seminar at the Department of Oncology, King Faisal Specialist Hospital, Riyadh, on Tuesday 10 Dhu Al Qadah (15 February 2000).

Keywords Health, Regulation

Introduction (1)

There is a huge body of evidence that the smoking of tobacco shortens life expectancy and damages health before that. Many western nations, including New Zealand, have therefore taken measures to reduce and eliminate smoking. They have been largely successfully both in terms of reducing the quantity of tobacco consumed and tobacco induced morbidity and mortality, although there is a considerable lag between the reduction in consumption and the reduction in disease. In another group of countries, typically the poorer ones, tobacco consumption levels are low in most social groups. However there are fears that with increases in discretionary incomes and more persuasive marketing by the international tobacco companies smoking will increase to levels as high as the peaks that occurred recently in Western nations a generation ago. Between these two groups of nations are those whose smoking has already reached peak Western levels, but have not yet taken measures to reduce them. They are, in effect, a generation behind the Western nations in terms of when they began smoking and also when the smoking induced disease becomes evident. The best documented is Japan, but some Middle East countries may belong to this category.

Electric Rhetoric: Sneering Instead Of Thinking

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”.