Kerr shows how the Right lie to themselves

Written By: - Date published: 5:33 pm, September 21st, 2008 - 42 comments
Categories: im/migration, national, spin - Tags:

The Business Roundtable held another in their series of forums on political issues targeted at young people on Thursday. The aim is obviously to get along the type of kid who goes to his (sorry for the gendering but they were 90% male) commerce classes in a suit that he can’t yet fill and give him an ideological steer. It’s pretty funny and there’s free pizza and beer, so worth going along to.

This forum was on the dreaded brain drain. Roger Kerr hosted a usual and the panelists were the CTU economist Peter Conway and Opus head Kevin Thompson. I can’t make up my mind if Kerr’s presentation was amusing or outrageous. The man’s a trained economist, he knows statistics and he knows when he’s mis-using them, so it speaks to a deep arrogance that he would present flawed statistics to what is, after all, meant to be a friendly audience; on the other hand, it’s amusing that none of them seemed to see the flaws in the numbers they were being shown but, then, there’s none so blind…

Three examples of how Kerr used faulty figures to make an argument about the mythical brain drain:

He did not show the historical trend in migration figures, he just said there were spikes in net emigration 1979, 1989, 2002 and now – he failed to mention that these ‘spikes’ are actually just peaks in a cycle and that the earlier peaks were much larger in terms of % of the population than the present one.  He also failed to show that peaks in the net migration were correlated with anything else.

Which didn’t stop him concluding that the wage gap is the problem (despite the head of Opus not mentioning wages once in his talk on retention strategies and studies showing we, like Australia, like Canada etc don’t have a brain drain but lose a small % of people representing a cross-section of skills and gain more highly skilled workers) and presented a graph of average full time equivalent wages in Australia and New Zealand. He knew this isn’t adjusted for purchasing power parity, that one should uses medians rather than averages because a situation as in the 1990s when the rich get richer and most people get poorer can show a rising average when most people are actually worse off, and that just look at FTE wages is useless if other sources of income are changing, like the removal of overtime and penalty rates in the 1990s, or if the composition of the workforce changes (ie casualisation and high unemployment in the 1990s) but chose to misrepresent the numbers that suited his argument – ie. that the wage gap grew less in the 1990s than the 2000s thanks to de-reguation.

He then brought up the productivity growth figures. The argument being if we are to raise wages we need more wealth (a higher GDP) and the way to do that is to increase productivity (through lower taxes, weaker work rights, and less regulation). Of course, that’s falsely premised. We know that growth is not passed on to workers in wage rises automatically it only happens if workers have a good bargaining position (eg low unemployment and strong work rights). It also seems somewhat odd that we should try to catch up to the wages paid in Australia, where there are stronger work rights, by further weakening our work rights. But the clincher is this: productivity per worker grew at something like 2.7% per annum under National and has grown 1.5% per annum per worker under Labour but GDP per capita barely rose under National and has grown much faster under Labour. How can GDP growth be faster when productivity growth is lower? Because under National we had hundreds of thousands of workers unemployed and lots of capital sitting ideal – only the highest quality workers and capital were used. Labour has succeeded in bringing New Zealand to practically full employment but that means lowering the overall quality of the workforce which makes productivity growth appear slower. According the Brian Easton, a study of workers employed in both the 1990s and 2000s showed their productivity growth rate did not change.

Of course, Kerr knew all that when he made be presentation but he chose to do it anyway. The interesting thing was that he was trying to fool young Tories (and succeeding, a smattering of questions from Lefties had him floundering by the tory-boys just swallowed it). Why lie to your own side, why not all just believe in something that is supported by the facts instead? I think there’s two answers. One is that the brain drain argument is veiled xenophobia. National certainly dog-whistles xenophobia when it talks about the number of ‘native-born New Zealanders’ who are overseas; if so many ‘real Kiwis’ weren’t leaving the proportion of the population from non-European ethnic groups would be smaller. For the second answer we have to look not at the ‘problem’ by the proposed solutions. The Right’s remedy is tax-cuts, weaker work rights, lower government spending, and weaker regulation. No serious person could think these would really solve a brain drain were there one – is anyone really leaving over $20 a week, $1000 a year, of tax? Would weakening work rights somehow see workers paid more? of course not. But it does just so happen that the ‘solutions’ proposed by National and others like Kerr for the brain drain are their solution for everything from growth rates to heartburn and the people who would certainly gain from lower tax, smaller government, weaker work rights (=lower wages), and less regulation are the big business owners that employ Kerr and finance the National party. Funny that.

42 comments on “Kerr shows how the Right lie to themselves ”

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  1. randal 1
    21 September 2008 at 5:47 pm

    even If I made a truthful contribution to this post I would still leave myself open for slander libel and defamation so I will refrain.

  2. Brett Dale 2
    21 September 2008 at 5:48 pm

    Steve:
    What is wrong with a male who takes a commerce class in a suit he cant fill? You write like its a bad thing.

    What did you major in anyway?

  3. Steve Pierson 3
    21 September 2008 at 6:02 pm

    brett.

    tory boys in suits they can’t fill just strikes me as metaphorical

    It’s not any of your business what I studied and I’m not interested in what you may have studied but, what the hell, I have an LLB, a BA majoring in Politics minoring in Economics, a Diploma in European Studies, and a Graduate Diploma in International Relations.

  4. Carol 4
    21 September 2008 at 6:10 pm

    And IF all these folks are currently leaving NZ in droves, why are they doing it at the same time as the polls are showing them that the Nats are soon to govern and going to (allegedly) line everyone’s pockets, and pave the streets with gold?

    Could people be emigrating because they’re appalled at the idea of a Nat government?

  5. Brett Dale 5
    21 September 2008 at 6:21 pm

    There wasn’t really any need for the first two lines of your reply.

  6. Brett Dale 6
    21 September 2008 at 6:30 pm

    My comments in my previous post were directed at Steve. Anyway I was Just trying to guess how you have came to have your political views.

  7. Steve Pierson 7
    21 September 2008 at 6:39 pm

    i’m planning on doing a series of posts on political philosophy rising from first principles, so that might give you a look in on where my views come from… they were well-established by uni, bit raw though

  8. randal 8
    21 September 2008 at 6:53 pm

    brett dale…do you have a qualification in little people backbiting and dragging others down to your level?

  9. Brett Dale 9
    21 September 2008 at 7:00 pm

    Randal:

    No I don’t, but thanks for sharing.

  10. roger nome 10
    21 September 2008 at 7:04 pm

    Steve, good post. Jafa Pete not long ago, gave DPF a going over for his unquestioning use of Roger Douglas’ faulty productivity statistics. DPF tries to defend the misleading figures, but quickly dissapears from the argument once it’s obvious he’s lost. Here’s that, fairly amusing thread:

    http://www.kiwiblog.co.nz/2008/07/salient_interviews_sir_roger_douglas.html

    BTW steve – you need to fix up the grammar in your post.

  11. Phillip Mason 11
    21 September 2008 at 7:11 pm

    Yes Steve, please fix the grammar. Thank you.

    [lprent: dad you’re still banned. You want me to isolate you from this system permanently regardless of which IP range you come in under?]

  12. Mr Mason 12
    21 September 2008 at 7:12 pm

    Hi roger
    [lprent: dad you’re still banned. You want me to isolate you from this system permanently regardless of which IP range you come in under?]

  14. Psycho Milt 14
    21 September 2008 at 7:37 pm

    Roger Nome: that thread was awesome! Just count up the blatherers getting their heads handed to them on a plate there, including DPF. Really, that was the dog’s bollocks.

  15. Millsy 15
    21 September 2008 at 8:06 pm

    Meanwhile, in our arrival lounges, thousands of English, South African and Indians queue up waiting to get into our communist, high tax, unsmacked kids hell-hole…..

    [lprent: dad you’re still banned. You want me to isolate you from this system permanently regardless of which IP range you come in under?]

  16. Nedyah Hsan 16
    21 September 2008 at 8:28 pm

    I guess it shows we’re doing something right Millsy that other nationalities want to come here.

  17. roger nome 17
    21 September 2008 at 8:37 pm

    Psycho Milt:

    yeah – always craks me up how the right accuse the left of being economically illiterate, when it’s so often the market fundamentalists that get it completely wrong.

    oh and, hey Dad – how’s the wheather in chchs? It’s a beautiful Sunday morning over here in Liverpool.

  18. Mr Mason 18
    21 September 2008 at 8:42 pm

    Do watch out for a Liverpool kiss roger. It’s that hot here it melted all the red billboards that feature some computer generated huckster bitch.

    [lprent: dad you’re still banned. You want me to isolate you from this system permanently regardless of which IP range you come in under?]

  19. Janet 19
    21 September 2008 at 8:49 pm

    I wonder if anyone can tell me the answer to this question about the Oz statistics? Many NZers who currently live in Australia come home frequently to visit – sometimes 2 or 3 times a year with the cheap fares. Each time they leave NZ they tick the box that says Are you leaving permanently? or Where will you spend the next 12 months? – or whatever (I can’t remember the exact wording). So are they counted each time as a new person leaving? If so the stats will be very exaggerated.

  20. randal 20
    21 September 2008 at 8:55 pm

    roger…dad’s feeling his oats after he harassed and hectored some poor judge somewhere today. It made the news so I gues he’s pretty fired up and his cojones are getting in the way of a rational argument.

  21. Pascal's bookie 21
    21 September 2008 at 9:04 pm

    i’m planning on doing a series of posts on political philosophy rising from first principles,

    Yay. Can’t wait 🙂

    But it’ll be libertarian bait I tells ya. Just ignore them.

  22. Killinginthenameof 22
    21 September 2008 at 9:08 pm

    “The aim is obviously to get along the type of kid who goes to his (sorry for the gendering but they were 90% male) commerce classes in a suit that he can’t yet fill and give him an ideological steer.”

    Ahh I know exactly the type of person you mean! Gosh what a joke they are. In fact last night I came across one at a party, in wearing chinos and the most chump-tastic private school knitted sleeveless jersey you’ve ever seen, this one had the nerve to interupt my conversation and attempt to defend the USA in Iraq.

    Its more an ideological smack over the head (so as to deal to any last trace of independent thought) than it is an ideological steer.

  23. jo zinny 23
    21 September 2008 at 9:16 pm

    gosh, this guy still going..huh..

    aka roger of the rolling arrrrs.. resentment being the first, rolling(as per political figures) somewhere close…BTW is rog still into buying speakers that dummie him.. and stats that deny reality..???

  24. Pascal's bookie 24
    21 September 2008 at 9:20 pm

    There’s a type of religious apologetics that jumps whole heartedly into accepting that many of the things they are asked to believe don’t make sense.

    During the enlightenment various big brains were pulling apart religious claims and pointing out inconsistencies and asking how can that be right, and don’t you have to be retarded to think this and so on and so forth.

    One response was to come up with some tidy theodicy or another to show that the claims did, in spite of all appearances, make sense. Another approach was to say, you know what, it doesn’t make sense, and that’s why I believe it. Look at how faithful I am! I really do believe five impossible things before breakfast. Jesus loves me so.

    Right wingers have internalised a lot of that shit.

  25. randal 25
    21 September 2008 at 9:25 pm

    nah…pb…they just lie as a matter of course because they want money and they will do anything to get it.

  26. Anita 26
    21 September 2008 at 9:30 pm

    Janet,

    I wonder if anyone can tell me the answer to this question about the Oz statistics? […]

    Your best bet will be asking Stats NZ. From memory they have a really handy service where you email them a question about their stats and they get back to you within 2 working days.

    If you’re asking them, you might want to check how they’re counting the Australian resident NZers coming in to the country. As NZers coming home? Or as holidaymakers?

  27. Janet 27
    21 September 2008 at 9:43 pm

    Thanks Anita.

    And SP re the principles of political philosophy I presume that covers morality as well?

    The lack of morality in the financial market crashes has been worrying me. Did Adam Smith or the earlier men (they were all men I presume while the women cooked and cleaned and soothed their brows and changed their ink wells) have anything to say about the role of morality in politics?

  28. Janet 28
    21 September 2008 at 9:54 pm

    This is what worries me about lack of morality in business/politics – a lack of personal responsibility or accountability for actions which have significant negative effects on others. Here is a quote from JKey which I found on the Sunday Star Times website in the 08 campaign section

    ‘Key says he does not believe a moral issue arises for the traders who make these speculative attacks on currencies, or for the dealing rooms that carry out their orders. “I don’t really see it as a judgemental business. You’re simply executing orders for people.”‘

    That last sentence is particularly chilling.

  29. jbc 29
    22 September 2008 at 1:46 am

    Janet

    Each time they leave NZ they tick the box that says Are you leaving permanently? or Where will you spend the next 12 months? – or whatever (I can’t remember the exact wording). So are they counted each time as a new person leaving?

    The form asks that question under a section titled “Answer these questions if you live in NZ, or lived in NZ until today, otherwise answer 4. [Visitor to NZ]”

    I don’t know about those NZers that moved to Australia, but I can say that I can follow the simple instructions and count myself only as a visitor on my trips to NZ.

    The Auckland Airport immigration/customs people don’t hesitate to treat as as visitors either. I was back in NZ to attend a funeral recently – a 3 day trip. While holding my NZ passport (the only passport I have) the officer proceeded to interrogate me in their best stern voice about my visit, why I was there, staying where, etc. Felt like I was visiting USA. I’ve never had such a grilling anywhere else.

    As far as I know natural born NZers can’t be denied entry to NZ can they?

  30. travellerev 30
    22 September 2008 at 8:05 am

    Janet,

    The other day Ms M another commenter provided this link this article was written in 1999 and it interviews a couple of investment bankers.

    One of them being John Key. It turns out that when the Glass-Steagall Act was repealed in Nov 1999 John Key was the managing director of debt for Merrill Lynch.

    The repeal of the Glass Seagall act is important because until than a bank could be only of of two forms of bank. You were either a gambling investment bank or a bank to help people finance business based sound investment principles.

    After the 4th of November 1999 these two types of banks could merge and merge they did. This meant that the big investment bankers could do some really big gambling and boy did they ever.
    According to John Key himself in the 19th of June NZHerald “unauthorised” biography, he was running a department that was developing all these cool new investment products like bonds and derivatives.

    The act that was repealed was called into existence after the previous Wall street crash of 1929 in 1933.
    It was repealed because Bankers would “regulate” themselves.

    The bankers of Wall street and London must have been pissing themselves with laughter when the got that one through.
    Of course bankers do no regulate themselves. Banksters are in it for the money and only the money and our Smiling Assassin was a very good bankster.

    The people of the US and make no mistake the UK, Australia and New Zealand are going to pay the price for the scheisters of Wall street robbing and gambling spree and John Key was one of them.

  31. ropata 31
    22 September 2008 at 10:50 am

    @PB.
    Your prejudice is showing. So much for Mickey Savage‘s “Applied Christianity” huh?

  32. Pascal's bookie 32
    22 September 2008 at 11:04 am

    Which Prejudice Ropata? Care to explain?

    No out of context quotes please.

    Depending on what you came up with I’ll either defend myself or apologise tonight, bit busy at the mo’

    cheers

  33. Brett Dale 33
    22 September 2008 at 11:20 am

    TRAVELLEREV:

    Trying to tie the wall street collapse to John Key is like the right in the USA trying to tie Clinton to Bin Laden.

  34. ropata 34
    22 September 2008 at 11:37 am

    @PB
    Sorry ’bout that misunderstanding. I see that you were basically critiquing a head-in-sand approach, but not all religion is like that. Cheers

  35. Pascal's bookie 35
    22 September 2008 at 11:43 am

    No worries.

  36. jbc 36
    22 September 2008 at 11:45 am

    travellerev,
    Lots of completely unconnected links and strange ‘facts’ there [bonds and derivatives ‘new’ in 1999?].

    Had me thinking back to the only govt-bailout of a NZ bank that I can remember.

    Which type of bank was BNZ in 1990? A gambler or one that helped people based on sound principles? Or was it the 3-day old governments fault? Where was John Key at the time?

    [apologies for getting way, way off-topic]

  37. travellerev 37
    22 September 2008 at 2:23 pm

    jbc,

    I just checked the links and they open on the correct pages, perhaps there is something wrong with your browser?
    I don’t know about BNZ. I wasn’t living at that time and have not done any research on it but all banks can go bankrupt if they have liquidity problems.

    John Key was working for the Bankers Trust at the time as forex manager and Treasurer.

    No, bonds and derivatives are an old speculative vehicle. They have just been taken out of the cupboard dusted off and with the internet deals could be made in seconds in totally non-transparent ways and with complicated computer models

    Brett,

    Are you suggesting that Clinton is a nice lefty president? He was hand in glove with the banksters. It was his administration that repealed the Glass- Seagall act making the road clear for the biggest speculative bubble in human history.
    With the paltry 700 billion Bush has just given Paulson to play with nothing is going to get solved. The banksters have created a derivatives bubble of some 700 trillion while the entire worlds annual GDP is something in the order of 60 trillion. That means US$640 trillion in leverage and it’s deflating fast.

    John Key was the managing director of debt for Merrill Lynch and one of only 4 upon invitation only advisors to Alan Greenspan and the fed, just as Alan Greenspan was pumping masses of cheap money in the system and the unsuspecting punters were told what a brilliant investments foreign exchange and other derivatives were.
    The other three were representatives for Lehman bros (just gone belly up), Citigroup (also in very serious trouble) and UBSWarburg again a bank very badly damaged by the subprime crisis.

    In fact Merril Lynch was one of the most prominent and advanced derivatives dealers and it was no accident that John Key was head hunted by them because the Banker trust had been developing derivatives and CDO’s and the whole alphabet of debt backed junk in the as if 1987 when John Key started to work for them.

    The Bankers trust was a bank who got in trouble as John Key said in the NZ herald, “in ’95 it all went to shit and I said I’m out of here.” because they sold derivatives to Proctor and gable and when the derivatives started to loose money they were taken to court and due to the phone tapes that were made off all the conversations Proctor and gamble was able to prove that the Bankers trust bankers were lying and cheating scum specialised in racy derivatives who derived their value from bonds, currencies commodities etc. What do you reckon is the chance of John Key ending up as a specialist in a variety of complex financial products and him ending up heading that department and as advisor to Alan Greenspan with the other three most hit banks and him being squeaky clean?

    He lived off and on in New York and had employees and an office in the Merrill Lynch head quarters in New York. In fact he lost three colleagues in the attacks on 911. According to his New York John Key had an expert knowledge of a multitude of complex financial products and in the link I gave previously John Key describes ho the internet is a fantastic medium to do trade in derivatives etc.

    John Key was a shark with the sharks mate, and very good at what he did.

  38. jbc 38
    22 September 2008 at 6:16 pm

    travellerev,
    by ‘unconnected’ I mean that if you follow the content then there is no connection to your argument.

    Attempts to link Key to the present global financial malaise are comical – but I suspect that most making these links are not trying to be satirical.

    Helen Clark was deputy PM in the government that sold Telecom. Can we blame her for that? It’s a pretty darned strong connection if you ask me. She must be at least partly responsible. Deputy PM. How could she not know?

    I don’t believe that any more than the rubbish about Key – but it is a stronger argument than those against him.

    OK, nuff said. Next time I’ll just skip the Key/meltdown conspiracy stories. I’ll be keeping my eye out for any argument that holds water though.

  39. Pascal's bookie 39
    22 September 2008 at 8:15 pm

    jbc, If a party leader ran on the fact that they were a leading trade unionist then I think it would be fair to say that they brought along with them, as a supposed qualification, a certain set of views reagarding labour policy at the least and economics in general.

    By the same token, the fact that Key used, until recently, his career in finance as a supposed qualification we are entitled to ask what exactly he brings with him to the job. The roles he had, and the level he reached surely point to the fact that he held certain views with regard to economics and the role of the free market. He was picked for the National party precisely because of his international success in the deregulated world of high finance. Which has just imploded. Until he explains, in detail, what his views are about neo liberalism and the ability of markets to regulate and discipline themselves with a light hand from the government, it is reasonable to assume that that he was on board with the Washington consensus, which has served us so poorly.

    What are his instincts? What does he think went wrong? Does he agree with the BRT? Did he see this coming? Has he changed his mind? Did he push for more regulation when he was on Wall street?

    All legitimate questions that Key won’t have a bar of. When the issue is raised, he attacks the questioner, which is less than reassuring.

  40. Millsy 40
    23 September 2008 at 1:25 am

    …I am not Dad4Justice…even though it would be nice to be a far-right jackboot wearing wannabe Nazi who hates gays and women and thinks the earth was made be a magical pixie fairy named “God”….

  41. travellerev 41
    23 September 2008 at 7:22 am

    jbc,

    According to John Key the subprime crisis was not hard to predict: this is what he said about it:

    Did he foresee the problems which resulted in the sub-prime crisis? “Was it hard to predict? Not really.”

    And the next sentence is:

    The products which underpinned the sub-prime boom – then bust – were hatched in 2004-2005, long after Key had left Merrill.

    Yeah right.

    In 1997 Fred Harris predicted the boom and bust of the subprime crisis and derivatives scam. In fact he warned Gordon Brown this would happen in that year.
    In 2001 a senior Treasury official, Sheila C. Bair tried to persuade subprime lenders to adopt a code of “best practices’ and to let outside monitors verify their compliance.

    Didn’t happen. Why not? They could sell the crap mortgages to unsuspecting suckers.

    This is what John Key had to say while being the managing director of debt for merrill Lynch.

    FX is just the first serving in a feast of products that banks are bringing on-line. “The initial thought was that, yes, the Internet’s great for foreign exchange because it’s vanilla. But there are applications that are just as wide in many other areas: corporate bond trading, government credit, equity underwriting, credit derivatives-it’s endless,” says Key.

    Isn’t “vanilla” a term for bland sexual practices?

    And lastly this is what John Key had to say about the debt department he was running: Key explains: “I had a whole lot of people working for me who were at the cutting edge of delivering quite complex and new and innovative products. They tended to either be a new product or into a new market, usually the emerging markets, Russia, Brazil, Argentina. I wasn’t the guy sitting there dreaming it all up, but I was the guy who was responsible for those people.”

    That and the fact that he was an upon invitation only advisor to the architect of the bubbles for the last 20 years Alan Greenspan and the fact that he was prepared to lie about his involvement in the attack on the New Zealand dollar in 1987 gives me reason enough to think John Key was up to his eyeballs in the derivative scam.

  42. travellerev 42
    23 September 2008 at 7:56 am

    Oops deleted some stuff.

    In 1997 Fred Harris predicted the boom and bust of the subprime crisis and derivatives scam. In fact he warned Gordon Brown this would happen in that year.
    In 2001 a senior Treasury official, Sheila C. Bair, tried to persuade subprime lenders to adopt a code of “best practices’ and to let outside monitors verify their compliance.

    Didn’t happen. Why? because they could sell the crappy mortgages on to unsuspecting suckers.

    In 1999 John Key Managing director of debt for Merrill Lynch has this to say about derivatives:

    FX is just the first serving in a feast of products that banks are bringing on-line. “The initial thought was that, yes, the Internet’s great for foreign exchange because it’s vanilla. But there are applications that are just as wide in many other areas: corporate bond trading, government credit, equity underwriting, credit derivatives-it’s endless,” says Key.

    This is what John Key had to say about his debt department:

    Key explains: “I had a whole lot of people working for me who were at the cutting edge of delivering quite complex and new and innovative products. They tended to either be a new product or into a new market, usually the emerging markets, Russia, Brazil, Argentina (very interesting by the way him mentioning those countries since a lot of them collapsed in the late 90s). I wasn’t the guy sitting there dreaming it all up, but I was the guy who was responsible for those people.”

    That makes his department a breeding ground for speculative crap and not as some might think the debt collection department. John Key was managing 140 geeks who were dreaming up ways to make money out of nothing with speculative crap and Foreign exchange manipulation.

    That and the fact that he was an upon invitation only advisor to the architect of the bubbles for the last 20 years Alan Greenspan and the fact that he was prepared to lie about his involvement in the attack on the New Zealand dollar in 1987 gives me reason enough to think that John Key is a scam artist and that he was up to his eyeballs in the derivative scam.

    As for the Key/meltdown conspiracy stories. The above is from the horses mouth. you can check the facts. What is it with you guys and the “Conspiracy” stories (theories, what ever) when I support everything I say with links to articles etc?

    I said here months ago that we would have en economic meltdown based on what Roubini, Engdahl and other eminent scholars and finance specialists have been saying for years. Fred Harris predicted a 10 year boom and a collapse in 2007. I don’t just make this shit up. What is it that makes it a “conspiracy” theory if you can see with your own eyes that it is actually happening?

    And if John Key himself places him in the middle of the grubbiest scummy business then what do I have to theorise about it? It’s there in plain sight.All I did was put a few quotes from different interviews together and they paint the picture not I.