Nats’ war on education: cutting wages

Written By: - Date published: 10:00 am, October 19th, 2010 - 87 comments
Categories: education, national, wages - Tags: ,

For some reason that I can’t quite puzzle out, the Nats hate public education. Even an elitist fool should be able to see that a well-educated workforce is valuable and public education is the cheapest way to achieve it. Yet National is attacking education at every level from early childhood to tertiary. The latest ‘offer’ to the secondary teachers would have required them to take 2 years of after-inflation pay cuts.

The teachers were offered 0.5% this year, vs 1.5% inflation, and 1.9% next year, vs over 5% forecast inflation. So that’s more than a 4% real wage cut in two years. Two years in which the economy is (supposedly) growing.

Now, to be fair, there is a one-off $1,000 payment in addition to the wage increases. But it’s only a one-off. that’s an old trick employers use to try to placate workers while not permanently increasing wages. If teachers took that deal, they would be negotiating from an even lower base wage in real terms the next time round.

There’s also an additional 3000 middle management allowances worth $1000 each, which looks like nothing more than an attempt to wedge senior teachers from junior ones.

It’s all cheap nastiness from National. The Nats promised teachers (50% of whom, I hear, voted National) higher wages and now they’re screwing them over and trying to publicly vilify them.

At the same time as saying the cupboard is bare for the people who teach our kids, the Tories can find hundreds of millions of dollars for tax cuts for the rich and to bail-out South Canterbury Finance investors.

Teachers don’t want to strike but we can’t expect these vital workers to put up with pay cuts when they could earn much more overseas. The solution to this problem is in National’s hands.

87 comments on “Nats’ war on education: cutting wages ”

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  1. Draco T Bastard 1
    19 October 2010 at 10:10 am

    But the only problem that the NACTs see is that they’re having to pay taxes at all.

    • Lanthanide 1.1
      19 October 2010 at 10:20 am

      That’s a good point, really. National see tax cuts as an alternative to wage increases for the public sector. Of course the actual tax cuts for most people won’t be more than 2 or 3% of their salary, while the fat cats at the top reap in huge amounts.

      By the same token, because of the tax cuts National can’t actually afford to give proper pay rises to the public sector. So I guess the tax cuts are truly diverting money that could’ve gone to teachers, doctors and nurses and directing it to MPs, ministers and CEOs (you know, “back office bureaucrats”).

      • Draco T Bastard 1.1.1
        19 October 2010 at 10:47 am

        Cut taxes, cut wages and still expect the services (in fact they expect more from those already over-worked as they cut staff). NACT really do seem to think that the services provided by government can be provided for nothing. That people can go to work and not need food or shelter. It’s as if NACT think that, outside of work, people don’t exist.

  2. Lanthanide 2
    19 October 2010 at 10:17 am

    English was quoted briefly on Morning Report this morning, talking about inflation. He said if people could “secure reasonable wage increases, they would be able to keep ahead and be better off” due to the low inflation of 1.5% (which while low, is higher than the RBNZ predicted, btw).

    I thought that was a bit rich, considering they are denying “reasonable wage increases” to teachers.

    I also suspect Key was playing loose with numbers when he said that inflation was 5.1% when Labour left office in 2008 – I don’t recall it officially getting over 4% at any point in the last 10 years, so probably its the dodgy ‘quarter to quarter’ comparison that Bill loves to do so much, rather than a true annualised figure.

    • Lanthanide 2.1
      19 October 2010 at 1:32 pm

      Ahh, Marty posted a new article about this. It reached 5%, but only because of oil prices. I think I immediately discounted that at the time as being outside their control, so hence don’t remember it.

  3. Crumble 3
    19 October 2010 at 10:25 am

    Plus the one off payment will be given to all teachers and not just union members so it is a half assed attempt to break the union.

    • Colonial Viper 3.1
      19 October 2010 at 10:29 am

      These new younger Righties don’t have the stomach for a full scale union stoush as from the days of old. The sight of protestors filling the streets in an election year raising fairness at work issues (how the Government is taking it away) is something that National desperately want to avoid.

      The Right are dead scared of a return to Class Awareness in this country because that would mean that their game is up.

  4. smhead 4
    19 October 2010 at 10:34 am

    It’s good you labour types are starting to worry about inflation on wages, even though its the lowest in six years and inflation was twice what it was now under a labour government. What did labour do? Oh that’s right you fuelled inflation by spending government money the economy couldn’t afford.

    You also forgot that tax cuts mean teachers are better off even with a zero increase.

    Why don’t you tell younger new zealanders that they will have to pay off the debt eventually for labour’s promises.

    • Pascal's bookie 4.1
      19 October 2010 at 10:48 am

      What did labour do? Oh that’s right you fuelled inflation by spending government money the economy couldn’t afford.

      Meanwhile, on planet real, the last government ran fiscal surpluses, and were attacked for doing so.

    • Bright Red 4.2
      19 October 2010 at 10:53 am

      smhead. Labour ran surpluses every year. Surpluses are deflationary because they take demand out of the economy.

      What is inflationary is borrowing for tax cuts and putting GST up.

      The tax cuts don’t make teachers better off because the tax cuts are funded by the GST hike (except the tax cuts for the rishest Kiwis, which are funded by more borrowing). It’s called a ‘tax swap’ by Key and English, remember? That’s becaue the money didn’t magically appear out of English’s arse, the cuts were funded by tax increases and borrowing

    • Draco T Bastard 4.3
      19 October 2010 at 10:55 am

      The stupid – it huts

      We’ve always been conscious of inflation as we know that pay rises that are below inflation are a pay cut. Over the last government real wages (wages after inflation) increased. Under this government real wages are going down.

      Tax cuts + Tax increases = no better off. Throw in wage cuts due to inflation (which are probably more than the tax cuts anyway) and teachers are worse off.

      I’m already telling them that they’re going to have to be paying off the debt of Nationals promises to Nationals owners (The rich).

    • Bright Red 4.4
      19 October 2010 at 10:57 am

      and either you think we’re stupid or you are talking about debt.

      National is running a $13 billion deficit this year and the government’s net debt has risen by $15.5 billion since National came to power.

      Labour left the Crown with no debt debt for the first time in a hundred years.

      • bbfloyd 4.4.1
        19 October 2010 at 5:32 pm

        B.R.. what was that about smhead thinking again? i admire your obvious charitable tendencies,, but assuming thought to some quarters is a “gift” too far…

  5. Jeremy Harris 5
    19 October 2010 at 10:49 am

    I think everyone in the public sector is taking effective paycuts, part of the problem of running $240,000,000 a week deficits…

    Many Eurpoean countries (hardly right wing bastions) have had big cuts across the board…

    We’re all having to pay for big government spending and government corporate welfare over the next 10 – 20 years…

    • Draco T Bastard 5.1
      19 October 2010 at 10:57 am

      Actually, we’re all having to pay for the greed of the wealthy.

      • Bored 5.1.1
        19 October 2010 at 11:46 am

        You are right in that the wealthy have cornered (as usual) the biggest chunk of the dosh.

        Now a criticism to ALL Standardistas in this argument (in unison jumping up and down for pay increases)….DEFLATION is what you can expect in the future (next 10-20 years) which means:
        * prices will fall overall particularly “asset” values such as houses.
        * the tax take will fall meaning the state sector (welfare / health / education etc) will be pinched.
        * wages across the board will have to fall to retain employment levels.

        This message is going to fly in the faces of two generations who have known nothing but growth and inflation, you wont accept it without a fight. It is caused by a sytemic failure in the growth model (thats another story altogether).

        The new fight will not be about wages for any sector like the teachers. It will be about how the pain of deflation and contracting economic activity is to be shared. On that note thank you Draco, you know the answer: the greedy have the dosh, we need to take it back.

        • Colonial Viper 5.1.1.1
          19 October 2010 at 12:32 pm

          Bear in mind that both paper dosh and that dosh in electronic ledger entries is completely worthless. We can always print a new form of paper money and invalidate theirs. The ownership of hard, productive assets however – that is what we want.

          And they will likely not give it up without a major, nasty fight.

          • nzfp 5.1.1.1.1
            19 October 2010 at 1:05 pm

            Hey CV,

            “We can always print a new form of paper money”

            We don’t need to print a new form of paper money – we just need to take control of the money in the first place.

            Australian economist Steve Keen has demonstrated that we are in a debt deflation right now – mainly because the money is not being spent on productive enterprise.

            Keens video “Why credit money crashes” explains the process in detail.

            What Keen also demonstrates is that money spent on infrastructure and other productive enterprises can forestall or prevent a crash. however in order for money to be spent – without incuring debt – on these projects, the Government must take back the power to print money – and do so.

            In New Zealand, the total money supply is “206,042” Billion NZ Dollars

            The New Zealand Government has printed and spent into the economy – without interest without debt – “3,938” Billion NZ dollars.

            The mainly Australian Private Banks have created – at interest as debt – the rest, which equals “202,104” Billion NZD.

            That means that 98.09% of all of the money in New Zealand is really debt incuring interest charges to the Australian banks.

            Source: http://www.rbnz.govt.nz/statistics/monfin/c3/data.html
            M3: “202,104”
            M1: “3,938”
            Note: M1 is created by the Reserve Bank – and is the only money created at zero interest without debt by the RBNZ.

            Therefore all we need to do is stop the banks creating our money and charging us interest to use it – and create it ourselves – as we do with the M1 and then spend it on the right stuff – Rail, Telcos, Health, Education etc…

            Hey Bored

            * the tax take will fall meaning the state sector (welfare / health / education etc) will be pinched.

            So what – I don’t mean that flippantly – I mean it in the sense that the Government should be funding all of it’s social and physical infrastructure requirements by printing money.

            As you see above, the Private banks have created as debt with interest 5,132% more money then the Government has. The vast majority has been created as Housing mortgages – “171,911” Billion dollars or 85% with a monthly weighted average interest rate of 6.84%.

            The result of this is massive asset price inflation on land brought about because the Government doesn’t control the money – the banks do – consequently the banks control the economy and the nation.

            Source: http://www.rbnz.govt.nz/statistics/monfin/c7/data.html
            Housing Total: 171,911 (Billion NZD)

            If we take away from the banks the capability – via legislation and progressive land and economic rent tax policy – the ability to create money and create asset price inflation – we can divert the money into the Governments fiscal responsibilities that are normally funded by tax revenue.

            So long as we have a Government willing to beat the banks – we don’t need to worry about lower taxes – in fact the Government could get rid of GST and income taxes entirely and replace it with a zero sum gain of land and Financial Transaction (bank) taxes – where – as you know – all of the classical economists state the tax burden should be.

            So how do we get there?

            Simple – vote for a party that has a monetary, economic and fiscal policy that can achieve this – like for example these guys.

            • Draco T Bastard 5.1.1.1.1.1
              19 October 2010 at 2:33 pm

              We don’t need to print a new form of paper money – we just need to take control of the money in the first place.

              We don’t need to, no, but it does help create a psychological break from one form (interest bearing debt based) of money to the other (non debt based).

    • Colonial Viper 5.2
      19 October 2010 at 12:29 pm

      Stupid monetary policy destroyed the productive economy in order to favour the bankers and financiers.

      Stupid stupid stupid.

      Government overspending – maybe, some. But most of the blame has to go on not generating the level of income that we needed.

  6. john 6
    19 October 2010 at 10:55 am

    The Act party nutters believe education in the future should be completely privatized!!! Refer the Listener where Deborah Coddington talks of a Prof who has studied private education in 3rd World Countries,he’s just been over here I wonder who paid his ticket?(If Nact have their way we will be a 3rd World Country!). Billionaires such as Oprah in disaster America are also buying this cause they don’t want to pay the TAXES(Scream very loudly now) that you must pay for public education!

    • nzfp 6.1
      19 October 2010 at 1:14 pm

      Education is an example of a natural monopoly,

      If the Government makes good quality education free, the burden of recovering the costs for the education is moved from the entrepreneurs – in the form of necessarily increased wages to pay back student loans – to the state in general.

      Once the costs are on the state – the state can fund the costs – as with all infrastructure costs, whether human (health, education, etc…) or physical (roading, rail, state housing, hospitals, police, firemen, libraries etc…) via the RBNZ at zero interest with zero debt. Any inflation can be taken care of with taxes – such as land and Financial taxes.

      Good public education is a boom and a win for industry and business – why they cannot understand this I have no idea.

      Captcha:hanged – hmmmm what images this word conjures up.

  7. Peter Martin 7
    19 October 2010 at 11:00 am

    As the Dom-Post reported…’Secondary school teachers are to make a play for a 4 per cent pay rise and other terms that could cost taxpayers an extra $105 million a year. ‘

    Which is what?..nearly a fifth of what the Govt borrowed to finance the last tax cuts…

    I thought too, that Govt policy was to bring us all closer to Australia.

    Literally?

    ‘Starting salaries for principals in Australia are between 11-20% higher than for New Zealand principals. For teachers, starting salaries are up to NZ$20,000 higher in Australia, and the gap widens to as much as NZ$30,000 after five or ten years experience. It’s little wonder that New Zealand loses around 600 quality, trained teachers to Australia every year.’

    • smhead 7.1
      19 October 2010 at 11:51 am

      Oh yeah so let’s just close the wage gap with Australia but only for TEACHERS.

      Australians get paid 30% more than NZers. As a proportion of the median wage NZ teachers are very well paid by OECD standards.

      Only a hundred and five mill to pay teachers more you say. Glad you’re not the finance minister. Every greedy little self interest group with no accountability but a union behind them can come up with teh same argument and hey presto, suddenly you’ve got Labour’s economic policy.

      • Draco T Bastard 7.1.1
        19 October 2010 at 11:57 am

        Yep, still stupid. Oh well, can’t expect miracles in the morning.

      • Bright Red 7.1.2
        19 October 2010 at 12:01 pm

        it’s funny how the right say they want higher wages and then oppose every group who wants even an inflation-matching wage round.

        no, not funny. what’s the word? Yeah hypocritical and decietful. You bastards shoudl just come out and say it – you oppose wage increases for all workers, because you want the money to go to the bosses.

        • smhead 7.1.2.1
          19 October 2010 at 12:16 pm

          No, I oppose wage rises for public sector workers when we’re in recession and there’s no money to pay it.

          • KJT 7.1.2.1.1
            19 October 2010 at 1:03 pm

            There is plenty of money. Just take some more taxes of the bludgers who get over $300k.

            Unlike them Teachers pay taxes and spend money within the NZ economy. What we need to get out of a recession. Not reducing taxes for overseas company shareholders.

          • Zorr 7.1.2.1.2
            19 October 2010 at 1:05 pm

            By that same reasoning there shouldn’t have been tax cuts either? Can’t have your cake and eat it too.

            Either there is NO money, or you are spending it wrong.

            • KJT 7.1.2.1.2.1
              19 October 2010 at 2:25 pm

              There should not have been tax cuts when we have to borrow for them. The US deficit was a direct result of tax cuts for the wealthiest.

      • Peter Martin 7.1.3
        19 October 2010 at 12:05 pm

        No…it is Govt policy to close the wage gap for ALL New Zealanders. Surely you would want teachers to embrace Govt policy? Especially after the National Standards debacle.

        Yes just over a hundred million. The Govt borrowed nearly five times that amount to help finance the tax cuts. Frankly , I’m surprised the upsurge in economic activity that the cuts caused, won’t pay for the teachers claims.

        As for greedy…even were the Govt to front up and meet the teachers claims, the teachers would still be going backwards by at least two percent per year. No, greedy would be borrowing money for tax cuts that are needed.

    • SHG 7.2
      19 October 2010 at 12:03 pm

      Newsflash, starting salaries for every employee in every job in every industry are higher in Australia than in NZ. That’s because Australia is a wealthier country than NZ.

      As a percentage of GDP Australia spends less than NZ on teacher salaries.

      • Colonial Viper 7.2.1
        19 October 2010 at 2:33 pm

        Yes and remind me what exactly Bill and John are doing to famously ‘close the gap’ with Australia?

        Sweet FA, as far as I can see, apart from giving business owners and the wealthy big tax breaks to deprive the Government of needed revenue and increase public debt. Oh and put in place policies to lower ordinary workers’ wages.

        That’s the plan? Seriously?

        • SHG 7.2.1.1
          19 October 2010 at 3:13 pm

          Well, it looks to me like they’re trying to put in place a national standards system like Australia has, for one. You know, the national standards system instituted by Australia’s Labor Government.

          • lprent 7.2.1.1.1
            19 October 2010 at 3:43 pm

            Perhaps they have someone competent doing it over there? Anne Tolley surely is not competent at anything she has done over the last two years.

            You have to remember that measurement standards were slowly going into the schools over the last 6 years with a number of trials to figure out what worked and what didn’t. Anne Silly ignored all of the work that was done on those, picked up some ideas from offshore in a half-baked manner without comprehending the issues, and then attempted to shove her idiotic ideas down the throats of the educational profession on the basis that being elected as an MP made her more competent than the people trained in the profession.

            Needless to say, the unfortunate experiment hasn’t gone very well….

            • SHG 7.2.1.1.1.1
              19 October 2010 at 4:35 pm

              The Australian National Standards program was Julia Gillard’s pet project when Minister of Education under Rudd.

              • lprent …
                19 October 2010 at 4:59 pm

                Precisely my point…

                In case you hadn’t realized, I have few objections to performance monitoring where it is a competent program AND where it is backed up by using training and resources to fix problem issues where they arise.

                Anne Tolley’s effort doesn’t fulfill either of those criteria from what I can see. Because of the half-arsed incompetent and utterly stupid way that it was conceived and then implemented, it will never work. Moreover she has probably screwed up any real chance of putting a useful scheme in for the next decade or so.

      • bbfloyd 7.2.2
        19 October 2010 at 5:40 pm

        Newsflash….Stanley(key) campaigned on a promise of”closing the wage gap with australia”. do you have trouble remembering what you had for breakfast this morning? if so, i would accept your seriously flawed recollection now… otherwise you would just be talking shit for the sake of it… you wouldn’t do that, would you?

    • SHG 7.3
      19 October 2010 at 12:07 pm

      @Peter Martin:

      It’s little wonder that New Zealand loses around 600 quality, trained teachers to Australia every year

      Yes, Australia, the country with a nice new national education standards system and school rankings published online for the public to view. Yet 600 quality trained teachers every year leave NZ to work as part of that system.

      It’s amazing how their “no national standards! for the good of the chiwdwen!” principles evaporate when a few dollars are waved in front of them.

      • Peter Martin 7.3.1
        19 October 2010 at 12:18 pm

        ‘Australia, the country with a nice new national education standards system and school rankings published online for the public to view.’

        Interestingly, the PM there has decided to listen to those folk who have expertise in the area ( unlike our Min of Education) and pull in the site that releases the stats that allow the league tables to be formulated.
        http://www.smh.com.au/national/education/my-school-changes-aim-to-stop-league-tables-20101014-16lwq.html

        Maybe it’s the influx of kiwi teachers that have contributed to the change. *s*

        • SHG 7.3.1.1
          19 October 2010 at 1:16 pm

          Pull in? Looks to me like they’re considering a proposal to include MORE information on myschool.edu.au.

          My point remains: the NZ teachers’ unions would lose their minds if a school-comparison site like myschool.edu.au was launched in NZ, yet it’s a good thing when Australia does it…?

          • lprent 7.3.1.1.1
            19 October 2010 at 2:16 pm

            With some of the horror stories that I’ve heard about how frigging subjective the national standards are, I suspect that you’d just have a GIGO site. Garbage in = Garbage out.

            The real issue is that if you’re going to measure the performance of teachers and schools then the first thing you need is a robust verifiable measurement regime. We merely have Tolley and her faith that whatever she wants will work. For some reason that appears as inadequate to most people as she appears to be as Minister of Education.

            The second part of course is that if you are going to measure performance of teachers and/or schools, then what is the purpose of it? You could of course do nothing. That will result in a widespread movement of parents trying to get their kids into the ‘better’ schools. The inevitable result of that will be a self-fulfilling prophecy with some schools expanding to the point that their systems collapse whilst sucking up scarce resources to do that increase and other schools failing for lack of students.

            Ideally you’d want to improve the performance of teachers and schools to get a more even spread. Usually by transferring skills and and resource allocation methods from where they are best used, to where they are most needed. But that doesn’t appear to be anywhere on Tolleys (or the NACT)’s mindset). It would involve doing some substantive work – something they appear to be completely adverse to doing. Instead they appear to be intent more on breaking things to fulfill a moronic election slogan than they are at actually making anything work better. But that is about the only thing that NACT ever does well. Being a destructive pack of buggers…

          • bbfloyd 7.3.1.1.2
            19 October 2010 at 5:44 pm

            SHG… “lose their minds”. yet another freudian slip by the maestro..

  8. Greg 8
    19 October 2010 at 11:25 am

    Teachers’ pay is too low. But thats by no means unique to teachers. New Zealanders in general are paid poorly. When you compare teachers pay to the average wage teachers in New Zealand are paid well compared to other western nations. The issue is productivity, the problem is how do we increase it?

    Have you looked into Christina Romer’s research? She produced a paper over in the US that suggested every dollar of tax cuts caused GDP to increase by $3 on average. If for arguments sake we apply that figure directly to NZ tax cuts seem like a pretty good solution.

    • Pascal's bookie 8.1
      19 October 2010 at 11:47 am

      She produced a paper over in the US that suggested every dollar of tax cuts caused GDP to increase by $3 on average.

      In which case we should expect to see it showing up empirically

      This guy took a look at what happens when you compare changes in the size of govt revenue as a percentage of GPD vs growth in real GDP , going back as far as the data will allow in the US…

      The graph shows that Presidents who cut the tax burden produced slower growth, on average, than Presidents who increased the tax burden.

      …and looks at it again in response to various critics’ objections with no real change to the result.

      http://www.presimetrics.com/blog/?p=92

    • Draco T Bastard 8.2
      19 October 2010 at 11:56 am

      And yet all we’ve seen over the last 3 decades of tax cuts and giving the wealth to the wealthy is less and less productivity increases. This would indicate that when she did her “research” she didn’t bother to check reality.

      • Colonial Viper 8.2.1
        19 October 2010 at 5:50 pm

        Of course we got less wealth amongst ordinary peeps and we got less productivity.

        TAX CUTS ARE FREE MONEY. The Right long ago decided that it was easier to lobby Congress for an extra dollar back as opposed to actually generating a new dollar productively.

        And we see the results all around us. The top 5% massively wealthy, everyone else pretty much struggling, and the bottom 20% with no real, or even negative net worth.

        The middle class was virtually created using progressively higher taxes on the rich. One hundred years ago there was a yawning chasm between haves and have nots. And its coming back.

    • Bright Red 8.3
      19 October 2010 at 11:58 am

      Christina Roma? Who’s that? You want to look at Zandi’s testimony to congress on multipliers. Not some no-body’s dodgy numbers.

      the problem that causes NZ’s low wages is not low productivity. It is employee’s share of GDP. In Australia employee compensation is 47% of GDP. Here, it’s 43.5% and falling.

      If New Zealand workers’ share of the economy was the same as their Australian counterparts, that would close about half the wage gap right away.

      Why do Australian workers get a higher share of the economic output of their country? Because they have strong unions to demand a fair share.

      • Pascal's bookie 8.3.1
        19 October 2010 at 12:09 pm

        It’s ‘Romer’.

        http://en.wikipedia.org/wiki/Christina_Romer

        Her recent work (with David Romer) has focused on the impact of tax policy on government and general economic growth. This work looks at the historical record of US tax changes from 1945-2007, excluding “endogenous” tax changes made to fight recessions or offset the cost of new government spending. It finds that such “exogenous” tax increases, made for example to reduce inherited budget deficits, reduce economic growth (though by smaller amounts after 1980 than before).[10] Romer and Romer also find “no support for the hypothesis that tax cuts restrain government spending; indeed … tax cuts may increase spending. The results also indicate that the main effect of tax cuts on the government budget is to induce subsequent legislated tax increases.”[11] However, she notes that “Our baseline specification suggests that an exogenous tax increase of one percent of GDP lowers real GDP by roughly three percent.”

        And what she said is apparently a little different and more nuanced than “every dollar of tax cuts caused GDP to increase by $3 on average”

    • KJT 8.4
      19 October 2010 at 1:22 pm

      Do you know who paid her?
      Reality has proven differently both in the States and here.

  9. Greg 9
    19 October 2010 at 12:08 pm

    Draco do you know who Christina Romer is?

    Sorry here’s the link to the paper: http://www.econ.berkeley.edu/~cromer/RomerDraft307.pdf

    Take a look at her paper. She expressly refers to why she took an approach different to studies like the one you reffered to Pascal. A study like that is likely to suffer from severe endogenaity. Her analysis is also emperical Draco.

    • Bunji 9.1
      19 October 2010 at 2:06 pm

      Her analysis also only supports tax cuts in a very limited set of circumstances – when the economy is going well for a start. But there is more learned commentary here and more commentary here. The Romers (David and Christina) seem to generally be more into spending than tax cuts as a means of stimulating an economy, thinking the multipliers are better there.

    • Draco T Bastard 9.2
      19 October 2010 at 6:15 pm

      Any measure, including executive actions, that receives serious discussion is included in our enumeration. Measures that are referred to only in passing or are discussed only in lists of all measures that affected revenues over some period are excluded.

      Excluding tax changes because people didn’t talk about them doesn’t seem like a great way to determine what effects tax changes had on the economy. I’m sure that such well publicised changes would have had more of an effect than ones that weren’t talked about. By knowing that those changes are coming people plan for the “boost” to the economy that is expected and so you end up with a boost to the economy. Effectively it becomes a self-fulfilling prophecy.

      You may not get the same result from less known tax changes. You’d have to do a study using the same criteria (just reversed) to choose the selection on those to prove it. Essentially, if the unknown tax decreases have the same effect then it can be said that decreasing taxes boosts the economy. If they don’t, even over time, then there’s no evidence that decreasing taxes boosts the economy but that people planned for a boost because they were told that there was one coming.

      I’m still reading the rest of it but that bit was bugging me.

  10. Greg 10
    19 October 2010 at 12:14 pm

    Sorry Bright Red, didn’t see your comment.

    Christina Romer is the head of Obama’s council of economic advisors, which probably makes her the most powerful economist in the world. Still thinks she’s a nobody? See http://en.wikipedia.org/wiki/Christina_Romer

    • Bright Red 10.1
      19 October 2010 at 12:20 pm

      you wrote Roma. Who is a nobody. You can understand the confusion.

      What Romer says is that if you raise $1 of tax and take that money out of the economy (ie you don’t spend it) then GDp is decreased by $3. That makes sense.

      But the idea that tax cuts increase GDP significantly is Reaganite bollocks. It didn’t work then, it won’t work now.

      And doing it wold mean taking the deficit to dangerous levels.

      • Colonial Viper 10.1.1
        19 October 2010 at 12:26 pm

        Seriously why are people still talking about increases in ‘GDP’? Who gives a flying frak about GDP?

        GDP is a shite measure of economic activity, and not only because GDP can increase exponentially and unsustainably (hello Ireland, Iceland), but it also doesn’t say who that wealth is going to – or not going to.

        And if you build enough prisons and enough tanks using enough debt, you’ll also see wonderful increases in GDP. Something to strive for I guess.

    • Vicky32 10.2
      19 October 2010 at 4:33 pm

      Because Obama is the Leader Of the Free World, right? Ma dai! It is to throw up..
      Deb

  11. Greg 11
    19 October 2010 at 12:31 pm

    Urm actually I wrote Romer. Look up, but thats beside the point.

    Yes it is true that the corallary is not always correct and I apologise for misquoting Romer. But in this case I think its pretty clear that it is. Why wouldn’t putting money back into the economy have a similar GDP multiplier than taking it out of it? To refute that statement would suggest that if I legislated to increase tax by 1% GDP would fall 3% then reversing that change would not result in a similar change in the other direction, if that were the case GDP would never recover from a tax increase.

    • Pascal's bookie 11.1
      19 October 2010 at 12:46 pm

      “Why wouldn’t putting money back into the economy have a similar GDP multiplier than taking it out of it? ”

      I guess it all depends on how the govt pays for the tax cut, and what people do with it.

      1)The govt cuts taxes by increasing the deficit rather than cutting spending, and people use that extra money to buy stuff at the shops. (might equal gdp 🙂 )

      2) Govt cuts taxes by decreasing spending, and people pay off their mortgages a little bit quicker. (might equal gdp 🙁 )

  12. Greg 12
    19 October 2010 at 12:35 pm

    Oh and Viper, something Churchill said about democracy rings a bell here. GDP is shit measure, but at this point in time, it’s the best one we’ve got!

    Btw, going into debt to build stuff will boost GDP in the short term, but not in the long term. Thats why you look at GDP’s trend over time.

    • Colonial Viper 12.1
      19 October 2010 at 12:44 pm

      GNP per capita is an alternative measure. So is green GDP. GDP is definitely *not* the only measure. At most it should be included in a basket of other measures.

      Politicians do not look at GDP’s trend over time. They have discovered that you can go into a lot of debt and play a lot of financial games to increase GDP before any one pays attention. And even then you can keep doing it more and more until you finally fall over (Ireland, Iceland, Greece).

    • bbfloyd 12.2
      19 October 2010 at 5:58 pm

      Greg… “it’s the best one we’ve got”. you must be joking! it may have simplicity going for it, but that is also it’s major weakness… you understand, i’m sure, that oversimplifying complicated issues like measuring the wealth of a whole society would have to entail many different measures, and account for the many facets of modern living.. a countries economy is made up of almost countless different factors, and contributers.. using gdp as a measure of the overall wealth of a society is simply a tool for misdirection, or misinformation.

      ‘

  13. burt 13
    19 October 2010 at 12:58 pm

    Public education as we have it in NZ is great for union membership numbers – pity the kids are not paying union fees or the system might consider them important as well.

    • KJT 13.1
      19 October 2010 at 5:01 pm

      If you considered them important you would be asking for a higher wage society. Not a future of boring Mcjobs as we sink to the same level as Somalia.

      Those who do not want to contribute to a fair and functional society should just move there and spare us their greed.

    • bbfloyd 13.2
      19 October 2010 at 6:10 pm

      Burt.. are you trying to win some sort of competition to see who can say the stupidest thing today?

  14. Greg 14
    19 October 2010 at 12:58 pm

    Your right its not the only measure. But GNP wold be incredibly difficult and expensive to calculate, plus I don’t see the argument for GNP when your concerned about domestic policy. Green GDP is effectively GDP but with a cost element to it, I’ve got no problem with that but its still essentially the same measure.

    I’m not defending the integrity of politicians here! Perhaps I should have said thats why ‘normal people’ look at GDP over time.

    Pascal I’m a little confused as to exactly what your saying but obviously you shouldn’t go into ridiculous amounts of debt just to cut taxes (although many seem willing to do it to fund infrastructure spending – which always confuses me). Funding tax cuts by cutting spending is much the same, you should do it only when the costs benefits outweigh the costs. The point I was making is the benefit actually seems to be a lot higher than what many people think it is.

    • Colonial Viper 14.1
      19 October 2010 at 6:30 pm

      Who are you kidding too expensive? that’s what govts pay their statistics and treasury departments for. GNP was the main measure of economic activity right through the 1970’s and 1980’s until the neocon right wing turned up with their freemarket globalisation agenda and realised that GNP would signal the damage being done to individual countries’ economies way too early. So all of a sudden GDP became en vogue.

      Really very very concerned you keep pushing GDP as your main measure when it has been excoriated for its weaknesses for so many years now.

      And if you think Green GDP is a better measure why don’t you start using it.

      plus I don’t see the argument for GNP when your concerned about domestic policy.

      For setting domestic policy GNP is a far superior measure than GDP. GNP demonstrates the benefits that the citizens of a country are earning from their economic activity. GDP does not.

      Like I said, I’m now very suspicious of why you keep pushing GDP the way you do, it is a measure favoured primarily by free market neo-con Chicago School types.

  15. dave brown 15
    19 October 2010 at 1:21 pm

    Nats cut public ed because it is not a market mechanism. They want natstandards, performance pay, and privatisation schools to introduce market signals and deliver cheapest skilled labour with fundy family morals (ha ha) cause works makes us free. Best and bright can user pays, and worst and dumbest can live in containers. Seth Key.

    • SHG 15.1
      19 October 2010 at 3:11 pm

      they want natstandards, performance pay

      Yes, like Australia has. That country NZ is supposedly trying to catch up to.

      • Dan 15.1.1
        19 October 2010 at 4:58 pm

        SHG, if Nat Standards are the linchpin of the bright new educational future, how come private schools in NZ do not have to do National standards??

        I am not sure what proportion of Nact ministers send their kids private, but I imagine there are quite a few.

        “National standards” implies the whole country. Or does it mean a lesser label for the munters who can’t afford private?

        • Bright Red 15.1.1.1
          19 October 2010 at 5:02 pm

          and how come, if national standards are so great, the Maori Party got a special exemption so that maori language schools aren’t covered by the standards?

        • SHG 15.1.1.2
          19 October 2010 at 5:21 pm

          SHG, if Nat Standards are the linchpin of the bright new educational future…(snip)

          I’m not saying that they are (although I personally favour them); I’m saying that it’s contradictory to say “we need to emulate Australia” and at the same time say “national standards are a terrible thing”. National standards have been adopted in Australia with almost universal community support.

          • Dan 15.1.1.2.1
            19 October 2010 at 5:49 pm

            SHG, you haven’t answered my question!

            • SHG 15.1.1.2.1.1
              19 October 2010 at 10:15 pm

              Dan, I assumed your question – predicated as it was on National Standards being “the linchpin of the bright new educational future” – was rhetorical.

              • Dan …
                20 October 2010 at 6:48 am

                No, it was not rhetorical: why do the Nats insist on National standards for all except for their mates in private schools? Answer please SHG.

          • lprent 15.1.1.2.2
            19 October 2010 at 6:06 pm

            National standards have been adopted in Australia with almost universal community support.

            Because they were done by a competent politician who listened to experts who knew what they were talking about. She talked to the educational community and the parent groups and ensured that there was a reasonable degree of buy-in by the various vested parties for a scheme that was a compromise.

            As far as I can tell Anne Tolley talked to her navel lint after reading the study that she considered to be comprehensive – the national party slogan on the subject. To ensure that she never heard anything different, she then proceeded to do sham consultations with carefully selected groups that told her what she wanted to hear.

            For some strange reason, the Anne Tolley approach didn’t work all that well.. Can you explain why that might be?

            • graham 15.1.1.2.2.1
              19 October 2010 at 6:27 pm

              Because the ppta will opose any thing that national does full frigging stop
              It has become a branch of the labour party rather than a group representing teachers.

              • Draco T Bastard …
                19 October 2010 at 9:49 pm

                No, the PPTA only opposes that which is stupid. If there was a case for National Standards they’d support it. Even the person who suggested it to National in the first place, Hattie, doesn’t support National Standards in their present form. This should tell you something about Nationals implementation.

          • Colonial Viper 15.1.1.2.3
            19 October 2010 at 6:48 pm

            Did you ever consider that’s because Tolley wasn’t in charge of signing off the final version the Aussies used, not for running the Australian implementation process?

            I’m saying that it’s contradictory to say “we need to emulate Australia”

            Who the hell is saying that we need to emulate Australia? John Key? If so that’s only PR spin, we know NACT are not serious about it.

  16. Dan 16
    19 October 2010 at 6:32 pm

    And while I am seeking answers to a few mysteries, here is another question: how come since May the Minister, and now the Prime Minister are persisting with the mischief that police have very reasonably taken a 1.3% increase over two years? Where is the mainstream media to check these figures?

    My understanding, which may be erroneous, is that police automatically get 2% each year for not striking. This year they all got another $2000 in July (ie about 1.8% average), and next year get another $2000 plus 1.3%. In all, approximately 7% over two years.

    Are these figures correct?

    • Dan 16.1
      20 October 2010 at 12:06 pm

      My digging has surfaced the following:

      NZPA NZPA
      Tuesday, 23 June 2009 – 5:28pm
      Bill English. Pic: NZPA
      Bill English. Pic: NZPA

      Wellington, June 23 NZPA – Finance Minister Bill English has criticised the Police Association for seeking a 4 percent pay rise for its members during the recession.

      He said in Parliament today police had probably the most secure jobs in New Zealand and the Government was strongly supporting the force.

      “We are pouring millions into more police to help them do the job, Tasers so that they can be safe, DNA testing to give them more capacity to resolve crimes — but I’m not sure the police are in step with the public in looking for a 4 percent pay increase,” he said during an economic debate.

      “The police get a 2 percent pay increase regardless.

      “That, by any standard in the rest of the community, is quite generous compared with people who are losing their jobs and taking pay cuts.”

      Mr English said the Police Association was claiming 2 percent above the pay rise its members were going to get.

      “It would do well for the association to check whether it is reflecting the views of its membership and the communities that those members are serving,” he said.

      End of article: Thank you Mr English. You might need to let the Minister aand the PM know the facts.

      And so: The police get an automatic 2% because they are not allowed to strike, so anything else they got would be on top of that. But I think the $1,000 would be a one-off payment and not added to their wage scale.

      I think they ended up with $1000 this year (not $2000) and 1.3% next year, but if they were already guaranteed 2%, that means 3.8% this year and 3.3% next year?? Which adds up to 7.1%.

  17. Vicky32 17
    20 October 2010 at 6:23 pm

    And on 3 News right now, a bunch of moronic students at AUT, who say “I don’t know what it’s for” about their student union… 3 News are creaming their jeans about the abolition of compulsory student union membership… (It is relevant, I promise!) 🙂

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