Rethinking Political Thought – Shamubeel Eaqub

Written By: - Date published: 10:21 am, July 14th, 2016 - 36 comments
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Rethinking political thought – Shamubeel Eaqub

A recent paper from the IMF’s research team suggests that neoliberalism – which places competition at its core – hasn’t delivered on its promise. They also found that fiscal austerity following the GFC hasn’t worked, as standard economic theory would suggest. Other work shows that reducing inequality and increasing economic growth is entirely possible for countries like New Zealand, where inequality is high and productivity is low. There is sufficient evidence in our daily experience and in academia to warrant an upgrade in our economic thinking. It is now time for pragmatism. We have many eminently solvable problems facing our society, like a shortage of state houses. We need to add some empathy, love and civic duty, to competition in our politics. We will be a better and fairer economy and society for it.

Shamubeel Eaqub (CFA) is an economist currently on career break to be dad. He was most recently principal economist at NZIER, and economist at Goldman Sachs JBWere and ANZ Bank. He has wide interests, but focuses on public policy and politics in housing and regional inequality.

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36 comments on “Rethinking Political Thought – Shamubeel Eaqub ”

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  1. Murray Simmonds 1
    14 July 2016 at 12:17 pm

    To judge from his RNZ interviews/comments in recent years, SE has shown himself to be one of those rarest of national assets – a “mainstream economist” who is certainly capable of thinking outside of the square and who is gradually coming to “see the light”.

    This man deserves all the public encouragement and support he can get.

    That said, I hope (and I imagine he has) read “Prosperity Without Growth: Economics for a Finite Planet”, by Tim Jackson. (I haven’t read it yet ‘cos my copy is still on order. However, to judge from its reviews, it looks like a “must read” for critics of the massive failure that we currently call “Classical” or “Mainstream” economic theory.

    Jackson was recently interviewed on RNZ. Can’t remember if the interview was by Kim Hill or by Kathryn Ryan – but either way it was BRILLIANT! Certainly well-worth “googling” on the RNZ website and downloading.

  2. Murray Simmonds 2
    14 July 2016 at 12:48 pm

    Thanks, Weka. (I’m getting older and lazier by the day).

    Shamubeel Eaqub needs to sit down and have a beer, or a coffee or whatever with Steve Weir.

    The output from such a meeting (assuming it hasn’t happened already) could only be good.

  3. Murray Simmonds 3
    14 July 2016 at 12:50 pm

    OOOOOps – forgot the “PS”:

    PS
    “Who needs “Linkedin”?

  4. Murray Simmonds 4
    14 July 2016 at 1:03 pm

    Just to clarify that, I think Steve Weir is one of the most FORWARD-THINKING people in this country, where “matters economic” are concerned.

  5. NoThanks 5
    14 July 2016 at 3:11 pm

    For those who can’t compete in the knowledge-based market economy and now are ‘advocating’ (steal from others) more social welfare should look at Brazil, a country with a once strong economy and an over-promised welfare state, now their economy has sunk and those ‘poor’ people are still demanding all the free stuff no one can pay.

    Be a bit more competitive, don’t be a jealous thief.

    • Pat 5.1
      14 July 2016 at 3:19 pm

      are you sure you wish to use Brazil as your example?

    • UncookedSelachimorpha 5.2
      14 July 2016 at 10:21 pm

      The poorest half of NZ own 4% of New Zealand’s wealth. This half will include nearly all social welfare recipients, except perhaps pensioners.

      The richest 5% own 45% of New Zealand’s wealth.

      Who is doing your “stealing from others” I wonder??

      There is good evidence that this inequality stifles the economy, not your alleged “stealing”. Your worship of the ‘competitive’ is a lie.

      • KJT 5.2.1
        14 July 2016 at 11:18 pm

        Less than 3% of the wealthy are entrepreneurs and business owners who earned their wealth.

        The rest either inherited it, were lucky, or stole it!

    • KJT 5.3
      14 July 2016 at 11:17 pm

      “The rich are so jealous of the poor, they constantly have to find more ways of stealing from them”.

      How do you make your living again?

      Is it something useful?

      Or, are you yet another parasite paid way beyound your ability, for finding ever better ways of ripping off rest of us?

    • Colonial Viper 5.4
      14 July 2016 at 11:20 pm

      This oligarch excusing fuck head “No Thanks” doesn’t understand that the USA prints dollars out of thin air with which it then acquires real goods resources and services from around the world, and in exchange the rest of the world gets their electronically created funny money.

      That’s the ultimate Imperial thievery disguised as a system of global finance.

      Now if this fuck head “No Thanks” was interested in countries being competitive, he would be advocating for them to be free of transnational corporate dominance so that they could actually develop their own independent economies and systems of intellectual property.

      But of course, he’s not interested in anything of the sort. All he wants is for these countries to be subjugated sweatshops and mines.

      Like I said, an oligarch excusing fuck head.

    • Stuart Munro 5.5
      14 July 2016 at 11:34 pm

      Dairy farming and real estate make a knowledge economy? Nope.

  7. Ant 7
    14 July 2016 at 3:59 pm

    For many its unthinkable that the competitive spirit be replaced by the cooperative one; for others the inner change has already jelled, freeing them to work in tandem with like minded folk.

    The submergence of ego (so admirably sustained via competition), in ventures that have the greater good in mind is startlingly satisfying.

    The article speaks of ‘love and empathy’; I doubt these can be appended to ‘competition’ as we know it.

    Seers of all ages and faiths have indicated there is a way for humanity. As one wise fellow said ‘religion hasn’t failed; its never been tried.’

    Driven by the cooperative spirit we free up energies and inspiration formerly equated with religious fervour. The new face of religion may be forming in our midst.

    • gsays 7.1
      14 July 2016 at 7:30 pm

      well observed, ant.
      cheers.

    • UncookedSelachimorpha 7.2
      14 July 2016 at 10:23 pm

      Yep, the neoliberal free marketeers would be simply confused and befuddled by the terms ‘love and empathy’ – they simply don’t know what to do with them, they have no place in their world.

    • Colonial Viper 7.3
      15 July 2016 at 12:07 am

      +1

  8. leftie 8
    14 July 2016 at 4:02 pm

    Consumer Watch: Renting smarter than buying

    “Renting rather than buying may be the smartest financial decision you can make at present.

    In 2012, New Zealand Institute of Economic Research (NZIER) economist Shamubeel Eaqub told the Herald on Sunday that he urged his friends not to waste their money buying houses, particularly in Auckland. “Houses are expensive compared to renting,” he said at the time. “New Zealanders’ obsession with property is madness.”

    Fast-forward two years and Auckland prices have increased from a median $500,000 to $637,000 and his view hasn’t changed. Buying a house probably wasn’t a good financial decision then and the situation is even worse now.”

    <a href="http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11237251

    Fast forward two more years, now people can’t afford to rent.

  9. gsays 9
    14 July 2016 at 7:34 pm

    fwiw, ‘economics’ needs to encompass a wider view of things.
    less of the singular, balance sheet attitude.

  10. Ad 10
    14 July 2016 at 10:43 pm

    Shammie should start with this question:

    If a home owner in a major NZ city decided to sell up their house right now, what should they do with their money that is better for themselves, their family, and their country than owning a house?

    Say it was half a mil.

    – Put it into the bank? at 3.5 %? What a joke.

    – Or NZ Bonds? Slightly slightly better joke?

    – Buy a farm? And be subject to the world’s commodity markets? Do you really want to be a slave any more than we already are?

    – Put it into a really good NZ stock? In NZ reality you either know the company personally and have relatives in it who can nod and wink to you, or you’re a trading algorithm.

    – Put it into your Kiwisaver? 65 is a long, long time away. And you’d have to be really confident you wouldn’t ever need it.

    – Buy a business? With what tax incentive over buying a house?

    – Or …. you buy another house. Which in Auckland or Queenstown-Lakes gets you say $60 – $80,000 extra per year.

    Doesn’t take much to figure out where financial motivation lies.
    Shammie makes no sense until there’s a major real estate correction and a whole bunch of tax policy changes.

    • weka 10.1
      14 July 2016 at 11:14 pm

      Why would someone in a major city in NZ sell their home?

      Can you add some empathy, love and civic duty, to your comment?

      • Colonial Viper 10.1.1
        14 July 2016 at 11:17 pm

        I think that’s Ad’s point. People aren’t going to sell their homes.

        • KJT 10.1.1.1
          14 July 2016 at 11:20 pm

          Yes they are.

          That’s why Whangarei prices are rising.

          • Colonial Viper 10.1.1.1.1
            14 July 2016 at 11:27 pm

            Dunedin as well. Hamilton. Even Piha is now in the “Auckland commuter belt.”

            Basically anyone with any sense is getting the fuck out of Auckland ASAP, or making preparations with that end in mind.

        • Pat 10.1.1.2
          14 July 2016 at 11:29 pm

          SE isn’t advocating selling…hes advocating staying out of the market until it corrects

          • Colonial Viper 10.1.1.2.1
            14 July 2016 at 11:39 pm

            That advice doesn’t work for anyone except someone looking to reallocate the asset classes in their investment portfolio.

            So who is he really advising with his suggestion? Not desperate first home buyers.

            • Pat 10.1.1.2.1.1
              14 July 2016 at 11:43 pm

              “So who is he really advising with his suggestion? Not desperate first home buyers.”

              Bollocks, thats exactly who he is advising…potential first home buyers who have saved a deposit, or are looking to draw down kiwisaver and risk that in an overheated property market with little time create an equity buffer…..the nervous banks are already dealing to the investors

              • Colonial Viper …
                15 July 2016 at 12:04 am

                So you are saying that someone with just enough deposit to buy a $650K Auckland first home now should hold off on his say so?

                What if this crash takes a couple more years to roll in, and before that happens, next year that house is $750K? And the year after that $850K?

                And when the predicted crash does happen it only drops prices 10%? From $850K back down to $765K?

                Would you still say to the first home buyers…don’t get in now at $650K…

                • Pat …
                  15 July 2016 at 12:18 am

                  that is what I would and have advised my own children, it would be foolish to advise or support entry into this market…..median Auck house price now sits at around 10 times median wage…the correction when it comes, be it deliberate or uncontrolled will be substantial….the pressure is building for action and the longer it runs the higher the chance event/s will occur that will start the withdrawal….40 or 50 % would not be unexpected and would still leave prices at 5 or 6 times median…..I don’t think the wait will be much longer, SE obviously expected it earlier as he was advising the same 2 or 3 years ago, but sure as eggs it will occur.

                  • Colonial Viper …
                    15 July 2016 at 12:30 am

                    well I agree that a crash in property prices is coming but I find it hard to visualise it being over 15% or so in the bottom half of the market.

                    In the top part of the market things could get ugly however. London and New York luxury apartment prices have already dropped by 20% or more, and now Sydney and Melbourne apartment prices have started to stumble. In a few months time those shockwaves will hit Auckland proper.

                    • Pat …
                      15 July 2016 at 12:35 am

                      even at 15% the first home buyers would be under water with a 10% deposit….good way to throw away 60K plus

                  • KJT …
                    15 July 2016 at 8:39 pm

                    National will keep the immigration tap turned up, for as long as it takes to prevent an Auckland house price crash. At least until the election.

                    • Pat …
                      15 July 2016 at 8:45 pm

                      I believe you are correct….that may not be enough to prevent their defeat …or a bursting of the bubble

  11. Pat 11
    14 July 2016 at 11:02 pm

    “Shammie makes no sense until there’s a major real estate correction and a whole bunch of tax policy changes.”

    He makes perfect sense for anyone considering entering a market bubble who will be caught in the bursting of that bubble….it will only be a paper loss to those with sufficient equity….how many recent purchasers, especially owner occupiers first home buyers who have recently bought into this market will fit that category? Any savings invested as deposit would be wiped out and then some…..3.5% pa and retention of those dollars would be looking pretty good then…..unless of course you believe this market is sustainable.

  12. Brendon Harre 12
    15 July 2016 at 7:02 am

    I wrote a political article about housing which included Eaqubs Generation Rent contribution. You can read it here.

    https://makingchristchurch.com/housing-new-alliances-new-battlefields-e47d81c24de5#.9y4rhdooj

  13. Philj 13
    16 July 2016 at 6:06 am

    The situation is entirely predictable. Bernard Hickey sold up and relocated from Auckland to Wellington. House price increases have followed him to Wellington. Auckland is a mess which is the economic powerhouse /basketcase which is at the heart of NZ. Can’t wait for the next wave of migrants to help keep the boat afloat a bit longer. You have to laugh…