Why does the Business Roundtable employ an economic illiterate to represent them to the public and argue their corner on macroeconomics? Here’s some of what Roger Kerr has to say in his op-ed in Granny Herald today:
“What seems to be overlooked is that the huge rises in core Crown spending in recent years – some $25 billion since 2000 – saw New Zealand “lead the world” into recession.” – He’s implying causation when there is none. The causes of New Zealand entering recession were lack of spare capacity in labour and capital for growth, record oil prices, the end of the housing boom, and a major drought. Show me a causative link between the increase in nominal government spending between 1999 and 2008 (the figure Roger is quoting) and I’ll eat my hat.
He mocks the idea conept of economic “stimulus” (his punctuation). I love the quotation marks used to throw into doubt the entire notion that higher spending by the government (or anyone for that matter) is stimulatory, flying in the face of not only the near universal economic consensus by the very names of economic terms like ‘fiscal stimulus’.
“Hundreds of economists in the United States are saying the Obama Administration’s so-called “stimulus” package is reckless” Yeah but there are tens of thousands, probably hundreds of thousands of economists in the US. So a small minority who think the stimulus package is reckless, so what?
“High levels of Government spending, already projected to be 45 per cent of GDP on the OECD’s measure (which includes local government), contributed to the balance of payments problem by driving up domestic costs” – bullshit. The balance of payments problem was exacerbated by cheap foreign credit and the wealth effect from the housing boom and full employment but it is a structural problem arising from us not having enough domestic manufacturing and too much of the profits from domestic production flowing overseas, or to sum it up, too much of our economy being based around foreign-owned companies exercising rentier behaviour, milking us rather than building us.
“[Singapore and Hong Kong] are able to ensure the provision of high-quality public goods and maintain strong social spending programmes with Government spending at far lower levels than NZ.” Great, all we have to do is move New Zealand to one of the world’s largest shipping choke-points and live under one form of dictatorship or another. At least the taxes will be lower. And, for the record: Singapore’s health system is nearly entirely private and our health is better despite much lower GDP per capita. Singapore has the 6th highest level of public debt in the world, ours is 86th. Singapore has a larger gap between rich and poor, and higher inflation.
“Improvements of this kind in fiscal policy are a key element”, – ‘are key elements’, more than one improvement = more than one element.
Maybe it’s just me but if I were the Business Roundtable, I would prefer to employ someone who knows what they’re talking about than someone who is ‘politically correct’ and just says what I want to hear. Better to be told the unpalatable truth than a wonderful fairytale. Maybe it’s just me.
On a related note, the organisers of the Jobs Summit have relented and decided to invite Roger Kerr after all. Well, there goes any hope (not that I had any) of that event being more than a platform for voicing extreme anti-worker ideology.
On a further related note, Anti-dismal has a list of 14 things that most US economists agree on (which reminds me of the joke of my first economics teacher, ask 20 economists a question and you’ll get 30 answers). I agree with them all but point out that the minimum wage question deals in the absolute question of its existence, not marginal increases, and that no-one said ensuring a basic living wage for hundreds of thousands of families was completely cost-free. Negative income tax is attractive but not when, as usually, it is tied to flat tax.