goonix

Govt considering SOE sales

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Bill English has been quoted as saying the Government is considering the sale of certain state owned enterprises in its next term. Apparently the Government are currently preparing an “investment statement” that will outline what it considers possible.

Currently a significant portion of Government capital is tied up in the SOEs, around $40 billion dollars (around four times the size of the largest projected Government deficit).

SOEs perform, as a class, very poorly. Recent reports suggest that in the last financial year they returned 1.5% on equity. This is below the risk free rate of return.

Such poor allocation has real costs to the New Zealand economy. The opportunity cost of maintaining investment in such low returning assets (as a whole) effectively amounts to taxpayer resources being wasted.

It is therefore very worthwhile that the Government looks at its investments and considers whether SOEs might be better placed in the private sector’s hands.

Matt Nolan

Budget 2010

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Apologises for the EPIC delay in doing this.  I wanted to have comments up by 6 (it was not out till nearly 10), but a meeting ran overtime, work servers went down, and my trip home from work on this was slower than expected. [ed. And the site went down …]

First here are links to other round up post round the country as of now:  Offsetting Behaviour, The Standard, Red Alert, Kiwiblog (*,*,*,*), Dim Post, NZIER, Infometrics, Rates Blog (*,*,round up post!), NBR, Not PC (*), Public Address, Education Directions (*,*,*).

So far we’ve done a review of the ACT and Libertarian alternative budgets.  Now it is time for the actual Budget, and then if we see any other alternative budgets we will have a look of them too 🙂  When reading all these reviews, keep in mind that I am aiming to be critical – I am putting up trade-offs so I will NEVER say “that is a good policy”.  I am not trying to say I hate any of these groups by doing this, I am just trying to describe other ways to look at policies to give them context.  If you keep that in mind when looking, then hopefully it will be useful.

Ok, so let me roll with my personal opinions – hopefully supported by a sound economic framework 😉

Also note that this is a first brush on what seem to be the main issues.  Over the next few days I plan to get down into more specific policies – and I will see if I can discuss some things through the weekend.

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goonix

Gambling at the TAB, monopolies and innovation

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I like to place the odd sports bet. In New Zealand I have no official option but to do this through the TAB, which is a state-sanctioned monopoly.

In other countries there are often many competing institutions offering odds on various events, including sports. In fact, there are now many companies that operate across borders in many countries. Recently the best real money casino apps for US players at www.EasyMobileCasino.com started offering sports bets as well as other online casinos.

The lack of competition in the betting market in New Zealand stifles innovation in the betting options they offer. One recent pundit proclaimed the TAB “the most conservative betting agency in the world”. Essentially the TAB has no incentive to innovate, as they know punters have limited ability to legally gamble through other avenues or https://casinos-enligne.fr/.

The TAB have started opening more interesting books on the FIFA World Cup, such as whether Lionel Messi will score more goals during the campaign than the All Whites combined (Messi the hot favourite at $1.55!).

If the gambling market were officially opened up to competition I suspect we would see a lot more of this innovation in amazing games like bar bar black sheep slots.

*I’m not sure of the legal status of these organisations in New Zealand, although I understand it is possible to open accounts with them (legally or otherwise).

Matt Nolan

Sir Roger’s alternative budget

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Notice that I just stole the title from Kiwiblog – as it was really the best title in my opinion 😉

This is the first set of policies for the Budget, so it is the first post for our “Budget 2010” series.

Kiwiblog has a great rundown, I’ve only got a few points to add:

  1. Yes it would increase efficiency and GDP.
  2. Yes it would have “equity” costs.
  3. Given that no party was elected on the basis of this sharp a change in “redistribution” between equity and efficiency it isn’t the budget I would recommend for actual policy at the current time.
  4. I do applaud Roger Douglas for doing a realistic run through of what his budget would look like though – I respect transparency.

As more Budget or alternative budget details come through we will have a crack at looking at them.

Matt Nolan

Compulsory 10 hours of unpaid work

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Inspired by this post on compulsory superannuation, here is a post on “compulsory work” (eg slavery).

Without compulsory work New Zealand is destined to become an economic backwater. Our relative standard of living, particularly when compared to Australia, will continue to decline.

Two important actions can reverse our long term economic decline, effective labour market regulation and compulsory work.

Compulsory work had been an unmitigated success in the New World and has helped transform their economy. While NZ academics can argue about whether or not it has increased their overall savings rate, it is clear that it has improved the amount that is produced in the economy.

Moving back away from the sarcasm let me say:

  • Compulsory superannuation is the love child of fund managers – as they can’t see past the idea that “more savings = more funds = more investment”.
  • Even those that do see past self interest only think of “GDP”.  However, the goal of policy is to maximise welfare not output – if people want to consume they should be allowed.  Forcing people to save is abhorrent.
  • Yes compulsory saving leads to more saving, and possibly to more investment (at least to lower borrowing).  But it does this by making people credit constrained – implying that people can’t smooth consumption over time and have lower lifetime satisfaction.

To me, compulsory superannuation/saving schemes are very wrong.  The people trying to push them need to learn that the purpose of policy isn’t to increase GDP or fatten their wallet, it is to ensure that we have a society where welfare is maximised.

Matt Nolan

We need a new Green party

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So I’ve been told by CPW that the Green party has a new policy regarding electricity generation. I will discuss it here, and then explain why I’ve titled the post as such – overall, I do think we need an actual Green party who aren’t just redistributionists in green drag …

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