Ok, so this may seem arbitrary – but I think it gives a good indication of how dodgy statistics can be 😉
So on Thursday the Balance of Payments was released. The BOP must equal zero – that is an identity it has to hold. When people talk about the BOP deficit they are being weird, they often mean a “current account deficit”.
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0.9% fall in December (production account, seasonally adjusted). However, September was revised down as well – so similarish to a 1% fall. Bigger decline than the RBNZ expected, but about in line with the market.
Expenditure account (old C+I+G+X-M) fell by 0.6% – but has fallen a lot further over the past year.
GDP deflator did rise a lot more strongly than I expected.
So, GDP is out today. The market expects a 1% fall, ANZ has gone as far as 1.2% (I’m talking about a quarterly seasonally adjusted fall – none of this annualised rubbish).
Now, I’m not so sure. Yesterday’s current account deficit came in on the money, but the deficit as a % of GDP was lower than expectations. There are three possibilities:
Now, it is dodgy trying to get a feeling out the the BOP figures for what GDP is – but with current estimates I could only get a small GDP fall to justify a 8.9% current account deficit. Combined with the hours worked revision today’s decline might be relatively small.
The IMF, in all its infinite glory and knowledge, has decided to give New Zealand some advice on fiscal and monetary policy. Here is my take on their sermon from the heavens.
We generally allow capital and goods to flow freely between nations nowadays – which is a good thing. However, that leaves us in the situation where the whole purpose of a nation appears to be working for the benefit of labour in that country.
Now it may well seem like the best thing to do – if we didn’t do it we would undoubtedly have lower incomes. However, this would be because the people in abject poverty overseas now have more options and will be able to manage a higher living standard.
Often people blame globalisation for the abject poverty we see overseas. But it isn’t globalisation that is the problem – it is the lack of globalisation. Closed labour markets, which are effectively massive labour unions, are a large part of the reason why poor countries can’t pull themselves out of poverty.
Now we may value the welfare of local citizens more than we do foreign people – some people have said so here. But even in the case where loosening migration would lead to worse outcomes for locals (which is not always the case), we would have to discount “non-local” people quite substantially not to let them in. Remember that the human cost isn’t all on one side – when we close off migration we are implicitly falling the lives of people overseas as well.
How is this like a labour union? Well labour unions do all they can to increase workers wages, often at the cost of the unemployed (who are the competition of the employed). Unions thrive by hurting the unemployed through artificial barriers – and they inherently value employed people more than unemployed people. Change unemployed to “non-local” and employed to “local” and we have the same thing for nation states.
Reading this article saying that in New Zealand as the economy is going down university enrolments are going up reminded me of a cartoon Matt emailed me last year:)
Hat tip: www.phdcomics.com