Matt Nolan

Ummmmm. Ohhh. Hmmmm.

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Government to cut back the number of temporary work permits for skilled labour.  Great way to make the recession deeper guys.

So there are jobs that could create real value and production in the country, and we don’t want to let people come in and do those jobs.  When did NZ first come into power – I thought they lost out in the recent election?

The economy is not a zero sum game, if we have the best person available doing the job, then because of taxes and the such this benefits everyone.  Migrants create work my friend, especially migrants that are coming into the country to work!

However – if you read the article its not quite as bad.  They aren’t saying that they are explicitly cutting back on migrants now – they are just admitting that there will be less available work during a recession, so there are less areas where they can bring in “productive employees”.  I hope.

Matt Nolan

Sigh

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Does anyone elses passion for New Zealand die a little bit when they read things like this. Reminds me of all this disappointment.

There is a difference between allowing people into the country when certain skills are “over-subscribed” and we have short term demand or infrastructure issues and this – talking about taking away peoples work permits when they are here because “New Zealander’s should have New Zealand jobs” is inhumane.

Writing that bit in quotations made me feel sick a little 🙁

Update:  So this sort of attitude has cross-party support:

Labour leader Phil Goff said it was unacceptable for Kiwi workers to be laid off if they could do the job

Matt Nolan

Dim Post on privatising Treasury

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Another spectacularly sarcastic post by the Dim Post – this time pretending that John Key has privatised Treasury.

Prime Minister John Key is pressing ahead with his plans to trim the state sector, today announcing that he will be privatising the Treasury Department and opening up their roles of fiscal advice, budget projections and government accountancy to competition from the private sector.

Now, the Standard actually made a similar claim sarcastically a while back.  But you know what – there are parts of this that might not be a bad idea.  If Treasury was an under-performing department, competitive pressures could help to increase the quality of the output received.  In order to make this very claim the Dim Post article states:

It cannot be denied that for the last decade, Treasury has repeatedly made inaccurate forecasts, first underestimating surpluses and now underestimating deficits. Their advice is routinely dismissed by almost all serious political commentators and both our major political parties. At times it is difficult to see what the purpose of this department even is

Now in reality this is a real problem – but it is a problem that can’t really be solved.  Macroeconomists are often attacked on these grounds – but with the type of data we have, we can’t do much better!  A made up Treasury official then suggests:

To replace the highly qualified and experienced professionals of the New Zealand Treasury with a bunch of Tarot card reading frauds would be a category error

However, given that Tarot Card reading and economic forecasting share very similar methods, I’m not so sure if this made up quote is fair 😉

Matt Nolan

Selling holidays: A more detailed discussion

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In my previous post on the issue I said that the idea of making the 4th week of holiday’s tradable sounded like a good idea to me. In the comments I was forced to discuss this issue in detail – and as a result, I aim to clarify why I think making the 4th week tradable is an improvement on not having a tradable 4th week.

Fundamentally, I believe that the argument for the 4 weeks of holiday’s is:

  1. It is costly to negotiate holiday’s on an individual basis,
  2. Firm’s prefer labour to be “available” during a given period of time,
  3. As a result, firms set up general contracts mainly, and these contracts involve a lower level of holiday’s than the general employee would like.
  4. “Society” more heavily weights the welfare of the employees,
  5. Therefore, the level of holiday’s is too low.

Now, I am NOT saying I agree with this argument – it is just the justification that I see for the policy in the first place.  Taking this as given, the government has set it up so employees get 4 weeks off.

What does the voluntary exchange of a week of holiday do in this case?  Well all contracts have “4 weeks off” in them.  If an employee is willing to exchange this week for some cash they can strike a deal with the employer – who is likely to be willing to given that the value the availability of workers.  In this case, the ability to trade the week off benefits both the employer and the employee at an individual level – and the welfare of other employers and employees is unchanged.

As a result, this must be a pareto improvement.  I am happy for the government to do things that don’t leave anyone worse off and make some people better off – that is why I appreciate this policy.

Matt Nolan

Housing supply and rents: The issue of indicators

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Over at the Rates Blog there has been a lot of talk about how we can’t have an under-supply of property – as rents are rising very slowly.

Now their are two issues I have with this claim.

  1. The general idea is that their is the risk of an under-supply of property later in the year – because of rising net migration and a collapse in building. The claim isn’t that there is an under-supply right now.
  2. Even if there was an under-supply relative to fundamentals, there are still reasons why rent growth may be slow.

Now the first statement is fairly self-evident. So let’s focus on the substance of the second statement and the idea of when under-supply matters.
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Matt Nolan

Hmmmmm….

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I heard on the news last night that the Greens are against the voluntary sale of a holiday week – because in a tough economic climate people may well have to sell the week.

However, how this is bad doesn’t make sense to me.  People are struggling because of the poor economic climate, so the value to the employee of selling a week of holiday is very high – they really want to do it.  When we prevent people from doing this aren’t we actually hurting them more?

It is like the Greens are saying that they don’t like the policy because people will use it – and the Greens think there is some reason (maybe externalities?) why people should HAVE to have this holiday, even if they would rather have the money to feed their family …

Beware emotive language that is used to hide the logic of the argument!