Matt Nolan

Vacuous economic explanations: Example 1

/in /by

From a report on NZIER’s latest forecasts:

The main factors reducing economic activity were falls in private consumption, investment and net exports, NZIER said.

I am going to assume that NZIER didn’t actually say that – and that it instead came straight from NZPA.

When everything is falling (except government spending it seems), saying that activity fell because activity fell is relatively meaningless.  Why not say that the decline in economic activity was broad based, and was the result of some REAL FACTORS, like a drought or high oil prices or a collapsing world economy.

I don’t really see C+I+G+X-M as an explanation – it is an identity that allows us to frame issues, but if we are going to talk about “factors” behind a recession we should actually talk about the things that lowered activity.  Bryan Caplan doesn’t like it either – so I’m not alone in this distaste 🙂

Matt Nolan

The cost of cannabis captures

/15 Comments/in /by

A recent article on Stuff pointed out that there has been a number of police raids of cannabis plantations over the past few months. The justification for this is that cannabis is an illegal drug – and it has been made illegal because people believe that this is socially optimal. Same time people trust CBD oil, right – here at https://cbdforsure.com/ is all information about it and it’s legal! (Image source SMBC). Apart from it, marijuana dispensary near me provides weed maps, which  show where to buy cannabis.

However, when I read the story this isn’t what went through my head. My first thought was crap – that will definitely drive up the demand for other drugs!

How does this work? Well cannabis is one in a array of drugs (including alcohol) which could be used for recreation – as a result these drugs are substitutes. If we increase the price of cannabis, then we increase the demand for other drugs. As these raids are destroying supplies, this will increase the price of cannabis – having that exact effect.

This concerns me, as I’m more concerned about individuals consuming and becoming addicted to higher level drugs (such as P) than I am about people getting stoned. As a result, I can easily conceive of a situation where these raids are not in the social interest.

Note:  The purpose of the image is to create a counter-argument you can use to argue with me – and also because I find it funny in its sarcasm 🙂

Matt Nolan

Economic journalism and the stimulus

/4 Comments/in /by

Steve Pierson over at the Standard is criticising National’s stimulus package, and the quality of economic journalism. Now, although I’m always happy to criticise things too I feel that some of his critiques are a bit harsh.

I’ll go through the two harshest criticisms below:

Read more

Matt Nolan

New Zealand to indulge in protectionism now?

/1 Comment/in /by

Just when I thought that the suggestions from the Job Summit couldn’t get to much worse (given my faith in the current government not to go all Muldoonist on me), some suggestions on the tourism fund have come out.

Subsidised airline tickets for travellers from countries such as Britain and the United States are also being suggested

Hopefully this is just the Dom Post talking a bit of rubbish – because it isn’t in New Zealand’s interest to become protectionist now.  This is protectionism after all – we are subsidising our tourism exports in order to arbitrarily make them more competitive.

If we want tariffs on beef and lamb to be removed, we should avoid implementing our own tariffs/subsidies.  I believe that asking for greater free trade and then introducing protectionism is officially termed “hypocrisy” – I’m hoping we don’t head down that road.

Matt Nolan

The job summit ideas: An opinion

/7 Comments/in /by

Kiwiblog appears to be pro the Job Summit – the complete opposite of the position we have taken.

However, so far David Farrar has given more detail as to why he feels like he does. As a result, we really need to discuss things a little bit more.

Now David mentions the main “potential policies” to come out of the summit were:

  • A nine day working fortnight, with the Government paying (but at leass than full wages) for training on the 10th day.
  • A $50 million cycleway from Cape Reinga to Bluff, employing 4,000 people (not sure for how long).
  • A multi-million or billion equity investment fund, with the Government and banks, designed to let companies access capital to grow.
  • A $60 million private-public fund to boost Tourism

Ok, so let me talk about them a little.

Read more

Matt Nolan

Dom post article: The technocrat’s tax

/6 Comments/in , , /by

Article:

Give an independent body (akin to the RBNZ) the ability to set tax rates

Discuss (but preferably read the article first 🙂 )