Matt Nolan

Can’t win in “managing the economy” it seems!

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Via Kiwiblog I spotted this:

The Government has no qualms about Australian companies shifting jobs to New Zealand because of lower wages.

Labour is concerned that New Zealand is becoming a desirable destination for Australian businesses taking advantage of the wage gap.

Several big Australian banks and food producers have shifted jobs to New Zealand in the last two years.

Now call centres are also making the move, mostly because it is cheaper.

Darien Fenton MP said the trend is deeply worrying.

Economic development Minister Steven Joyce said the wage gap with Australia is an opportunity to create more jobs.

But the Council of Trade Unions said an economy created on low paid jobs lowers productivity, which could actually widen the pay gap even further.

So it is a good idea for Labour to try to intervene in the exchange rate to cut labour costs to “create jobs”.  But then if the exchange rate falls and people move over in of itself it is a worrying trend.

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Matt Nolan

Wolak strikes back

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Remember the energy policy disucssion (here and here on TVHE) – where the Labour and Greens took a number from the Wolak report to try to justify a single buyer model.  Via a reader here is Frank Wolak himself:  (More details here)

The Labour-Greens’ single buyer electricity policy has a problem.

While it remains politically resonant with voters who perceive power companies as rapacious and inescapable, the American academic whose analysis is a key plank of the Labour-Greens NZ Power proposal says the Opposition parties have got it wrong.

Not only that, but Stanford University’s Professor Frank Wolak – a top US electricity markets academic and one-time regulator – says that despite repeated assertions to the contrary, he never concluded that power companies here had ripped off consumers to the tune of $4.3 billion over the mid-2000’s.

Unfortunately, that $4.3 b figure has been the smoking gun fact around which the political argument for the policy has been built.

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Matt Nolan

Sorry, what?

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This quote blew my mind: (turns out it came from a release here)

“It is based on the notion that increasing supply of houses at any price will somehow bring down prices. This is trickle-down economics at its most dubious.”

What.

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Matt Nolan

Careful claiming “risks” as a justification for banning sales!

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Over on Gareth Morgan’s blog there is a piece saying we should look into controls on foreign investment in housing.  I disagree with the case.  Let’s put the argument here:

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Matt Nolan

Lucas critique and DSGE models

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I’ve seen the view that DSGE models fail the Lucas Critique come up a bunch in recent years, and nodded my head in agreement.  But I’ve never popped a post down saying it – so this speech by Plosser gives me that opportunity (ht Stephen Williamson).  I find it hard to disagree with this statement:

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Matt Nolan

Recommended reading for today

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I aim to read the new book “Inequality:  A New Zealand Crisis” – I am just deciding whether to start that, read the book by Stiglitz first, or finish my reread of “The Economic World View“.

However, I see Bill has started his review over at Groping to Bethleham – I suggest jumping over there and reading that.  I will not read it until I’ve caught up – but knowing Bill this will be good, so I can recommend it unseen 🙂

If anyone comments here, can you not discuss the book or the review.  Instead, I wouldn’t mind more recommendations of things to read 😉