Matt Nolan

Yo RBNZ

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Hey RBNZ, love your work and all that.  But I have to point out something about today’s speech.

I love seeing you guys discuss what is going on with the public, describing the factors, and talking about risks – this is incredibly valuable!  And given your views, I get why you are jawboning the dollar, that is all good.  But, I’m not sure you’ve really thought through the way people will interpret some parts.

Key point – do you realise that one of the main reason people think you control the structure of the economy (you don’t) is because you comment on it a lot, and never explicitly point out that you don’t control it.  The reason you have the Greens saying lets get the RBNZ to fund the rebuild as a “solution to structural issues” and the reason you have other economists and journalist going on about having the RBNZ “rebalance”, is because people explicitly think you are doing things to determine the underlying make-up of the economy.

Now I know, this is a bit ridiculous, but let’s read parts of the speech:

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Matt Nolan

Series on tax: Part 3 – poll taxes, ability taxes, and fairness considerations

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Over on Rates Blog they’ve popped up part three of the six part thing I’m writing about tax.  Over here, we’ve blogged on part 1 and part 2, and added a part 2b for kicks.

You’ll notice I’m doing sometime pretty specific when I’m loitering around the tax system.  I’m talking about the properties of a tax, and then given we don’t use specific types of tax I’m inferring that there may be some social preference involved such that we’ve chosen not to.  Given that, I’m trying to build up concepts of fairness (read vertical and horizontal equity if you will, but I do mean it a bit more broadly than that) from the way society had evolved.

This may not be the case, but it doesn’t have to be.  It is merely a mechanism I can use to tease out these sorts of principals to try and make them a visible part of the “trade-off” we are discussing.  This series isn’t about saying what tax system we “should” have – it is about describing what different types of tax are, albeit on quite a surface level.  As I stated in the first article, it is actually a lot more complicated (and a damned interesting issue) to figure out exactly how redistribution will work from a given policy!

Of course, if we were to describe the type of tax system we SHOULD have, we would want to actual make subjective judgments about value and potential “social preferences for fairness”.  We require these additional value judgments to actually make a conclusion 😉

Next time I’m talking about income, capital, land, and consumption taxes.  I hope you get ready for me to bring up elasticities again, as we’re going to need them 😉

 

Matt Nolan

Rant on more NIIP complaints

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I wrote this as a comment over on Dim Post on this blog post.  Then I decided, why don’t I just use this rant as a blog post instead, so I don’t need to think of anything else to write?  Sure, very few people will see it, but it will reduce my workload for the day 🙂  So here it is:

Update:  Danyl notes the post here.  Just to be clear – I’m probably far too terse in this post, but that is due to exacerbation about the issue.  I love Danyl”s stuff, and read the blog all the time, but the line I quote in this post just saw all the frustration from recent years come out of me in a rant 😉

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Matt Nolan

A tax by any other name

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Over on Frog Blog Russell Norman says we should have a rational debate about policy – in this instance the idea of having the RBNZ finance government spending by buying government bonds when the government increases spending.  Good, this is the right sort of attitude, we should be willing to debate and discuss everything – and to do so in a logical, clear, and transparent manner.

Now, as I’ve discussed that I don’t agree with his policy conclusions.  The post I’ve linked too was pretty clear on things – but I’m going to do a shorter post here.  Since that QE post I’ve talked with people who are pro this sort of financing, and in this post I am explicitly trying to talk about the trade-offs in a way that is consistent with the way they have 🙂

I would note that, getting the RBNZ to purchase bonds when other monetary policy actions are consistent with their inflation mandate will violate their inflation mandate – it will violate their “non-monetization” commitment in this sense.

This is important, as it implies that in the first instance bond purchase financing is essentially a tax.  This is something I will get to in part 5 of the tax series I’m popping up at the moment.  I’m only up to part 3 at present (out tomorrow), so the argument will have to wait till then.

Let me give a brief flavour though.

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Matt Nolan

Beware those bearing gifts of free exchange rate depreciation

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I don’t like to write about other economists, unless it is to say how sexy they are.  But I can’t let this slide

Ganesh, why, why are you willing to sell soundbites that do not cover off the trade-offs you are advocating?

The Berl economist told deer farmers in Wellington the bank should become a daily trader till the exchange rate fell to “something sensible for our export sector”.

Asked if New Zealand had the resources to do this, Nana replied, “It’s called a printing press. I’m not kidding,” he said to laughter.

It would be a transfer of wealth, from the people who consume imports, “the baddies”, to the people who earn exports, “the goodies”.

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Matt Nolan

Series on tax: Part 2b – let’s experiment with explanations

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In the second part of my series on taxation I wrote about distortion and burden.  But I’m not sure whether my description about wedges and how people respond to prices was necessarily clear enough for a non-economist audience.  So I’m going to experiment with some other ways of articulating what I mean – ways that are equivalent, but for different people may be clearer.

Note:  I apologise in advance if this is a bit scattered – if you have questions or comments note them down in the comments, you’ll be doing me a favour 🙂

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