Matt Nolan

Introducing the Hand

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As you will have noted all four of the current authours (Matt, Rauparaha, Agnitio, and Goonix) have been running at close to full capacity outside of the blog, and so blog material has been lacking for the last three months. Furthermore, we have barely been able to respond to comments.

To help push along blog output we have expanded the effective labour force by introducing “the Hand”. It will cover issues that the rest of us either don’t really care about or don’t feel that we know enough about. However, the authour of the Hand will not remain constant. Effectively, it is a guest blogger.

The Hand differs from previous guest bloggers in that it allows people to post with us without having to think up their own pseudonym. This should reduce the cost associated with producing a piece for us, increasing output at the margin.

The first “the Hand” post will take place at 8am tomorrow on the BERL alcohol report – the one issue I can think of that I’m both sick of hearing about and haven’t read anything about 🙂

Matt Nolan

Careful with this investment now …

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So I hear that Wellington’s Morrison & Co’s Public Infrastructure Partnership fund is going to start spending the government’s “$500m infrastructure fund” ($100m of which is arbitrarily from the Super Fund).

According to the article they:

see significant potential for the fund because of under-investment in the past and because the Government is facing many years of budget deficits

I find this strange since:

  1. We haven’t necessarily had under-investment (discussed here and here)
  2. Spending more makes the budget deficit worse, not better

Now I have no problem with PPP’s, as I have this fantasy that the private sector part of the investment will actually listen to market signals, and do things that provide an economic benefit.

However, I think we need to be careful here. We are in a situation where, as a nation, we have been borrowing to invest (poorly at times) – do we really think that ramping up the number of arbitrary public projects based on sketchy cost-benefit studies is going to help us here. Or will it hinder us?

Matt Nolan

Has the government been “over-spending”?

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The question of whether the government has been over-spending is not one I can actually answer – as there is no way of telling exactly what sized government New Zealand wants. However, looking at how government spending compares to recent history can give us some idea about what is going on. Lets do this in the below graphs.

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Matt Nolan

Missing the point on productivity

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I hate the “goal” of productivity growth personally. I think any policy goals we have should be based on equity and allocative efficiency, not trying to make arbitrary ratios look pretty.

However, I also disagree with Idiot/Savant’s description of productivity and how he feels that a productivity target is anti-worker (h.t. CPW).

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Matt Nolan

Football Detour: Phoenix sign Ifill

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I know no-one here will really care, but I’m actually pretty excited that we (the Phoenix) signed Paul Ifill (ht Yellow Fever).  He is a player I’ve rated for this level for a couple of years now and had no idea that we were tracking him.

Definitely looking forward to the start of the season.  BTW, buy a season ticket already.

Matt Nolan

When did NZ’s right become communist?

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I am very confused at the moment. I keep hearing the NZ right talk about “catching up to Australia” and increasing New Zealand’s labour productivity (eg here and here).

But doesn’t this presume that the government has the ability to do these things? This confuses me as I thought that the basis of the NZ right was that the government doesn’t have the ability to significantly improve economic outcomes.

For example, Don Brash, the ACT party, and Roger Kerr, believe that the government can increase real GDP growth in New Zealand sufficiently for us to catch Aussie. According to them this involves growing adding 31% more output in this period (15 years) as well as any growth that Aussie achieves. Is it me or is this insane.

I also hear people say “China has been growing in excess of 10%pa” why can’t we. Well this is because they are starting at a low base, and are catching up in technology to developed economies – we don’t have this “low hanging fruit” to pick up on.

Long-term growth is based on technology, resource allocation, and to some degree the structure of institutions in the economy. I severely doubt that the government can turn around and improve any of these things to the degree required to “catch Australia”. Hell, Australia is closer to its markets, has a larger set of currently important natural resources, and gets “economies of scale” due to its higher population. No government policies can magically fill this gap.

Update:  Paul Walker shares similar sentiments, and a bit more discussion, here.