Some people don’t understand why organic farming isn’t more popular than it is

If Only We Had Listened To The Experts In 1986

Real Science

In 1986, “big league climatologists conveyed with great authority” that global warming would kill us all by the year 2000.

ScreenHunter_5349 Dec. 20 05.37

EARTH’S CLIMATIC CRISIS EXAMINED BY ‘NOVA’ – NYTimes.com

Had we listened to the experts in 1986, we wouldn’t all be dead now.

View original post

Did the World Bank just solve the puzzle of low NZ growth relative to Australia?

The World Bank published a major 300 odd page report that discussed puzzles of economic growth around the world included a chapter on New Zealand’s slow economic growth relative to Australia.

The World Bank publication is copyrighted 2015, so I assume that it has been published very recently. However, the data analysis in the chapter on New Zealand stop in 2002.

The conclusions of the World Bank with regard to the emergence of the trans-Tasman income gap were as follows:

The extent of economic freedom—as determined by propelling institutions—evolved in a similar manner in both countries.

The small differences in propelling institutions in both countries mostly netted out and as such cannot account for the differences in economic performance.

One exception was the fiscal position of the state—a rise in public expenditure after the first oil crisis entailed increased tax burdens in both countries.

A particularly sharp rise in taxation in New Zealand (in comparison to Australia) occurred during the country’s second downturn.

Differences in the size of the public sector figure prominently in the analysis of the World Bank of the emergence of the trans-Tasman income gap. The measure by the World Bank of the size of the public sector in New Zealand and Australia is reproduced below – its figure 3.3.

Figure 3.3 Government expenditure in Australia and New Zealand, 1970–2002

In particular, the World Bank was concerned about the rapid growth in the size of the public sector in New Zealand while the size of the public sector was shrinking in Australia:

In 1977–82 Australia’s government expenditure rose more slowly than that of New Zealand (and in 1975–80 Australia’s expenditure was smaller than New Zealand’s by 13 percent of GDP.

Then, as relative economic growth declined in New Zealand, between 1987 and 1990 public expenditure increased by around 5 percent of GDP from the 1982–86 level. In the meantime, public expenditure in Australia fell by 4 percent of GDP.

As a result, the difference in the general government expenditure level between New Zealand and Australia increased to over 18 percent of GDP in 1987–90.

After 1990 and until 2002 government spending in New Zealand decreased steadily—from approximately 44 percent of GDP in 1990 to roughly 30 percent of in 2002.

In Australia this expenditure was maintained at an average of 25 percent of GDP over the same period (see figure 3.3 with highlighted periods of significant increases of government expenditures in New Zealand).

A spike in the size of state sector in the 1980s may explain a delay in productivity growing rapidly again, but the state sector in New Zealand is now smaller.

Indeed, figure 3.3 above shows that the public sector in New Zealand as measured by general government expenditure has fallen by a quarter in size, by 10 percentage points of GDP in a matter of seven years between 1990 and 1996. There should be rapid growth because of the greatly reduced crowding out by the state sector but that rapid growth is not there.

Figure 2 shows that GDP growth per working age New Zealander resumed at its trend rate of 2% after 1992. This resumption of growth was in conjunction with the decline in the size of public sector tax burden rather than after it. Figure 2 shows that there was no significant growth in real GDP per working age New Zealander from 1974 to 1992. New Zealand lost almost two decades of productivity growth. Real GDP per New Zealander aged 15-64 on a purchasing power parity basis dropped from equality with Australia up until 1974 to a 30 per cent gap by 1992.

Figure 2: Real GDP per New Zealander and Australian aged 15-64, converted to 2013 price level with updated 2005 EKS purchasing power parities, 1956-2012

Source: Computed from OECD Stat Extract and The Conference Board, Total Database, January 2014, http://www.conference-board.org/economics

There was no growth rebound when the burden of an oversized public sector was lifted. That is the greater puzzle. The World Bank did not address that greater puzzle. If there is a global pool of useful technological knowledge accessible at a low cost by suitably prepared people, what stops New Zealand from using this knowledge to grow faster until it catches-up with Australia and the USA?

Another puzzle for the World Bank is that it is using general government expenditure estimates by the OECD.

When tax revenue as a percentage of GDP is used to measure the size of the public sector and the burden on private sector initiative, figure 3 shows that the tax burden in the two countries is not that different and is in the low 30% range, not the 40% plus range as is suggested by the general government expenditure data in Figure 3.3.

Figure 3: tax revenue as a percentage of New Zealand and Australian GDP, 1965-2011

Source: OECD Stats

There are no 14 point gaps in tax burdens in figure 3 as suggested in the World Bank’s analysis. This is because the World Bank’s using general government expenditure shown in its figure 3.3 reproduced above.

A major conclusion about the causes of New Zealand’s poor growth performance in the last few decades should be robust to different measures of the size of the public sector, but it is not.

Economic reforms returned real GDP growth per New Zealander aged 15-64 from no growth from 1974 to 1992 to the previous two per cent trend rate from 1993. There was no sustained productivity growth rebound beyond 2 per cent growth a year for New Zealand to recover the lost ground in the 1980s and 1970s. That is the great puzzle that the World Bank did not address, much less solve.

1974 New York Times : Global Cooling Induced Climate Change To Kill Us All

Nasa reveals groundbreaking views of Earth | Daily Mail Online

017e11b32142e755ff36815f91bdc01e77fdaf0f c5c5c1f15bdf300fcbac6cb1957897a23d8db411 915bee82f5d4b696dbfc350ba26f0986b6004406 b4049e30c5f36b4369e339df5a8485a78509eabd

via Nasa reveals fifteen most groundbreaking views of Earth | Daily Mail Online.

Image

Papal assist aside, economics are the reason Cuba ditched Venezuela for America

JS Mill: The object of this Essay is to assert one very simple principle

Image

Dogs (and cats) are obligate carnivores

Image

Bjorn Lomborg on the costs of policies against global warming

Image

Belief And The Atomism Of Social Change

The Dish

by Will Wilkinson

Here is one of the most spectacular shifts in public opinion in our lifetime.

y0ffodnhgeejsgoevfw40w

What explains this?

Don’t ask the psychologist and social scientists who study political opinion. They don’t know.

One family of influential theories says that our political opinions are “motivated” by certain deep-seated emotional needs. According to one version, the “system justification theory” of Jon Jost, variation in the need to justify the status quo distribution of goods and power in society determines whether one has a broadly liberal or conservative worldview. In other versions of the needs-based theory, our opinions are said to be fixed by the degree to which we are or are not dominated by a need to preserve comforting illusions, or, alternatively, the need to manage uncertainty and fear.

A related line of inquiry posits that variations in political opinion arise from ingrained differences in personality and moral…

View original post 973 more words

Previous Older Entries

JONATHAN TURLEY

Res ipsa loquitur - The thing itself speaks

(macro)Economics live from London

Franck Portier's professional page

Catallaxy Files

Australia's leading libertarian and centre-right blog

Climate Audit

by Steve McIntyre

The Secret Barrister

Independent Blogger of the Year, The Comment Awards 2016 & 2017

Notes On Liberty

Spontaneous thoughts on a humble creed

Michael Sandberg's Data Visualization Blog

Getting people excited about their data one visual at a time™

StephenFranks.co.nz

A New Zealand lawyer, ex-MP, farmer and enthusiast for life opines on law, politics and the universe

Friends of Science Calgary

The Sun is the main driver of climate change. Not you. Not carbon dioxide.

Books & Boots

reflections on books and art

Legal History Miscellany

Posts on the History of Law, Crime, and Justice

No Punches Pulled

Laughter – the best medicine

The Dangerous Economist

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

Sex, Drugs and Economics

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

Economic Growth in History

Nuno Palma's economic and political history blog

The Logical Place

Tim Harding's writings on rationality, informal logic and skepticism

The Long Run

the EHS blog

The Undercover Historian

Beatrice Cherrier's blog

Vincent Geloso

Economics, History, Lots of Data and French Stuff

Climatism

Tracking Anthropogenic Climate Alarmism

Science Matters

Reading between the lines, and underneath the hype.

Point of Order

Politics and the economy

FREEcology

Libertarian environmentalism

Doc's Books

A window into Doc Freiberger's library

Newmark's Door

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

Media Myth Alert

Calling out media myths

Uneasy Money

Commentary on monetary policy in the spirit of R. G. Hawtrey

European Royal History

Exploring the History of European Royalty

Tallbloke's Talkshop

Cutting edge science you can dice with

Marginal REVOLUTION

Small Steps Toward A Much Better World

THE COLUMBOPHILE

The blog for those who LOVE Lieutenant Columbo...

The Risk-Monger

Let's examine hard decisions!

NOT A LOT OF PEOPLE KNOW THAT

“We do not believe any group of men adequate enough or wise enough to operate without scrutiny or without criticism. We know that the only way to avoid error is to detect it, that the only way to detect it is to be free to inquire. We know that in secrecy error undetected will flourish and subvert”. - J Robert Oppenheimer.

STOP THESE THINGS

The truth about the great wind power fraud

Trust, yet verify

Searching for the missing pieces of climate change communication

Roger Pielke Jr.

professor, author, speaker

commentisfreewatch.wordpress.com/

Promoting fair and accurate coverage of Israel

Economics in the Rear-View Mirror

Archival Artifacts from the History of Economics

%d bloggers like this: