The Liberals’ Version of Book Burning
23 Apr 2017 Leave a comment
in liberalism, Public Choice Tags: political correctness
France’s presidential election: A populist front
21 Apr 2017 Leave a comment
in Public Choice Tags: 2017 French elections
Making trouble again for @stevenljoyce for @TaxpayersUnion
21 Apr 2017 Leave a comment
in applied price theory, applied welfare economics, industrial organisation, international economics, politics - New Zealand, Public Choice, rentseeking, survivor principle Tags: picking winners
The Dutch disease for the benefit of #GarethMorgan @stevenljoyce
18 Apr 2017 1 Comment
in applied price theory, applied welfare economics, economic history, industrial organisation, international economics, politics - New Zealand, Public Choice, rentseeking, survivor principle Tags: Dutch disease, export subsidies, picking winners
I am putting in a Official Information Act request to see if anyone advise ministers that a export promotion target results in a matching increase in imports along with a large appreciation in the New Zealand dollar. Did New Zealand dodge the Dutch disease from this foolhardy export promotion policy? The Dutch Disease story is one of sectoral shifts.
In the 1960s, with fixed exchange rates under the Bretton Woods system, the Netherlands discovered off-shore natural gas. As natural gas was extracted, it increased domestic income and spending. Investment was redirected toward the natural gas sector. Dutch wages and prices began to rise gradually. The Dutch guilder became overvalued in real terms, their industrial products became uncompetitive, and the manufacturing sector shrunk. This phenomenon of de-industrialization in the presence of rich natural resources was called the Dutch disease. They got natural gas but lost manufacturing.
In the late 1970s and early 80s, the UK experienced similar de-industrialization under a floating exchange rate regime. They discovered and exploited the North Sea oil fields. Since the global oil price was rising, the UK was expected to earn a great amount of foreign exchange in the future. But even before these earnings were realized, the British pound appreciated suddenly in both nominal and real terms. This damaged the British manufacturing sector.
Source: MF model – float
If there is an increasing demand for New Zealand exports if the Business Growth Agenda target of increasing New Zealand exports was successful, there is an increase in demand for New Zealand dollars to pay for these exports. This will result in an appreciation of the New Zealand dollar making imports cheaper. This will switch demand for New Zealand competing industries to these imports.
This process of currency appreciation and expenditure switching will continue until export match exports again. There is nothing wrong with an export boom as long as it is based on comparative advantage rather than subsidies.
Marxism Explained in 2 Minutes, with Deirdre McCloskey
17 Apr 2017 Leave a comment
in applied price theory, development economics, economic history, history of economic thought, Marxist economics, Public Choice Tags: Deirdre McCloskey
Here Comes Supersonic Flight: The Rebirth of a Former White Elephant
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in applied price theory, economic history, industrial organisation, politics - USA, rentseeking, survivor principle, transport economics Tags: corporate welfare, picking winners
The psychology behind globalism, nationalism & political tribalism – Jonathan Haidt
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Corruption, Rent Seeking and Multiple Equilibria
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in applied price theory, constitutional political economy, development economics, economics of bureaucracy, growth disasters, growth miracles, income redistribution, law and economics, Public Choice, rentseeking Tags: The Great Escape
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