The introduction of the GST in 1986 led to a major change in the New Zealand tax mix. There was no offsetting income tax cuts.
Source: Tax – Tax on goods and services – OECD Data and Tax – Tax on personal income – OECD Data.
The impact of the 1986 GST on the New Zealand tax mix since 1965
17 Mar 2016 Leave a comment
in economic history, politics - New Zealand, public economics Tags: growth of government, GST, income tax, size of government, taxation and labour supply, VAT
Combined federal, state and local company tax rates across the OECD, 2015
17 Mar 2016 Leave a comment
in politics - New Zealand, public economics Tags: British economy, company tax rate, optimal tax theory
Britain will have the 2nd lowest company tax rate across the OECD by 2020. The 2016 British budget announced overnight reduces the tax to 17% by 2020.
Source: OECD Stat Table II.1. Corporate income tax rate.
New Zealand physical and human capital (by a skill level), 1986 – 2001
17 Mar 2016 Leave a comment
in applied welfare economics, economic history, economics of education, entrepreneurship, human capital, labour economics, politics - New Zealand, poverty and inequality Tags: pension fund socialism, top 1%, Withering away of the proletariat
New Zealand working class is wealthier than the entire capitalist class. Their human capital, shown in the chart below as the human capital of the unskilled and non-degree workers, far exceeds the value of the physical capital stock of New Zealand.
Source: Lˆe Thi. Vˆan Tr`ınh, Estimating the monetary value of the stock of human capital for New Zealand, University of Canterbury PhD thesis (September 2006).
Only part of this physical capital stock is owned by the capitalist class given we live in the era of pension fund socialism. About a 3rd of that physical capital stock is owner occupied homes.
Source: Lˆe Thi. Vˆan Tr`ınh, Estimating the monetary value of the stock of human capital for New Zealand, University of Canterbury PhD thesis (September 2006).
The only reason that the share of unskilled and non-degree workers is in any way declining is the withering away of the proletariat. More and more people are joining the middle-class and going on to higher education.
Andrew Little is looking to update Labour's definition of the 'working class': stuff.co.nz/national/polit… http://t.co/AQ9mJL7CQf—
NZ Stuff Politics (@NZStuffPolitics) November 30, 2014
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The value of New Zealand owner occupied homes, net capital stock and human capital stock since 1987
17 Mar 2016 Leave a comment
in applied welfare economics, economic history, economics of education, entrepreneurship, human capital, labour economics, politics - New Zealand, poverty and inequality, urban economics Tags: household wealth, housing prices, pessimism bias, top 1%
Tring Le found that the human capital stock was consistently 2.6 times the value of the physical capital stock of New Zealand.
I decided to apply that ratio to the net capital stock of New Zealand estimates of Statistics New Zealand back to 1987 to see what we get. It is pretty standard for the value of human capital to be two to two and one-half times the value of physical capital.
Source: National Accounts (Industry Benchmarks): Year ended March 2013 and Lˆe Thi. Vˆan Tr`ınh, Estimating the monetary value of the stock of human capital for New Zealand, University of Canterbury PhD thesis (September 2006), Table 4.8: Human and physical capital stocks.
All the above chart says it is most wealth in New Zealand is held by ordinary people either as their human capital or the value of their homes.
@BernieSanders lies more often than @HillaryClinton
16 Mar 2016 Leave a comment
in economics of media and culture, politics - USA
The presidential scorecards so far @realdonaldtrump
16 Mar 2016 Leave a comment
in economics of media and culture, politics - USA
% of New Zealand mortgages that were fixed and floating since 2004
16 Mar 2016 Leave a comment
in economic history, economics of information, economics of regulation, monetary economics, politics - USA Tags: antimarket bias, libertarian paternalism, monetary policy, mortgage interest rates, New Zealand Labour Party, Other people are stupid fallacy, rational irrationality, The fatal conceit, The pretence to knowledge
Despite the best efforts of the libertarian paternalists to sell the other people are stupid fallacy, ordinary New Zealanders are quite nimble at moving between fixed and floating rates depending upon their forecasts of the future of interest rates. Price controls on floating rate mortgages, as suggested by the New Zealand Labour Party, would make this more difficult, not easier.
Source: S8 Banks: Mortgage lending ($m) – Reserve Bank of New Zealand.
The explosion of lead in the saddlebags of trade agreements @KennedyGraham @DavidShearerMP #TPPANoWay
16 Mar 2016 Leave a comment
in economics of bureaucracy, international economic law, international economics, law and economics, politics - New Zealand, property rights, Public Choice, rentseeking Tags: crony capitalism, customs unions, free trade agreements, international investment law, investor state dispute settlement, preferential trading agreements
Percentage of fixed and floating mortgages in New Zealand
16 Mar 2016 Leave a comment
in economics of regulation, industrial organisation, monetary economics, politics - New Zealand Tags: antimarket bias, mortgage interest rates, New Zealand Greens, New Zealand Labour Party, price controls, rational irrationality
I did not know so many people were on a fixed rate mortgage. Labour is risking its economic credibility on regulating the rates for a minority of mortgages.
Source: S8 Banks: Mortgage lending ($m) – Reserve Bank of New Zealand.
Capped mortgages cannot be linked to the current official cash rate of the Reserve Bank of New Zealand because they are based on expected future interest rates over an up to 5 year span, not current interest rates.
An important motivation for going onto a floating rate is you can repay faster. Fixed rate mortgages have penalties for early repayment.
Source: Price Controls: Price Floors and Ceilings, Illustrated.
In consequence, price controls linking floating rate mortgages to the official cash rate of the Reserve Bank would benefit better off mortgagees expecting to repay quickly. A typical policy of the modern Labour Party.
@TheDailyBlogNZ just does not understand why @JohnKeypm is popular and beats them
16 Mar 2016 Leave a comment
in economics of media and culture, politics - New Zealand Tags: Attack Ads, Key derangement syndrome, media bias, Ronald Reagan
The latest example of Key derangement syndrome, a photo essay, reminded me of a story about some prime time TV network current affairs coverage of Ronald Reagan early in his first term. It was a long piece arguing that he was not a very good president.
The White House communications director Mike Dever rung up the journalist and thanked him for the coverage. The journalist did not understand why did not understand why.
Dever said that collection of TV clips they put together were excellent – some of the best they have seen. They showed Reagan meeting congressional leaders, business, the public and foreign leaders. Dever said the only thing that the public will remember is the images of Reagan as a hard-working world leader but still a man of the people.
New Zealand bank market shares in mortgage and other lending, 2015
15 Mar 2016 Leave a comment
in financial economics, industrial organisation, law and economics, monetary economics, politics - New Zealand Tags: competition law, competition policy, economics of banking, state owned enterprises
New Zealand Post (incl. Kiwibank) dividends
15 Mar 2016 Leave a comment
in industrial organisation, monetary economics, politics - USA, public economics Tags: economics of banking, government ownership, KiwiBank, network industries, New Zealand Greens, New Zealand Post, rational irrationality, state owned enterprises
Source: New Zealand Treasury – data released under the Official Information Act.
Profit rates of New Zealand banks, 2015
15 Mar 2016 Leave a comment
in industrial organisation, law and economics, monetary economics, politics - New Zealand, survivor principle Tags: competition law, competition policy, economics of banking, state owned enterprises
@toddmcclaymp #MFAT hasn’t heard of trade diversion? @DavidShearerMP #TPPANoWay @KennedyGraham
15 Mar 2016 Leave a comment
in economics of bureaucracy, international economics, politics - New Zealand, Public Choice, rentseeking Tags: customs unions, free trade agreements, preferential trading agreements, TPPA, trade creation, trade diversion
Trade diversion occurs when preferential trading agreements cause imports to shift from low cost countries to higher cost countries. Rather than gaining tariff revenue from inexpensive imports from world markets, a country may import expensive products from member countries but not gain any tariff revenue. An example of trade diversion is when Britain closed its doors to New Zealand agricultural exports after joining the common market.
Preferential trading agreements are trade agreements between countries in which they lower tariffs for each other but not for the rest of the world. The mass media mislabel them free trade agreements.
Under trade diversion, the partner country benefits from this change as an exporter, but the importing country loses due to this higher cost, as does the third country whose exports fall.
The loss to the importing country is not visible to consumers, who find the higher-cost product cheaper due to the absence of tariff. The country as a whole loses, with that loss being lost tariff revenue – lost to cover the cost of the higher cost imports from a member of the new preferential trading agreement.
It does not take much trade diversion to make a preferential trading agreement welfare reducing because of this switch to high cost producers.
The New Zealand Minister of Trade and the Ministry of Foreign Affairs and Trade did not discuss this major risk even from the simplest preferential trading agreement in recent policy analysis of the TPPA as my Official Information Act request has revealed. The term trade version does not appear in any of their analysis.
Adherents of the natural trading partner hypothesis argue that preferential trade agreements are more likely to improve welfare if participating countries already trade disproportionately with each other. Opponents of the hypothesis claim that the opposite is true: welfare gains are likely to be greater if participating countries trade less with each other. The powerful critique by Bhagwati and Panagariya (1996) is now widely accepted and one hears little justification of on preferential trading agreements on the grounds of the natural trading partners hypothesis
Brian Easton on whether inequality has risen in the past 20 years in New Zealand
14 Mar 2016 Leave a comment
in economic history, politics - New Zealand, poverty and inequality
Source: Brian Easton (14 March 2016) Do inequality and poverty matter? | Pundit
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