Celebrating humanity's flourishing through the spread of capitalism and the rule of law
21 Nov 2014 Leave a comment
in applied price theory, applied welfare economics, comparative institutional analysis, constitutional political economy, election campaigns, liberalism, macroeconomics, Marxist economics, political change, politics - Australia, politics - New Zealand, politics - USA, public economics, technological progress Tags: free trade, globalisation, market augmenting governments
Politicians can’t be heroes any more. Instead, they have to operate within the tightly drawn tramlines of the global economy.
This is true for those on the left and the right, but the pressure that this places on countries to adopt a low-tax, light-regulation regime is something with which the right is far more comfortable.
via It’s not just Ed Miliband. Labour’s on the wrong side of history » The Spectator.
18 Nov 2014 1 Comment
in business cycles, economic growth, geography, global financial crisis (GFC), great recession, macroeconomics, politics - Australia, politics - New Zealand Tags: lost decades, prosperity and depression
Figure 1: Real GDP per New Zealander and Australian aged 15-64, converted to 2013 price level with updated 2005 EKS purchasing power parities, 1956-2013, $US
Source: Computed from OECD Stat Extract and The Conference Board, Total Database, January 2014, http://www.conference-board.org/economics
Figure 1 shows that New Zealand lost two decades of growth between 1974 and 1992 after level pegging with Australia for the preceding two decades.
New Zealand returned to trend growth between 1992 and 2007. New Zealand did not make up the lost growth of the previous two decades to catch up to Australia.
Figure 2: Real GDP per New Zealander and Australian aged 15-64, converted to 2013 price level with updated 2005 EKS purchasing power parities, 1.9 per cent detrended, base 100 = 1974, 1956-2013, $US
Source: Computed from OECD Stat Extract and The Conference Board, Total Database, January 2014, http://www.conference-board.org/economics
In Figure 2, a flat line equates to a 1.9% GDP annual growth rate; a falling line is a below trend growth rate; a rising line is an above 1.9% growth rate.
Figure 2 shows that there was a 34% drop against trend between 1974 and 1992; a return to trend growth and slightly better between 1992 and 2007; and then a recession to 2010.
Australia had its ups and downs since 1956 but essentially grew at the trend growth rate of 1.85% since 1970. The so-called resources boom in Australia does not show up in Figures 1 or 2.
There was no growth rebound in New Zealand to recover the lost ground, either in the lost decades between 1974 and 1992, or after the Global Financial Crisis. The strong GDP growth in Australia after that Keating recession in 1991 is an example of the country recovering lost ground after a recession – See Figure 2.
A trend growth rate of 1.9% is the 20th century trend growth rate that Edward Prescott currently estimates for the global industrial leader, which is the United States of America.
17 Nov 2014 Leave a comment
16 Nov 2014 Leave a comment
in liberalism, politics - New Zealand Tags: 2014 New Zealand general election, green party, Leftover Left
A rather good analysis of the abysmal failure of the green party in the 2014 New Zealand election to increase its party vote despite the disastrous result of its main rival for left-wing votes.
Two-thirds of New Zealand gave their party vote to non-left-wing parties.
16 Nov 2014 Leave a comment
in income redistribution, liberalism, politics - New Zealand, Public Choice, public economics Tags: tax burdens, tax incidence
14 Nov 2014 Leave a comment
in constitutional political economy, political change, politics - Australia, politics - New Zealand, politics - USA, Public Choice Tags: george stigler, Leftover Left, Milton Friedman, neoliberal conspiracies, public choice, Twitter left, Tyler Cowen
Tyler Cowen has drawn attention to a 2011 paper on policy learning in the 1970s and 80s by Francisco J. Buera, Alexander Monge-Narajo, and Giorgio E. Primiceri was published in Econometrica in 2011. Their paper found that:
1. Policymakers have priors about how good the market economy is, and they revise those views — and thus revise policy — as they observe their own growth results and those of their neighbors.
2. A simple learning model predicts about 97% of the policy choices observed in the data. The model accounts for more than 77% of the observed policy switches over a three-year time window.
3. Evolving beliefs — and not just the fixed demographic characteristics of countries — are critical for understanding policy decisions.
4. It was probably the growth collapse of the late 1970s for interventionist countries which led to a greater reliance on markets.
5. Adjustment toward better-performing policies is often quite slow. In part this is because policymakers attribute the superior performance of other countries to heterogeneity rather than policy per se.
This record of politicians learning from failure and success at home and abroad is a vindication of George Stigler’s views of the relative unimportance of economists in influencing public policy.
There was no neoliberal conspiracy that captured the hearts and minds of politicians through mass hypnosis in the 1970s and 1980s as both the Left over Left and the Twitter Left like to suggest
The policies of Friedman had to wait, as George Stigler predicted, for a market to develop among interest groups and the voting public. Once that market developed, Milton Friedman, FA Hayek and others looked like leaders of an opinion.
A few years earlier, Friedman and Hayek were just angry men in the wilderness.
The reason for this sudden change in their public profile and purported influence on the shape the course of public policy in th 1970s and 1980s onwards was political parties were yet to conclude that the existing policy regime had failed irretrievably, and that the successes of neighbours on economic reform might be worth imitating locally.
Once politicians, the voting public and interest groups concluded that new solutions are needed, just as Stigler predicted, the ideas for reform been around for a long time came to the front.
via http://marginalrevolution.com/marginalrevolution/2014/11/learning-the-wealth-of-nations.html
14 Nov 2014 Leave a comment
in comparative institutional analysis, liberalism, Marxist economics, politics, politics - Australia, politics - New Zealand, politics - USA, technological progress Tags: Leftover Left, Twitter left
12 Nov 2014 Leave a comment
in labour economics, politics - New Zealand, poverty and inequality, welfare reform Tags: poverty and inequality, The Great Enrichment
12 Nov 2014 1 Comment
in environmental economics, global warming, politics - New Zealand, politics - USA Tags: climate alarmism, expressive voting, global warming, international environmental law, international law, international trade law, Leftover Left, preferential trading agreements
The United States and China have unveiled a secretly negotiated deal to reduce their greenhouse gas output, with China agreeing to cap emissions for the first time and the US committing to deep reductions by 2025. Jointly announced in Beijing by President Obama and President Xi Jinping, includes new targets for carbon emissions reductions by the United States and a first-ever commitment by China to stop its emissions from growing by 2030.
https://twitter.com/CearaProut/status/531251207033982977
Will protestors take to streets about the secrecy that proceeded the negotiation of this international agreement?
The Left over Left picks and chooses the international law that it champion:
12 Nov 2014 2 Comments
in industrial organisation, Marxist economics, politics - New Zealand, public economics Tags: privatisation, state owned enterprises
In a Briefing to the Incoming Minister just released, the Treasury said that in 2013, total shareholder return from state owned enterprises to the taxpayer was just 3 per cent. This is a little bit better than leaving the money in the bank.
Note: KiwiRail is excluded because of significant changes in its valuation methodologies over the past few years, including the significant write down in its asset values in 2012. . Total shareholder return for 2012 has been restated to include Solid Energy.
KiwiRail lost $248 million in 2013, after a $174.4 million loss a year earlier. Solid Energy lost $182 million last year last year. This $182m loss follows a $335.4m loss in the June 2013 year and a $40m loss the year before that.
08 Nov 2014 1 Comment
in politics - Australia, politics - New Zealand Tags: Leftover Left, The withering away of the Labour Party, the withering away of the proletariat
John Quiggin made an interesting point the other day that explains why the Australian Labor Party caucus is no longer the cream of the working class:
In 1945, the largest single occupational group in Australia (and an archetypal group of Labor supporters) were railwaymen (there were almost no women in the industry).
By the 1970s, the largest occupational group, also becoming the archetypal group of Labor supporters. were schoolteachers.
Quiggin was not making the point I am making, but his data was instructive.
The traditional labour voter of days gone by was socially conservative, fiscally conservative, strict on educational standards and believed in hard work, self-improvement and being frugal. They agreed with Dalton Trumbo who said:
I never considered the working class anything other than something to get out of.
08 Nov 2014 Leave a comment
in labour economics, labour supply, politics - New Zealand, public economics, taxation, welfare reform Tags: effective marginal tax rates, tax – welfare system interactions
There are 3.38 million individual taxpayers. Of these, about 120,000 (3.4 percent) face EMTRs over 60%, 120,000 (3.4 percent) face EMTRs between 50% and 60%, and 160,000 (4.5 percent) face EMTRs between 40% and 50%. Slightly more than 88 percent of taxpayers face EMTRs below 40%.
HT: New-Zealand-tax-system-and-how-it-compares-internationally
07 Nov 2014 Leave a comment
in economics of bureaucracy, health and safety, politics - New Zealand, Public Choice Tags: economics of natural disasters, expressive voting, health and safety, Taxpayers Union, Wellington City Council
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