Donal Curtin

Donal Curtin is a macroeconomist (former chief economist for a big bank), writer (six years as a financial journalist with Euromoney, award-winning economics columnist, blogger), economic regulator (12 years on the Commerce Commission). He has an economics consultancy based in Auckland and blogs for The Dismal Science. Donal is on Twitter @donal_curtin

An economist chooses his favourite books of 2016 - The Dismal Science

Dec 18, 2016

Surrounded by “isn’t it awful”, “the world is going to the dogs” types? Here are two antidotes: Nobel laureate Angus Deaton’s The Great Escape: Health, Wealth and the Origins of Inequality and Johan Norberg’s Progress: Ten Reasons to Look Forward to the Future. Both document the immense progress made in the past three hundred years by large parts of the world on multiple fronts – not just in living standards, but also in health, longevity, literacy, freedom, peace and global equality. Deaton’s book in particular will remind you that a prime reason many poor countries have missed out is political: they are kleptocrat tyrannies (another reminder, if you haven’t yet, to read Acemoglu and Robinson’s Why Nations Fail), which is one of the reasons why Deaton is critical of foreign aid (it keeps the Mugabes going). He’s … Read More

Productivity Commission: Good ideas – but now what? - The Dismal Science

Nov 29, 2016

Yesterday’s report from the Productivity Commission, ‘Achieving New Zealand’s Productivity Potential’ (press release here, overview here, whole thing here), is full of good ideas. In the housing market, for example, their proposals would have the happy outcome of pressing both the equity and efficiency buttons at once. In addition to dealing to people sleeping in cars, a better functioning market would lift productivity: “A housing market that responds to demand pressures facilitates labour mobility and improves productivity by allowing firms access to a deeper labour market, as well as more opportunities for specialisation, innovation and technology spillovers. For workers, being able to live in places where their skills are most valued improves their incomes” (p65). The Commission is big enough and bad enough to push its own barrow, so I’m not going to recycle its … Read More

Budget 2016: No drama – and that’s fine - The Dismal Science

May 26, 2016

First thing I’d say about yesterday’s Budget is that I hope the central economic forecasts work out as expected. If we do indeed get annual economic growth of close to 3% a year, low inflation, and the unemployment rate gradually falling to 4.6% by 2019, we’ll be doing quite nicely, thank you. The growth numbers aren’t as hot if you do them on a per capita basis, as you really ought, but even so 1.3% a year isn’t too shabby. And a 4.6% overall unemployment rate does a power of good for getting more marginal groups into employment. The Budget is one of the few places where people can get some sort of feel for what is likely to happen to business profits in coming years: we don’t yet have a Statistics NZ measure (most other countries do), but fortunately … Read More

A once in a generation opportunity - The Dismal Science

Mar 10, 2016

I’m going to be talking about infrastructure, but first let’s detour back to August 1968. President Johnson is waging the Vietnam War, the Warsaw Pact forces have invaded Czechoslovakia. In Dublin I have just turned 17, and I’m hoping that José Feliciano’s Come on baby light my fire will encourage one of the prettier girls from St Louis Rathmines to have a slow dance with me (it won’t). And on August 19, 1968 this concrete power pole was manufactured: the date was inscribed in the concrete by someone at the (unidentified) factory. It’s one of Vector’s, and it’s on Albany Heights Road in Auckland. It’s a fine example of how infrastructure can be a great, enabling investment. It’s not just that this pole has been giving good service for 47 years already and, based on manufacturers’ blurbs and various … Read More

Visit to a Special Housing Area - The Dismal Science

Nov 27, 2015

A while back, I saw that a Special Housing Area (SHA) had been set up quite close to us, in Browns Bay. So I went and had a nosey, as you do. It wasn’t what I’d expected, from a number of perspectives. I’d had at the back of my mind that SHAs would be reasonably substantial sites – it’s rather implicit in the term ‘area’, you’d think – so I was somewhat surprised that the SHA consisted of a single, small to medium sized commercial building at 4 Bute Road (pictured below). To be fair to Auckland Council, this must be an unusually small SHA. Their guidelines for approving SHAs say (at point 5) that “The council has a preference for SHAs with a yield of at least 50 dwellings”, and this one just scrapes in. The Council’s … Read More

When network effects go bad - The Dismal Science

Nov 23, 2015

“Final Mail Newsletter”, says the December 2015 issue from a chap I buy stuff from. “Due to the increased costs of postage and decreased service from NZ Post this will be the final newsletter that you will receive via post. From 2016 the Monthly Newsletter will be sent out by email”. Nothing new there, you might think: that’s how it is these days. And yet it says some important things about monopolies and network industries. One is that we tend to assume that monopolies, and especially those ‘natural’ monopolies, are a fixture that we’re lumbered with. There’s only ever going to be one national grid for electricity transmission, only one network of letterboxes and post offices. And with that mindset comes at least some disposition towards regulation – if nothing’s going to relieve us any time soon from our vulnerability … Read More

Who’s been ‘buying up’ New Zealand? - The Dismal Science

Sep 26, 2015

There’s a huge interest in foreign investment in New Zealand – it’s front page news when Chinese investors aren’t allowed to buy farms, or Asian investors are supposedly snapping up Auckland houses, and the piece I wrote about Statistics NZ’s data on foreign direct investment has had by far the biggest number of pageviews of anything I’ve written recently. Yeah, yeah, yeah, I know, they’re not Krugmanesque numbers, but still. Yesterday Stats released an update to the numbers, showing the situation at the end of March ’15 (the spreadsheet with the numbers is here). First, here’s the total stock of foreign direct investment in New Zealand, which includes the likes of those farms.   One country overshadows everybody else. Australia has more invested here ($51.4 billion) than the rest of the world put together ($48.2 billion). Read More

A good idea finally gets the nod - The Dismal Science

Aug 29, 2015

First, the good news. On Thursday Paul Goldsmith, the Minister of Commerce and Consumer Affairs, announced a welcome change to New Zealand’s anti-dumping regime. In future, the plan is, domestic producers won’t be able to have cheap peaches or tomatoes or building materials shut out of the New Zealand market unless they can show that the damage to them is more than the damage to New Zealand consumers. Which it often won’t be: there’s only a  few of them, and there’s lots of us. A process that has been much abused for protectionist reasons, both here and abroad, is finally getting defanged. But why has it taken so long? The Ministry of Business, Innovation and Employment, MBIE, first came up with options for changing the anti-dumping regime in the middle of last year: I wrote about them last … Read More

Lifestyles: our beliefs and behaviours - The Dismal Science

Aug 26, 2015

Bryce Edwards’ Twitter feed pointed me towards an interesting new piece of research from the Lifestyles Research Group at the University of Otago – ‘Change, Challenge and Choice: A New Zealand Consumer Lifestyles Study’. It’s an interesting insight into our collective beliefs and behaviours, and rings true, sometimes almost archetypically: I was amused to see that one of the statements New Zealanders most disagree with is “I keep my wardrobe up to date with fashion”. This is the sixth instalment of what is now becoming a pretty impressive longitudinal survey (dating back to 1979). The guts of it is a derivation of seven different consumer segments, based on cluster analysis of quite a large survey sample (2,036) and a large number of questions (almost 600). Here is the key result: there’s more detail on each segment in the … Read More

29th is not good enough – neither is 27th - The Dismal Science

Aug 07, 2015

I'd no sooner posted a piece on our relatively poor infrastructure than I discovered that Ireland's National Competitiveness Council had come out with its latest annual assessment (pdf) of Ireland's competitiveness.

It picked up on exactly the same point: as it happens, Ireland scores almost exactly the same as us (a global 27th for them, a global 29th for us) on the perceived quality of infrastructure. Here's how the Irish showed the picture from their perspective: they happened to include us in their graph.

It's interesting to see that the rating of Ireland's infrastructure has improved, for a mixture of good and unfortunate reasons: "Perceptions about the quality of Ireland’s infrastructure have improved since 2010, reflecting both the impact of a decade or more of investment, and the reduced capacity constraints as a result of the economic downturn" (all quotes are from p17 of the report). Ours is also better than five years ago, but only slightly. Despite the Irish improvement, "Ireland, however, still lags behind the OECD average and scores significantly less than leading performers", and the same is true for us.

The Irish policy conclusion, which I think applies with equal force to us, was
As the economy continues to improve, further investment growth is forecast for 2015. However,projected public investment levels are insufficient to address the emerging infrastructural needs of a growing economy and population, particularly as a significant proportion of public funds will be absorbed in maintaining the existing stock, leaving less funding available for new investment. While recognising the importance of maintaining sustainable public finances, further additional targeted investment is urgently required to address constraints which could undermine the economy’s growth prospects, dampening productivity growth, increasing costs, and weakening Ireland’s attractiveness as an investment location (for both foreign and indigenous investors). To achieve the improvements required, prioritisation will be required such that over the medium term, investment is directed to those areas of the economy which can have the greatest impact upon competitiveness. It is critically important to put in place the appropriate policy and regulatory frameworks to facilitate this targeted approach.
Speaking of those "appropriate policy and regulatory frameworks", I discovered from Joel Mokyr's history of the Industrial Revolution, The Enlightened Economy, that the Birmingham Canal was authorised by Act of Parliament in 1768 and completed in 1772. I looked it up here: it was some 22.5 miles (36 kilometres) long, and took only 13 months from the first public meeting to regulatory approval. The first 10 miles were built in only 18 months, and the whole thing from approval to completion took four and a half years.

I seriously doubt we could match that today.