Michael Reddell

Natural resources: Norway and the UK - The Dismal Science

Mar 31, 2017

The contribution of natural resources to the prosperity of nations is much-debated.   There is little doubt that a) natural resources can be wasted, mismanaged etc, such that a country well-provided for by nature still ends up pretty poor (Zambia is my favourite example, partly because I worked there), and b) that it is perfectly feasible for some countries to do very well indeed with little in the way of natural resources (one could think of Singapore or Japan, but also Belgium or Switzerland).    The quality of the human capital of the people in a place, and the “institutions” that are put in place or sustained, make a huge difference.   Location looks as though it might matter too. But equally, it is easy to think of countries where it is pretty clear that natural resources have made a great deal of … Read More

What does the OECD really have to offer us? - The Dismal Science

Mar 24, 2017

The Organisation for Economic Cooperation and Development (OECD) is often loosely described as “the rich countries club”.  It isn’t an entirely accurate description –  there are several high income oil exporting countries who don’t belong (as well as places like Singapore and Taiwan), and some countries that are members (notably Mexico and Turkey) aren’t particularly high income.     But it is a grouping of mostly fairly advanced fairly open economies (New Zealand’s been a member since 1973).   And the organisation claims to be able to offer useful advice to countries as to how to improve their economic performance.  I’ve become increasingly sceptical of that proposition, especially as regards New Zealand. On a biennial cycle the OECD’s Economic and Development Review Committee (EDRC) meets in Paris to review each member country’s overall economic performance, and offers some specific advice both on general economic management … Read More

Are experts really being ignored? - The Dismal Science

Feb 20, 2017

A few months ago, I wrote a post on the role of “experts”, responding to a British journalist and author’s lament for the apparent willlingness of voters/societies to downplay, or even dismiss, the role of experts when it comes to making significant public policy decisions. In his column in yesterday’s Sunday Star-Times, local economist Shamubeel Eaqub returns to the theme. Experts are increasingly side-lined. Political leaders openly ridicule them and the public emphatically ignore their advice when voting. Our public servants at Treasury must have identified – “yes, someone feels our pain” – even unusually taking to Twitter over the weekend to draw attention to Eaqub’s column. I’m not sure when this golden age was, when “experts” apparently held sway with voters. I can’t think of a time in New Zealand, or British, history and although I know the … Read More

Brexit, Trump and all that - The Dismal Science

Dec 14, 2016

Last week, The Treasury hosted a guest lecture featuring two visiting academics under the heading Brexit, Trump & Economics: Where did we go wrong.  One of the visitors –  Samuel Bowles, now a professor at the Santa Fe Insitute -had been around long enough that in his youth he had served as an economic adviser in Robert Kennedy’s presidential campaign,  and at other times as an economic adviser to the Castro government in Cuba.  The other –  Wendy Carlin –  is a professor of economics at University College, London. When the invitation went out, I was rather puzzled by the title?  Who was this “we” that apparently “got things wrong”?    After all, I was –  and remain –  keen on Brexit, and will recall for a long time the thrill of that June Friday afternoon as the results rolled in.  … Read More

Steven Joyce as Minister of Finance - The Dismal Science

Dec 08, 2016

Bill English is reported to have the numbers to become leader of the National Party and, thus, our next Prime Minister.  And if does succeed in that quest he has indicated that Steven Joyce will become the Minister of Finance. That news had me digging out a couple of posts I’d written this year on Mr Joyce’s comments and claims.  He has been Minister of Economic Development for some years –  years in which, as throughout the term of this government, there has been no progress towards closing the large productivity gaps with other advanced countries. In fact, over the last four years official statistics suggests New Zealand has had no productivity growth at all. In a post in April I posed A Question for Steven Joyce after an interview in which as Science and Innovation minister he argued for even … Read More

Key’s legacy – an economist’s view - The Dismal Science

Dec 06, 2016

Perhaps nothing became John Key more than the manner of his departure.  Tired –  “nothing left in the tank” –  and admirably unwilling to go into an election year and lie about his willingness to serve another full term, or to just struggle on, he chose to walk away instead. It is rare for political leaders to leave voluntarily when they are well, undefeated, and not facing any serious internal challenge.  Harold Wilson (in the UK) and Calvin Coolidge are two who spring to mind.  Enoch Powell’s maxim was that: “All political lives, unless they are cut off in midstream at a happy juncture, end in failure, because that is the nature of politics and of human affairs.” John F Kennedy and Norman Kirk were examples of leaders cut off in their prime, and reputations shaped for decades by the combination of their short … Read More

Thoughts prompted by Cuba - The Dismal Science

Nov 28, 2016

Fidel Castro is dead.  Sadly, the same can’t be said for the brutal regime that has controlled Cuba for 57 years now –  the regime that suppresses speech, religion, and the exercise of democratic freedoms that we take for granted; the regime that executed thousands of its political opponents and which, to this day, imprisons many of those brave enough to stand against it; the regime that suppresses free economic activity; the regime that actively tries to stop its own people leaving. There have been plenty of awful Latin American regimes in the last 100 years or so, but fortunately most of the worst have now passed into history.  But not the Cuban regime.  I won’t rejoice in anyone’s death, but consider what type of man this was:  Fidel Castro had enthused about the idea of a nuclear attack on … Read More

US Election: We’re still here - The Dismal Science

Nov 10, 2016

For the last 24 hours, the US election has been much much more interesting that anything New Zealand-related that I might have written about.   Even my 10 year old came home from school yesterday telling me that her class had been following the early results intensely, even if (she reported that) some of the offspring of liberal Island Bay had apparently somehow become convinced that Donald Trump would soon be bombing New Zealand. I wasn’t a Trump or Clinton supporter going into the election, and am pretty sure that if I’d been American I’d have voted for neither of them (although one of the interesting things in the last few weeks had been the collapse of the third party candidates’ vote share).  I laid out some of my reasons on my other blog.  So unconfident was I in … Read More

Experts: harness them, don’t let them set the course - The Dismal Science

Oct 25, 2016

There was interesting long article in The Guardian the other day by Sebastian Mallaby, the author of a new biography of Alan Greenspan, on “The cult of the expert – and how it collapsed”.  His focus is central banking, but his concerns range much wider. For Mallaby, the (alleged) “collapse” of this “cult” is something to lament. Of course, when you are brought up the son of a former senior British ambassador, educated at Eton and Oxford, previously a columnist for the Financial Times and then the Washington Post, when you are married to the editor of The Economist, when your books are biographies of two prominent unelected figures – Greenspan and James Wolfensohn, former head of the World Bank –  and when your column is published in The Guardian –  house journal of the British left-liberal technocratic elite – such a lament might … Read More

Productivity growth: how have we been doing? - The Dismal Science

Oct 18, 2016

A few weeks ago I ran the chart below chart, showing quarterly real GDP per hour worked for New Zealand for the last decade or so.  I used an average of production and expenditure GDP, and Household Labour Force Survey (HLFS) hours worked data.  The rather dismal picture was of no productivity growth at all for the last few years. Comparable quarterly data isn’t readily available for a wide range of other countries, so for such comparisons one is forced back onto annual data from international databases such as the OECD’s. And the international agencies take a while to get a full set of annual data –  thus, New Zealand’s annual national accounts for the year to March 2016 (used as the basis for the OECD’s 2015 annual numbers) won’t be released until next month. We aren’t the only … Read More