Michael Reddell

What do the Brits have to be grumpy about? - The Dismal Science

Jun 22, 2016

UK voters go the polls tomorrow for the EU membership referendum.  Of the two polls of polls I follow, one has a very slight lead to the Leave side, and the other a very slight lead to Remain. You might have thought –  rightly –  that New Zealand’s productivity performance over recent years had been pretty poor.  But here is what happens if we add the United Kingdom to the chart of real GDP per hour worked (labour productivity) that I ran the other day. In their case, no productivity growth for eight years. But even cyclically the story isn’t all bad in the UK.  Take unemployment for example.  Going into the 2008/09 recession, the OECD reckons that if anything the UK had a slightly larger positive output gap than New Zealand did.  British labour market regulation seems … Read More

How has our population grown? - The Dismal Science

May 31, 2016

New Zealand’s population is estimated to have risen by 11.8 per cent in the last decade (much of it in the last three years). The starting point for that estimate is reasonably well-anchored: I used the population numbers for the March quarter of 2006, and the 2006 Census happened in that month. The end-point (March 2016) is only a Statistics New Zealand estimate, which will be recalibrated after the next census.  But for now it is what we have. The high-level breakdown of where the population growth came from. Net migration accounts for about 35 per cent of the total increase.  But even at very high level, this chart somewhat misrepresents the picture.  Many migrants are of child-bearing age, and some of the natural increase will itself have resulted from the net migration flows of New Zealanders and foreigners (both those … Read More

The Herald’s wrongheaded call for an ever-bigger population - The Dismal Science

May 28, 2016

The Herald’s editorial on Saturday was headed “Population growth is powering NZ economy”.  It isn’t just a statement of the rather obvious, that a rapid growth in the population –  particularly unexpectedly rapid growth – boosts total GDP.    When there are more people, they all need to consume stuff, and they need houses, schools, shops, roads, offices etc.  And unexpected surges in the population boost demand more, in the short-term, than they do supply.    But they don’t do anything much to boost sustainable per capita real GDP. That isn’t, of course, the Herald line.  Rather, channelling the Prime Minister, they assert that The population increase is helping to generate the growth in the economy that puts New Zealand ahead of most other and larger economies at present, which in turn makes it a magnet for yet more migrants, as well as … Read More

Diversity dividends? Maybe not - The Dismal Science

Apr 30, 2016

The belief that “diversity is good”, and probably “and more diversity is better” pervades our public debate.  Sometimes people just mean intellectual diversity, sometimes diversity of managerial style, sometime gender diversity, sometimes ethnic diversity, sometimes diversity of nationalities.  But too often is all lumped together in some amorphous mass.  Who, after all, would argue that diversity might not always be good? Enthusiasm for diversity pops up all over the place.  The Secretary to the Treasury  –  often, it seems, something of a bellwether of elite sentiment –  has celebrated diversity and called for more of it (but Eric Crampton has cast significant doubt on Makhlouf’s use of the literature on gender diversity). Even amid the general elite celebration of “diversity”, I was a bit surprised to note a letter in last week’s Listener from a representative of … Read More

Food, culture, regulation - The Dismal Science

Apr 29, 2016

The Herald reports that new Auckland university research shows –  shock, horror – that: “Sixty-nine per cent of urban schools have a convenience store within 800m and sixty-two per cent have a fast-food or takeaway shop in that distance” I was surprised the number was that low, but then in Wellington one finds small schools in all sorts of odd nooks and crannies.  My three kids now go to three different schools, and each of the schools has shops nearby.  As it was nearest, we took a walk around the area that encircles my youngest child’s decile 10 primary school. What did we find? On the first corner: a dairy a specialist pie shop On the next corner: two dairies the Empire Cinema, with its neighbourhood café and gelato outlet And then in the main shopping area the supermarket, (as … Read More

Housing: what can be done - The Dismal Science

Apr 19, 2016

In the seemingly-endless housing supply debate, there is often a divide between those favouring greater intensification, and those favouring a larger physical footprint for growing cities.  My own policy view is squarely in the “it should be a matter of individual choice, provided the infrastructure etc costs of development are appropriately internalized, and the rights of existing property owners are protected” camp (and yes, I recognize that the definition of almost every word in that statement could be extensively debated). My practical prediction is that New Zealand is a society where most people will prefer to have a decent backyard (they don’t flock to high rise apartment buildings or town houses with tiny sections in Hastings or Timaru), so long as regulatory restrictions don’t make that infeasible.  It was quite possible 50 years ago, when New Zealand incomes were much lower.  … Read More

A question for Steven Joyce - The Dismal Science

Apr 09, 2016

A reader pointed me to an article on the NBR website in which Science and Innovation Minister [isn’t there something wrong when we even have a government “innovation minister?]  was quoted as telling a business audience yesterday that: more migration is the only way to bridge the current skills gap for ICT companies in New Zealand. and “That’s one of the reasons I’m leery of calls to halt immigration – apart from the fact there’s not much reason to because of the economic gains,” he said. In the last fifteen years, we have had huge waves of immigration,  under both governments, and yet there is not the slightest evidence of economic gains accruing to the New Zealand population as a whole.  Tradables sector production per capita has gone nowhere in fifteen years, productivity growth has been lousy, and there is no sign … Read More

Kiwibank: a retrograde step - The Dismal Science

Apr 07, 2016

I wrote about Kiwibank last week, noting that there had never been a good economic reason for the Crown to have established it, and that there was not a good economic reason for the Crown to continue to own it.   Doing so undermines (modestly) the efficiency of the financial system, and poses unnecessary risks for taxpayers. I take it that the Minister of Finance agrees.  Listening to him on Morning Report, unable to give any reason why the government should own a bank other than “it is government policy that we do so”, one almost felt a little sorry for him.  Then again, he is the Deputy Prime Minister. What to make of yesterday’s announcement from New Zealand Post?  The plan is that NZ Post will sell 45 per cent of its stake in Kiwi Group Holdings (KGH) to ACC … Read More

Productivity: where do we stand? - The Dismal Science

Apr 06, 2016

Comparisons of material living standards across time and across countries are fraught with measurement problems.  No one seriously questions that 100 years ago we had some of the very highest material living standards, and equally no one really questions that we are a long way off that mark now. Some want to focus instead on wellbeing indicators. That is a topic for another day, but a country that has as many of its own people leaving as New Zealand has had, shouldn’t be seeking to rest on its laurels. Historical estimates are fairly imprecise, and only available for a small number of variables (typically GDP per capita). For more recent periods, we have much more, and better-measured, data –  although always less than researchers and analysts might want – but even then we face problems in comparing outcomes from country to … Read More

Universities, export education and migration - The Dismal Science

Mar 31, 2016

I’ve made a few passing comments in recent weeks about New Zealand universities, mostly in the context of discussions and debates around immigration.  Export education is one of the key emphases of the current government’s economic strategy; they and their MBIE advisers appear to believe that somehow we boost the incomes of New Zealanders by making it relative easy for people who come to study here to gain residence. I’ve been a bit skeptical about this argument.  If there are economic benefits to New Zealanders from immigration to New Zealand, they probably arise mostly if we are able to attract particularly high-skilled, able and innovative people.  In a US context, people often talk of the benefits of having a top tier university system, which attracts top-flight students to do PhDs in the US and can help encourage some of those people … Read More