Inquiry suggests lower wages and taxpayers taking on firm risk
I have read over the opposition report into manufacturing, and there is so much geniunely wrong in it that it deserves a significant post – one I will hopefully have the chance to (at least partially) do this week. Note, I don’t disagree with absolutely everything in it, and I do congratulate them for the idea of getting together an inquiry and sorting policy – I think that is neat. But there are trade-offs, and this report acts like there are none.
As a result, I thought I should probably translate what their report actually suggests in title of this post though. This is not a blueprint for higher wages and “better jobs”. This is a blue print for:
- Cutting the real purchasing power of households,
- Getting the government (therefore the taxpayer) to take on risk for businesses
- Therefore, subsidising an industry that the rest of the world is subsidising because of mystical “spillovers” we think may occur – ignoring the fact that having firms currently focus on their comparative advantage is making NZ into a very wealthy country …
This is our “left wing” parties talking – essentially about NZ Inc. What happened to actually thinking about poverty and equity, issues that I know I might actually vote for them about if they ever bothered to be actual left wing parties, instead of an accidental vested interest group for firms.
Update: Brennan McDonald discusses here. I like the focus on specific biases between economists and (what I would term) folk economists. IMO, economists need to be clear on their communication around these issues when discussing policy debates – as they are the principles that tend to “defy common-sense” for folk economists the burden of proof falls on us 
. Also Groping to Bethleham discusses this here and here.