Michael Reddell’s blog started so quietly that I didn’t notice it until it was pointed out to me last week. But he’s now on my feedly Must Read list.
Michael has a wealth of institutional knowledge from a long career advising central banks, working with the IMF, the RBNZ and Treasury. I expect I will find his coming series of posts on immigration to be the most challenging; Michael believes that too high of immigration has been substantially detrimental for New Zealand, where I’m rather pro-immigration. But his is the anti-immigration case worth taking seriously.
Here’s a ‘best of’ round-up of his posts thus far:
- New Zealand’s entry into WW1 was preceded, by one day, by the suspension of gold convertibility of New Zealand bank notes. And, until 1934, there was no central bank and only customary practice in which the banks ensured that their own notes remained convertible into sterling.
- Maybe, just maybe, having central government get out of the way in the regions and stop there imposing costly regulatory mandates would help regional economies.
- A review of Saint-Paul’s The Tyranny of Utility and Micklethwait and Wooldridge’s The Fourth Revolution.
- New Zealand’s economic performance relative to Australia doesn’t look so hot in terms of real GDP per hour worked since 2012.
- Reddell’s first salvo against immigration. I agree with Reddell that immigration cannot solve underlying economic problems in the vast majority of cases, but with two potential exceptions: if agglomeration is becoming more important and size and distance are now hurting New Zealand more, a bigger country can help to solve that. And migration can potentially help a bit with an ageing domestic population. But it is important that complementary policies be reasonable: we have to be willing to allow more house and apartment building if immigration is strong.
- A caution that we shouldn’t be too quick to take all the praise that the Oz press wishes to heap upon New Zealand:
“Yes, the labour market is a bit easier in New Zealand at present than it is in Australia, although at 5.7% our unemployment rate is not something to be complacent about. But nothing has happened to even begin to reverse the decades-long widening in the now very large gap between New Zealand and Australian incomes and productivity. And favourable commentary from the other side of the Tasman will be a false friend if it distracts from the serious economic challenges that our own policymakers should be grappling with.
I would note, though, that that 5.7% unemployment rate is in the midst of strengthening labour force participation.
- Is the IMF becoming obsolete?
- Further reasonable scepticism about New Zealand’s performance relative to Oz – this time on government consumption as fraction of GDP. See Michael’s graph below.
Is it really enough for a rightish National Party coalition government to get government consumption back down to only being a bit more than it was at the start of its term in office, which was preceded by a really substantial expansion in government spending in the third term of Helen Clark’s government?