Compulsory income insurance submissions

Hey all, just a reminder that submissions are currently open on quite a major policy change – the introduction of large scale fully funded income insurance in New Zealand. So if you have thoughts or feelings on the issue, make sure to get a submission in before Tuesday.

In the lead up Simon Chapple has posted a good article on the issue, and I’ve posted up my own article as well. This is a major policy proposal that is being pushed through under de facto urgency without a proper policy design process – and with lots of unintended consequences. As a result, even though we both agree with looking at improving support and transitions for individuals facing hardship – in fact this is an issue we have both focused on in the past – this ain’t it son.

For those who do not want to trudge through text, the thoughts can be boiled down as follows:

Read more

RBNZ’s 50bp hike

The RBNZ increased the OCR by 50 basis points to 1.5% – to someone from three years ago that level might not sound strange, but just take a look at this 10 year government bond rate track. Highest 10 year rate since 2017 and, given when the cash rate is, an indication that higher average rates are expected in the future.

The last time there was a 50bp increase was May 2000. If you want to understand what was going on there take a look at inflation and the exchange rate during that period – a drop in the dollar was stimulating activity while inflation was high and climbing, so the Bank responded.

The exchange rate isn’t doing that now, but the world (and NZ) opening up post-COVID is filling that role – while core inflation is high, and headline inflation is at levels a lot of people have not seen before. In this way, the Bank is tightening – makes sense, and I trust they’ve worked it all though.

Read more

NZ Public Service and Economics

Robert MacCulloch has written an interesting piece on economic advice within the public service in New Zealand (free link), with Eric Crampton noting a lack of trained economists in government as a key concern. Given the recent incoherent experience of rushed policy and advice on fuel taxes this seems like quite a pertinent discussion.

I’m a trained economist. And I’ve been working in government in New Zealand fairly recently, and am now actively employed in the private sector. So do I have juicy gossip?

No, not at all. I do have a perspective however that isn’t just about some arbitrary lack of hiring “well trained economists” – lets have a chat.

Read more

Anti-trust articles: Fintech and 5G

One of the founding authors and editors of TVHE has a couple of cool anti-trust articles up for the Anti-Trust writing awards. I reckon we should go an give them some support. Will Taylor notes this on LinkedIn here – but if that doesn’t work for you the link to the voting for the two articles is here.

COLLABORATION AND COMBINATION DUE TO 5G: UNLOCKING INVESTMENT OR REDUCING COMPETITION?

FINTECH DEVELOPMENTS AND ANTITRUST CONSIDERATIONS IN PAYMENTS

The voting is for the “reader choice” award – you can vote towards the bottom of each of these links.

Go give them a read – I definitely learned a thing or two. Anti-trust stuff is complex, but getting this right is incredibly important – and industrial economics is definitely the topic that “feels” most like real economics, with its mix of theory, application, data.

How we talk about the nature of work

Over two days Betsey Stevenson had two posts on the nature of work – both of which I agree with, and both of which sound like they may contradict.

So wait a second, if someone in a high status job gets paid more for the same effort and same contribution then why are we talking about marginal revenue product? Shouldn’t they already be rewarded by status? Is this a product of power? Let’s have a think

Read more

Firms are greedy, but that isn’t the reason for inflation

With prices rising an increasing number of people are looking for a scapegoat. Fairly “obviously” the blame should be on those who are increasing prices – namely firms. This outbreak of greed is then being used as an explanation for why firms are increasing prices, and the suggestion is that – instead of cutting government spending or increasing interest rates, the solution is to break up monopolies.

Now I have no problem with breaking up monopolies, and I’m a huge fan of clear competition policy. But this isn’t going to deal with the “inflation” problem we are talking about. Let’s chat about it.

Read more