Hume’s History of England is excellent bedtime reading…..

Hi Andrew,

Thanks for the links.

@Eric Crampton

Hi Eric,

My impression from 7th form history was that Charles struggles with parliament came from him trying to do things his wife wanted him to do. Maybe the more important lesson from the English Civil War is not the need to balance the excesses of absolute power – maybe it is to be careful of women.

However, on a more serious note, I think we can only defend that type of monarchy system through the lens of historical revisionism – in reality the freedoms provided to us through more democratic forms of governance have paid real dividends for sure. That is a point we can all agree on.

@steve

Hi Steve,

Indeed, these sorts of issues do matter – there isn’t a single eqm for the economy, and if we can quantify and analyse these issues then we can see some type of useful interventions.

Furthermore, I agree that our focus should be specifically on NZ – not on “how can we be like Aussie”, as you say we are fundamentally different from them.

However, I would always keep in mind that we have to be careful when talking about these spillovers in an open economy sense. When we go to estimate we have to make sure:

1) The benefit (usually derived in a partial equilibrium sense) is worth the cost of raising the taxes to fund this.
2) That the benefit is net of any “reaction” from other countries/prices – some interventions could be seen as protectionism, and if we don’t model the reaction then we miss part of the cost.

@steve

Hi again Steve,

“Since it was decided foreigners shouldn’t own it, maybe it would be in the government interest to do it themselves.”

Or promote the private sector doing it through subsidies and the such. We don’t want to lose the power of revealed preferences and prices which comes through private market discipline – as that is part of the way we figure out whether these schemes are worth doing.

“My point was a dig at the 2025 taskforce who should really be doing something about those factors of location, scale and endowment”

The taskforce – that was Brash right? That was a pretty random taskforce to be honest 😛

Since it was decided foreigners shouldn’t own it, maybe it would be in the government interest to do it themselves. They already have a large interest in Air NZ, and local government in Auckland Airport.

Possibly the new super city could do a joint venture with Air NZ.

My point was a dig at the 2025 taskforce who should really be doing something about those factors of location, scale and endowment; if we want to even think about catching up with Australia that is.

Phil McCann, the eminent former Professor of Economics at Waikato, has been saying this for a while, with the added comment that the take-over bid for Auckland Airport was partially aimed at making Auckland a connection hub between Asia and South America.

As is well known, enlightened Government policy ruled that this takeover would be against the national interest.

Mind you, Phil wan’t convinced that our geographical disadvantages could be overcome in a world where face-to-face meetings are increasingly important- and voted with his feet, leaving to the Netherlands.

Does that mean we can’t do anything about it? I think we can, but we have to consider those factors, “location”, “scale” and “endowment” and what we can do about them. At first glance this is rather limited.

Firstly we can build scale. While there might not be a convergence of incomes for the whole country, a bigger Auckland could lead to a convergence in incomes for Auckland and Sydney.

We probably can’t do a lot about endowment, we have what we have. But the review of what we have is a step in the right direction. look at the whole portfolio of our endowment and see if we are making the most of it.

Now location. A modern economy is dependent on cities and innovation. Both of these are affected by location and scale. But if we can make New Zealand a location which facilitates business in Asia, the pacific and South America, then knowledge and innovation would spill-over here. Auckland would become a business/knowledge hub. Auckland already has a specialisation in Professional Services firms which serve NZ, why not have those firmstserve the wider region? The way to do this is to make our location important to international business. This is the success of London, New York, Hong Kong, Singapore and to a lesser extent Sydney. Make Auckland (and Air New Zealand) a hub between Asia and South America. It is virtually the only city which could do it (if you look at a globe the only real alternatives are Hawaii, LAX a handfull of pacific islands and South Africa). We are right in the centre of 3 out of 4 BRICs countries, add indonesia and it is 4 out of 5. NZ could be a very important location for international business as China, India, Indonesia and the South America countries continue to develop. if we have the right policies for trade, foreign affairs, immigration and infrastructure in Auckland we can catch Australia

In particular, we would become an innovation rich economy, as opposed to a resource rich economy. This would allow us to catch up with Australia, and potentially pass them.

The problem with focussing on Australia is exactly that, we focus on what they have got and/or done that is different from us, instead of focusing on a solution specifically for New Zealand.

http://www.treasury.gov.au/documents/876/PDF/Policy_advice_Treasury_wellbeing_framework.pdf

http://www.treasury.gov.au/documents/1678/HTML/docshell.asp?URL=Whitlam_Institute_Speech.htm