Matt Nolan

List of Kiwi’s who think they know better

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Well, they are pretty certain they are better at making your life choices than you are.

The list from the Hearld is:

  • Sir Paul Reeves, former Governor-General (convenor).
  • Dame Silvia Cartwright, former Governor-General.
  • Archbishop John Dew, Catholic primate.
  • Professor Sir Mason Durie, Maori health expert.
  • Georgina Earl (Evers-Swindell), rowing gold medallist.
  • Jeanette Fitzsimons, former Green Party co-leader.
  • Sir Lloyd Geering, theologian.
  • Dame Te Muranga Batley-Jackson, Manukau Urban Maori Authority founder.
  • Michael Jones, ex-All Black.
  • Dr Semisi Maia’i, Pacific Medical Association co-founder.
  • Caroline Meyer (Evers-Swindell), rowing gold medallist.
  • Archbishop David Moxon, Anglican leader.
  • Inga Tuigamala, ex-All Black.
  • Archbishop Brown Turei, Anglican leader.

Hey guys, if you think there is a problem with New Zealand’s culture of drinking, why don’t you try to understand why the problem exists and then come up with solutions to those problems – rather than just saying we should turn around and introduce prohibition.  I’m tempted to say it’s because these “high powered Kiwis” don’t understand how us common people think and feel – but I better not.

On that note, economics transmission will return next week – once I again have hours in the day to do real posting.

Matt Nolan

Labour’s perspective on monetary policy

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= Changing rhetoric to win votes.  I don’t know whether it makes me laugh or hit my desk angrily – I guess I’ll do both.

Listen to this:

Labour would broaden the Reserve Bank’s monetary policy targets, adding a requirement to aim for a stable currency, full employment, and the economic prosperity and welfare of the people to its existing inflation target

Yes, because determining how quickly to run printing presses can do all these things.

And has Labour figured out how to measure welfare in society?  If so I would like to meet them and congratulate them – that has been a vexing issue for economists AND psychologists for centuries.

Also:

“The Reserve Bank Act needs to be clarified to ensure the bank can use such tools primarily for the purpose of supporting Monetary Policy,” Labour’s associate finance spokesman David Parker said.

“Labour will make that change. Faced with rapid credit expansion, such as that in recent years, the change would cause the Reserve Bank to use prudential ratios, rather than rely solely on interest rates.”

Yes because, ex ante, when we have little information on the nature of the economy relative to its potential the Reserve Bank is incredibly well placed to determine the level of risk banks should take on.

Also, prudential regulation will change interest rates – acting like this is a “cost free” way to change monetary conditions is weird.

I realise the Bank is introducing prudential regulations, and I can see some potential for it theoretically.  However, I’m still not convinced at this level – and as a result definitely don’t think it should be made a central part of their mandate yet.  As I’ve said before, I think the organisations that determine monetary policy and prudential policy should be kept separate on transparency grounds.

You want more discussion on these issues – search the blog, we’ve written about these things repeatedly.  One day soon I may come back to it.  And if you think this “change” in policy make sense, feel free to email me/comment etc, but there is only the slimmest of chances I’ll ever agree with you – so keep that in mind.

Matt Nolan

All Whites

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Sorry I haven’t been posting – been extremely busy, and although I have some ideas I won’t have time to write until next week.

On that note though – New Zealand has managed draws against Slovakia and Italy.  We beat Paraguay we are, regardless of other results, through to the last 16.  Wow – good stuff All Whites 😀

Matt Nolan

RBNZ lifts rates for first time in three years

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So the OCR went up 25 basis points.  Cool, that is nice.

It was almost entirely in line with expectations so there isn’t much to say, except:

  1. They more explicitly discussed Eric’s concerns regarding the impact of ETS increases into inflation expectations.
  2. They put table 5.2 in which talked about “who got what” from tax cuts.  OMG, seriously – this table was unnecessary.
  3. The continued to state that there is no real reason for our TOT to hold up – so a lot of the issues I’ve viewed as “structural” (rising commodity demand from China’s middle classes, Biofuels, falling subsidies on agriculture around the world) are being viewed as temporary by the Bank methinks.  This is why I will always disagree with their medium term forecasts …
Matt Nolan

The taxing issue of burden

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One thing I have noticed of late is that many people want to talk about tax cuts in terms of “who gets what”.  We see someone with an income of $XXX and say they will get $Y a week from the tax cut.  I find this perplexing as I have never seen tax this way.

The reason why I find this way of looking at tax changes strange is that it ignores how prices change in response to the structure of the tax system.  I fear that, to many people, this seems like a benign (possibly even esoteric) issue – when actually it is one of the most essential issues to keep in mind when thinking about the design of a tax system.

Read more

Matt Nolan

Solving the prisoner’s dilemma

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Saturday morning breakfast ceral has an excellent comic regarding the prisoner’s dilemma.  Of course, I was bound to appreciate it given my view that Jesus was an early applied economist.