Matt Nolan

Burgeoning government bureaucracy? Links

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There is some suggestion that the size and scope of governments around the world has become excessive.  Two recent examples of this are:

The Standard has suggested that similar comparison in NZ could be a little out of whack, and in the most part I agree with them.  After all, Labour was elected to a third term on the promise of larger government, National was re-elected to keep it at that level, as a result I think society is suggesting that they want government to continue spending a quarter of our income.

However, I do disagree with them with regards to the idea that government spending didn’t markedly rise as a proportion of GDP in Labour’s third term – to me the GDP Statistics seem to suggest this was the big mover (with the recent increase solely the result of a recession, and “automatic stabilisers”):

The Hand

3D = Anti piracy?

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As recently reported, Avatar now holds the title of highest grossing film of all time.

Furthermore, the film has grossed over $800 million more than Hollywood’s previous blockbuster, 2008’s The Dark Knight.

Given that the themes and story quality of both films was equally awful, the only explanation (in my opinion at least) is that the piracy level of Avatar must be significantly lower than that of The Dark Night. The explanation for this I believe lies in that fact that one film was presented in 3D, while the other was not.

Thus, as the lay pirater is without 3D technology, has Hollywood inadvertently found a (short-term) solution to it’s declining revenue problem: making films in 3D?

Matt Nolan

Comic: Game theory and living arrangements

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Source SMBC

I am sure that anyone with a history of flatting can relate to this comic.

Matt Nolan

On “the” fiscal stimulus

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Over at Kiwiblog there is discussion of the Democrat loss in Massachusetts.  Reading through the piece David Farrar stated:

Priorities. Obama’s fiscal stimulus did little bar increase the deficit massively, and turn the country into deficit hawks. Unemployment went well beyond his worst forecasts

Now I found this statement unusal in that David’s writing is usually very balanced, and yet I do not find this statement balanced at all.  Why?

  1. We have no idea if Obama’s fiscal stimulus did anything until the data is all finalised.  In a couple of years researchers will be able to look over the data and discuss the design, implementation, and need of the scheme and reach an educated conclusion.  At the moment people can only present an opinion on the basis of ideology.
  2. Personally (going onto my ideology 😉 ), I think the fact that unemployment rose even further than expected was the result of the shock being larger than expected (and areas of the US economy being more fragile).  During the crisis the US government was able to borrow cheaply and use this borrowing to undertake investment when the cost of building this investment was cheap (thanks to the spare capacity in the economy) This sounds like a good thing to me …
  3. Unemployment as high as  10% indicates to me that there was a hole in demand – I do not believe that “structural” economic issues could be sufficient enough to warrant 1/10 people who want a job not being able to get a job.  With the Fed unwilling to soften its monetary stance further the government is in a position to be “consumer of last resort”.  Although I don’t really like the idea of this, in the face of sticky prices and a massive shock to the economy I have to concede that such a role exists in extreme circumstances.

As a result, if I had to guess I would say that the immediate crisis would have been worse if the stimulus hadn’t happened. This appears to be a moderate position among economists, between the “stimulus did nothing” and the “we needed more stimulus” extremes.

Now, we may find that the long run impact of this borrowing will be bad, and we may look back on the evidence and find that the scheme is flawed.  However, the point that “Obama’s fiscal stimulus did little bar increase the deficit massively” is an extreme view (that could potentially turn out to be true) – not an objective fact.

Matt Nolan

Tax working group: The corporate tax rate

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The Tax Working Group has released their report, as you all already know.  The recommendations are as expected, so its not particularly exciting in that sense.

However, there are some issues I would like to discuss – lets start with the idea that we “urgently need to cut the corporate tax rate” if Australia does.

Currently there is talk that, if Aussie cuts the corporate tax rate to 30% we need to do the same immediately.  We are told this as if it is a self-evident truth, and told that if we don’t all investment will head to Australia.  This is a touch over the top.

Read more

Will Taylor

Apparently China needs censorship because Chinese people are stupid….

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….that is the justification offered by a Chinese journalist in this article related to the Google vs China row (blow by blow at Ars technica here). This quote is shocking:

The Chinese society has generally less information bearing capacity than developed countries such as the U.S., which is an objective reality that no one can deny. Chinese intellectuals living in China should show understanding to the motherland’s weakness.