The story of this election

Well, if it’s frustrating to see major parties wrangle over spreadsheets it’s heartening to see someone try to unravel the narrative of each party’s campaign. Bill Kaye-Blake has laid out what he sees as the story of each party’s policies. He gives a nod to Deirdre McCloskey but I think Bill probably has a career in marketing with stories like this!

For National he thinks:

the hero is Government. Read more

Stats NZ is politically neutral … Labour isn’t

Look, I have no idea why Labour feels it is necessary to run their election campaign as a bunch of muppets – but they have, and in order to keep surprising everyone with their ridiculousness they have attacked the political neutrality of Statistics New Zealand.

The complaint is that Statistics New Zealand said that their trend measure of building activity was crawling up, at the same time there was a sharp seasonally adjusted drop in consents in September.  The reason for this was that August was “strong” (relative to recent history) – so even with the decline September was a stroke higher than we have been used to, and the real “trend” measure of activity they have (and have always talked about) did increase.

Look, this isn’t just a case of Phil Twyford not being able to understand data – I mean, that is part of it it seems, but that isn’t the whole issue.  I’ll even ignore that fact that Twyford seems to think political parties run the economy – a fallacy among politicians that gives them a sense of unwarranted self importance.  The most confusing issue for me here is that anyone would think this is the best use of scarce time on the campaign trail – you can arbitrarily attack Statistics New Zealand and get zero votes (as it is such a non-issue), or you can be a competent politician and go out to try and get votes by talking to the public and showing them that you are the best option in terms of meeting their interests.

If Labour was a real opposition party, their members would be doing the second.  Hopefully they will be by next election, so that I actually feel like I have a choice when that election comes along – a competent opposition is essential for democracy … just saying.

Fun with fiscal forecasting

Apparently fiscal forecasts are the cool new thing to blog about since both major parties are talking about them. As the frantic blogging shows, even political commentators are getting excited about their spreadsheets at the moment. However, the only consensus so far is that nobody really knows who’s right about what.

Thankfully economists have a lot of experience with forecasting, and the accompanying abuse when one gets it wrong. As Matt has written about many times previously, the main thing to remember is that forecasting isn’t about the numbers: it’s about the story. Your numbers, however good at the time, will always be overtaken by events and end up being wildly inaccurate. What’s important is the reasoning behind the numbers and how it stacks up. For example, the argument about accounting conventions that’s presently raging in the political blogs may or may not be good politics — that’s not my area of expertise — but it doesn’t seem to be adding to our understanding of either party’s policies. Whether borrowing to invest in the Super Fund adds to a particular measure of debt is fairly irrelevant and won’t change anyone’s views on the policy. What people care about is whether the government borrows to invest in it at all, and each party’s policy on that seems fairly well established. Read more

The Economist on ‘job creation’ in the energy sector

A very timely opinion piece in The Economist here on how energy policy should not be confused as with job creation.

Too often investment in the energy sector, especially around low-carbon energy, is held up as a way to ‘create’ jobs for the economy. This article dispels the myth:

At the risk of being obvious: energy policy is not a jobs programme. Here are three reasons why politicians shouldn’t try to create jobs through energy policy: it’s ambiguous, it’s inefficient, and, most importantly, it’s undesirable.

In summary the author’s critiques are as follows:

1. What counts as a ‘green’ job, for example? Would that job have occurred anyway? Did the ‘creation’ of that job crowd-out another job?
2. The energy sector is typically capital intensive rather than labour intensive and hence efforts to ‘create’ jobs may be better directed elsewhere.
3. More important issues exist in energy, such as accessing cheap, sustainable energy and the security of energy supply – adding a further goal of ‘job-creation’ muddles this.

Given job-creation via energy seems such a hot topic throughout much of the world right now due to weak economic activity, elections forthcoming in the US and NZ and ongoing concern with carbon emissions and a need to ‘green’ the energy sector, it’s worth keeping in mind these criticisms.

Goff and Key agree on something

Phil Goff:

[There is] no businessperson in New Zealand that would say when you are in difficulty the best thing you could do is sell off your best-performing assets.

At least both major parties now agree that that the election is all about finding a new CE to run NZ Inc. What a shame we’re not inviting applications from people with proven, international experience.

Disgusting, barefaced, manipulation of the day: Labour on Kiwisaver

I was browsing the Herald to keep abreast of national events when I ran into this new set of policies from Labour.

I saw they wanted to gradually increase the retirement age, and I was thinking “this is good stuff”.

Then I saw that they have absolutely no moral fibre and have decided to package a tax-savings change for Kiwisaver members as money for nothing.  The moment I read this:

Employee contributions remain at 2 per cent, “because we know families are finding it hard to make ends meet right now, let alone save”.

However, employer contributions would increase by 0.5 per cent a year from 3 per cent in 2014 to 7 per cent by 2022.

I stood up and started swearing loudly at my workmates.  Calming myself to the point where I was only enraged, I explained to people at work what they already knew – it doesn’t matter who pays the contribution/tax in name, as over time wages will adjust so that the incidence of the tax is different.

This isn’t a complicated idea, I remember racing through it in test while I was in secondary school and thinking it was one of the easiest things we have to cover.  However, it is only taught in economics – and as a result, politicians can just blatantly lie about the impact of policy without the public realising.  And f**k, people in the party have studied enough to know this – they KNOW they are lying to the public, but they are happy to do it because they want to get elected.

Lets look at this case.  If as Labour says things are really a struggle for households, labour supply is likely to be very inelastic.  This would suggest that a significant amount of the “burden of tax” would in fact fall on them.  In essence, they are just increasing the minimum amount you have to put into the scheme to get your “sweeteners” back … which you are being taxed to provide in the first place.

This sort of rubbish makes me feel ill – it is deception, it is lying, and its straight out immoral.  This is why I dislike politicians.

Update:  Via Kiwiblog I see that they did sneak in an admission that it will impact on wages – look this is fine, but when you make your main selling point that you are increasing employer and not employee contributions, you make it sound like they have a different impact.  Which they don’t.

How about, instead of packaging your policy in a way to trick people you are just honest about it – and then you will see if people actually want it.  Its this thing called democracy.