Points for the Budget

Over at Dim Post, there is the general question of whether a “zero-budget” makes sense.

Commenting on the post, I remembered some of the key points to keep in mind when looking at actual policy – rather than the tiresome and incoherent ramblings we will get from politicians of all stripes and colours when the Budget is released.

What you are saying is valid – but when we view the budget in economics terms, instead of the political terms it is being sold in, there are a few things to keep in mind:

  1. The goal should be to have a balanced budget, once the economy is back at “potential”. So the surplus in 14/15 has to come with a forecast that has unemployment at or below 5%. If unemployment ends up higher than this, the government will continue to run a deficit by default – and so even when the forecasts are wrong this aim squares out.
  2. Government has been borrowing heavily, at low interest rates, to fund infrastructure. If it wasn’t for government building there would have been virtually no non-residential building in recent years. Infrastructure spending (in real terms) is at record highs. The government is actually being very Keynesian – they just don’t want to say it because their supporters might get grumpy.
  3. If the government keeps to the idea of getting the budget back in balance by the time the economy is back at potential, and makes that clear, it makes it easier for the RBNZ to cut the OCR or at least keep it at its current level, which will also help to boost activity/cut unemployment.

You are right it is an incredible period of uncertainty – but the government can’t do too much about that directly except limit uncertainty from them by ensuring their plans are clear. We can debate what the appropriate long term “size” of government should be – but I think both parties are being responsible by making sure that we have the budget back in balance by the time the economy is back at potential.

The key way to judge the Budget in “macro” terms will be the consistency of the UR forecast to the surplus.  In “micro” terms there will also be a lot of marginal issues we can address – hopefully there will be more talk about superannuation.

Either way, I’m not forward to listening to all the blah blah blah about politics, but I will be sifting through the Budget to get an understanding of ways government policy will influence the outlook for the general economy during the coming years.

Mallard scalps helpless students

Apparently Trevor Mallard understands why secondary markets add value:

Mr Mallard [said] that the sale was neither scalping nor dodgy. He bought the tickets last year but now had another engagement.

It’s a shame that he didn’t apply similar logic when he was a Minister:

In November 2006, Mr Mallard initiated legislation …to protect event sponsors from people making money out of major events with which they had no formal association.

He said at the time: “When there is bulk-buying of tickets to such events simply for the purpose of profiteering, scalping is a ripoff that could deny many people the opportunity to see an event.”

So Mallard is almost hoist with his own petard, but the sad thing is that that there’s any law against it. And maybe that the students decided to go to the Dom Post even though they wouldn’t have got the tickets they wanted were it not for Mallard selling them. For some righteous outrage over the demonising of scalpers see goonix, Eric, Trent Reznor, and more Eric.

Referendum Tool: MPP vs FPP etc..

If you are looking for a way to kill 5 mins at the end of the day, this tool/quiz to help you decide whether you like MMP or FPP is interesting… I must say I felt weird after doing the quiz as I wasn’t sure it accurately represented my feelings. Preconceptions are there to be shattered though:)


Greens on poverty

The Green party has recently released their policy program for helping the poor:

[Turei’s] party wants to extend Working For Families tax credits by $60 a week for the poorest 140,000 households, reinstate the Training Incentive Allowance for university-level courses to help beneficiaries get educated and into work, raise the minimum wage to $15 an hour and create minimum standards for rental properties to ensure they were warm and healthy.

I like the idea of helping poor families but is the best plan really to:

  • raise marginal tax rates on them,
  • give them cheaper bachelor’s degrees,
  • increase the barriers to entering the workforce at the minimum wage; and,
  • increase the cost of rental properties?

I’m sure Matt will have a more thoughtful analysis up soon but does this policy really tackle the problems that our poorest citizens and their children face? I don’t know for sure but I imagine that the cost of a university degree isn’t a binding constraint for many of them, for example.

It’s going to be fascinating to see all the parties releasing more meaty policy agendas as we approach the election!

Comic government test

Look at this comic right now, before reading any other comments or anything I have to say.


Then, if you can be bothered, write in the comments your first impression regarding what this comic implied about government.

Brief comment from me under the fold.

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Apparently China needs censorship because Chinese people are stupid….

….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.