Matt Nolan

Support of inheritance tax in NZ and the UK

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Two of my favourite applied economists have come out in support of inheritance taxes (to some degree):

In NZ we have David Grimmond of Infometrics:

A means of correcting for dynastic privilege is to introduce a uniform tax on capital. The absence of bequest taxes, in combination with a lack of uniform tax on capital, is a stark aberration in the New Zealand tax system

Then in the UK we have Patrick Nolan of Reform:

In this environment it is unclear why reducing inheritance tax should be a priority. It could be argued that falling property prices mean it would now be relatively cheap, with some estimates indicating that the cost has fallen by almost half to £1.3bn for 2011-12. Yet this is money that could be put to better uses – including reducing other more harmful taxes.

I am a fan of inheritance taxes – as they don’t distort economic behaviour to the same degree as other taxes.  If we want to change the tax system this is the sort of tax we should be introducing – with a corresponding cut to the top tax rate.

Matt Nolan

Jobs and production

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In the comments to the “Sigh” post, rainman raises the following reason for government action against currently employed temporary workers:

What then do the displaced workers like the welder in this story do? Go on the dole?

Now, the primary argument against this is that the “displaced workers” aren’t solely displaced. The immigrants are doing a job making things, and therefore this will “create work” for other people.

However, there is another, more fundamental argument against that. And it comes from the idea that we aren’t actually after “making work” (work is a cost after all) we are after making stuff and having a nice living standard for people.

Read more

goonix

Immigration and specialist labour – the CEO’s defense

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I heard an interview with the CEO of the metals firm last night in the middle of the immigration furore on Radio NZ. His point was that he had employed specialist Filipinos to fill roles for which there was no local supply. This was during boom time. Local people, on the other hand, were undertaking non-specialist work. As demand for their products fell, there was less specialist work available. So he re-allocated some of the specialist (i.e. Filipino) staff to perform non-specialist tasks in their downtime, and laid off the non-specialist (i.e. local staff). So now the specialist staff are undertaking specialist work when they can, and non-specialist work at other times. Which makes complete sense. You’re not going to lay off the specialist staff or there will be nobody left to do the real work once demand increases!

I feel sorry for the guy trying to run a business while politicians look to score political capital from xenophobia. Embarrassing.

Matt Nolan

Ummmmm. Ohhh. Hmmmm.

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Government to cut back the number of temporary work permits for skilled labour.  Great way to make the recession deeper guys.

So there are jobs that could create real value and production in the country, and we don’t want to let people come in and do those jobs.  When did NZ first come into power – I thought they lost out in the recent election?

The economy is not a zero sum game, if we have the best person available doing the job, then because of taxes and the such this benefits everyone.  Migrants create work my friend, especially migrants that are coming into the country to work!

However – if you read the article its not quite as bad.  They aren’t saying that they are explicitly cutting back on migrants now – they are just admitting that there will be less available work during a recession, so there are less areas where they can bring in “productive employees”.  I hope.

Matt Nolan

Sigh

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Does anyone elses passion for New Zealand die a little bit when they read things like this. Reminds me of all this disappointment.

There is a difference between allowing people into the country when certain skills are “over-subscribed” and we have short term demand or infrastructure issues and this – talking about taking away peoples work permits when they are here because “New Zealander’s should have New Zealand jobs” is inhumane.

Writing that bit in quotations made me feel sick a little 🙁

Update:  So this sort of attitude has cross-party support:

Labour leader Phil Goff said it was unacceptable for Kiwi workers to be laid off if they could do the job

Matt Nolan

Dim Post on privatising Treasury

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Another spectacularly sarcastic post by the Dim Post – this time pretending that John Key has privatised Treasury.

Prime Minister John Key is pressing ahead with his plans to trim the state sector, today announcing that he will be privatising the Treasury Department and opening up their roles of fiscal advice, budget projections and government accountancy to competition from the private sector.

Now, the Standard actually made a similar claim sarcastically a while back.  But you know what – there are parts of this that might not be a bad idea.  If Treasury was an under-performing department, competitive pressures could help to increase the quality of the output received.  In order to make this very claim the Dim Post article states:

It cannot be denied that for the last decade, Treasury has repeatedly made inaccurate forecasts, first underestimating surpluses and now underestimating deficits. Their advice is routinely dismissed by almost all serious political commentators and both our major political parties. At times it is difficult to see what the purpose of this department even is

Now in reality this is a real problem – but it is a problem that can’t really be solved.  Macroeconomists are often attacked on these grounds – but with the type of data we have, we can’t do much better!  A made up Treasury official then suggests:

To replace the highly qualified and experienced professionals of the New Zealand Treasury with a bunch of Tarot card reading frauds would be a category error

However, given that Tarot Card reading and economic forecasting share very similar methods, I’m not so sure if this made up quote is fair 😉