by Brian Easton

Paul Krugman, the 2008 winner, tweeted ‘Yes! Behavorial econ is the best thing to happen to the field in generations, and [Richard] Thaler showed the way.'

Good science is essentially a subversive activity. Most scientists work within the existing paradigm – the framework of the basic assumptions, ways of thinking, and methodology commonly accepted by the discipline. The better ones keep an eye out for anomalies which require some adaptation of the paradigm.

How effective are those who pursue change outside the parliamentary system?

My first memory of Sue Bradford is of the feisty speech she gave to the 1984 Economic Summit Conference pleading that a greater commitment be given to the people she worked with – those on the margins of society: the unemployed, the poor, the mentally and physically disabled. It was so impressive that some businessmen offered Sue a job.

New Zealand’s electoral system gives it a parliament which represents voters. Its winner-takes-all executive government, however, remains unrepresentative.* (This is a follow on from the earlier column on coalitions.)

This paper tries to evaluate various coalitions on the basis of their political ideologies. It uses the scores given to parties by the TVNZ website Vote-Compass, which identifies two dimensions: Right-Left and Social Conservative-Social Progressive.

This was written before the election outcome is known. It looks at the part of the executive which is not elected: the public servants and advisors.

Steven Joyce, National’s campaign manager, must have thought he had Labour out cold when he claimed that its spending plans announced during the election were enormous and unsustainable. He proved to be very wrong, as economists – of a variety of political persuasions – have said.

This is a series of quantitative thoughts on the election outcome. It is based on the 2017 election night vote. Specials are likely to change precise voting shares and even seats. However potential changes do not invalidate the column’s overall conclusions.

Summary (which is less numerically challenging)

Is public spending stuck in the vicelike grip of our quasi-Austerian economic policy?

Are we at a turning point in our politics? I don’t mean whether we have a new government. That is a matter for the voters; the polls say that either they are very volatile or that the polls are very unreliable – probably both. What I am interested in is whether we will have a new approach to the economy.

The last column described the philosophy of economist James Buchanan as it applied to the United States. What is its relevance to New Zealand?

When I looked at James Buchanan’s theory of public choice, I was struck by how it reflected an American institutional setting; Our political system is different. Even so, our colonial mentality meant his economics and social philosophy was influential on ‘Rogernomics/Ruthanasia’ in the 1980s and 1990s generating patterns of thinking which persist to this day.

A new biography of James Buchanan, a founder of economist’s public choice theory, suggests he was not only anti-democratic but was working with others to revoke democracy in America.

The work of economist and social philosopher James Buchanan (1919-2013) came to prominence in the mid-1980s when he was awarded the Economics Prize in honour of Alfred Nobel and when his thinking was impacting on Rogernomics (more of that next week).

The just published PREFU, Treasury’s assessment of the economy, raises more important questions about our fiscal stance than what the election is talking about. Have we the right borrowing strategy?

 

It was amusing how the Minister of Finance, Stephen Joyce, had to present the PREFU (Pre-election Economic and Fiscal Update) as both an optimistic account of how well the economy was doing, and yet caution that it was not doing so well that the opposition parties could spend or cut taxes big.

The policy dimension of the election appears to be about the concerns with past restraints on government spending and the consequential social failures. But whatever the rhetoric, implementation of campaign promises is going to be much harder.

Last Saturday, the Minister for Social Housing, Amy Adams, admitted her government had a poor record on social housing but promised to do better. On the same day, the Prime Minister said the government would (might?) spend $1.2billion on the Dunedin Hospital which was a similar admission of poor past performance on capital funding for DHBs.