The Government’s proposed infrastructural entity in context.

From the earliest European settlements in New Zealand, economic strategy was dominated by the notion that the state should lead the development of the economy. There wasn’t really anyone else to install the facilities and networks that progress needed. In any case, the development state had been integral to the evolution of capitalism elsewhere.

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.

Answering that question proves to be challenging. This preliminary assessment suggests the economic benefits to incumbent New Zealanders may not be great.

During the Vogel boom, say between 1871 and 1881, the population of New Zealand doubled, as did real GDP (as best as we can measure). That means per capita GDP was much the same at the end of the boom as it was at the beginning. Was it a boom then?

If it necessary to run a budget deficit then it should be spent in the interests of future generations, rather than on increased consumption to be paid for in the future.

It is very easy to demand the government should run, or increase, its budget deficit, that is, it should spend more than its revenue and (one way or another) borrow the difference. Many think that is what Keynes said, but the Keynesian analysis is more subtle than the crudities that the deficit advocates seem to rely upon.

The Northland by-election demonstrates we do not have a regional development policy. Should we? What might it look like?

The government’s announcement that it would be upgrading ten one-way bridges in Northland was a response inspired by the forthcoming by-election. Whatever the politics, it well illustrated the feeble state of regional development policy in New Zealand.