Gut Reaction

I thought the Greens would surpise us all and elect Sue Bradford as their new co-leader – she’s easily their most formidible and effective MP but I guess her utter lack of interest in enviornmental issues counted against her in the end.

The only factoids I knew about Metiria Turei before today were that she was a corporate lawyer with Simpson Grierson and a candidate for the Aotearoa Legalise Cannibis Party which is an attractive dichotomy – so it’s a pity I found her so intensely dislikable during her appearance on Q & A this morning. How can someone with such an interesting background be so insipid? Maybe it’s just her game face.

And she’s certainly ready for prime-time – every statement she made was carefully parsed and filtered to prevent anything significant or meaningful accidentally escaping her lips. Whatever else she’s a born politician.

Total Eclipse of the Heart Redux

THAT is what I think of your comments

For some reason WordPress has started putting legitimate comments in the spam queue. Most are from regular posters and have pretty much the same content as all of the of unspammed comments so I’m not sure what’s going on. My theory is that they’re trying out new heuristic filtering scripts – if that’s the case then the algorithms should sort themselves out over a couple of days or weeks.

Anyway, if you’re wondering why your comment didn’t show up for a while after posting then that’s the reason.

Change in North Korea

North Korean propaganda poster, courtesy of Lew at KiwiPolitico: The caption reads 'Let's extensively raise goats in all families!'

The Browser interviews Andrei Lankov, a Russian historian currently teaching in Seoul who specialises in the history of North Korea:

Under Kim Il Song’s rule until the early 1990’s, North Korea was a perfect Stalinist state. It was a strange mixture of Confucian traditionalism, nationalism and Stalinism. Economically it was very Stalinist, based on total state property; even small private economic activity was discouraged or banned. In the 1990’s the old economy collapsed. It had been inefficient and only survived so long as the Soviet Union and China were willing to provide North Korea with aid. When the aid flow abruptly ended the result was economic disaster. The economy collapsed, with the partial exception of the military sector. In order to survive, the populace had no choice but to rediscover capitalism. It was market economy from below. Until this point people lived on government rations, there was almost no free trade, nearly total rationing of everything. This system was introduced in the late 1950’s and became all encompassing in the 1960’s. Change occurred largely because the government was no longer able to provide rations. Since the early 1990s people were forced to find ways to generate other, independent, means of income. Booming markets began to grow, there was smuggling, farmers began to work on their private plots, low-level officials, sometimes out of compassion but more frequently in search of bribes, began to turn a blind eye on all of this “bad” activity. To all intents and purposes, North Korea is no longer a perfect Stalinist economy. It is more like a country in central Africa, but with a bad and cold climate.

Framing the budget

Media and opposition parties like to coin cute little phrases to describe budgets: ‘the Colby budget’, ‘the chewing gum budget’ etc. Labour have tried to label this one ‘the dishonest budget’, which is really more of an indication of how tin-eared and unimaginative the opposition party is in these sad days. So in the interests of public service I humbly suggest they try ‘the dog food budget’, the talking point being that that’s what New Zealanders are going to spend their retirement years eating for dinner under the National Government.

The decision to scrap the Cullen fund seems like an odd move politically. Why didn’t they just announce that they were suspending it for two to three years and that they’d review it based on the state of the economy at that time ? The only reason I can come up with is that they didn’t want it to become an election issue which is a rather vain and naive hope – even Labour are going to be able to make something out of the fact that around a million New Zealanders are set to retire over the next few decades and and there isn’t any money to pay for it.

Good journalism o’ the day

Atul Gawande who is a Professor of Surgery at Harvard as well as a contributing writer for the New Yorker goes to McAllen, Texas, which is one of the most expensive places in the US (and thus the world) for healthcare:

In recent years, we doctors have markedly increased the number of operations we do, for instance. In 2006, doctors performed at least sixty million surgical procedures, one for every five Americans. No other country does anything like as many operations on its citizens. Are we better off for it? No one knows for sure, but it seems highly unlikely. After all, some hundred thousand people die each year from complications of surgery—far more than die in car crashes.

Obviously the US has a different health care system to us, but the core problem – that they’re spending a lot more money for little gain, and even arguably worse outcomes – seems very relevant.

Surprise surprise

S & P have carefully examined the budget and decided not to downgrade our credit rating. One suspects you could have just shouted the S & P analysts to a few lagers, a lap dance and a curry and they’d have reached the same conclusion.

Also, the budget isn’t all doom and spending cuts – Treasury are getting an extra $60 million dollars next year! I guess it’s important not to degrade the government’s access to economic forecasts that are never accurate and insane policy recommendations that nobody listens to.

Budget Reax

Audrey Young:

It’s the skinny budget. Bill English has just put New Zealand on a permanent diet. Even his Budget speech is shorter than previous years.

If Government departments and public servants were feeling the pinch as this Budget was prepared, be warned: it will get tougher.

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The Golden Weather is over.

David Farrar:

It is pretty orthodox, and as I said probably almost wrote itself. It isn’t a budget for closing the gap with Australia, or seriously rejigging the economy. It’s the budget you have to have first, before you can get to grips with some of the other stuff . . . The consensus amongst most media in the lockup seems to be that there wasn’t much else the Government could have done.

Vernon Small:

But the big surprises are in the extent of delays to tax cuts and future contributions to the Cullen superannuation fund.

Tax cuts planned for 2010 and 2011 are on ice, and are likely to be repealed under urgency tonight reversing their passing under urgency last year. Goodbye the flagship promise from the 2008 election campaign, though ironically Labour’s key spending promises – Working for Families and student loans for instance – have survived.

In the Budget lock-up English said tax cuts were unlikely to be reinstated this term, and would only be back when forecasts were “magnificently better”.

With 10 years of deficits ahead, that is a promise on the never-never.

If tax cuts are on ice, the Cullen fund is in the deep freeze. A deferral was expected, but no automatic payments till 2020? That is one step short of cancelling it altogether and is a “mere” four elections away. Not so much a promise as soothsaying.

Bernard Hickey:

Do we reduce the living standards of the baby boomers and ensure there are jobs and standards of living for Generations X and Y. Or do we tax the earnings of Generations X and Y more heavily so the baby boomers can retire in comfort.

Bill English and John Key have deferred the decision in the hope that the economy will catch their hail mary pass.

But decisions delayed can often make the final decision more painful.

Pragmatism won through in Budget 2009, but we may all pay in the end if someone doesn’t confront our core problem at some stage in the next couple of years.

Our economy has too much government and its taxes are too high and in the wrong place. Until we change that structure to make us more productive, we will forever be stuck facing decisions about robbing Generation X Peter to pay Baby boomer Paul.

John Armstrong:

Bill English has dished up a budget which is a bitter pill wrapped in sugar-coating.

He has managed to scrape together enough cash to deliver more in the way of short-term sweeteners than had been expected, boosting spending on such things as hospitals, early childhood education, research and development and even a Prime Minister’s Science Prize.

Enjoy it while you can. Because there may be some jam after all today but its bread and water tomorrow and thereafter. English has judged that after nine years of a Labour spend-up it was asking too much for the populace to go cold turkey but the message is clear: it is belt-tightening time.

Fran ‘Haldol’ O’Sullivan:

. . . English knows full well he has been persuaded by cruel circumstances to deliver a (Socialistic) Budget that would have made his predecessor Michael Cullen proud . . . the Government is still funding Labour’s election bribes like the frankly extravagant Working for Families and the student loans scam.

Colin Espiner:

I have to say I expected a bit more slash and burn than the Government has in fact delivered, and a quicker return to surpluses than the Budget documents actually indicate.

It took me quite a long while to get far enough back in the Treasury forecasts to discover that the so-called “decade of deficits” English railed against and in fact said was “unacceptable” is actually still there.

Yup, I’m not kidding. It’s difficult to find it, but way at the back of the document, Treasury admits that the operating balance will hit minus $9.6 billion in 2012 and is still not forecast to return to surplus until 2019.

If Budget 2009 was a tussle between English and Key over spending versus saving, I reckon Key won.

Kieth Ng:

Fiscal hawk says: YUSSS! In yo face!

Quick post budget prediction

The next election will be about superannuation and very little else.

Non budget related economics writing

Stephen Levy profiles Hal Varian, Google’s chief economist:

Varian is an expert on what may be the most successful business idea in history: AdWords, Google’s unique method for selling online advertising. AdWords analyzes every Google search to determine which advertisers get each of up to 11 “sponsored links” on every results page. It’s the world’s biggest, fastest auction, a never-ending, automated, self-service version of Tokyo’s boisterous Tsukiji fish market, and it takes place, Varian says, “every time you search.” He never mentions how much revenue advertising brings in. But Google is a public company, so anyone can find the number: It was $21 billion last year.