The Dim-Post

November 29, 2009

Transuranic, heavy elements may not be used where there is life

Filed under: Politics — danylmc @ 8:07 pm

The recommendations of the Brash task force into productivity have been leaked to TVNZ, presumably by the National Party so that they could proactively distance themselves from the report.

John Key and Phil Goff are so opaque and their real convictions so mysterious it’s a relief to be dealing with Don Brash again, with his faith in the magical powers of monetarist policy and his majestic indifference to anything that’s happened back on Earth since the repeal of the Corn Laws. Say what we like about Brash, at least we know what he truly, utterly believes. His advice has little to do with productivity and will be hauntingly familiar to the residents of Iceland, Estonia and other such nations that have recently had their banks nationalised and their treasury bond ratings downgraded to junk status: flat tax, slash spending, privatise everything.

Key told TVNZ that Brash was a psychotic maniac (I paraphrase slightly) and that he would not be implementing his recommendations.

The task-force was negotiated by the ACT Party in their coalition deal with National. Finding out that Dr Brash  likes tax cuts has cost taxpayers about half a million dollars.

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36 Comments »

  1. Half a million dollars will be money well spent if the report is symbolically burned on the steps of Parliament and the ashes scattered over the Southern Ocean. The recommendations are likely to be horribly expensive.

    Comment by George Darroch — November 29, 2009 @ 8:37 pm

  2. Yeah. Key is real opaque. Who’d Brash have in Finance? Who appointed Brash productivity czar?

    This report’s job is to give the government room to move right while still being reported as centrist. ‘The crazier the better’ was probably in the brief.

    Comment by Pascal's bookie — November 29, 2009 @ 8:45 pm

  3. “The crazier the better” possibly, except also include a “don’t touch super” clause. Even though that’s where most of the money goes isn’t it?
    Means testing (or whatever) education benefits will make us more productive?

    Comment by Roger Parkinson — November 29, 2009 @ 8:53 pm

  4. Bookie has it in one. This is the rightward outlier against Cullen’s leftward, in order to give Key leave to establish a new false mean. Which we’ll begin to see in reality — as a not-false mean — after 2011.

    L

    Comment by Lew — November 29, 2009 @ 8:55 pm

  5. I agree on the half a million well spent. It is almost as well spent as the half a million that ‘we” spent getting Clark and her Renfield sent to New York.

    Comment by Barnsley Bill — November 29, 2009 @ 9:04 pm

  6. Bookie has it in one. This is the rightward outlier against Cullen’s leftward, in order to give Key leave to establish a new false mean. Which we’ll begin to see in reality — as a not-false mean — after 2011.

    That’s conspiracy talk, Lew. You’ve been spending too much time on Cryptogon.. this is a centre-left Government, and has no right-wing agendas.

    Comment by George Darroch — November 29, 2009 @ 10:58 pm

  7. Singapore and Irelands economic models have fallen into the memory hole, Slovakia is the new Randian economic fantasy land where flat tax pixie dust and slashing public spending have provided endless rainbows and unicorns.

    Key on Nat radio said the recommendations were ungood, then turned around and said that some of them have merit further down the road thus Doubleplusgood.

    “We’ve always been at war with Eastasia”

    Comment by andy (the other one) — November 30, 2009 @ 6:39 am

  8. This report’s job is to give the government room to move right while still being reported as centrist.

    Maybe – that’s what Labour are saying. But given the state of the opposition right now National could implement pretty much any far-right policies they felt like without risking popularity; I don’t think they need decoy task forces to shift the centre of debate.

    ACT wanted this task-force, it didn’t ‘cost’ Key anything to give it to them, it could be as simple as that.

    Comment by danylmc — November 30, 2009 @ 7:56 am

  9. ACT wanted this task-force, it didn’t ‘cost’ Key anything to give it to them, it could be as simple as that.

    In fact its a gift from the Flying Spaghetti Monster for Key.

    It draws a distinct line between Key and Brash (Winner/loser)and the approach to politics and the economy, making Brash look like the ACToid he is. Shorter Key: ‘Heh, the old boss and his craaaazzzy old ideas. He had to print out his emails, I am on facebook, Burn!’

    Unlike the still fuzzy line between the Goff/Clark leaderships.

    Comment by andy (the other one) — November 30, 2009 @ 8:05 am

  10. Transuranic, heavy elements may not be used where there is life

    Actually made my morning.

    Comment by lyndon — November 30, 2009 @ 8:35 am

  11. Yep central bankers / planning have ruined economics and lives all around the world.

    What Brash / Act is promoting is nonsense. What the hell does the tax rate matter if all you have got going for you are agricultural goods and tourism?

    “His advice has little to do with productivity”

    So true and nothing to do with free markets.

    And in Iceland now that central banking voodoosim is behind it the free market properly rewards savings and hard work.

    Comment by Simon — November 30, 2009 @ 9:02 am

  12. What the hell does the tax rate matter if all you have got going for you are agricultural goods and tourism?

    We should double tax rates and get more moneys! :-D :-D

    Comment by StephenR — November 30, 2009 @ 9:24 am

  13. I don’t think they need decoy task forces to shift the centre of debate.

    They never hurt though.

    NZPA

    Finance Minister Bill English was asked on Newstalk ZB what was the point of the report if the Government was rejecting its recommendations before it was even released.

    “It’s not a complete waste of time, politics is about getting a balance between what’s practical and what’s going to make progress,” he said.

    Not having a translator handy, I think that is English saying he politics is the art of dragging the electorate to your ideological position, and that this report is useful for that.

    Comment by Pascal's Bookie — November 30, 2009 @ 10:12 am

  14. Our problems vis a vis the Australian gap are a lack of capital, poor savings rates and a lack of investment for productivity. Answer? 25% FLAT TAX AND SELL THE SUPER FUND YAYS!

    Comment by garethw — November 30, 2009 @ 10:31 am

  15. Heh:

    All we need now is for the Insert Name of Fringe Left Wing Think Tank Here to release the findings of its shadow task force that recommends raising income tax rates to %70 (with a corporate rate of ‘death by execution’), introduce drastic increases to twilight golf and te reo sing-along courses, compulsory moroccon cooking night-classes for all under 75s, and to release all repeat violent sex-offenders in order to fill the predicted increase in demand for babysitters that would be associated with all this extra night-class attendance. Then politicians of the centre-left can come out swinging, saying that such ideas are utter madness and that perhaps we should just trust them to take care of far more modest changes to the tax system.

    http://lifeandpolitics.wordpress.com/2009/11/29/mind-numbing-brilliance/

    Comment by StephenR — November 30, 2009 @ 10:33 am

  16. “His advice has little to do with productivity”

    Forgive me if this seems too blindingly obvious that it makes me look rude to think ya’ll are a bit, err, dim to point it out: but the productivity of a lot of government workers, such as (by way of example) the Families Commission is ZERO. Yet money is taken from the pockets of the worker, nay, food is taken from the mouths of her children, to pay for the foolish vagueness of this “Commission” and it’s “output”.
    The productivity of the country would be enhanced somewhat, if the government “freed up the future” of the Commission’s numerous well-paid staff: they would be reemployed in the private sector to pay tax. Even if all they did was pack groceries whilst receiving WFF, that’s a better use of their time and my money than the non-output of the Commission.

    Comment by Clunking Fist — November 30, 2009 @ 11:59 am

  17. @lyndon #10. mine too.

    pity we can’t export all those sapphires and all that steel to make NZL the lucky country.

    Comment by Che Tibby — November 30, 2009 @ 12:44 pm

  18. …the productivity of a lot of government workers, such as (by way of example) the Families Commission is ZERO.

    Oh, I’m sure they produce lots of reports ;P

    I see your point, and yet you picked a terrible comparison. Why do we need people to pack our shopping? Shouldn’t they be doing soemthing more useful, like weeding, or going down a mine? But no, it’s a generic example – as is your choice of government sector (I am not going to go into th issue of whether it is broken or not, as that is a very different and complicated topic, and detracts from the subject at hand)

    But more seriously, you’re measuring direct productivity versus societal productivity. Beaurcracy is there to provide a framework and direction,a nd to put back on track, the functions of society which allow us to be productive, and to make use of that production in a way which benefits us. The Family’s Commisson (in theory) enhances the chances of fmailys not damaging the productivity of others, and of being productive now or in future. And packing shopping bags ALSO falls into the latter: that of ‘enhancing the productivity of others

    Comment by Flynn — November 30, 2009 @ 1:22 pm

  19. From the report: “anyone earning more than $14,000 a year would pay less tax and that would lead to a surge of enterprise, excitment about the future, and stronger economic growth”.

    Baaaahahahahaha. So a good chunk of people wouldn’t just go “sweet, bigger paycheck, I’ll go buy that boat”? Inane hoping and an almost religious belief in the elasticity of the Laffer Curve is not really a useful contribution

    Comment by garethw — November 30, 2009 @ 1:22 pm

  20. Meanwhile Bernard Hickey thinks its amazing except for one thing. His obsession of a Capital Gains Tax wasn’t included. Also does anyone else find the idea of a congestion tax a bit stupid when there is nothing that talks about public transportation or anything like that?

    I do tire of the right sometimes. They just can’t seem to evolve from the eighties. Its disappointing.

    Comment by gingercrush — November 30, 2009 @ 1:50 pm

  21. indeed. with no evident savings culture, huge tax cuts are a recipe for a consumer binge.

    highly productive all that importing huge TVs.

    Comment by Che Tibby — November 30, 2009 @ 1:50 pm

  22. highly productive all that importing huge TVs.

    But thank god they won’t be regulated for energy efficiency! Cause we don’t want anyone regulatin our god give right to waste energy!

    Comment by George Darroch — November 30, 2009 @ 1:57 pm

  23. And as predictable as Don Brash’s 2025 report was so too is the predictable crap coming from the left.

    Goff now would be the time to talk up your speech on the Reserve Bank Act and how that could improve productivity and do much better than what Brash came up with.

    Comment by gingercrush — November 30, 2009 @ 2:05 pm

  24. how to close the gap with Aussie by 2025:

    divert all production to military and invade them in 2024.

    Wouldn’t it make more sense to close the gap between Mangere and Remuera before we worry about Australia?

    Comment by nommopilot — November 30, 2009 @ 2:08 pm

  25. Brash obviously has serious mental issues….probably bought on by extreme old age (get the locks fixed on the old peoples home).

    So predictable and up to the usual tory standard…in other words report only usuable to wipe ones behind!

    Bring back Helen.

    Comment by kerry — November 30, 2009 @ 2:33 pm

  26. Can someone who would be more productive (remembering that our issue isn’t labour-hours-worked) because they got a tax cut please put their hand up?

    Comment by garethw — November 30, 2009 @ 3:04 pm

  27. Putting all the pointing-and-laughing to one side though, I’m not quite following how returning Govt spending as a percentage of GDP to the same levels as 2005 (to 29% from 35%) could allow for such a dramatically lower tax rate than what he had in play back in 2005?
    Could someone do the maths for me please?

    Comment by garethw — November 30, 2009 @ 3:17 pm

  28. Could someone do the maths for me please?

    It is alchemy brother, 2 drops of unicorn sweat, 8.37 shavings of a rainbow, sprinkle generously with pixie dust and stir with your favourite cum stained copy of atlas shrugged. Huzzzah!!

    Its a kind of magic!

    Comment by andy (the other one) — November 30, 2009 @ 4:52 pm

  29. Flynn @ 18
    “I see your point, and yet you picked a terrible comparison. Why do we need people to pack our shopping?” Cos I absolutely hate packing my own shopping and am prepared to pay New World prices to have it done for me whilst I chat with the staff. Who are you to say that “we” “doesn’t need” such and such a service. If a person is prepared to pay for a service, then we NEED it. You the fuck is prepared to pay for all those useless reports? Next point.

    “Beaurcracy is there to provide a framework and direction” Yes, but what if your fundamental belief is wrong? Most of my life is not DIRECTED by bureaucracy, but stifled or MIS-directed by it. This bureaucracy has not taken the time to consult me or understand my wishes. This bureaucracy seems to exist in order to make work for like minded individuals.
    “The Family’s Commission (in theory) enhances the chances of fmailys not damaging the productivity of others, and of being productive now or in future.” It does no such thing. It’s probably not even theoretically possible to “enhance” when no one is prepared to pay for this “service” so we are forced to pay for it.
    I’ll give you a real-world example. I have children in preschool. I am willing and kinda able to pay for this. But the bureaucracy makes my chosen preschool have certain ratios of staff to pupils, and had mandated that, over time, all these employees had to be fully trained and registered pre-school teachers. No thought was given to the demand/supply equation and, like a property bubble, a gummint mandate forced up the price of these teachers. This would have the effect of pricing me out of the market for childcare, but luckily the current shower has halted the movement towards that mandate. I’m sure the bureaucracy had my child’s best interests at heart, rather than being heavily lobbied by the early childhood teachers association (or whatever). But they never asked me if I was happy for my children to be looked after by a mix of qualified and unqualified staff. They tried to impose a Rolls Royce service on me that I couldn’t afford, threatening the viability of many a preschool.
    “And packing shopping bags ALSO falls into the latter: that of ‘enhancing the productivity of others‘”
    I don’t care about productivity when it comes to groceries: if I were to have me nails done at one of these fancy new nail salons, I wouldn’t be enhancing my productivity as I can’t come back later to pick up my completed nails. It about something economists call “social welfare “that is, the satisfaction I get from paying someone to perform a service or supply a good. The idea is that I’d hardly spend the money if I didn’t get some benefit from it, this is me behaving “rationally”: if you hate the thought of having someone fiddle with your nails, or can’t see the point of spending money that way, that does not make one of us irrational, it merely means we would choose different ways to enhance our social welfare. The way you talk about productivity makes me think you wnt to start seeing daily tractor production statistics.

    Garethw @ 19 “Inane hoping and an almost religious belief in the elasticity of the Laffer Curve is not really a useful contribution”
    Strange rference to the Laffer curve: do you believe the government should be trying to maximise the tax take? Or should a government only take what is adequate to fulfill the obligations expected by the populace?

    Che @ 21
    “with no evident savings culture, huge tax cuts are a recipe for a consumer binge.”
    Why should we save: the gummint has all the money to look after us in our retirement, treat us when we get sick, feed and clothe us if we decide we want a baby. It’s called moral hazard and is what happens when you train the populace to believe their gummint has all the answers.

    Comment by Clunking Fist — November 30, 2009 @ 5:37 pm

  30. “Strange rference to the Laffer curve”
    I don’t think it’s that strange – it’s the academic underpinning of “drop taxes and there’ll be a surge of economic activity” that Brash et al are proposing here. Problem is, there’s never been any evidence at works outside the theoretical construct of a 75% tax rate vs a 15% tax rate.

    I would actually support a return to a Govt spending level of ~2005 – there has been an unnecessary level of growth in the years beyond that. I just fail to see how spending like it’s 2005 gets you a 20% tax rate when we had a 39% rate then?

    Comment by garethw — November 30, 2009 @ 6:46 pm

  31. Interesting – read the tax section of the full report, specifically around page 100 or so. They offer another option to the 20% aligned top rate – a dual system like Scandinavia’s where income from capital is taxed much lower than a progressive income tax. It seems they are saying if you slash spending as they suggest, you’d leave the income tax AS IS and drop the tax rate on capital income (note, this is not capital gain) to 12.5% They kinda shoot themselves in the foot by then saying a capital gains tax is awful – yet the Scandinavian tax systems apply the (lower) capital tax rate on gains as well as income.

    I gotta say, that approach is really attractive to me (not at quite that low a level, the spending slash seems a bit extreme) – capital accumulation is vitally important for us, much more so than incentives to working harder. And the guts of the report really seems to be pretty agnostic as to which of those two options should be taken (they are the leading major thoughts on tax globally it seems) – the 20% flat tax rate was given prominence in the Exec Summary for some reason though (I wonder if Brash wrote that himself and it was analysts doing the bulk of it).

    Comment by garethw — November 30, 2009 @ 8:18 pm

  32. “drop taxes and there’ll be a surge of economic activity”

    I think you are confusing two ideas. The Laffer curve (which IS only a theory) attempts to demonstrate that there is a tax rate that maximises the tax take, and that in diffeent economies (cultures?) the rate may be different. It’s all about how the taxpayers behave or react to differnt rates of tax.

    The idea “drop taxes and there’ll be a surge of economic activity” is another idea or bunch of ideas, empirically proven I believe, that the multiplier effect of govt spending is seldom better tah 1.0, whereas the multiplier effect of private expemditure (a mix of investment and consumption) can be quite a bit higher than 1.0. So assuming taxpayers spent 80% of a cut cut, then a private sector multiplier of 1.25 would see GDP remain about the same. The real world shows that a tax cut matched by a spending cut takes a little while to work through, as ll those redundant govt workers find new work in the private sector.

    Comment by Clunking Fist — December 1, 2009 @ 3:30 am

  33. It’s all about how the taxpayers behave or react to differnt rates of tax.
    Bingo. I don’t doubt that Brash et al believe in a greater private multiplier, but they also clearly believe that a lower tax take from now will see people work harder/better/magically to unleash this surge of economic activity. It’s quite clearly stated in the document (as a given, without any real analysis).

    Comment by garethw — December 2, 2009 @ 8:33 am

  34. “to unleash this surge of economic activity. It’s quite clearly stated in the document (as a given, without any real analysis).”
    Well, as the “science” of the private sector vs public sector multiplier is “settled”, of course it’s a given. Scientists seeking a grant to study the effect of global warming on the garden earthworm don’t first have to prove global warming, do they.

    Comment by Clunking Fist — December 2, 2009 @ 12:27 pm

  35. The Brash Taskforce`s call for congestion tax, starting in Auckland, is most welcome. See my blog http://www.greenbranz.org/?cat=20

    Comment by Tony Everitt — December 3, 2009 @ 6:10 am

  36. [...] example, the term monetarist.  In a discussion with my sister and on this post from the DimPost the term “monetarist” was used to describe a relatively right wing outlook about [...]

    Pingback by TVHE » What happened to the term monetarism? — December 3, 2009 @ 7:04 am


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