ACCORDING TO THE
GENDER GENIE: This is a manly blog. Hmmmm. This appears to be primarily due to excessive use of the word 'the'. I shall have to cut down.
For those who are interested, [the] following are apparently masuline keywords:
some
this
as
now
good
something
if
ever
is
the
well
in
While [if] you want to bring out your feminine side you should use:
him
so
because
actually
everything
but
like
am
more
out
too
has
since
Link courtesy of
NZPundit.
SOME CENTRIST SPIN: Meanwhile,
Kiwi Pundit claims to be countering left-wing spin by arguing that lowering tax rates will actually increase government revenue. While theoretically possible, I have to admit I find this somewhat implausible. And Kiwi Pundit definitely doesn't do enough to prove it.
He offers two main reasons for his faith that lower tax rates will mean higher tax revenue.
He cites unidentified IRD Research, which has apparently found the optimum tax rate, for revenue purposes, to be between 15% and 23% of GDP. Now, I'm assuming (though KP can feel free to correct me on this) that by this he's referring to the Gerald Scully paper commissioned by the IRD in 1996. Problem is, the methodology of this paper has been pretty roundly destroyed by Ted Sieper, and even
Roger Kerr has disowned it. Moreover, as far as I was aware, the paper investigated relationships between tax and growth, rather than tax and government revenue. While lower tax might have positive growth effects, it doesn't follow that tax revenue will be higher, at least in the short to medium term.
He also refers to the recovery in tax revenue following Roger Douglas' tax slashing escapades in the 80s. But again, while these demonstrate the theoretical possibility of lower tax rates leading to increased revenue, they do nothing to prove that this will follow here. First, it's doubtful that all of the recovery was the result of tax cuts, as opposed to other Rogernomics reforms. Second, even if the tax cuts accounted for all of the growth, this would say nothing about the effect further tax cuts might have. We might have been better off, from a revenue perspective, to cut less or to cut more. The historical record gives us no guidance.
Of course, none of this says that cutting taxes is a bad idea of course (especially if one believes the link between lower tax and growth), but Kiwipundit's argument that it won't result in a cut in revenue seems a bit far fetched. Even Brash has estimated the fiscal cost at $1.7 billion.
SO WHAT"S CHANGED DON'S MIND?: In 1997, as head of the Reserve Bank
Don Brash stated that:
I myself do not know ... whether there is any causal relationship between low tax levels and high growth.
Yet right now he is
touting tax cuts as the secret to NZ's future growth. So what's changed his mind?
ANOTHER ONE BITES THE DUST: Centre Right leaders are falling left, right and um... right. Iain Duncan Smith's been voted out this morning as leader of the Conservative Party in Britain. Wonder who's going to be next?
DESTINY'S CHILDREN:
"After having launched only 3 months ago, Destiny NZ is presenting
stage one of its policy developments."
Predictably:
"All of Destiny NZ policies have been designed with the family in mind. 'The success of our nation will be determined by the design, health, and prosperity of our families,' says Richard Lewis, the Party Leader."
They're also promising to repeal prostitution reform, crack down on drugs, demand tougher sentences blah blah blah... If it sounds familiar, it's probably because just about all of it is already somebody else's policy - except perhaps for the introduction into the national curriculum of "'seven strands' of Character Education", and the "NATIONWIDE WORK ETHIC" (which is so important it has to be capitalised every time it's written). Aaah, social engineering.
Other highlights include:
Vowing to "slay the 'red tape' monster" and reform the Resource Management Act, while simultaneously promising introduce a "Responsible Business Act to ensure success is evaluated not only by economical, but also by qualitative factors, i.e. environmental, social and moral impact on future generations." (economical?)
Putting "inverted commas" around everything: e.g. In order to "eat" a man has to "work".
A rather odd attraction to the Treaty of Waitangi for an otherwise conservative party (I suppose Destiny have no political support to alienate with
philosophical consistency). The Treaty section is also the only one that makes any reference to God. Go figure.
COMPULSORY 2 CENTS WORTH - NATIONAL PARTY LEADERSHIP COUP BRINGS OUT THE STUPID IN EVERYBODY: So Don Brash and Nick Smith are the new National tag team. Seems they've already got some of the other parties scared senseless.
Jeanette Fitzsimons and Rod Donald:
"As Co-leaders of the
only real opposition party in Parliament, we didn't accept Mr English as the 'Official Leader of the Opposition' and we find Dr Brash's policies even less acceptable."
Winston Peters:
"New Zealand First, like most First World governments, rejects these hard right policies and has nothing in common with the politicians who espouse them.
We believe in an inclusive society in which everyone has a part to play."
They're not the only delusional ones. Unlike many on the left, who are hailing Don Brash's appointment as consigning National to semi-permanent opposition status, I think Brash is just what National needs at the moment. It's might be okay to judge right wing parties by left wing standards if you're criticising the substance of their policies, but as analysis of political strategy it's just silly. Let's face it, you couldn't get much worse than Bill. Right now National's nowhere: it needs to reclaim the right as much as it needs to reclaim the centre. And it should reclaim the right first. The election of Nick Smith as deputy should give it a decent shot at the centre once it sorts that out.
Labour should be worried. There's a long way to go yet, but National is at least in the race now.
THE WORLD IS TURNING UPSIDE DOWN: I never expected to end up opposing a regulation Kiwi Pundit supported, but it seems I've been proven wrong.
KP likes the proposed new emissions tests for cars. I'm not convinced the cost is worth it, especially when it's primarily going to hit low income families with crappy cars, who may have to pay up to $5000 to make them compliant. Most of the problems with exhaust pollution are worst when there's congestion: for which road pricing would seem a more sensible solution. But if we're going to push on with this regardless, we could at least spare the $40 odd million it's going to cost to do the testing (and accomplish similar results) by intorducing a simple 'visible exhaust smoke' test: this would seem to be a far more cost effective method of getting rid of smoking cars.
INDOCTRINATION WATCH:
No Right Turn is unhappy about Peter Dunne's
nefarious plans to indoctrinate children with values of citizenship.
I'm not sure exactly how this could be pulled off (are we to have Civics in school?). But assuming it could, I'm not sure that NRT's hostility to the proposal is entirely justified. They argue that the whole project
"
is based on a fundamental misconception about the role of the State in a pluralistic society.
A pluralistic society is one in which people are free to pursue multiple goods, and multiple visions of the Good Life. Another way of looking at it is a society where there is moral disagreement, and people follow different moral codes. What these goods or moral codes are is up to the citizens; the State will reflect them, but has no role in choosing them. It is not the role of the State to say "these are the goods we are pursuing, and we will indoctrinate people to pursue them".
In other words, the values should flow from the bottom up, not be imposed from the top down.
There are things a pluralistic society can do to encourage good citizenship, but they lie in providing the tools, not the values. Teaching people to think, to be reflective, and to decide for themselves what they want and how they want to live."
It seems to me that NRT has overlooked a crucial distinction between what we might call first and second order 'values'. Even if you accept that the first (which would include United Future's particular brand of Christianity, the Green's environmental philosophy etc.) should not be forced upon people, there is at least an argument that a second tier of values (mostly revolving around tolerance of others' first order value systems, but also including respect for democracy, the rule of law etc.) can legitimately be fostered in a liberal society. It is these that provide the framework for the pluralism that NRT so values; so what's wrong with promoting them?
I realise that this is a
massive debate in academia, but NRT runs straight past the whole thing.
NB: If anyone read the
Treasury Working Paper on the 'Inclusive Economy' a couple of years back - you'll recognise the United Future proposal. It was floated in 2001, but it seems no-one wanted a bar of it.
UNITED FUTURE MAKES A POINT: In reponse to
Green claims that "One in five doctors have patients who they know are using cannabis medicinally and many more would consider prescribing it if they were allowed"
United Future seems to make a valid point.
"
If the Greens were genuine in their concerns, they would be lobbying Medsafe, which sets the medicines schedule in New Zealand, not politicians ... should cannabis ever be used for medicinal purposes, ... it should go through the same rigorous process that any substance goes through before being approved as a medicine. It is an issue for scientists and pharmacists, not politicians and drug aficionados desperate to promote their favourite substance by any means possible."
Oh yeah, except that it would still be illegal to grow or possess it under the Crimes Act, regardless of what Medsafe decided. Whoops.
RANDOM MUSING: In response to criticism from Gerry Brownlee, a number of ACT MPs have
suggested that National is simply jealous of the fact that ACT has a coherent philosophy whereas National doesn't, making it difficult to tell where they stand on anything.
Nonetheless, while it's true that ACT's philosophy makes it clear where they are likely to stand on most issues (although it would be clearer if they were consistent with their principles more often) to my mind, this doesn't warrant the skiting. As far as I can tell, the ease with with one can predict a party's stance on a particular issue has less to do with the coherence of their underlying philosophy than with the degree to which that philosophy allows them to ignore facts in coming to their conclusions. The reason that we know what stance the more ideological parties like ACT are going to take is because their philosophies often don't require us to know the answers to complicated empirical questions about how things will work in practice. (Are the environmental risks associated with GE outweighed by the potential benefits? Who cares, as long as the engineering takes place without coercion and doesn't interfere with anyone else's property rights.)
The flipside of this is that the lack of policy clarity exhibited by National (and Labour) isn't due so much to a lack of philosophical clarity (although this probably plays some role), as to empirical disagreements about how best to further broadly similar aims.
Now to my mind a philosphy that can afford to ignore empirical evidence is clearly missing something, and this is why I don't think the clarity of ACT's policy stances gives them skiting rights. But for those those who hold true to their philosophy, the ability to ignore facts shouldn't be seen as a criticism. The fact is that libertarianism often can generate aswers to public policy questions mostly a priori. True, libertarians sometimes feel the need to back their conclusions up with consequentialist arguments, but by rights they shouldn't.
Of course, this is something of a caricature: ideology doesn't generate automatic answers to everything (the Supreme Court issue is one example where it doesn't). But I think the analysis holds for a large proportion of public policy issues.
HOORAH FOR CHEAP CLOTHES: Labour's
recently announced decision to continue with the (previously stalled) phasing out of tariffs on clothing and textiles satisfies two useful rules of thumb for identifying good policy:
(1) It's supported by the centre-right (
ACT, National and United Future) as well as Labour: meaning that, while it's unlikely to shaft the poor for the sake of the rich, it probably also makes good economic sense.
(2) It's opposed by
NZ First and the
Greens: meaning that it probabably makes good economic sense.
A quick tour of bad reasons for opposing tariff cuts:
Reason 1: "Labour has abandoned workers"
There's little evidence to suggest that tariffs have a significant effect on employment in the aggregate. There will be transitional costs, but these will be mitigated by phasing the removals in slowly. Moreover, tariff removal has real benefits for workers:
- it will promote employment opportunities in sectors in which NZ has a real competitive advantage
- greater certainty about their operating environment means that a number of employers in the clothing and textile industry have now indicated a willingness to invest further (and create more jobs) as a result this policy
- low income groups stand to benefit most from the almost $300 million savings to be made by consumers per annum
Reason 2: "We must aim to win the export and employment stakes, not some artificial tariff removal race"
Our export performance suffers as a result of tariffs, because internationally uncompetitive firms keep producing for a domestically protected market, instead of focusing on export opportunities.
Reason 3: "Reducing tariffs would increase imports to New Zealand and hence increase the record trade deficit and the current account deficit."
Aside from the fact that cutting tariffs should promote better export performance (thereby decreasing the trade deficit) this argument is just stupid. Somebody needs to slap the Greens and NZ First out of their 19th-century-mercanitilist-let's-measure-our-economic-performance-by-the-size-of-our-current-account mentality. Imports aren't bad. Cheap imports are even less bad. What's the problem?
Reason 4: "Previous tariff reductions have led to a flood of cheap imports from countries that don't mind exploiting their workers to turn a dollar."
Whacking great big tariffs on third world imports does nothing to protect their workers. It means those workers' labour is worth less (and they get paid less) because fewer people are willing to buy what they produce. Removing tariffs on items like clothing and textiles and incresing the amount they can export is one of the best ways to help poor countries out of poverty.
Reason 5: "Tariff removal must be consistent with the policies and progress of our trading partners."
It would be better if other countries came to the party on this, but when it boils down to it, the benefits of this policy have nothing to do with what other countries do or do not do: the benefits to consumers will accrue regardless of whether other countries follow suit; so will the productivity gains that tariff removal spurs; so will the investment benefits of greater certainty; and so will the benefits to poor countries.
More reasons in support of the proposed tariff cuts can be found in the Ministry of Economic Development's Report
here.
APOLOGIES: for the irregularity of blog activity lately. International travel is taking its toll, but we hope to resume our normal broadcasts shortly.
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