Hard News by Russell Brown

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Hard News: On Ideas

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  • Russell Brown,

    Rusell: ORLY? :) To be fair, you really think that a year ago we wouldn't have had a blaring lead about National's latest "flip-flop" and how could you trust these people to run a country when they can't manage a policy release...

    But ... but ... he did announce it. And then quietly shelved it. I don't recall the mocking headlines. To be honest, I think the political journalists just forgot ...

    Auckland • Since Nov 2006 • 22825 posts Report Reply

  • st ephen,

    They have always had ample mineral resources, but only in the last couple of decades have they pulled away from us in terms of per capita income.

    ...possibly coincides with increased investment in the mining industry, which has seen its export returns creep up to 40% of total returns? But also ticket-clipping in the financial sector in Melbourne and Sydney - they don't work harder, longer or smarter; they just take their cut from a bigger pie.

    And many wealthier countries than us have fewer natural resources.

    Sure, but they're not asking "why aren't we like Singapore or Switzerland". That would be interesting too though. It's obvious that some countries have been prepared to make sacrifices to get ahead - imagine South Korea's development constrained by OSH regulations and an RMA...

    dunedin • Since Jul 2008 • 254 posts Report Reply

  • George Darroch,

    I think Phil Goff's recent announcements on welfare policy show how disconnected the Labour Party was.

    Not one of them seemed to realise that to qualify for the dole, you needed to be both excuciatingly poor and have exhausted all of your liquid assets. Having illiquid assets of any kind is looked on in a very negative manner. And then, when you get the dole ($180 per week, after a two week stand-down), you don't have enough to live on, and have to beg for rent or mortgage assistance. This is often given at levels which do not allow the unemployed to maintain their accomodation. You're quite quickly encouraged to sell your house.

    Labour didn't get this. It still doesn't. I know a young woman on the unemployment benefit who dumpsters food, and sells the emergency food supplement in order to meet other essential costs.

    You're also highly encouraged to take any job offered, regardless of whether you're skilled in other things.

    The downside of all of this is that it harms New Zealand's productivity. People cling to their jobs more than they otherwise would, despite being ill suited to them and not utilising their full skill set. This is particularly the case in vulnerable sectors and those with high turnover. People know that going onto the benefit might see them shunted into the wrong job, and find it difficult to get back out. Employers are also more reluctant to offload staff, as they don't want to send their staff into poverty.

    Denmark has some of the highest unemployment benefits in the world, but it also liberal hiring policies. As a result, it has one of the highest productivity levels in the world, while maintaining very low unemployment.

    Paying higher unemployment benefits to raise productivity. There's an idea you'll never hear Brash countenance. Yet it's worth considering - we should be looking at all high wage and high productivity countries, and seeing what they differently, and what can and should be applied to New Zealand. I'm not saying we copy Denmark exactly, but we could do worse than ask these questions.

    WLG • Since Nov 2006 • 2264 posts Report Reply

  • Russell Brown,

    George, that was bloody interesting. Thanks.

    Auckland • Since Nov 2006 • 22825 posts Report Reply

  • Angus Robertson,

    Denmark has some of the highest unemployment benefits in the world, but it also liberal hiring policies. As a result, it has one of the highest productivity levels in the world, while maintaining very low unemployment.

    Denmark also has regressive immigration law which assists a low unemployment rate by restricting the flow of new entrants to the job market.

    Auckland • Since May 2007 • 984 posts Report Reply

  • Luke Williamson,

    Presumably we all need to earn more so that we can get back to buying bigger TV sets and speculating in the property market again. I'm sick of constantly being told I have to compare myself to Australians. I don't value that comparison and would rather compare myself to Uruguay or Portugal or somewhere a little more interesting. It used to be Australia AND Ireland but no-one's allowed to mention Ireland anymore after their wonderful dream economy exploded in their faces. Let's choose to compare ourselves to Zimbabwe and then we can all relax.

    Warkworth • Since Oct 2007 • 297 posts Report Reply

  • Gareth Ward,

    George, that was bloody interesting. Thanks.

    Seconded.
    And there has been regular reference to a "liquid" labour market at the edges. The type of shift you're talking about there directly addresses that

    Auckland, NZ • Since Mar 2007 • 1727 posts Report Reply

  • Kyle Matthews,

    Denmark has some of the highest unemployment benefits in the world, but it also liberal hiring policies.

    What do you mean by liberal hiring policies? Liberal for employers? Employees? Both?

    Since Nov 2006 • 6243 posts Report Reply

  • Paul Williams,

    Further to George's heretical comments, there's also a surprising reversal in some leading Australian economists thinking about the impact of changes to the minimum wages.

    On the one hand, you have the argument that decreasing the minimum wage has a negligable impact on labour participation rates since so few are on the minimum wage. On the other hand, there's an argument that increasing the minimum wage may improve productivity if it displaces what would otherwise sustainable low-wage, low-productivity work (this might be of little comfort to workers in textile, clothing and footwear however).

    Also, while we're comparing Australian and NZ responses to productivity concerns, you might appreciate the contrast between NZ capping funding for tertiary enrolments, at the very point Australia is uncapping them in universities and massively increasing funding for what's called vocational education and training. There's a wealth of research showing the very positive returns for investments in education and training including one that shows a $6.40 (NPV) return for every dollar invested. Odd then that National have cut spending...

    Sydney • Since Nov 2006 • 2273 posts Report Reply

  • Idiot Savant,

    Denmark also has regressive immigration law which assists a low unemployment rate by restricting the flow of new entrants to the job market.

    I call bullshit.

    Denmark is part of the Schengen Agreement. Anyone in the Schengen Area (which is most of the EU, with the exception of the UK, Ireland, Romania and Bulgaria, but with the non-EU Scandanavia, Iceland and Switzerland added) can move and work there freely. Like us and Australia - only much, much bigger.

    Palmerston North • Since Nov 2006 • 1716 posts Report Reply

  • Idiot Savant,

    I'm sick of constantly being told I have to compare myself to Australians.

    I'm not.

    Looking at the things which actually matter - freedom, democracy, toleance, a lack of racism or corruption - we come out rather well. its only businessmen who feelemasculated by the comparison.

    Palmerston North • Since Nov 2006 • 1716 posts Report Reply

  • Idiot Savant,

    Also, while we're comparing Australian and NZ responses to productivity concerns, you might appreciate the contrast between NZ capping funding for tertiary enrolments, at the very point Australia is uncapping them in universities and massively increasing funding for what's called vocational education and training. There's a wealth of research showing the very positive returns for investments in education and training including one that shows a $6.40 (NPV) return for every dollar invested. Odd then that National have cut spending...

    Not really. Lower taxes for their business mates trump investment in New Zealand every time.

    Palmerston North • Since Nov 2006 • 1716 posts Report Reply

  • Ian Dalziel,

    outsourcing to the private sector...
    aah! The Quigley effect!

    Can some one remind me how many times privatising or outsourcing to private consultants has saved money and helped "move things forward" productively...

    <aside> This approach to improving productivity is kind of up there with Bob Parker and Tony Marryatt - rulers of Christchurch - taking a fact finding tour to four cities vastly bigger and different to Chch - Vancouver, Portland, Seattle & San Francisco - nice work if you can get it (and someone else pays for it!) </aside>

    ...and could some one buy the Parliamentary Library a subscription to Private Eye a great source of tales of the ongoing folly of privatising or private/public partnerships.

    Moreu has a good take on it today...

    yrs
    Private Sonparade
    member of parsley mint

    Christchurch • Since Dec 2006 • 7943 posts Report Reply

  • Christopher Worthington,

    There seems to be a good deal of confusion about what "productivity" is arising from that fact that distinction between labour productivity and multi-factor productivity is not always apparent.

    Typically, adding capital will mechanically raise your output (real GDP), and therefore, since you're holding labour constant, raise labour productivity.

    However, whether this is desirable or not is entirely dependent on what the return is on that capital investment. So while it is true that lack of capital depth is a partial explanation of why our labour productivity is lower than Australia, that information does not imply that New Zealanders would be better off with a higher level of investment (investment is costly after all).

    When economists talk about productivity, they're normally referring to multi-factor productivity - that is, growth in output holding labour and capital constant. Now increasing this kind of productivity is fairly unambiguously desirable - a free lunch of sorts. But there's no reason to assume that capital deepening would have any impact on multi-factor productivity.

    As an aside, since we're measuring real inputs and outputs, there is no direct impact of a change in nominal wages on productivity either.

    Australia has its own productivity commission, I imagine we're heading towards something similar here.

    Since Jan 2008 • 25 posts Report Reply

  • Don Christie,

    Did someone mention Iceland?

    Wellington • Since Nov 2006 • 1645 posts Report Reply

  • 81stcolumn,

    This one's a bit of a drive by but on the same lines as the Doctors point:

    As an "Educator" I can teach more students to pass more tests - Does that make me more productive ?

    Nawthshaw • Since Nov 2006 • 790 posts Report Reply

  • Gareth Ward,

    multi-factor productivity - that is, growth in output holding labour and capital constant. Now increasing this kind of productivity is fairly unambiguously desirable - a free lunch of sorts.

    That's kinda misrepresenting MFP though - it's considering the best combination of inputs to get a growth in output. As opposed to looking at labour and assuming that growth comes from other factors.

    It's very tough to define though, and very hard to measure, so is unlikely to be used as the official measure here. It also doesn't strike me as allowing for a great deal of prescriptive policy

    Auckland, NZ • Since Mar 2007 • 1727 posts Report Reply

  • George Darroch,

    What do you mean by liberal hiring policies? Liberal for employers? Employees? Both?

    It's relatively easy to hire some, but it's also very easy to fire them. But since they're eligible for 80% of their former income for up to a year, up to particularly high income levels, it's not something employers are afraid to do. The high turnover in jobs (approx. 30% per year) is thought to drive much of the productivity, as people are slotted into the best places available. See Wikipedia's article on the concept for more information. I'm not an expert, just repeating what I know.

    The thing is that both parts have to be in place together. If you simply make it easier to fire people, as this Government has done, you make people markedly less secure in their jobs, so they cling to them. That can have the effect of making the labour market less mobile, not more.

    The system is also supported by Scandinavian headline tax levels. And they're in the middle of a continent. Not everything translates. But again, there's no reason why NZ couldn't adopt parts of the system. We weren't afraid to be the first in the world set in place a system that pays 80% of former income for up to a year in the case of accidental injury*.

    Denmark is regularly ranked as among the happiest nations on earth, for a number of reasons, but a feeling of personal security is one of them. Angus is right that the system is under threat from the men who peddle fear, selfishness, and insecurity, and stir the pot of ethnic tensions. The same type who conspire to prevent such a thing from being considered here.

    *mind you, this Government is determined to be the first in the world to remove such a scheme.

    WLG • Since Nov 2006 • 2264 posts Report Reply

  • Kumara Republic,

    The thing is that both parts have to be in place together. If you simply make it easier to fire people, as this Government has done, you make people markedly less secure in their jobs, so they cling to them. That can have the effect of making the labour market less mobile, not more.

    Not surprisingly, in France, this insecurity has taken the form of boss-napping.

    The southernmost capital … • Since Nov 2006 • 5429 posts Report Reply

  • Angus Robertson,

    I call bullshit.

    Denmark is part of the Schengen Agreement. Anyone in the Schengen Area

    The Danes are unique amoung the Schengen Area, in that they can accept or decline to adopt measures at their own behest. (Think of it this way, Denmark supports the Schengen Agreement like Peter Garrett opposes nuclear energy.)

    The UN High Commissioner for Refugees has been critical of their immigration law.

    It ain't BS.

    Auckland • Since May 2007 • 984 posts Report Reply

  • Stephen,

    But since they're eligible for 80% of their former income for up to a year, up to particularly high income levels, it's not something employers are afraid to do.

    Might be tricky to sell politically ('more money for bludgers' and all that - you don't have to be a nat/act voter to feel that way either) - would taking out income protection insurance provide the same effect? It's 75% in NZ from the few examples i've seen. Course a tax cut would need to fund this or people might grumble about the extra cost.

    and

    Employers are also more reluctant to offload staff, as they don't want to send their staff into poverty.

    Not sure I follow the bit about employers being afraid - why would they care what conditions their ex-employees are subject to? Not saying they don't care, but surely it varies too much to generalise about...

    Auckland • Since Apr 2008 • 47 posts Report Reply

  • George Darroch,

    Stephen, yes, indeed. I've had employers who didn't appear to care whether I was earning an income while I was their employee.

    However, there are a good proportion of employers who do care enough to not want to put their employees out into the colld. There are also those for whom well publicised layoffs would damage their brand or create the perception that they're a company in financial strife.

    So, not everyone, but I imagine enough to have some effect on productivity.

    WLG • Since Nov 2006 • 2264 posts Report Reply

  • George Darroch,

    Might be tricky to sell politically

    That's an understatement. Still, if we're going to think creatively, and look at what might work here....

    George, that was bloody interesting. Thanks.

    I've had a lot of years to refine these ideas. I'll have a few more, by the looks of things.

    WLG • Since Nov 2006 • 2264 posts Report Reply

  • Idiot Savant,

    The Danes are unique amoung the Schengen Area, in that they can accept or decline to adopt measures at their own behest.

    You forgot a very important word there: "new". Because they came in late, they can refuse new measures. But they're in for the fundamentals, which includes free movement of workers.

    The UN High Commissioner for Refugees has been critical of their immigration law.

    Specifically, their asylum policies. I agree, they're regressive - but they have very little to do with entry of "foreign" (to the extent that word applies in Europe anymore) labour into the Danish labour market. Despite the media attention, refugees are not Denmark's primary source of migrants; they accept only 500 a year, which works out to less than 4% of their total net migration.

    In other words, you're still talking bullshit.

    Palmerston North • Since Nov 2006 • 1716 posts Report Reply

  • Idiot Savant,

    Not sure I follow the bit about employers being afraid - why would they care what conditions their ex-employees are subject to? Not saying they don't care, but surely it varies too much to generalise about...

    Its called a sense of social responsibility - somethign sadly lacking among our business leaders.

    Palmerston North • Since Nov 2006 • 1716 posts Report Reply

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