Dawn Chorus with 6 things at 6:26am, including: GDP/hour slumps back to 2012 levels; Council loses big High Court case on irrigation; Alternative review of Kāinga Ora;
GDP .. So much work ( eg voluntary , parenting ) is not taken into account . I am no economist ..but thought Marilyn Warings TED talk on GDP some years ago an interesting angle to how work is valued ( or not ) .
The cicadas and dawn sounds this morning a magical start to the day ! thanks
Another area I see holding productivity down (in a technical sense) is all the effort to meet regulations, especially in finance and local government. Those activities don’t generally show up as productivity because the only GDP created is the salary of the employee. For everyone else it’s just more cost (inflation) which then eats away at real growth. This is the bureaucratic cost that drags productivity down.
You also understate the vicious circle problem that arises with the inability to change things - starting a business is hard and risky, AND tax disadvantaged, so of course no one bothers. This contributes to less competition as well as low productivity, and therefore higher inflation (which seems stickier here than abroad, notwithstanding aggressive interest rate moves.)
One thing you didn’t mention on councils yesterday was their dependence on building permits to generate revenue. If building/permits continue to plunge, it’s additional stress on council budgets.
Happy birthday 🎂 old man! (I turned 59 9 days ago! )
Where is the joy in anything the govt are doing? It feels like white men (and Winston) in suits bashing away at how awful things are. And they are awful for some but do we need a privatisation agenda that feels like it’s coming?? Secondary School here built with PPP but can community use its facilities out of hrs?? NO, not without paying $$$$. So hardly gets used at all.
Hi Bernard, great post and pretty much agree with every point. However I've just come back from a trip to Silicon Valley and in has been interesting to see the ecosystem they have setup between early stage VCs and academia to spin out promising IP, and just have not seen much equivalent here in NZ. Is that not also an issue here in NZ that even if we realigned the economic incentives towards R&D investment, that there is necessarily a lot of (at least obvious) places to put that capital? And also is there any political party that has formed any kind of policy of setting up some basic R&D infrastructure for private funding to funnel into in NZ?
Happy Birthday Bernard, this morning’s Kaka was accompanied by the loudest serenade from your local wildlife yet, so we can assume they are celebrating you as well.
Numbers 4 and 5 do not make any sense to me to be honest... How is giving money to families with kids to help them with childcare costs end up being portrayed as a benefit for property investors??? This is some serious mental gymnastics..... One day the readers here shout that this government hates children. The next day when the government helps working families with childcare costs it is being vilified for doing it.
The concept of productivity is a difficult one for the layman- a lot of people think falling productivity literally means lazy workers spending too much time on their phones instead of working! This misunderstanding is very conducive to political worker-bashing I'm sure.
In reality, labour productivity is actually capital productivity expressed in terms of the labour applied to the capital= Technological change = new investment. (Bernard says this).
The blip after covid is people spending money they couldn't spend during covid- but much of the money came from Covid support payments. The big down-slide since mid '22 in graph 2 is 'reverse LSAP' where the RB is selling bonds to NZDMO i.e. the Treasury- more than $8 billion srarting in June '22 (data files here: https://www.rbnz.govt.nz/statistics/series/reserve-bank/open-market-operations ). This is money that Treasury can't spend on goods and services, sucking money out of the economy, thus the recession.
This is part of a rule that treasury shouldn't run a permanent deficit at the reserve bank- I believe it's an IMF rule that has its origin in the ancient days of 'gold standard' where countries would periodically leave the standard during a crisis (usually war) then have to cut the money supply drastically afterwards (creating recession in the process) in order to return to parity with gold reserves , but there's no good reason for it in accountancy terms or in a fiat/credit based economy. IMO it's a sop to the commercial bank sector where the government is thus forced to borrow. It's also a good demonstration of how reductions in government spending creates recession, not the other way round.
Yo Bernard, I trust you have a Birthday celebration that includes lots of awareness that your productivity and abilities result in much appreciation from me and many.
Bernard, I’m listening to a great podcast from the guardian Australia about ‘who screwed millennials ‘ out of a house in Australia.
I’ll be sending it to the boomers in my life for the arguments to understand what changed compared to their lives. So many people don’t understand the economics and would be great to see a NZ commentary on similarités and differences - as I think it’s even worse in NZ than Aussie. As you highlight here, we don’t have even the tax system or productivity of Australia.
Happy birthday, Bernard!
Ditto for a happy day Bernard . 🎉
GDP .. So much work ( eg voluntary , parenting ) is not taken into account . I am no economist ..but thought Marilyn Warings TED talk on GDP some years ago an interesting angle to how work is valued ( or not ) .
The cicadas and dawn sounds this morning a magical start to the day ! thanks
Is long covid another factor in the reduced labour productivity since 2020?
https://billmitchell.org/blog/?p=61652
Hari huritau e te rangatira!
Happy Birthday, hope it’s a good one!
Another area I see holding productivity down (in a technical sense) is all the effort to meet regulations, especially in finance and local government. Those activities don’t generally show up as productivity because the only GDP created is the salary of the employee. For everyone else it’s just more cost (inflation) which then eats away at real growth. This is the bureaucratic cost that drags productivity down.
You also understate the vicious circle problem that arises with the inability to change things - starting a business is hard and risky, AND tax disadvantaged, so of course no one bothers. This contributes to less competition as well as low productivity, and therefore higher inflation (which seems stickier here than abroad, notwithstanding aggressive interest rate moves.)
One thing you didn’t mention on councils yesterday was their dependence on building permits to generate revenue. If building/permits continue to plunge, it’s additional stress on council budgets.
Wishing you a very happy day, Bernard, filled with aroha and whānau.
🎶 Hari huritau ki a koe 🎶 🥳 🍻
Be blest with health, and peace, and sweet content.
- Robert Burns
🌊 🌬 🌱
Happy birthday 🎂 old man! (I turned 59 9 days ago! )
Where is the joy in anything the govt are doing? It feels like white men (and Winston) in suits bashing away at how awful things are. And they are awful for some but do we need a privatisation agenda that feels like it’s coming?? Secondary School here built with PPP but can community use its facilities out of hrs?? NO, not without paying $$$$. So hardly gets used at all.
Happy Birthday Bernard have a great one. It looks like a beautiful day weather wise. Enjoy! Thanks for another insightful dawn chorus.
Hi Bernard, great post and pretty much agree with every point. However I've just come back from a trip to Silicon Valley and in has been interesting to see the ecosystem they have setup between early stage VCs and academia to spin out promising IP, and just have not seen much equivalent here in NZ. Is that not also an issue here in NZ that even if we realigned the economic incentives towards R&D investment, that there is necessarily a lot of (at least obvious) places to put that capital? And also is there any political party that has formed any kind of policy of setting up some basic R&D infrastructure for private funding to funnel into in NZ?
Happy Birthday Bernard, this morning’s Kaka was accompanied by the loudest serenade from your local wildlife yet, so we can assume they are celebrating you as well.
In huge appreciation for what you do. Hugs!
Numbers 4 and 5 do not make any sense to me to be honest... How is giving money to families with kids to help them with childcare costs end up being portrayed as a benefit for property investors??? This is some serious mental gymnastics..... One day the readers here shout that this government hates children. The next day when the government helps working families with childcare costs it is being vilified for doing it.
Happy birthday Bernard. Keep doing what you're doing its so important! Have a great day
The concept of productivity is a difficult one for the layman- a lot of people think falling productivity literally means lazy workers spending too much time on their phones instead of working! This misunderstanding is very conducive to political worker-bashing I'm sure.
In reality, labour productivity is actually capital productivity expressed in terms of the labour applied to the capital= Technological change = new investment. (Bernard says this).
The blip after covid is people spending money they couldn't spend during covid- but much of the money came from Covid support payments. The big down-slide since mid '22 in graph 2 is 'reverse LSAP' where the RB is selling bonds to NZDMO i.e. the Treasury- more than $8 billion srarting in June '22 (data files here: https://www.rbnz.govt.nz/statistics/series/reserve-bank/open-market-operations ). This is money that Treasury can't spend on goods and services, sucking money out of the economy, thus the recession.
This is part of a rule that treasury shouldn't run a permanent deficit at the reserve bank- I believe it's an IMF rule that has its origin in the ancient days of 'gold standard' where countries would periodically leave the standard during a crisis (usually war) then have to cut the money supply drastically afterwards (creating recession in the process) in order to return to parity with gold reserves , but there's no good reason for it in accountancy terms or in a fiat/credit based economy. IMO it's a sop to the commercial bank sector where the government is thus forced to borrow. It's also a good demonstration of how reductions in government spending creates recession, not the other way round.
Yo Bernard, I trust you have a Birthday celebration that includes lots of awareness that your productivity and abilities result in much appreciation from me and many.
Bernard, I’m listening to a great podcast from the guardian Australia about ‘who screwed millennials ‘ out of a house in Australia.
I’ll be sending it to the boomers in my life for the arguments to understand what changed compared to their lives. So many people don’t understand the economics and would be great to see a NZ commentary on similarités and differences - as I think it’s even worse in NZ than Aussie. As you highlight here, we don’t have even the tax system or productivity of Australia.
https://podcasts.apple.com/nz/podcast/full-story/id1482061243?i=1000650261496
Happy Birthday Bernard and congratulations on your spritely mind pondering GDP in relation to happiness. Waiheke working its magic.