By Alex Tarrant
We're not a bunch of neo-liberal orthodoxists.
That's the message from Treasury Secretary Gabriel Makhlouf as he continues the crusade to prove the public servants at number one The Terrace are not a bunch of pencil heads living in an ivory tower.
Appearing before Parliament's Finance and Expenditure Select Committee on Wednesday, Makhlouf was responding to comments from New Zealand First leader Winston Peters criticising Treasury's "Monty Python analysis" and "orthodox neo-liberal advice."
“Firstly, we’re not neo-liberal orthodoxists," Makhlouf said.
“I’m happy to put it on the record now."
“What we are, are people who think really hard about evidence, and really hard about the quality of our analysis, and really hard about how we’re going to improve the living standards of New Zealanders," he said.
“Living standards – you can call it quality of life if you want – is what we’re focussed on. In some ways I don’t think it’s a brand new thing that the Treasury’s doing.
“What it is, is we’re actually explaining it better. We ourselves are understanding it better, and we don’t see inconsistencies between improving living standards and some of the stuff that people would describe as orthodox," Makhlouf said.
“I’m completely relaxed about it. You could call me unorthodox or you could call me orthodox. But we’re focussed on improving New Zealand’s living standards," he said.
Advice needed to be based on good evidence, while implementation and execution were just as important pieces of advice and analysis as the theory behind policy recommendations.
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and we don’t see inconsistencies between improving living standards and some of the stuff that people would describe as orthodox," Makhlouf said.
Let's define 'living standards'. How about 'ability to buy stuff'?
Let's define 'orthodoxy'. How about 'belief that a growth-based fiscal system can last indefinitely.?
I keep putting this up, but there is no better graph of what is inevitably ahead, if we keep on orthodoxily 'buying stuff'.
http://www.smithsonianmag.com/science-nature/Looking-Back-on-the-Limits-of-Growth.html
Ask the real question of our time, Mr Makhlouf. Sorry, but it is outside orthodoxy, but then, every game-changer is (goes with the territory). Orthodoxy poo-poo-ed what is in that graph, for 40 years, clearly demonstrating the cranial-capacity limits of those aligned with the - indeed any - status quo.
Steger suggested back in 2005 (might have updated the ideas further since - I haven't checked) that the new ideological "centre" is globalism (essentially neoliberal + war on terror + globalization narratives/institutions) - and it has two variants: pre-911 market globalism and post-911 imperial globalism.
And that the new paradigm Left of these globalist positions might, for example, be conceived as occupied by global feminism, international-populism and global social justice movements, and the Right might be represented by ideologies such as national-populism, new localisms and religious fundamentalism.
It's an interesting typology to apply to NZ.
Steger, M. (2005) ‘Ideologies of globalization’, Journal of Political Ideologies, 10(1):11-30.
Article is posted online as well.
“What we are, are people who think really hard about evidence, and really hard about the quality of our analysis''.
One assumes then that Mr Makhlouf has spent a long time thinking really hard about the success that his former patron Gordon Brown made of running the UK economy.
All fine words but the results of all their really hard thinking and exaining the facts has been singularly ineffective if we look at the results that their advice to succesive governments. Where once the average familly enjoyed owning their own home and was able get by with a few pleasures, today the majority of people are stuggling between pay cheques and a rapidly increasing number will never be able to afford their own home. Many of our young folk are leaving because they can see no future here. Go and think about those facts Mr Maklhouf and consider where your department's past advice has been wrong. You surely can't tell us that it has been correct and effective.
ChrisM - this is a global problem, shifting away is a temporary solution, they're not making any more land, and housing is made of oil - which is a wee tad more expensive lately.
They could build cheap housing - I can show them how - but conditioning-by-commercial has most of them in unreality-land.
Labour are just as wrong as the neo's at this stage - spot one who doesn't advocate economic growth - which always an impossibility at some point. Did you look at the link I put up? Note the timing? Thought about comparing that timing to a young person's mortgage?
Have been having an online discussion with a helpful bloke at Infometrics. He broadly believes the Resere Bank and Treasury approach to life; and inflation targetting using the OCR in particular, are optimal tools. I do not.
Can't say either of us persuaded the other of too much, but it was all polite, and brought up a few perspectives that just possibly others may find interesting.
We did go on for a while as a warning.
The discussion is in the comments when you scroll down.
I have an alter ego callled Yossarian (its a long story and related to the Disqus platform).
http://www.tvhe.co.nz/2011/07/27/core-funding-ratios-monetary-policy-an…
Great link, thanks.
Although I have to agree with Matt that a choice not to save is causal and the capital flows that occur (assuming we find anyone willing to loan us the money) is the effect and not the other way around.
I think to argue the reverse is to suggest people have no control over their choices - or - they are simply trying to avoid the consequences of their actions. Along the lines of "They sat sugar in front of me and I can't be held accountable if I chose to eat it and become obese".
Ralph,
Glad you enjoyed it.
Deep down I agree with you, and Matt, on this point as well. The current system, knowing full well that the obese chap will eat as much sugar as he can get, only limits it by altering the amount of interest he has to pay for the sugar. The metaphor isn't perfect, because the interest rates also don't distinguish on whether he uses the sugar (or money) to invest in productive assets, housing assets, or consumption. And it sources all the money from offshore, when it could find other sources without the damaging effect on the exchange rate.
Knowing we don't save well; or always overconsume at any interest rate; then some other tools to limit or lower demand for borrowed money would seem useful to consider. And if that left a shortfall of money in the economy, there are tools to manage that.
But I shouldn't get started yet again.
Well, I would be pleased if Mr Makhlouf could get his staff to attend to the basics.
How am I ever going to be encouraged to buy inflation-indexed bonds if the forward quarterly inflation factors are not posted for public review.
As of 5.42pm the latest release is dated 13 August 2012 - we need the figures for next February calculations as of today -coupon payment date - not tomorrow or any other day that may suit.
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