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Never argue with an economist

July 1st 2010 03:14

John Key

Wages in New Zealand are about a third lower than wages across the puddle in Australia, and the country's much-respected Reserve Bank Governor, Sir Alan Bollard, was recently quoted as saying that wasn't about to change. New Zealand, he said, did not have the same advantages, such as mineral deposits, and was unable to compete.

New Zealand Prime Minister John Key sniffed a political opportunity and made a public pronouncement that Bollard's comments were negative. His government, he said, was pursuing policies to raise New Zealand income levels to match those of Australia within 15 years.

Bollard, who has a PhD in Economics, an Honorary Doctorate in Laws and a lot of common sense, said nothing.

But the television station TVNZ sniffed a journalistic opportunity and conducted a poll asking people who they believed. More than 70 per cent believed Bollard, about 20 per cent sided with Key.

Economics 1, Politics 0.
image: Otago Daily Times

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Who first called economics 'the dismal science'?

April 26th 2010 08:09

Thomas Carlyle, 1795-1881

It was another time, another world, in December 1849 when Thomas Carlyle wrote his name into history by describing economics as "the dismal science". Carlyle, described variously as a teacher, historian and satirical writer, used the term in an article entitled "Occasional Discourse on the Negro Question", in which he argued for the reintroduction of slavery as a means to regulate the labour market in the West Indies.

Yes, reintroduction. Mr Carlyle, whom many may consider to have been an endearingly witty person to coin such a phrase, was not an endearingly enlightened man.

Economists of the time spent much energy discussing the relationship between population and welfare, based on the 18th century postulations by Thomas Robert Malthus. Malthus, a British scholar and political theorist, thought that economic good times must always lead to economic bad times because good times will produce population growth which will create food shortages, poverty and hardship.

This was used by Carlyle and others as an argument against abolishing slavery because that, they said, would increase the rate of population growth.

Carlyle's opponents in this thinking were led by John Stuart Mill, who dared to suggest that it was institutions rather than population or race which created economic inequalities and hardship.

Slavery in the British colonies was abolished in 1834, and the French and Austrians did the same in 1848. The 1840s saw a series of reforms in factory conditions, including the introduction of a 10-hour day, and legislation prohibiting child and women labour in underground mines.

It's a pity Thomas Carlyle viewed such things as dismal developments.

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They will call Australia home

April 13th 2010 22:10

The question being commonly asked these days about Australian real estate is "duoshao qian?" It means "how much?" in Mandarin and, according to a recent report in Melbourne's Herald Sun newspaper, leading property agents say more than 30 per cent of their stock is bought by families from mainland China.

Scott Patterson, a director at agent Jellis Craig, said late last year that 34 per cent of his firm's sales in 2009 had been to mainland Chinese, up from 15 per cent in 2008. "Demand is so strong we've got two native speaker agents starting next week."

The boom was kickstarted by an Australian government decision in 2008 to ease foreign investment rules on property. The Chinese are said to be most interested in properties in the A$1 million to $4 million range in upmarket suburbs and near private schools.

Former plastic surgeon and financial planner Jin Shang was Jellis Craig's first Mandarin-speaking agent. "China is the world's strongest economy and Australia's major trading partner," he said. "Chinese want residential properties here because they feel comfortable in Australia's multicultural environment and they know it has one of the world's best education systems."

It's just another challenge for home-grown Australian property agents. First they learned some polite greetings in Japanese when they drove a Queensland investment boom in the 1980s and 1990s, and then they learned the same greetings in Cantonese to welcome the Hong Kong interest in the run-up to the 1997 handover.

Now they are busy adding Mandarin to their growing language skills.

image: unisa.edu.au

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Was it really economics?

April 8th 2010 06:54

When Professor Elinor Ostrom was named as a co-winner of the 2009 Nobel Prize for Economics, it was considered controversial.

The 76-year-old American academic was one of a record five women to win Nobel prizes last year and the first ever woman to win an economics prize, but that is not what was controversial. The arm-flapping comes from traditionalists who label the work of Ostrom as social science rather than strict economics

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Telstra investors long on patience, short on return

April 2nd 2010 07:46

"I have said it before and I will say it again, for the life of me I cannot understand why anyone would want to own (shares in) Telstra. It just does not make good investment sense.''

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A Keynsian moment in history

March 27th 2010 04:14

John Maynard Keynes

John Maynard Keynes had a way of putting real life into economic perspective, even early in his career.

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Worthless surveys

March 27th 2010 01:49

Where would we be without reliable economic modelling based on objective and scientifically managed surveys? According to an American economics professor, it's a moot point. The question should actually be: where would we be with reliable economic modelling based on objective and scientifically collected data?

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Hong Kong to a tea

March 21st 2010 05:57

Talk about full circle. For years Hong Kong was the world's greatest example of laissez-faire economics, a big component of which was its duty free status. Who needs high taxes and who needs import duties when you can just fill in your harbour, foot by foot, and create the world's most expensive real estate? Not for nothing has Hong Kong been voted number one on the Index of Economic Freedom ever since the index was created in 1995.

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A past persepctive

March 16th 2010 10:54

Peter Drucker

People are struggling to find new ways to describe the impact of the information age on today's society, and the speed of the changes we are seeing. Nothing in economic history has ever moved as fast as, or had a greater impact on us than the information age.

Right

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Recovery lesson

March 13th 2010 19:00

Amongst the many economic recovery lessons of 2009 came one from a medium-sized Australian banking group which turned potentially bad publicity into good by finding an innovative way not to sack staff.

Around the middle of last year Bendigo and Adelaide Bank was feeling bottom-line pressure due to declining lending activity - who wasn't - and was staring at what seemed inevitable staff cuts. Faced with similar pressures, Australia's biggest banks had done pretty much what you'd expect: the ANZ bank shed almost 1000 jobs, the Commonwealth shifted jobs offshore and the National Australia Bank closed branches

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July 2010

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