Posts Tagged ‘economy’

A Response to Feedback on the Work Programme

Thursday, March 25th, 2010

We’re getting towards the end of the feedback period on Policy Progress’s draft work programme – tomorrow (26th March) is the last day.

Much of the feedback to date has been pretty approving of my original suggestions, which I’ve been elaborating upon in this blog over the last few weeks. I have however received a couple of more challenging contributions, which I want to highlight and make an initial response to in this post.

Firstly, reader Zooey questions the overall balance of the proposed work programme:

Hi! Suggestion for a topic: “nanny state” issues and progressive government. The aim to lift families out of the dark ages of children “seen not heard” and physical punishment, with excellent resources such as SKIP – where does that stand now, considering the backlash we experienced about corporal punishment? How does a progressive government want to interact with society / community – is there a good case for better “social engineering”? Post-post-modern Feminism and “women’s issues” (the childcare debate…)

I hope you will have a slot for childcare / family / education-related issues. Must say so far the website has been a bit “male” (science, money …). Thank you for your time.

I think Zooey makes a reasonable point. In fact, this has been a slight nagging concern I’ve had about the balance of topics for a little while now, as subscribers to the e-newsletter and followers of the Facebook page will be aware.

On the other hand, I think three topics in 2010 is the maximum workload manageable, so if we added something in the childcare / family / education area, we would need to drop one of the ones I’ve previous proposed (Progressive Path to Prosperity, Theoretical Foundations or Fiscal Record).

I have suggested one other topic of more of a social policy orientation, and that’s child poverty and cycles of disadvantage. But I was proposing to do some initial work and thinking on this in 2010 before developing it into a full theme for 2011. In practical terms, that means there would be a number of blog posts this year but no formal report on this topic until after March 2011 when the current work programme finishes. Moreover, that topic is quite a bit different from the one Zooey was proposing, although both move away from the kind of science, money etc concerns Zooey saw as dominating.

Another consideration is the Theoretical Foundations topic. I think I may have created the impression that this is largely about the logic for whether to be economically interventionist or not. But it also applies to the separate but connected argument of when, how and on what basis to intervene in the social policy sphere as well. I’d been thinking about that mainly in terms of welfare state services and support, but the more I think about it, the issues around interventions in support of socially-desirable behaviours would be fascinating to cover as well. (And on a related note, I’ve got a guest post in the pipeline on the role that ‘choice architecture’ can play in that . . . )

What do you think about Zooey’s general point about balance, and specific suggestion? Might the Theoretical Foundations topic as clarified above address one or both of those? Or should we drop one of the previously proposed topics, and if so, which one? Leave a comment below!

Source: Ministry of Economic Development, Economic Development Indicators 2007, Figure 2.1, http://www.med.govt.nz/upload/53549/Indicators-Report-2007.pdf

The second bit of challenging feedback came when I outlined the various barriers to economic success that I saw as being the focus of the Progressive Path to Prosperity topic. I got the following comment from Big Cake, the sobriquet of the author of the bigcake.co.nz website, which is focussed on similar ‘NZ growth challenge’ issues:

. . . the big issue I think with your approach – and with the current Government’s – is the lack of vision. In a way it’s cart before horse.

We need to ask ‘what future do we want?’ and then work back from there.

Prevous economic-reform minded governments I think have come unstuck on this because the reforms they have put in place are often not politically sustainable long-term.

The current Government’s tax reforms and mining in national parks process look to be falling into this trap.

BigCake’s ‘growth sceptics’ who believe past reforms have failed to deliver so have no faith in current ones remain a force to be reckoned with.

We need to follow the track of Ireland and establish a consensus. Difficult if not impossible in the current circumstances.

This ‘cart before the horse’ criticism was echoed by regular commenter Achela who questioned whether pursuit of endless GDP growth should really be the default option.

I’ve given these challenges a bit of thought over the last day or two. I think Big Cake and Achela both raise important issues but I’m not convinced I should radically rethink this work programme topic in response.

I think Big Cake is planning some sort of project to address the “what future do we want?” question on his own site, and I wish him well with that. But I don’t feel that the Policy Progress think-site is really well-suited to tackling that task.

Partly this stems from some doubts I can’t shake about how tractable such an endeavour is. My progressive heart wants to believe it can and should be done, but my policy-analyst head remains to be convinced. (Self-professed non-progressive Nik makes an argument that recent attempts in this area have been fundamentally misguided; without necessarily accepting his argument in total, the experience with Knowledge Wave/GIF/Economic Transformation does probably contain some cautionary lessons.)

Moreover, I’m certain that there are a number of respectable progressives out there who would strongly argue against the government and/or society trying to envisage a particular model of our future economy. I would envisage phrases like ‘picking winners’, ‘manpower planning’ and ‘centralised decision-making’ would crop up a lot.

Therefore, I think the best service that Policy Progress can perform for the “what future do we want?” project is to try to establish (whether there is) a strong theoretical basis for the approach of having a particular economic vision and then taking action to achieve it. In other words, once again the Theoretical Foundations topic seems the appropriate place to address this gap (hat-tip to Achela for suggesting this).

If that’s the horse, what about the cart? Should Policy Progress hold off on identifying (and thinking about how to address) the issues holding New Zealand back economically, until we know where we want to go? I would argue, no.

As the graph above reminds us, New Zealand’s current current economic standing appears pretty dismal – even the low per capita GDP we current attain is only achieved by working more hours than just about everybody else. Yes, we might benefit from having a clearer and effective economic strategy. But I would argue that there are some pretty generic problems and obstacles that are holding us back whatever particular strategy we adopt. I think it’s worth diagnosing these and thinking about solutions alongside the bigger picture ‘vision’ stuff that Big Cake and others are embarked upon.

I also think that low productive output per hour worked shown in the graph addresses Achela’s point too, to some extent. The problems causing that are probably ones we want to tackle regardless of whether we buy into the economic growth paradigm – if we raise our productivity, that gives us more choices (a point Achela also makes).

Perhaps what these thoughtful challenges remind us is that we need to be careful in the Progressive Path topic to stress that this is just about addressing economic barriers and obstacles that block the path, rather than trying to define the destination.

But I’m interesting in hearing from you – do you agree with Big Cake and/or Achela’s critique? Does the Progressive Path topic need to change? Or do you think my response above adequately addresses their points? Leave a comment below!

Economic Prosperity – What’s under the Umbrella?

Tuesday, March 23rd, 2010

Wikimedia Commons / CC BY 3.0

As I mentioned earlier, the topic about “A Progressive Path to Prosperity”, which is being proposed as part of the work programme, is intended as an umbrella topic.

The approach I want Policy Progress to take with this area is to avoid either simply coming up with a wishlist or grab-bag of appealing ideas, or choosing a few favourite hobby-horses and then working back to argue how advancing them will benefit the New Zealand economy.

Instead, I think we should think carefully about New Zealand’s economic performance and what’s been holding it back, and then figure out – from a progressive perspective – the best way to tackle these problems.

Ideally, this would add up to a list of things that, if they were all tackled effectively, would lead us onto the sort of growth path we’re all looking for.

Obviously, there’s a limit to how systematic you can be with this sort of approach – inevitably there’s a lot of judgment involved – but that’s the basic “lens” I’m proposing.

I’ve given this issue a bit of thought already, and here are my ’starters for ten’ for what we need to focus on. But I’m very interested in hearing from you – what’s missing? What’s on my draft list but actually unimportant (or, just as importantly, which problems have been mis-specified)?

Continuing to encourage/facilitate New Zealanders to raise their savings level
This was a major theme of Michael Cullen’s, and Kiwisaver should over time make a difference here, but there is still more to do.

Lifting private sector rates of capital formation and R & D investment
The low rate of private sector R & D investment is a well-rehearsed theme, although there are some structural factors involved (firm size). The R & D tax credits aimed to shift this, as did Fast Forward, but both have been abolished. Alongside this, though, general capital investment levels by New Zealand firms are not high, yet this is a key factor in driving labour productivity. There is a likely connection to the previous issue, and to New Zealand’s high interest rates, but there will be other drivers as well.

Addressing the high proportion of New Zealand graduates working overseas
The crisis rhetoric around the ‘brain drain’ is overblown, and often gives the impression that the consequences are catastrophic (they aren’t) and that the phenomenon is new (it isn’t). New Zealand and Ireland have for many years had a far higher proportion of people born in their country living abroad than any other industrialised country, and there is a (disproportionate?) number of highly-educated people amongst that group. Can we turn that around, and should we make better use of our diaspora?

Improving management capability
It is, I think, fairly well-acknowledged that New Zealand’s management capability levels are fairly weak overall, and particularly in our small and medium-sized firms. This is what often prevents them from making the transition to become the larger, export-oriented enterprises that we need more of. It’s not an easy issue to tackle, but it’s an important one.

Better skill utilisation in the workplace
I’ve already mentioned that productivity at the workplace level is what really counts in the productivity debate. We have good levels of skill development within the existing workforce (through industry training), but where we often seem to fall down is on making sure the skills being developed are made effective use of.

Rebalancing the economy to a more carbon-neutral mix
The climate challenge is a massive issue for our generation, and is widely written about. Policy Progress won’t be trying to add anything to the scientific debate about cause and effects, and even the issues around getting a proper incentive structure (e.g. an emissions trading scheme) have been pretty exhaustively canvassed. But how we restructure our economy in response over the medium to long term, and what challenges and opportunities that will entail, seems a very appropriate thing to consider as part of the “Progressive Path to Prosperity”. Changing our patterns of energy generation and use will be an important component of that.

The role and evolution of iwi enterprises in the economy.
A path to prosperity that’s progressive should give explicit consideration to Maori economic development. As treaty settlements continue, the nature of the challenge changes, and becomes increasingly one about effective resource development – and how that is reinvested in the community. From a wider progressive perspective, iwi enterprises could during the 21st century prove to be an uniquely New Zealand form of major business actor that effectively mixes economic, social and sustainability objectives. Or they could become simply another group of corporates. Is there anything we can, or should, do to influence the likelihood of the former outcome?

Proposed Topic: A Progressive Path to Prosperity

Thursday, March 4th, 2010


Mapping out a policy prescription to enhance New Zealand’s economic performance isn’t exactly a new endeavour.

In the last year alone, it’s been attempted by everyone from Don Brash through the New Zealand Institute to Bryan Gould to the CTU. But there’s a good reason for that – it’s a critically important task, and in many ways a prerequisite for the various forms of progressive social investment that we all want to see.

New Zealand currently faces a period of economic difficulties. It has just emerged from a recession, the government accounts are in deficit and our unemployment rate is the highest it’s been in ten years. In many ways these problems are more related to international events than to our underlying domestic economic shortcomings, but nevertheless they have focussed public attention on these issues, as well.

The point of undertaking this topic is not so much that Policy Progress can come up with a totally different prescription that has never been thought of before. There is likely to be significant overlap with what other progressive organisations have advocated previously.

But setting out our own ‘take’ on this issues seems to be a useful way of defining our general position in the economic policy area, as a precursor to more focussed work on particular issues in the future.

This would be something of an umbrella topic. We would aim to identify a handful of challenges New Zealand needs to tackle, and then write more detailed reports setting forth a progressive approach to addressing these.

I will write more soon on a first cut of what those challenges might be.

What do you think? Does this sound like an interesting, achievable and worthwhile topic for the work programme?

2010 Work Programme – Have Your Say

Tuesday, March 2nd, 2010

As I said last week, this blog is just part of Policy Progress’s activities. We also undertake longer-form work, and will produce 3-4 reports each year that aim to advance thinking on particular topics.

We are now developing our work programme for the first year, and invite suggestions from our readers.

A draft of the work programme is now available. It proposes three major themes:

  • A Progressive Path to Prosperity
  • Theoretical Foundations
  • The Fiscal Record of the Fifth Labour Government

There’s a short description of each theme on the Work Programme page, but I will also elaborate on these over the next fortnight on this blog.

This Thursday’s post will cover ‘A Progressive Path to Prosperity’, and then next week I’ll deal with ‘Theoretical Foundations’ (Tuesday) and ‘The Fiscal Record of the Fifth Labour Government’ (Thursday). Hopefully, this will provide a pretty clear idea of what’s being proposed in each area.

A fourth proposed topic, for initial work and thinking in 2010 before developing into a major theme in 2011, is around child poverty and cycles of disadvantage.

I’m keen to hear your feedback, both on ways of tackling these topics or on other issues that you see as more urgent and/or important.

The comments thread on this post will be the central location for feedback on the draft work programme, although you are also welcome to put forward your views in the comments for later work programme-related posts. Alternately you can email us directly at workprogramme@policyprogress.org.nz.

I will close off feedback on the work programme on Friday 26th March, with a view to finalising the 2010 work programme at the beginning of April.

In the meantime, many of my blog posts are going to focus on the proposed initial themes. Hopefully these will be interesting in their own right and will also help to clarify further the direction and scope of proposed work in these areas.

It doesn’t mean, however, that any topic is a fait accompli until we’ve heard from you!