“..For the members of the 2025 Taskforce, the income gap with Australia and the size of the Kiwi diaspora are evidence of calamitous policy failure.
Their prescriptions for what to do about it are rooted in 1980s thinking: slash taxes and what people can expect from the state, deregulate and privatise.
The risk, of course, is that instead of stemming the outflow of migrants .. they make Australia look more attractive to more people by comparison.
If you are going to prescribe a course of radiation and chemotherapy to shrink the state .. you need to be very sure of your diagnosis.
A quite different one is offered by Professor Philip McCann in his paper “Economic geography, globalisation and New Zealand’s productivity paradox” (New Zealand Economic Papers, December 2009).
He argues that New Zealand’s mediocre productivity and therefore income cannot be explained by our institutional arrangements, which are on the whole pretty good ..
.. but rather by that fact that economic geography and history are against us.
Taskforce members’ view of the world may not have changed much since the 1980s ..
.. but the world has .. profoundly ..
.. and not always in a good way from a New Zealand point of view.
China has abandoned communism, India has abandoned autarky and the Soviet empire has collapsed.
These epoch-making events have hugely increased the effective size of the world economy.
At the same time, new transport and communication technologies, and trade liberalisation, have slashed “spatial transactions costs” or the cost of doing business with people far away.
That ought be be good for a geographically remote country, right?
Only up to a point..”
go to source/story>>Brian Fallow : Old prescription unlikely to fix new ills – Opinion – NZ Herald News
