sign up log in
Want to go ad-free? Find out how, here.

Monday's Top 10 with NZ Mint; Al Roth; the cost of defending a currency; Martin Wolf; Howard Davies; immigration politics; Greg Smith fails; PIMCO says we will cut; Dilbert

Monday's Top 10 with NZ Mint; Al Roth; the cost of defending a currency; Martin Wolf; Howard Davies; immigration politics; Greg Smith fails; PIMCO says we will cut; Dilbert

Here's my Top 10 links from around the Internet at 10:00 am today in association with NZ Mint.

Bernard will be back with his version tomorrow.

As always, we welcome your additions in the comments below or via email to bernard.hickey@interest.co.nz.

See all previous Top 10s here.

 

1. An economist who saves lives
Few economists could honestly describe themselves as life-savers.

Professor Al Roth from Stanford University in the United States doesn't describe himself that way either.

But he is, or so says Richard Knight at the BBC.

His application of a kind of mathematics developed as a thought-experiment 50 years ago is keeping hundreds - perhaps thousands - of people alive.

Al Roth was awarded the 2012 Nobel Memorial Prize in Economic Sciences this week. He shared it with Lloyd Shapley, the man behind that half-a-century-old thought experiment.

The story starts in 1962 when Lloyd Shapley and the late David Gale published a paper in which they demonstrated how an algorithm - a step-by-step calculation - could solve what they described as the "stable marriage problem".

What sounds a little like a slightly out-of-control economists' party, with a bit of the swinging 60s about it, has turned out to be astonishingly useful. This idea of a "matching algorithm" is the mathematical underpinning of Al Roth's later, life-saving work.

"I started to think about how it might be applied to actual marketplaces," he says. Among his ideas was the thought that perhaps he could create an exchange for one unusual but important product - human kidneys.

2. The cost of defending your currency
How much did Hong Kong spend defending its currency peg limit? The answer is NZ$730 mln. Not sure over what period that was but it might have been just a few days. That's ok if you are either rich or using other people's money. Bit of a worry if its your own, though. And there are reports emerging of investors betting against the central bank.

Hong Kong’s de facto central bank stepped in for the first time since 2009 to prevent the city’s currency from rising against the U.S. dollar after it touched the upper limit of a range that triggers an intervention.

The Hong Kong Monetary Authority said it bought $603 million at HK$7.75 per dollar, which is the so-called strong side of the permitted convertibility range of HK$7.75 to HK$7.85 that obligates intervention. The move, announced in an e-mailed statement yesterday, was confirmed by spokeswoman Rhonda Lam who said the HKMA acted during New York trading hours.

“Funds continue to flow into Hong Kong given the monetary easing in the U.S. and Europe,” said Kenix Lai, a currency analyst at Bank of East Asia Ltd. in Hong Kong. “That’s evident by the rising stock market and property prices. I expect HKMA will still have to intervene in the near term as capital inflows continue.” 

3. Critical analysis
Tim Colebatch of the Melbourne Age has done a very nice profile on FT columnist Martin Wolf. Wolf has a cult following these days, and appears almost as influential in EU economic policy as some insiders - they certainly notice his opinion.

Martin Wolf has not got every call right in the global financial crisis, but it's hard to think of a significant one he's got wrong. In an uncertain world, he is now probably the most trusted commentator on the global economy.

When Europe's leaders decided their top priority should be to cut deficits, he warned this would condemn the European Union to a long recession, making deficits bigger, not smaller. Each time leaders declared they had found the solution to its problems, he shredded their PR bluff with relentless logic.

If governments, banks and companies all pursued contractionary policies at once, he asked, where would the growth come from? 

4. Fiscal stimulus works
Christina Romer has published a spirited but wide-eyed defence of Keynsian stimulus as practiced by the Obama administration - she just wishes it had "that extra, Rooseveltian kick". Maybe this is only an issue now because of the US election, but it is a useful contribution none-the-less:

After listening to Representative Paul Ryan in the vice-presidential debate, you might think that careful evaluation [of fiscal stimulus] isn’t needed. In his view, we spent $800 billion on the stimulus, yet unemployment still rose to 10 percent - so obviously it wasn’t helpful.

To understand what’s wrong with that reasoning, think of someone who’s been in a terrible accident and has massive internal bleeding. After lifesaving surgery, the patient still feels rotten. But we shouldn’t conclude from this lingering pain that the surgery was useless - because without it, the patient would have died. 

5. A game played by the elites
Howard Davies has identified the real issue that will sink the work by Brussells to contruct a European banking union.

Non-Europeans, in particular, may find the entire topic impenetrably abstruse. But it illustrates a simple point: Europe is trying to achieve a stronger federal model that responds to the weaknesses revealed by the eurozone crisis. But it is doing so without addressing the crucial need to bring its citizens along. Indeed, the devices that the EU is adopting are designed specifically to avoid having to consult them.

The proposed construction of a banking union reveals this fundamental flaw at the heart of the European project today. It is difficult to be optimistic about the success of an initiative built on such flimsy legal foundations, and lacking democratic legitimacy. Europe’s banks and their customers deserve better.

6. 'Something for nothing'
Eric Crampton makes a useful point about NZ labour costs.

Of course wages are going to be pretty stagnant when legislation loads a pile of non-wage labour cost growth onto employers by statute but onto employees by tax incidence.

Prefer that you get more of your pay as wages rather than other considerations? Stop lobbying for more holidays and stop imagining that a pretty decent proportion of employer-side Kiwisaver contributions don't come out of your own pocket.

7. Immigration politics
Of all the economic forces buffeting the middle class these days, immigration might seem the easiest to explain: poor immigrants pour illegally into the country seeking work, the conventional wisdom goes, they competed with more expensive local workers, displacing them from their jobs and undercutting their wages.

Unions wail, WinstonFirst whines, Shearer sulks, arguing for 'import protection' just like some throwback ceos who want exchange rate controls. The media can always find someone at the margin being affected, but annecotal evidence drives really poor public policy. The NYTimes has been looking at the issue from an American perspective: it's probably a very similar story here.

This understanding of immigration helped propel a vast increase in the Border Patrol’s budget over the last two decades to stop immigrants on their way in. It was the rationale for proposals to build a long, tall fence along the southern border. President Obama, who in 2008 said he would push for a law that would grant many of these immigrants legal access to jobs in the United States, instead deported a record number of immigrants working here illegally.

But this explanation of the impact of immigration is mostly wrong.

For years, economists have been poring through job market statistics looking for evidence that immigrants undercut less-educated Americans in the labor market. The most recent empirical studies conclude that the impact is slight: they confirm earlier findings that immigration on the whole has not led to fewer jobs for American workers. More significantly, they suggest that immigrants have had, at most, a small negative impact on the wages of Americans who compete with them most directly, those with a high school degree or less.

Meanwhile, the research has found that immigrants - including the poor, uneducated ones coming from south of the border - have a big positive impact on the economy over the long run, bolstering the profitability of American firms, reducing the prices of some products and services by providing employers with a new labor source and creating more opportunities for investment and jobs.

8. Never mind the facts
No, I'm not defending investment bankers, but it does look a bit like the Greg Smith "Muppets" smear was just that - a shameless smear designed to sell books. His problem is that his about-to-be-published book doesn't back up his charges. Still, the cynical will still believe it. Is it just another 'constructed narrative'?

Even the New York Times who published the original accusations seems quite embarrassed:

When Greg Smith resigned in March as an executive director and vice president of Goldman Sachs with an Op-Ed page article in The New York Times, he leveled some sweeping charges: Goldman’s culture was “toxic and destructive”; the firm promoted “morally bankrupt people”; and - most devastating to any professional organization - Goldman Sachs bankers were “ripping their clients off.”

Mr. Smith’s letter clearly hit a popular nerve, coming as it did during a devastating financial crisis in which Goldman emerged as the rich, arrogant and unfeeling perpetrator of much of the financial wreckage still afflicting Americans. And it’s hard to quarrel with Mr. Smith’s overriding message: Wall Street should put clients interests’ first or risk oblivion. Indeed, that was Goldman Sachs’s own credo, “Our clients’ interests always come first.”

But stripped of its incendiary conclusions, Mr. Smith’s manifesto was curiously short on facts. Other than the now-infamous reference to muppets - “I have seen five different managing directors refer to their own clients as ‘muppets,’ sometimes over internal e-mail” - there were no examples of a toxic culture at work, no actual names of morally bankrupt people and no examples of a client getting ripped off. Mr. Smith declined to elaborate after the article was published, heightening suspense and no doubt fueling the literary bidding that reached a reported $1.5 million for a book that would deliver the goods.

 

9. Savers beware
The international smart money is apparently betting on a rate cut in New Zealand, and the consequent gains in bond prices. Will new Governor Wheeler deliver on Thursday?

Pacific Investment Management Co., manager of the world’s biggest bond fund, has boosted holdings in Australia and New Zealand as it expects policy makers to cut interest rates to combat currency gains and weaker world growth.

Decisions in larger developed economies to keep policy rates close to zero and engage in currency market intervention have helped push the Australian and New Zealand dollars higher, according to Scott Mather, head of global portfolio management at Pimco, which oversees $1.8 trillion in assets. The Newport Beach, California-based company’s holdings in the region are at the highest levels “in a very long time,” he said at a briefing in Auckland.

“Rates will continue to fall in this region, in Australia and New Zealand,” Mather said in a conference call from Auckland. “It’s partially the reflection of weak global growth and partially in response to an abnormal amount of currency strength relative to what history would tell you we should have.” 

10. Obituary: Stanford Ovshinsky

Stanford Ovshinsky, a self-taught American physicist who designed the battery now used in hybrid cars, has died aged 89 from prostate cancer. More from Reuters.

The electronics field of ovonics was named after Mr Ovshinsky, who owned over 200 patents and has been described as a "[Thomas] Edison of our age". He introduced the idea of "glass transistors" in 1968, which paved the way for modern flat-screen monitors. The firm he founded specialises in manufacturing the nickel-metal hydride batteries he designed, which are still used in hybrid vehicles, and also produces large thin, flexible sheets of solar panelling also invented by Mr Ovshinsky.

He received various honorary degrees and awards but had no formal education after high school. He claimed to have taught himself science by using the public libraries of Ohio where he grew up.

 

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

34 Comments

6.  Don't agree with that at all - not for large employers with salary scale systems or for persons on award rates.  The scales and awards stay the same - yet the benefits, such as an additional weeks annual leave are a straight addition to the salary package.  The standard cost of living rises for both types of remuneration systems also remain in place.  The only folks for which Mr Crampton's premise might apply are those who truely negotiate their salary package on a one-to-one basis annually with their employer.

Up
0

Hi Kate, have you watched the trap?  35  mins in, Blair/Gordon etc  should interest you but the whole thing is worth watching.

http://www.youtube.com/watch?v=WbRApO3k_Jo

Up
0

Fascinating.  I wonder whether 50% of Americans are still on Prozac and other SSRIs and I also enjoyed the last line about findings suggesting the only two types of "rational" human actors in the academic definition are the economists and the psychopaths among us!  :-)

Up
0

Andrewj - thanks for posting link. Shows how stupid Politicians are. Unbelievable that they talked about and promoted freedom for the people and then allowed the Crony-Capitalists to control it. 

 

Bureaucrats here in NZ have displayed the same behaviour as in the UK. I hate KPI's with a vengeance but they do allow one to see WHO HAS SELF-SERVING BEHAVIOUR - they should use the Search and Surveillance Act on the bureacrats at least it would be put to good use..

 

And thanks to the incompetence of the Politicians and Bureaucrats we end up with Crony Capitalism and then the first two participants use more compliance to cover up their incompetencies even further.

Up
0

However the case for small business, non-profits and NGOs..so which has the great numbers of employees in NZ....

Up
0

Last figure I heard was that government (central and local) amounted to around 45% of GDP - so those employees are all in the salary scale category - as is all of the education sector.  Then the big employers like Telecom, the multinationals, the grocery trade etc all also fit into that salary scale type HR department driven category as well - and industries like hospitality where award rates apply ..

 

I'm guessing that actual small business, non-profits and others (i.e. independent, one-on-one negotiate with your boss salary and benefits) are only a small percentage of our entire workforce.    

Up
0

I think you can blame that on the New Public Management revolution - the one where government departments/employees all got assigned KPIs and performance targets (and derived from these came salary bonuses as well - an absolutely stupid concept for public servants IMO).  You see the State Sector was told by those promoting the reorganisation idea - e.g. Roger Douglas' baby here in NZ - to go forth and emulate the private sector.

 

What we found is they (the State Sector bosses) excelled at this 'challenge' beyond all expectation :-).  Bureaucrats shifted from the cardigan wearers to the latte sect.

 

More evidence that Douglas was a twat - a Yes Minister job of serious long term consequence.

 

Up
0

My guess it is not a small percentage. From what I do see...Government GDP is not a good proxy as so much of this expenditure is not reflected in employment numbers with core Government entities. Take health... a larger number employed under this vote are NGOs that provide services ranging  from disability, support service and mental health. Same for MSD...exclude the beneficiary vote then...The capped funding to non profits and NGOs alone means minimum wage with stagnant wages alone has occur because of kiwisaver, act on a  few boards in this area, it is a nationwide problem. Education vote, certainily a core number of workers in the state sector and tertiary but large numbers still working in PTEs that utilise this vote. Again a great areas of minimum and skinny wages abound, same in hospitality even though a limited award exists, does not apply to all. 

The only stats I could find suggest small businesses dominate in the employment numbers in NZ...this initially surprised me however the half dozen larger companies I act for have radically reduced the employee numbers over the past 20 years. Same can be said for all of the top 50 companies in NZ. Really the only larger employers in NZ business.

Up
0

Re #4. This is always the line that governments use when printing money or any other policy does not deliver the desired results:- "We may be in deep trouble now, but think of how much worse it would be if we had not acted".

Up
0

So you are renouncing all the standard Austrian arguments which claim that if there was no Stimulus then the US economy would have done a short bounce recovery? Maybe its time to talk about the results of Austerity policies in the cases where they were tried then,

So when does the recovery kick in in Greece anyway?

 

Up
0

2. You represent what the Hong Kong authorities have spent on keeping their currency pegged as a cost. They will inevitably have bought assets- USDs presumably- with the money, such that any eventual cost will be any depreciation in those USDs against the HKDs. If they have printed the HKDs in the first place, then they haven't even broken sweat in doing so.

Given HK has a current account surplus of ~US$16 billion; their currency should appreciate, and frankly the rest of the world should be somewhat annoyed that they are resisting it doing so. But a cost to their central bank of a depreciation in foreign assets from these purchases will be the least of their worries.

Up
0

I don't pretend to be an expert in this area but share with you what I heard in the last week. My sister in law is in high finance and living in Switzerland. She has decided to return to HK (where I live) and has been looking at the overpriced ( relative to most incomes) property HK has to offer. Her discussions with a top banking official were illuminating. He told her that within 5 years HK will drop the US dollar peg and that this will cause a 30% drop in property values. Sure the HK dollar will soar if released from the peg but I suspect this will have repercussions elswhere. Well off HKers have bought investment property in OZ, NZ and elsewhere. I would anticipate a massive  rush for the exits!

Up
0
Up
0

And if housing unfriendly wasn't enough - add in motorist unfriendly;

 

http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10842075

 

 

Up
0

Yep, it's looking bad.  But in my opinion it's unlikely opening up land on the fringes will have any effect on the bubble in the centre.  Housing construction/materials aren't going to get any cheaper - and folks will always pay a premium for the land in the decile 8+ districts.  The "league tables" will only serve to further cement this.  The feeder schools on the developing fringes are likely to be lower decile - intensification at the centre where the high decile schools are is where the young professional families will continue to want to be.  And then there are energy prices and the liklihood of current public transport subsidies slowly being eaten away at.

 

Christchurch problems have mainly been exacerbated in the short term by the quake - and indeed as more insurance money gets paid out - it simply exacerbates the Auckland problem.  But Chch's problem's will be solved over time, I think. 

 

Wider Auckland however is going to deteriorate - the SuperCity was a dumb idea as the focus on neighbourhoods, beautification and crime fighting/prevention will (under further constrained budgets) migrate to where the money is (the centre) not to where the problems reside.  The growing disparity in incomes up there is being largely ignored.  We are getting concentrations of poverty and it's going to get worse as these communities lose their identity and the will of the established families to put it right in/for their own community.  Instead the community minded will migrate out for a quieter life, less struggle and greater security.  

 

In 25 years time - Auckland's inequality will be very serious.  I don't see fringe as a solution - the trend will more be toward gentrification - as is already evident.  Which means higher and higher prices at the centre and more and more Asian money and families flowing there as it becomes more and more unaffordable for NZers.

Up
0

Yes, I appreciate that that is your theory.  But just look at the fringe boom in the US - the properties were largely built and then bought as part of Bush Jrs "property owning democracy" initiative - which gave rise to the liars loans and the whole property mess in the US. 

 

Problem was the large bulk of folks who didn't already own a home - didn't own one because they were bad credit risks.  Is that not the case with many of the folks in NZ that don't own their own homes?  "Build and they will come" seems to be your mantra .. but who are "they"?  "They" who will be keen to own in the periphery are not likely the good credit risks.  That's why Pegasus Town was not designed by its developers as a low income housing project.  That's why spec builds are more of the McMansion variety.  And that's why so many of the greenfields subdivisions in the high growth Tauranga, Auckland, Kapiti, Queenstown areas had covenants placed on them by the developers - basically so that you couldn't plonk a Keith Hay home on the sections.

Up
0

I think you are missing my point, Hugh.  Follow the numbers of the foreclosure crisis in the US and you get an idea of why so many of their housing markets are affordable - their bubble burst arising out of the shady lending practices and the effects are still a dominant factor in these markets where pricing is concerned.

 

In Sept this year, for example, 16% of all house sales in Houston were foreclosures.  That drags the rest of the market down with it.

 

http://rismedia.com/2012-10-17/houston-home-sales-power-through-16th-straight-month/

 

I think that housing affordability in many areas of the US has more to do with the foreclosure crisis than the fact that they opened up the periphery to new builds.

 

 

 

Up
0

No you miss the point Kate, what Hugh means is that you follow the numbers that support your bias.

Up
0

No, completely impossible, in fact we know Hugh is not biased himself, because he doesn't have a theory and is just following the numbers. Its obvious from this and the fact that Hugh and Kate are both just following the numbers that they agree 100% and there is no debate going on.

One of the methodological lessons to be drawn from Austrian economics is that you are better off not to have a falsifiable theory, because having a falsifiable theory might lead to it being falsified. Of course everybody knows bad science is wrong, you are better off not to have a theory in the first place, saves all the hastle you see.

Up
0

Its chicken feed value at those low numbers Kate. Check out the values and prices collapses in the California market these past few years.

 

My point exactly.  The housing market in pretty much everywhere across the US has burst and as a result housing is generally more affordable there because average wages didn't take the same percentage hit.

 

We both agree NZ has had a bubble - just like most/many of the places in the US did.  Whether Houston did or didn't isn't so much the issue anymore.  So the policy question is not so much how to "grow" to prevent a bubble, but rather how to make the necessary correction within the existing stock - if that is what is desirable - becuase then new builds wherever they might be will have to compete with a lower price for existing stock.

 

Will cheap fringe land (and we're talking Auckland only here given its already wide geographic footprint) bring down the price of existing stock at/near the centre?  Not to the level of decrease needed to make the centre affordable in relation to the income multiple you propose.  My theory is all that will likely do that is a significant "foreclosure event".

 

I've got no problem with opening up land at the periphery - as long as that development pays its own way for infrastructure - something you don't want it to have to do.  Your argument being it is in the public interest that the Auckland periphery is developed.  I disagree.  I believe it is in the public interest for NZ's population to be less concentrated in one district/region.  If I were our dear leader - I would be analysing what districts/regions in NZ have spare infrastructure capacity and directing economic development initiatives towards those districts/regions.     

 

 

Up
0

Christchurch GDP down 10%, hardly a blip!

Up
0

Government has no other option than to act decisively...really... poltically it seems to be working rather well for them to do nothing. Nats voting block of Aucklanders feeling rather smug siting on their property holdings and a high exchange rate makes that new European car, overseas holiday just soo easy, take a look at the new MV stats...while your at it look at how you win an election...it comes down to Auckland.

Up
0

One  person one vote.....South Auckland is a labour stronghold and how some  areas are doing when many are not is indeed important in an election.  Not sure how swingy Auck is....Id have to go look. As I'd Guess we'd have to look where the swings are, I suspect actually its going to be down to the semi-rural seats National loses and Chch,

In a word, jobs..

Do nothing, well when faced with lots of choices ranging from poor to bloody awful and all influenced by overseas Id want to sit and wait as well. Indeed thats what Im doing....cashed up  (with what little I had in stocks...) and sitting waiting....

 regards

Up
0

Just to keep banging on my drum.....just how do you reduce those costs?  Just looking at them the baseline is you cannot I believe. Then there is the profit margin expected by the ppl developing these technologies....they expect to become the new Exxon mobile's of the world.  That is a double whammy on energy costs alone....let alone the population pressure  driving up demand.  Sure the rich in ponsonby can afford $4 a litre gas, but their house cleaners on $14 an hour cant.  Realistically bio-fuel is going to only work at $100USD a barrel, a price our overall economy cannot afford IMHO. 

Apart from the above Im watching Steve Joyce and his energy announcments, they strike me as someone who knows about peak oil and is quietly doing things in the background to mitigate it.....probably too little.......it would be fasinating to sit on his shoulder for a few weeks....

Hybrid ute carrying 1.2tonne?  as long as the 1.2 tonne is the battery pack, yes OK....and the fact that its life will be 1/2 that of a conventional ute and cost 3 or 5 times as much.

If you want something like that I'd suggest your own bio-deisel setup on the farm and make your own fuel....I think it would be more flexible, last longer and probably be cheaper....

iPhones, yes I love to watch ppl, Im amazed how many students have iphones, thats $1000+ for someone whos supposed to be broke.  

 

regards

 

Up
0

This is indiscriminant rape of the citizens - how can our civil servants central or otherwise impose this impost upon the citizens? Do we vote for this - are such policies mandated or justified to support those appointed beyond the merry go round of the ballot box.

Up
0

This is retrenched budgets from the centre - so the periphery finds the means to supplement that.

 

It happened in cash strapped New York City with a vengence as well.

 

http://newyork.cbslocal.com/2011/07/14/un-bee-lievable-nyc-fines-man-2000-for-not-watering-his-hive/

 

http://www.nypost.com/p/news/local/seek_we_shall_fine_kelWJBWexKXkZfqQmew4cI

 

http://www.cnbc.com/id/49200378/Red_Light_Cameras_Help_Cash_Strapped_Cities

 

And the point is that those folks here who get the WoF and rego fines - get them BECAUSE they can't afford to pay for their WoFs and regos in the first place - so add to that the court costs and the penalties charged on late/non-payment.  What the boffins don't understand is that you can't get blood out of a stone - or more likely they understand it but their KPIs have to be met and a debt (no matter how unlikely its collection) is an asset where the ledger is concerned. 

 

 

Up
0

The problem with 'the periphery' is that it is always 'further away', so must cost more to service. Atop that, the declining availability of resources to do the servicing, compounds the problem.

 

Not to mention old-fashioned land-banker/developer types wanting their cut; if there were really no rules, you could just buy a 1/4 acre off the Cocky, for diddly-squat.

 

Never again will there be sections at Hughey's beloved medium thingy, unless it is because the BigAg model fails. Always a possibility

 

 

 

Up
0

I suspect its going to get worse...

regards

Up
0

Steven, heres me thinking you were an optimist?

Up
0

Im a realist.....I look at the head winds which look like gale warnings  and think, Im staying indoors for now thanks.

Then there are the blindly optimistic, the "eyes wide shut" brigade. Funny thing but they seem to gamble the future will be better and not calculate it, Ive watched  them crash and burn often enough when the "emperor has no clothes" syndrome finally cathes up with them.

Then there are the suicidal depressives, "its all going to be bad so I'll jump under the next train" Im not one of those either...

Its a Q of knowing when to raise and when to fold.

Im perfectly happy that for the last 5+ decades Ive got that broadly right.

regards

Up
0

#7 you can't have too much of a good thing!  but you can't stop either as when the next %age of migrant's arrive they will again be arguing the virtue of (more) migrants.

What we appear to have in places like Auckland and Melbourne is growth for the sake of growth ( ponzi scheme).

If that article is an indepth analysis of immigration politics it would have to address the role of banks, land bankers and powerfull groups such as the Property Council plus why so much support comes from the insulated intellectual class and idiological left .

Herman Daly on what free migration might mean:

/*-->*/

At a deeper level, what if globalization began to entail the overt encouragement of free migration? Even some free trade advocates might recoil from the radical cosmopolitanism of such a policy. Perhaps they can see that it would lead to massive relocation of people between world regions of vastly differing wealth, creating a tragedy of the open access commons. The strain on local communities, both the sending and the receiving, would be enormous. In the face of unlimited migration, how could any national community maintain a minimum wage, a welfare program, subsidized medical care, or a public school system? How could a nation punish its criminals and tax evaders if citizens were totally free to emigrate? Indeed, one wonders, would it not be much cheaper to encourage emigration of a country's poor, sick, or criminals, rather than run welfare programs, charity hospitals, and prisons? (Fidel Castro took precisely this course of action in opening Cuba's jails in 1980. His policy encouraged migration of prisoners and others that became part of the wave of "marielito" immigrants to the United States.)

Further, one might reasonably wonder how a country could reap the benefit of educational investments made in its own citizens if those citizens are totally free to emigrate. Would nations continue to make such investments in the face of free migration and a continuing "brain drain"? Would a country make investments in education if it experienced massive immigration pressures, which would dilute the educational resources of the nation? Would any country any longer try to limit its birth rate, since youths who migrate abroad and send back remittances can be a good investment, a fact that might increase the birth rate? (With unfettered migration, a country could never control its numbers anyway, so why even talk about the controversial issue of birth control?)

Up
0

Not to mention the fact that he'd be lying.....      :)

Up
0

"Having been badly burned by an orgy of easy credit and profligate spending, consumers have had enough, too . They're deleveraging. Many don't want debt - even if it's free."
http://www.marketoracle.co.uk/Article37076.html

This week in Noddyland the bankers puppet is expected to toe their line and make their credit all but free....do you wonder why!

Up
0

 @ No 9 ...We are deluding ourselves if we think that the strong NZ$ is good for New Zealand  as an exporter of primary agricutural based produce.

Mather , the  Bond trader commenting on the strong NZ$ has nailed it saying  "........ an abnormal amount of currency strength relative to what history would tell you we should have.”

I have been saying this for ages ,

OUR ECONOMIC FUNDAMENTALS HAVE NOT CHANGED ENOUGH TO WARRANT THE STRENGTH OF THE KIWI DOLLAR

 

Up
0