The concept of Modern Monetary Theory (MMT) is gaining traction around the world, and the visit of Bill Mitchell last week has given a boost to these ideas locally. There are a bunch of things where MMT has a similar view of the world to conventional economists. It also debunks a few of the popular narratives about government surpluses and deficits, particularly challenging the idea that the government’s books are the same as running a household. Whether or not the ideas will work depend a lot on the circumstances, and while MMT has a lot to offer we don’t think New Zealand is ready to apply it – yet.
You can tell it is election time, because politicians are promising to complete their pet transport projects. This important issue shouldn’t be used as a political pawn – it is time to depoliticize transport funding.
Rail vs Road: Rail Wins, Transparency Loses
The release of KiwiRail’s business case for the “Third Main” freight rail line between Otahuhu and Wiri raises three massive issues.
First, this is one of the first times that road and rail infrastructure spending have been evaluated on a level playing field, and rail came out the clear winner. Second, it raises questions over transparency; why was the National-lead Government reticent to release this information, while they pursue road projects with fervor? Third, it calls into question their image as responsible managers of the economy – whether they can make good decisions on the basis of simple business cases.
One of the often heard regrets from employers is how they can’t get labour from the local market. They resort as much as possible to getting the Immigration Department to approve the importation of labour from abroad. We’re not talking highly skilled labour here; we’re talking about those with middle-of-the-road or lower skill sets primarily.