In the past few hours, it has been stated that the US economy grew at a solid 3% rate last quarter, as given in the American government's final estimate. New Zealand's economy, on the other hand, shrank at a rate of -0.2%. The US Federal Funds rate (the equivalent of NZ's Official Cash Rate, OCR) is currently set at between 4.75 & 5 percent. By contrast, our OCR is presently at the higher rate of 5.25%. Meanwhile inflation in NZ was just over 3 percent for the June 2024 year, whereas inflation in the US was just under 3 percent for that same year. Given the Kiwi economy is hugely weaker than the US, and our inflation rates are almost the same, its a no-brainer that the Official Cash Rate should now be set far lower in NZ than the US right now - not higher. This Blog has consistently argued monetary policy was way too loose in NZ during the pandemic. The RBNZ $100 billion money printing program - one of the world's largest - was a knee-jerk reaction, especially when the virus did not ravage NZ remotely like it did many other nations during 2020-21. Then in another panicked knee-jerk reaction, the Reserve Bank Governor announced he was "engineering a recession" with punishingly higher interest rates to get the inflation he created back down again. The rest of the world is currently enjoying a "soft landing", which this Blog argued years ago that NZ should also have aimed for. The fact interest rates are higher here than in the US when our economy is stagnant & theirs is booming is revealing of a gross error in our monetary policy.
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It has been announced that the Police Commissioner has been chosen to head the Finance Minister Nicola Willis' Social Investment Agency when he steps down in November. An NZ Treasury lecture defines social investment as, "The use of actuarial techniques to calculate a measure of future fiscal liability - which is then used for evaluation of “success” and policy purposes. The techniques require the use of large longitudinal datasets to prioritize policy and actions, to help choose who to focus case management on, and which interventions to use". Yes, it's a no-brainer. That leadership position must be widely advertised to attract the person, either local or overseas, with the highly sophisticated maths & statistical skill set to know how to do such calculations, or at least be able to advise on how they are to be done. The chap with a similar job in the US is called Richard Revesz who's at the White House Office overseeing cost-benefit calculations. He has a Masters in Civil Engineering from MIT, and then did a Doctor of Jurisprudence at Yale. There's no way a lay-person can head a Social Investment Agency without high-level maths & statistics skills, given the nature of that specific method of evaluating projects. So why did Police Minister, Mark Mitchell, say "The Social Investment Agency's got a big role to play & I think Andy Coster, when you look at his background & experience, he's the perfect fit for the role" when Commissioner Coster does not have the background, nor experience? Mitchell is a politician. Say no more. If Finance Minister Willis & Mitchell think they're smart playing the political appointment game in Wellington, then those of us with the background & experience to execute these kinds of "social investment" style approaches are over it. We've already worked out our response.
Here's what "my group" of economists, actuaries, statisticians, computer scientists and mathematicians are doing. We've had a gutsful of the top jobs in Wellington going to people who are well connected yet don't have maths skills. So we no longer have an interest in applying to the lower-down technical positions that prop those folks up. Our students are not being recommended to apply to them. We're no longer going to be the slaves in the engine room who do the difficult work so Wellington bosses who don't know what we've done can take credit for our work. We're telling our students to go overseas, to Sydney, Silicon Valley, London and New York, to take up more highly valued jobs, both in terms of status & money, rather than go to Wellington to be the poor little girl, or boy, who has studied like a dog only to be patronized by the likes of Nicola Willis, Mark Mitchell, and the non-qualified bosses they've appointed. We're no longer going to be thrown into the engine room of the Titanic whilst the captain who's chatting to guests steers the ship into an iceberg. Willis & Mitchell just hastened the brain drain making this appointment. When they advertise for a (non) senior management team low grade Tier 3-style economist, actuary, comp. scientist, or maths person at "Social Investment" to do the hard yards, as they're doing at Seymour's Ministry of Regulation, we're telling our talented graduates, "Don't apply". The world's a different place now. The techs call the shots. Only not in NZ.
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