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  • rmacculloch

Newsroom are featuring an article today which states, "When Christopher Luxon, leader of the National Party, asserts that, in order to protect businesses against further losses, New Zealand should be emerging from social restrictions much faster than the Government is permitting, he is joining Bloomberg in valuing big business over the lives of people at risk of dying of Covid".

Now that is a very strong statement, which accuses the Leader of the Opposition of putting money - and not anyone's money - but money, in particular, going to "big business", ahead of human lives. But Phil Goff, the Mayor of Auckland and former Labour Party Minister, has also argued that Auckland should ease restrictions much faster. He strongly advocated that the city end its Level 4 lockdown in the face of strong objections from the Covid Modelers and health department officials for the following reason:

"the psychological pressures of the long level 4 lockdown are growing and the financial pressures on businesses and jobs … I always listen to the epidemiologists ... but they're looking at it through one lens ... there are other implications of staying at level 4”.

So why doesn't Newsroom state that, "When Phil Goff, the Mayor of Auckland, asserted that, in order to protect businesses against further losses, NZ should be emerging from social restrictions much faster than the Government is permitting, he is joining Bloomberg in valuing big business over the lives of people at risk of dying of Covid"?

A motive of many in the mainstream media is beginning to emerge. That is, there appears to be a desire to sway public opinion that National is a party of GDP, money, profits and business whereas Labour is the Party that cares about the "well-being" of the people.

To be fair to those who have this agenda, maybe the years when John Key was PM, during which the three drivers of growth were immigration, tourists and property development, have left a lasting impression on Kiwis who still feel that our infrastructure wasn't able to cope, our environment soured, speculation ran rampant and gaps opened up, like between homeowners and non-homeowners. So the National Party does have a challenge. Namely to shake off this impression and stand for a vision of the country - a set of principles - that is genuine and authentic and strikes a chord with us all. Being the party of more GDP, of more production, whatever the cost, just doesn't the cut the mustard anymore. A vision of "inclusive prosperity" would be a far better aim for them.


The RBNZ has featured in the news on the issue of staff turnover, which became a line of questioning at yesterday's Finance & Expenditure Select Committee. Questions by Shadow Finance Spokesman, Simon Bridges, and Leader of the ACT Party, David Seymour, on this topic were rebuffed by the Governor. We have already blogged on the dwindling pool of talented economists who work at the Bank. Gone are the days when the likes of Dr (now Professor) Arthur Grimes (PhD & Masters with Distinction, London School of Economics), Dr Alan Bollard, Dr Don Brash (PhD, Australian National University), Dr John McDermott (PhD, Yale University), Graeme Wheeler (former Managing Director of the World Bank) & Grant Spencer (Masters with Distinction, London School of Economics) worked there.

Indeed, it's hard to find anyone who I'd rank as an economist with serious international standing or clout who is there now. Staggeringly, it's hard to even find an economist on the Senior Executive Leadership Team or Board. The shift against economists now seems to have intensified. Today the RBNZ announced three new "Assistant Governor" appointments to its Executive Leadership Team, none of whom are economists. One of them has studied "information management", another has a (LLB) law degree, and the other is an accountant.

With Geoff Bascand leaving, I now count 6 out of the 8 remaining "Executive Leaders" to be untrained in economics, leaving only the Governor (Masters, Leicester) and his underling, Hawkesby (Masters, Canterbury). Odd, isn't it, when this subject is THE core discipline required at a Central Bank? The reason, one may speculate, is that the RBNZ as an institution doesn't want folks with high standing in the subject who may not go along with the "narrative" that the Bank is trying to push - for example, like how it had to implement a $100 billion money printing program to avoid deflation in NZ, which is garbage. Instead all that program did was send house prices through the roof.

In response to a request for comment from the Herald, Reserve Bank Chair Neil Quigley "has now expressed confidence in the Governor's handling of a restructure". Quigley said he had been involved in the interview process for the Assistant Governor roles. "We are impressed by the quality of the field that the bank has attracted for these roles, making it clear that the bank is an attractive place for talented people to work."

I'd flatly disagree with Neil Quigley and now do not encourage talented economics students to pursue a career at the RBNZ, even though it was once the pre-eminent place of nurturing for such young people. I can't help but think that the Bank is deliberately not championing the careers of these types, who are so desperately needed to help design the environment conducive for inclusive economic growth in this country.

And yes, there does appear to be a deliberate political strategy at play. Back in August, 2019, reported, "the Reserve Bank Board & Finance Minister's Decision to Rule out Specialist Researchers from Joining Committee tasked with Setting the Official Cash Rate dubbed 'Utterly Extraordinary' and at Odds with International Norms". Former Governor Bollard pointed out that the appointment criteria could’ve simply been aimed at ensuring those with market interests weren’t hired. Former Governor Brash was the one who described the revelations that there was a policy to write off specialist researchers as “utterly extraordinary”.

The above move signaled the start of Finance Minister Robertson's politicization of our Central Bank & destruction of its independence, which had previously made it one of our most venerated institutions. His government appeared to have been worried that someone who specialized in financial supervision & monetary economics research - that is, someone who was actually knowledgeable about these topics - may not tow the government line.

By the way, evidence of an independent Central Bank occurs when a left-wing government re-appoints a Governor who was originally appointed by a right-wing one (and vice versa). Alan Greenspan, for example, a past US Federal Reserve Chair, was appointed by President Reagan (Republican) & re-appointed by President Clinton (Democrat). The fact National & ACT seem unhappy with the RBNZ Governor & are unlikely to support him being re-appointed is practically proof of how our Central Bank is no longer independent & has instead become a politicized institution.




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Robert MacCulloch