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  • Robert MacCulloch

He may have a Nobel Prize, but Jo Stiglitz reveals he is no expert on the Kiwi economy

Media outlets this past week gave big headlines to former Nobel Laureate, Jo Stiglitz, who wrote in a recent article that "NZ has managed to bring the disease under control and is working to redeploy some underused resources to build the kind of economy that should mark the post-pandemic world: one that is greener and more knowledge-based, with even greater equality, trust, and solidarity".


The beginning of the sentence is (so far) correct but then Jo Stiglitz goes way off course. There is little, if any, evidence that NZ is currently mapping out longer term plans to build a green, knowledge-based economy with greater equality. Unless he takes the $10 million public subsidy paid to the "green" private school in Taranaki as his evidence.


Does Jo Stiglitz know that the government just last year exempted agriculture from the Emissions Trading Scheme until 2025 and possibly forever? Does he know that the vast majority of energy for our electricity generation has long been from renewable sources, which made NZ one of the lowest carbon dioxide emitting countries in terms of this sector way before the virus blew up? Ironically, the most positive effect of the virus crisis on our environment comes from the collapse of international tourists.


In terms of "knowledge" there has been little discernible change in education policy these past six months. What's more, our universities are experiencing a funding crisis due to the loss of overseas students. There has been no strategic shift in NZ economic policy whatsoever to address our zero productivity growth, as measured by output per hour, that we have been experiencing in recent times. Research and development spending in NZ has been, and remains, one of the lowest in the OECD. Furthermore, highly skilled "knowledge-based-economy" overseas workers who are in demand by Kiwi businesses are unlikely to get through our increasingly sealed borders. And being a small country, we can't rely only on home-grown talent.


In terms of greater equality, the extension of the wage subsidy to big business on 23 March directly helped power the NZX 50, which measures the value of our 50 biggest companies, to all time highs. The stock market and housing market booms have also been fanned by the Reserve Bank of NZ cutting interest rates nearly to zero and undertaking a massive "quantitative easing" program which may see it buying up to $100 billion of government debt. So wealth inequality is looking like it has actually soared the past six months in NZ (!)


So what on earth is Jo Stiglitz on about? Looks like his comments are a partisan criticism of the Trump administration in the lead up to the US election, as part of an attempt to put the Republicans in a bad light, rather than any kind of serious comment about the successes or failures of NZ economic policy.