Can I have my 62c back please?
Filed under: Economics, General Budgeting, Hubby's Views, Immigration Advisers, Life in New Zealand, Retirement, Pensions and Kiwisaver
I was browsing through some news articles on Kiwiblog and came across this one about Govt income & expense. Which is talking about the Where’s My Tax? website, using figures from this weeks budget.
Which is quite a fascinating resource..
Top right of the page you can switch between income (taxes) and expense (public spending) .
One of the wow! factors for me was the single biggest Govt expenditure:
NZ Super (Pension). At $2173 per person per year.
Second place goes to Treasury debt servicing, at $829 pppy Our collective revolving credit facility costs us all $829 a year. hmm, that seems like an awful lot of money doesn’t it?
Primary education comes in third at $620 pppy, that’ll be all those ‘voluntary’ contributions.
With Secondary & Tertiary education each getting $455 pppy, more ‘voluntary’ contributions then! 
DPB, at $430 pppy, comes a long way behind as the second biggest MSD expense, after NZ Super.
One of the buried slithers (actually the second smallest) on the income page is Dept of Labour, showing this income;
Yes. The effective income from immigration ‘advisers’ is 22c per year. The effective income from giving someone Residency, ten times that.
But wait, lets look at the expenses shall we?
So this is just a list of the bottom half of DoL expenses. 62c a year to run the IAA.
I don’t think these numbers are any different from what has been previously posted. Presented in a fascinating way though.
No Money? Why not buy a few top range BMWs?
It’s the end of the second year of a recession, and last week the Finance Minister Bill English said that we could actually face a “double-dip” recession. (That means its going to get worse before it gets better). And yet, because the VIP fleet that Government uses is 3 years old – we have to buy a whole new fleet. That’s 34 BMWs at $200k each. That’s $6.8million spent on replacing a bunch of 3 year old cars.
When apparently there is no money to be spent on front line services. You will be left to die if you have the bad luck to have certain types of cancer because we wont pay decent wages for oncologists – but who cares – government ministers will have a flash car to be driven around in while you die.
The Green Party has called the ordering of the cars a disgrace.
Which is way too mild – they should call it revolting and abusive.
The cars are for transporting ministers, their guests, the leader of the Opposition and occasionally judges.
We have 121 MPs. Why do we need 34 cars in the first place? And why do they need to be replaced after 3 years? I bought a 10 year old car and I’ve kept it so far for 5 years. We have had to buy a second car, but we cannot afford to replace the first one for a new model. I mean we could if – like the government – we were prepared to live with a debt that grows each week. But we are bullied, insulted and forced to cut back and save. But the people in charge get to spend spend spend.
It really is sick isn’t it.
[The green party leader] understood the cars were ordered to arrive in time for the Rugby World Cup. “People can’t even afford to go to the games.”
I am personally sick to death of money we don’t have being spent so that NZ looks like it has money when the RWC fans descend on the place. NZ is not a rich country, and beggering oursleves to try and trick tourists into thinking we are flash is just not on. They will be going home – we have to live with the pile of debt and we will be forced to save money we don’t have to get the government out of the crap.
Not impressive.
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Christmas pressie from the Reserve Bank
Filed under: Cost of living, Economics, Interest Rates, Credit Cards & Mortgages in NZ, Property & General Investing
Alan Bollard (bless his little cotton socks) has decided that the base interest rate in New Zealand is not going up this month.
“Interest rates are now projected to rise to a more limited extent over the next two years than signalled in September.
Oh Yay! Just in time for my investment mortgages to come off their fixed rates – and there was me thinking that I might have a snowballs chance in hell of reducing my mortgage payments.
Of course the reason for the hold is becuase no one has any money to spend, so the economy isn’t taking off as well as it should. I’m not sure where anyone expects us to get money to spend from right now – prices are still going up and wages aren’t. And to be honest, even if I had any money – what he’s saying is that If I spend it and “help the economy” hes going to put my interest rates up as a result.
Does this make any sense to anyone?
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And why are the IRD being so selective in who they audit and prosecute?
Filed under: Economics, General Budgeting, Jobs & Work, Property & General Investing
As I’m on a rile complaining about laws being applied unevenly and inconsistently – I thought I would mention an article this weekend about the Inland Revenue not collected overdue taxes.
Now Ive made no secret of my dislike of over-taxing people. I’m the first one in the queue to get a legal reduction in tax if at all possible. I maintain that its my money and I should be able to hold to it. Not that I think all taxation is bad – I feel its right to pay a central agency some share of income to cover infrastructure: roads, schools, healthcare, a proper welfare system for people in need – that sort of thing. My issue is with taking more and more tax becuase the government just feels like spending more and more money on things that are vote winners rather than things the country needs.
Anyway – to stop waffling!
Commissioner of Inland Revenue Bob Russell took a swing at the insolvency industry last month, criticising “friendly” liquidators for not delving deeply into the affairs of failed companies. He was reporting to Parliament on the $740 million of taxes lost to firms in liquidation.
Ok – so thats a lot of tax lost by companies going belly-up – but as the article goes on to point out – how the hell has the IRD allowed these companies not to pay the tax? If I am late with my taxes – I get into a lot of trouble – and get fines and penalties.
Of the money owing from liquidation files, 90 per cent is over a year old, confirming what many in the insolvency industry see: the IRD is slow to enforce overdue tax debt.
So this isnt because of the liquidators – its because the IRD isnt chasing late payments. But then there’s this little gem:
Importantly, there is more than $5 billion in arrears from taxpayers not in liquidation or bankruptcy.
So the commissioner is taking pot shots at an industry he claims is costing $740,000,000 in lost taxes while overseeing an IRD that has cost itself $5,000,000,000 by not doing its job properly.
But who are the IRD spending millions investigating and going after? Property Investors and Traders. Who owe a paltry $240,000,000 of that $5 billion. Not that they shouldn’t – but It would be nice if when all us property people get tarred and feathered it was occasionally remembered that we don’t actually the bulk of the owed taxes – we are just the easiest to audit and prosecute – possibly also the most popular to be tarred and feathered.
But also last week, there was a rather interesting post on KiwiBlog, about the Unite union not having paid its PAYE or GST to the Inland Revenue. Now thats a bit embarrassing – but worse was the shitty attitude to the situation displayed my Matt McCarten – the head of the union:
Unite head Matt McCarten confirmed yesterday that the union owed money to the IRD but said he had made choices to pay for union campaigns rather than clear the debt. “I don’t shy away from these decisions, I make the calls.”
So basically – this twit decided off his own back that he had better things to spend the GST and PAYE that his union has collected on behalf of the government, and that he would use that money – that wasn’t his to spend- in order to run political campaigns. Utterly corrupt – and actually illegal. Nit only that – hes been thick enough to admit in the media that hes not paying taxes because hes campaigning with the money instead.
So why would the IRD rather come after me as an individual if I paid my income taxes late (which is money I have earned and have to give them a share of) but doesnt throw the book at Mr McCarten for refusing to hand over taxes he has taken from othe rpeople – ie – its not his own money and never was. Hes stealing it.
Paying employee deductions
Employers must pay deductions to us by each due date. The money deducted does not, at any stage, belong to employers. Under no circumstances should the deductions be used for any other purpose than for payment to Inland Revenue. We will help employers who try to meet their responsibilities but will take action against employers who do not comply with the tax laws.
Failing to pay deductions to Inland Revenue is a serious offence and can result in prosecution. An employer who is convicted may be:
fined up to $50,000 and/or
sent to prison for up to five years.
The name of anyone convicted will also appear in the New Zealand Gazette.
Ha! Still a lesser sentence than giving immigration advise 
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For Shane: The problems with overseas workers.
As promised, Ive copied the comment from Shane, so that it’s easier to both write a response and for people to read it. I guess for some people, the questions could be seen as “anti-immigrant” but I hope that most people will understand where he is coming from. I believe that these points are well made, and need to be thought about.
I am writing today too see what your thoughts are on Overseas workers – work force at present,
I have just spent 3 years working on projects around Taranaki in the Oil and generating electricity sector. I am a New Zealander born and bred and also a qualified electrician.
Recently have finished work on a big project, a company laid off 40 electricians, 10 stayed on, they were all from overseas – only a couple of them have just got nz qualified electrician, but the rest work under the company electrical licence – how does this help the NZ electricians ??
It doesn’t – and as far as I’m aware that it is total contravention of what immigration is there for. In fact – I blogged briefly in March last year about a similar issue – also in Taranaki. The original article in the papers is here. The important think to understand is whether the 10 people who were kept on were on Work Visas – or were permanent residents. If they were residents, then theres really not much you can do I’m afraid – they have actually worked through the legal process and have a right to the job if they will accept the wages (see below – my hubby has the same issue with Kiwis working for low wages).
If however they are on Work Permits – I would personally suggest you contact the journalist who wrote that article. It really is the best way to get things done in New Zealand – talk to the media. If I was going to make any more complaints about the immigration Dept – I honestly wouldn’t bother – Id just talk to the press and cause a load of hassle.
You also need to consider that while these migrants have just qualified in NZ (or not) – they may have decades of experience overseas that is basically shat on by New Zealand and totally discounted. Many British electricians are forced to work for peanuts when the come here despite being highly qualified and experienced sparkies. This is because of the outdated and stupid rules that says none of that counts for squat here. Again – it may actually not be the fault of the immigrant that they get paid so poorly. I have heard many UK sparkies complain bitterly at being paid so badly here, and it’s certainly not their choice – and they aren’t doing it to go to Australia. They have given up everything to move here.
Presently i have notice big electrical companies in the area hiring overseas workers to fill jobs in this region…….
1. Overseas workers are paid less – there fore less tax to the government – how is this beneficial to our country
This has always annoyed me – and it happens to be something that I have spoken and written about ever since we came to NZ ourselves almost 6 years ago. If the Skilled Migrant system was being used properly – then overseas workers should be employed because they have skills that NZ needs – so why are they being paid less? Often we have skills that NZers don’t actually have, but are needed, yet we get paid less becuase we aren’t Kiwis? I guess in this, Ive been arguing the other side of the point from you – but thinking about it it would have the same result. Overseas workers would not be hired because they are cheaper than Kiwi’s.
To me that is wrong, and its both exploiting an overseas workforce, and as you point out – there are Kiwis who should have those jobs. Immigration is supposed to fill a Labour gap – not create unemployment for Kiwis.
2. Overseas workers send all their money offshore to support their families – how does this benefit our country
I’m going to assume here that you are not in fact talking about ALL overseas workers? I think its fair to say that most of the migrants I personally know are Brits, and I would like to assure you that our wages are sure as hell not leaving NZ – we can’t afford to do that! I wish I knew the answer to this – it happens in Britain as well – and is about as popular. You can’t ban people from doing it – and I cant see a way for the immigration dept to screen people coming here on the basis of where they spend the money they earn.
It does kinda worry me that low NZ wages are still considered high enough for some people to leave their families, come here to work, and still have enough left over to send back home.
3. Overseas worker are only here for 3 years to achieve NZ residency, then off they go to AUZ where they get better pay,
To be fair – that happens the other way as well. When migrants decide they want to go to either Australia or New Zealand, there is always the option of going to the one where you can get a job, and using that to bounce into the other. We were personally advised to emigrate to Australia first as a way of getting into New Zealand. No good for us – as I sure as hell wasn’t going to live in Aus!
Also, it is the case that less immigrants leave New Zealand to go to Australia than Kiwis.
4. so while this happens Overseas worker don’t care about working conditions, hourly rates, all they are here for is to get NZ residency and leave,
Nutters! Yeah – I feel your frustration on this one. In hubbies line of work there is often the same issue: people (often Kiwis in this case) who are prepared to accept being treated like crap, get paid a lot less than they are worth, don’t get pay rises for years on end, don’t get a bonus unless they do the jobs of 10 people. I’m not sure that would be particularly an Overseas worker issue – though again – I’m happy to accept that the kind of work you were doing would mean you are seeing something quite different to me.
I know immigration have stepped in recently and prosecuted some guys for using overseas farm labour – basically little more than slaves. It’s an extreme version of what you are talking about – but yes – a lot of farm workers were being paid a few dollars an hour, and it took a long time for them to complain about it to the authorities.
5. mean while this is driving down my working conditions and hourly rate.
Yep. Again – we have the same issue – if people are willing to work the equivalent of 10 jobs for less money and worse conditions than my hubby would – oddly enough – he’s the one that loses his job. One of the reasons I actually write this blog – and wrote the book – and before that used to write on forums, was to persuade immigrants that taking a low paid job just because it was in New Zealand was counterproductive – for everyone. We are fed a line that living here is so cheap, we don’t NEED to earn much – then once you get here on a low salary – it takes some guts to fight for more. It’s complete bollocks of course – Kiwis all know that living here is relatively expensive – but migrants don’t know that. They are being conned by Kiwi Employers into taking those crap wages and working conditions.
6. Then the companies hire overseas workers are making more money as they pay them less and charge out the same rate regardless, are hiring good accountants to hide their tax’s and make more profit.
I should declare that I’m personally a huge fan of hiring an accountant so I pay less tax (which I will continue to do until governments world-wide stop wasting taxes becuase there know theres an endless store of more funds they can steal from me). If you haven’t really read my blog before – you may not have come across that. Companies making a profit is not a bad thing – but on the one hand exploiting cheap migrant labour while on the other hand refusing Kiwis work is in my book NOT the way to do that.
7. Meanwhile i sit on the dole as a citizen of this country with a trade
8. And yes – i have rang WINZ and ask what they have in plan for Qualified, experienced trades person like myself for CHCH clean up and helping – and like all government agency’s – i have yet to hear back from WINZ…..i wonder if you can help on these questions ??
I think you may be working at this from the wrong angle to be honest. Please consider emailing that journalist – and see if theres a story here for them. You certainly shouldn’t be on the dole with a skill like this – and as I understand whats happening with immigration – they CANNOT give a work visa to a migrant if theres a Kiwi that can do the job. I know from what I was told about 12 months by a staffer at Immigration that they are turning down 95% of work visa applications. And many migrants on work visas (those are the temporary ones – different from Permanent residence) are being sent back to their home countries even if they have been here for many years.
As for Christchurch – I think thats exactly where you should be heading. I’m gobsmacked that WINZ aren’t on top of this already! But then again – maybe I shouldn’t be. In your shoes – I would actually contact the Sallie Army down there and see if they have any contacts of people looking for sparkies. Possibly even the mayors office? There has to be someone down there who can point you in the right direction.
Regarding the issue of whether you have lost your job to a migrant when the company should not be employing migrants if Kiwis are available:
Well – as Ive said above – you need to understand that theres really only an issue you can do something about if they are on Temporary Work Permits. If you know that is the case – and you choose to make a complaint and not go to the media – the address you need is:
The Manager
Compliance Operations
Immigration New Zealand
PO Box 5342
AUCKLAND
At least I think it is – I couldn’t find any clear info that covers your issue. Just be aware that Immigration don’t take kindly to people making complaints – probably you’ll get as far as you would with letters to MP’s! I still reckon the media is the way to go – but DO make sure you have your facts right about the migrants involved. Thats really important – otherwise you will do your case more harm than good.
I know thats not really much help to your current situation, but I hope I have helped in some way. And I hope you get that job soon.
Good luck 
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What is happening to LAQC’s?
Well, what it looks like is happening is that they are going to be crushed into a billion little pieces and those pieces consigned to the depths of hell where us greedy property investors should also be consigned for daring to be slightly wealthy. That’s the headline, and that’s what most people will read and understand about what the government has done. And I’m pretty sure that most people (who don’t have an LAQC) will be rather happy about that.
However….
Actually – that isn’t happening at all, so if you were thinking of going into Property Investing in New Zealand – don’t panic.
Gilligan Rowe & Associates – the people we used to tell us how to set up our companies and trusts – have written an article about the new setup – it’s actually quite clear and easy to read. Maybe I’ve just got used to hearing Matt Gilligan speak about tax issues – and now I understand him!
Basically it consists of us having to contact the IRD and file a document that says our LAQC will now become an LTC – or Look Through Company. (Who the hell comes up with these names???)
And despite what many people assume is going to happen, other than that – it’s business as usual for us. We appear to still be able to claim losses against our personal income, as long as that does not exceed the amount of money we have either personally put into the company by way of capital or loans, or the amount of mortgage we have personally guaranteed. As that happens to be an unlimited amount (the banks don’t miss an opportunity to get your signature guaranteeing the moon if they can help it) essentially it means that we can can still claim a tax refund every month.
So at the end of the day – all we lose is the tax refund on the depreciation of the buildings we own. That amounts to about $3000 a year extra we have to find charge our tenants.
Personally, it bugs the hell out of me that I have had to worry about how to cope with suddenly losing the ability the claim tax losses, and being forced to sell three properties (cos I’m damn sure my tenants won’t feel like paying twice as much rent). Because thats what the media have been feeding to everyone. It just turns out not to have been the case. But if it keeps people happy, and means I’m personally not going to have to bankrupt myself for having had the audacity to try and not be poor – I’m actually OK with that.
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Inequality increases in NZ (?)
Filed under: Cost of living, Economics, Hubby's Views, Jobs & Work, Life in New Zealand
I was reading an article in this weekends’ Dom Post entitled ‘skilled workers reap pay benefits’. The article by Andrew Whiteford from Infometrics talks about the latest inequality statistics from MSD (Ministry of Social Development). Fortunately, Infometrics are good enough to publish it on their website.
The article talks about household income and reasonably points out that just because there is a bigger gap between those earning less and those earning more, doesn’t mean it’s all bad. Fundamentally, with a move to more IT focused businesses rather than manual labour or manufacturing, there is a greater demand for people with skills. The more money they earn, the more money they spend. To spend money, on things like coffee or eating out, you need people in those service industries, who typically earn a low hourly rate.
So; more higher paying jobs, more income, more spending, also means more lower paying jobs (which also presumably leads to more income & more spending since if people didn’t have a lower paying job they would be doing what?? Not earning, or heading overseas to earn money.)
(Or bludging off the state to focus on something as enlightening as a TaxPayer funded “Art Installation” to show the benefits of bludging of the state and refusing to work, resulting in some of the funniest insults ever created on KiwiBlog! – Avalon.)
Now because I’m a little suspicious of the normal standard of reporting, the DomPost even managed to mangle a simple graphic showing employment growth, I figured I would look for the source MSD information.
Only a search of the MSD website doesn’t find this information easily either. We can get to the 2009 report here {which does include a whole bundle of interesting reading}
And Google being your friend, actually takes you off to the NZ Institute.
Which helpfully does cite references back on the MSD website, bringing us back to the information we were looking for in the first place, being the MSD report the Infometrics article is based on. Still with me on this treasure hunt?
The MSD analysis is actually of data from StatsNZ up to June 2009. So while it’s officially a 2010 report, it’s based on data between a year and two years old.
So are we all poor, well off, or somewhere not quite in the middle?
1/ Median income for households has grown evenly between 2007 & 2009. Before this, there had been a big bump up due to the Working For Families (WFF) tax credit. WFF is also responsible for reducing the inequality in income. i.e. those on low incomes get tax credit’s nominally paid for by those on higher incomes. So WFF is working effectively in terms of income redistribution across the country.
2/ Accommodation costs across the country are going up as a proportion of household income. The measure here is how many households are spending more than 30% of their income after tax & benefits are applied on the roof over their head. Whether that’s as rent or a mortgage.
3/ Poverty depends on how you measure it. Even I can’t quite make sense of what the two different measures are actually looking at and what it means beyond that they are looking at ‘disposable income after housing costs are paid for.
4/ Sixty six percent (66%) of two parent families are dual income households. i.e. both parents work. Which is actually down from the 75% level five years ago, and these days a greater proportion of those two parents are both in full time work. Interestingly enough, those 9% who are no longer in full time work are typically not working (in paid employment) at all. And the overall proportion of two parent families with one in full time employment and one in part time employment have dropped. This may be a WFF thing again. If the part time earner is having to work longer hours to pay for child care while they are at work, and overall income drops because the household income goes above the WFF threshold, it makes sense to stop working, get the benefit income and not have to pay childcare costs. Clearly this is just one possible reason, and the report doesn’t provide any real analysis of why there has been this change in the distribution of employment in two parent families.
What the income inequality report doesn’t tell us, is whether low income individuals or households are increasing their income over time to the middle of the pack. The bottom rung then being taken up by young people starting off in the workforce. It also doesn’t tell us whether low income individuals are part time or full time employed, self employed, or indeed whether there is a preponderance of two income households which still have a significantly lower overall total income. The statistics only look at disposable income, so we can infer what overall income looks like by considering the relative cost of housing. Net result, more households across the entire income spectrum across the country have less disposable income left to spend on things like food, electricity etc.
To be fair I can’t see a good way of being able to track the information on progress. So the caveat to all this is that the surveys talk about averages. With NZ having relatively easy access for Pacific Islanders to move here and work, there is also a consideration that not all emigration to NZ is of skilled workers. As has been pointed out before, all economies need a mix of skilled and unskilled people to fill the available jobs. So again, it’s entirely likely that in comparison to a standard of living measured by income, that a low skilled & low paid job in NZ is better than a lower paid job on what many of us would view as an idyllic Pacific island.
Tax Changes hit today.
Filed under: Banks, General Budgeting, Interest Rates, Credit Cards & Mortgages in NZ, Property & General Investing
GST rises from 12.5% to 15% (coffee has suddenly shot up from $3.50 for a Flat White to $4.00 for a flat white in the past few weeks – which I’m sure most people will realise is not a 2.5% rise in GST).
Income Tax goes down – so many people will see a nice little increase in their next pay packet. This one we personally won’t see till about next July as it all gets worked out in the wash of our tax return.
The tax changes for property investors don’t actually come into force yet – that’s not till next April, and a chat last week with my accountant showed that actually the changes haven’t been confirmed yet, so no one is 100% sure what the effect is going to be. Which is helpful. In a not-very-helpful sort of way.
So, to be on the safe side, I’m budgeting on paying the same amount of tax that we usually do, and as soon as hubby gets paid each month, I shovel the usual proportion of that money into a savings account (I’m using RaboPlus (now called RaboDirect) because the interest rate is higher and it takes the savings out of the hands of ASB). That should give us some leeway with our tax until we know for definate what the property investing taxes are going to change to. But at a rough estimate – its going to cost us a lot more than the cuts are giving us.
Which is nice. In a not-very-nice sort of way.
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Is Income Splitting coming to New Zealand?
Filed under: Cost of living, Economics, Retirement, Pensions and Kiwisaver
It seems that a bill has been selecting for reading in Parliament which would allow single wage families to split that income and therefore pay less tax. Note the word families. Apparently me and hubby do not “count” as a family because we don’t have children. And Peter Dunne – “party leader” of United Future ( party of 1 MP – but hey – he gets a Party Leaders expense allowance and salary!) believes that you are only a family if you have Children.
Git.
I quite liked the sound of Income Splitting, until it was linked to ability to have children. (And is anyone else slightly confused that on the one hand we have Politicians saying you can only have more tax cuts if you have children at the same time we are threatening to throw someone out of the country for being pregnant???)
I personally don’t think this will go anywhere, because it does advantage those on higher incomes, and thats almost always seen as a bad thing for anyone except those on the high incomes. And besides – we have already had a raft of tax cuts, and as far as I’m aware the NZ government is still saying that tax cuts have to be paid for by equal tax increases.
But doesn’t income splitting already exist in New Zealand?
You may hear this from some people – we certainly did. Over and Over again. But it actually doesn’t. In order for one single income to be diverted to more than the person who actually did the work to earn it – you have to jump through a whole load of legal and accounting hoops to keep on the right side of the Tax Man. And you need to be self-employed. And thats always the side of the Tax Man you want to be on.
Theoretically, some of Hubbies contracting income could be diverted to me, and therefore he would earn less and pay less tax. But, its not that simple: because he does the work that brings in the money, he has to earn the bulk of that income in his own name, otherwise we are using tax rules to avoid paying tax, which isn’t legal.
So if I was to take some of that contracting income, as a wage for myself, then the amount I get has to reflect the contribution I make to earning that income. As my contribution is running this blog – which doesn’t make us any money- and doing the paperwork for the business, which doesn’t earn any income but is a necessary job, I can hardly “earn” the same amount as Hubby, and thus split the income down the middle.
So bringing in a bill to allow Income Splitting on the whole sounds like a good plan. I’m all for less taxes and I think its about time that people should be able to access the same tax cutting measures as employees that the self- employed can. I just think its wrong to link tax to ability to have children.
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What if economists ran the world?
With all this talk of politicians fiddling their expenses and paying for all sorts of entertainment with taxpayer funded credit cards, there’s some question about whether other people could run the place better.
I was listening to a Freakeconomics radio podcast (From the 24th March, you’ll find it on iTunes) the other day about how great the world would be if we ditched politicians and let economists run the world.
humpfh
Anyway, it went something along these lines;
Economists, mostly ignored.
[A small affectation normally reserved for great things like The Hitch Hikers Guide to the Galaxy.]
Milton Freedman – a great man, with high intellect and amazing theories about how to run the optimum capitalist economy.
Which the then new president of Estonia adopted whole heartedly.
And then discovered that Freedman never had any experience of putting any of these economic ideas into practice.
So undeterred by this lack of practical experience to look at, those young crazy Estonians went ahead with the reforms.
Like privitisation, abolition of import duties/taxes, and a flat tax rate for all sources of income.
Sound familiar? Like NZ’s free trade deal with China, negotiations for similar with India, and the fervent dream of a free trade deal with the USA.
And Nationals’ changes to taxation which are bringing company, trust & personal tax rates into alignment. So perhaps we’re already living in an economists dream society?
Moving on. What would an exhaulted US economist do if he got the keys to the White House?
Abolish the Education department
Abolish the minimum wage
Legalise all drugs
ohhh interesting – now you might think this is a cunning plan to then tax the sale of drugs – just like cigarettes & alcohol. But no, alas it’s only on the theory that the Govt. spends a lot of money trying to control illegal drugs, so lets legalise them and we can stop spending all that money. So scrap the DEA also.
At least we could sell tickets to wrestling matches of Economists vs Teachers.
& legalisation of prostitution
Hmm – taxation here too perhaps?
Nope – apparently it’s all about supply & demand.
Prostitutes cost a lot of money, well apparently the one’s economists visit do anyway, so if you legalise prostitution (removing the barriers to trade!) then more ‘girls’ will enter the industry, there by bringing prices down.
Next.
Change the Federal Reserve, so it only has one thing to look after. Inflation.
No dabbling in Wall St, and all the other stuff they interfere in.
Although really you don’t need the Fed to do anything, just let the free markets run things.
[that'll be the free markets that have screwed the world economy so badly in the last few years then?]
Okay, so what does Milton Freedman’s grandson think?
Well, he is off setting up island nations so that people have a free choice about which nation they want to live in. These nations would be run by business people who would hire economists [really?!], to help them setup societies that are attractive for people to live. Unlike the countries run by our current world Govts.
Hiring economists with big brains and lots of great ideas – is that really a good plan?
Well, the interview continues with this economist who decided to take charge of toilet training their young child. Applying economic theory of effort & reward, every time the child went to the toilet, they got some M&M’s.
It worked. For two days.
This 3 year old child had rapidly figured out how to get the maximum quantity of M&M’s for minimum effort.
hmm – perhaps we need three year olds running the country so they can figure out how to work all the systems we have in place to optimum effect? You sure don’t want a brainy economist in charge who can be outwitted by a three year old.
So what would happen to the world if economists were in charge?
The worlds supply of chocolate would rapidly end up in the hands of children, while the adults sat there befuddled wondering what the heck had happened.
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