Regulations, and the ease of doing business

One big issue for governments everywhere (especially in a competitive and mobile global economy) is the maintenance of appropriate regulations to ensure that economic life is conducted with transparency, predictability and fairness. Further, regulations should not add too costly a burden to businesses, or the cost of creating new business activity becomes too great, and investors take their money elsewhere. Over-regulation can be a constraint on economic growth - besides just adding to people's everyday frustration with 'red tape'. The NZ government has recently announced a review of regulations governing business (see Beehive website link on the right).
Although the World Bank has rated NZ number 1 in the world on its 'ease of doing business' survey scale (click here to see their international rankings), the NZ Government has accepted that more needs to be done to streamline regulatory compliance for business.

Budget 2006

Those of you doing 144723 can no doubt anticipate more detailed analysis of the Budget than is required for 721. Nonetheless, the Minister of Finance's Budget Speech normally has some interesting clues about prevailing policy ideas, and these can be linked to broader models of political economy. So, the Budget contains some fairly predictable measures to boost investment in transport infrastructure, health, education and research. Cullen's statement that 'the most important contributor to economic growth in a modern economy is human capital' helps to justify extra spending in education, and is also a common theme in this 'third way' era.
This government's savings programme (mainly, but not only, the NZ Super Fund) is making substantial inroads into the public debt position. So, while Cullen is having to remind us that NZ is at the bottom of the economic cycle, he boasts that 'NZ is in a far stronger position to cope with the fiscal consequences of the demographic transformation which will occur over the next 30 to 40 years than almost any other developed country. This will increasingly become a competitive advantage for us...'
But, also intriguing is Cullen's statement that his government 'does not subscribe to the theory that economic transformation consists of a period of actual intense pain followed by often hypothetical gains', noting also that the pains and gains are not normally evenly distributed through the population. Here, Cullen is rejecting a form of fiscal austerity that would have been applied by strict neo-liberal dogma.
So, Cullen argues that 'slashing government expenditure, thus making the slowdown worse', while at the bottom of the economic cycle, is not the way he intends to go. He uses the phrase 'automatic stabilisers' to refer to the way that government spending, if sustained - and not slashed - during a slow phase of the cycle should help smooth the long-run growth path. It helps us understand why he is able to be confidently announcing new spending and investment while facing cash deficits ahead.
All this sounds rather Keynesian to me - or am I just thinking too hard?
For all the Budget details, click on the Treasury link to the right...

Public sector ethics: 144724

Those of you doing 144724 may note - in advance of the management component next semester - that the State Services Commission's report on the leak of a cabinet paper concerning unbundling of Telecom's local loop is available on line.
Click here! This is relevant to questions of public-service ethics, confidentiality and internal management, including the handling of serious misconduct by an employee.

Government on Mars, and Wikipedia

Recently on National Radio, there was a discussion about people colonising Mars, as part of an interview with Sir Geoffrey Palmer (former PM and now public law practitioner). He was asked whether there would need to be laws on Mars and what kind of laws they would be. He answered that, of course, there would need to be laws; that Mars, which presently falls into the category of 'international commons', would need to be governed under international law (like Antarctica) if people were to colonise it - and if they wanted to avoid a state of nature (though I don't recall him actually using that last phrase). Anyway, he spoke like a good social-contract theorist. (He also noted the lack of water on Mars, so you can imagine already the need for water policy on Mars, if ever humans and water were to make it there together).
Now, some of you may already have read a recent article by Russell Brown about Wikipedia, which is a free on-line encyclopedia that anyone can edit. It has mushroomed into a huge information resource, and is often very good (though a recent article in the Economist notes that it was found to have more frequent errors than Encyclopedia Brittanica - but that's not surprising). Well, Russell Brown informs us that the originator of Wikipedia, Jimmy Wales, is a fan of Ayn Rand, the famous libertarian 'objectivist' philosopher, novelist, Aristotle admirer and enemy of all forms of governmental regulation. You can see why the individual liberty, freedom of information and lack of centralised authority of the Wikipedia concept should have come from someone who loves Ayn Rand. Well, it turns out that Jimmy Wales's wonderful idea has spawned a lot of factional wars and infighting between user/contributors of Wikipedia, to the extent that he has been forced to (shock horror!) make arbitrary decisions about specific entries etc. And so, here is a fascinating quote from a columnist called Jason Scott (copied from Brown's article) about this whole sad affair: "What Wikipedia has taught us now, is that in a vacuum of politics, politics will be created. There is no vacuum of politics. People who are encountering this space where they can not lord over others for technicalities and gain power for themselves will then proceed to invoke technicalities, take power from other people. They just do this. This is what human beings do."
Sounds very much like Thomas Hobbes, one of the great social-contract theorists.
Anyway, all of this has to do with the need we seem to have for that 'necessary evil' called 'government'. Even on Mars, even in cyberspace, people require regulation by a central authority who holds ultimate power - if only so that they can enjoy the limited freedom that they aspire to have.
Further, though, there is some genuine concern (alarm, even) nowadays about the world's super-power, the US, denigrating and ignoring international legal covenants, such as the Geneva Convention, the International Criminal Court, and even the UN Security Council. This US uni-lateralism sets a bad example for the rest of the world, and the worst possible case would be a reversion to a 'state of nature' between the nations. Not a good idea when nuclear weapons are all over the place.
In short, then, is the possibility of a loss of confidence in international law and global governance structures (in spite of talk of globalization) one of the 'big issues' the world faces today? You be the judge!

Knowledge and science funding

Those of you who may be interested in the 721 essay 3 topic on knowledge might like to look at the recent statement from Steve Maharey on science funding. (Hit the Beehive link on the right, and select Steve from the list of Ministers to find his recent statements etc.)

He has announced a new funding model that would have less emphasis on contestability and provide more long-term certainty and consistency of funding for well-performing science programmes and institutions. This will especially welcome, I imagine, for Crown Research Institutes. Contestability is supposed to increase efficiency and quality. But good science requires long-term efforts with stable employment for top researchers. The contestability model has the unfortunate effect of forcing CRIs to use fixed-term employment and to tie up lots of their time in filling out funding application forms (and let me assure you that applying for public-good science funding is a very very time-consuming process). I used to wonder if some university would eventually offer a new degree called a Masters of Funding Applications (MFA) to reflect the present reality of what scientists actually have to do.

Anyway, this new model is significant not only for that 721 essay topic, but also perhaps for 723 (re funding models generally) and even for 724 (indicating part of the shift away from a purist quasi-market model, preferred in the 1990s). There will still be some contestable funds, of course, but the idea is to provide long-term certainty for institutions that are known to perform well.

World Finance: Robert Wade

A recent article by Robert Wade on the world financial system and the effects it has on 'underdevelopment' may be of interest to you, especially as it gives a quick over-view of the Bretton Woods system and the results of it collapse. I can send this article to you in pdf, if you email me directly to ask for it. It could be useful for your first assignment.

Coincidentally, Robert Wade, who is based at the London School of Economics, is to give a seminar on justice and the international financial order at Auckland Uni at 5pm on 10 May. If you are able and willing to attend, see details below:

Auckland University Public Policy Group
Invites you to a seminar Wednesday 10th May
Upstairs Old Government House

Professor Robert Wade
London School of Economics

5-6.30 pm

‘In search of a just international economic system’

Robert Wade is Professor of Political Economy and Development in the Development Studies Institute at the London School of Economics. Prof Wade is a highly regarded commentator on the economic orthodoxies of neoliberal development and wider economic policy, especially as practiced by multilateral agencies including the World Bank and WTO. He has recently focussed on global inequality in income and wealth, emerging US Empire, and the liberalized global financial system’s impact on the poorest countries. He is author of Governing the Market: Economic Theory and the Role of Government in East Asia's Industrialization (1990, 2003) and is a regular contributor to leading journals including World Development and the New Left Review. One of NZ’s best regarded economist exports, he has worked at the IDS Sussex, the World Bank, Brown Universities, and the Institute for Advanced Studies at Princeton and Berlin.


Followed by drinks and a book launch 6.30-7pm

Dr David Craig and Dr Doug Porter
University of Auckland and Asian Development Bank

‘Development beyond neoliberalism?
Governance, poverty reduction and political economy’ (Routledge 2006).


Sponsorship by The Department of Sociology, the Centre for Development Studies and the Centre for Critical Inquiry gratefully acknowledged

RSVP by the 9th May please to s.stjohn@auckland.ac.nz

Welcome

Welcome to this new blog-based teaching and discussion tool, which is very experimental. Please leave a comment, so I know you were here! This site will be updated weekly (I hope) during the teaching semesters, and will contain comments and opinions (not ones that will always pass muster if quoted in an essay!), and useful info about new developments, documents, research, books, articles, etc that I may happen to find.
This experimental teaching blog is intended to replace Web CT which is slow, user-UNfriendly and generally painful. Let's give this a try instead!
Grant