Professor Roger Bowden
That referendums can lead to disintegration of rational thought and political process has become abundantly evident from the chaos that has followed the UK Brexit referendum of June 2016.
Everybody loves complaining about education; either theirs, or more typically, someone else’s. But things do rather come to a head when politicians spot a voting opportunity.
The polls all say that Team Key (the new name of the National Party) will win in a canter, with a bit of help from coalitional support riders. But then polls are often wrong and it's as well to remind ourselves that Team NZ were 8 to 1 up at the same stage.
You'd have to say the current National led coalition hasn't done so badly on the economic front. Our public accounts, notably the core government budget balance, are in the best state for years. The government has foreshowed a billion dollars or so new spending initiatives, but as yet we don't know the details, including how they'll be financed.
A lifetime of observation and work in the social sciences has convinced me of one thing. George Orwell was partly wrong in his classic novel 1984. The threats to the open society do not come from above. They come from all around us: from our peers. The oppression is rooted in economic interest and professional capture.
Any way you add up the sums, the message is that present and future commitments under just the one Vote, Treaty Negotiations, will comes to something like 5-6 billion dollars in total present value, probably even more. It’s hard to find Votes with a similarly spectacular explosion.
On the face of it, the euromess is an old story. Populist governments and rampant bureaucrats are expensive indulgences at the best of times. With the global economic hangover we call the global financial crisis, to spend too much and save too little is downright dangerous, and not just for your own taxpayers.
You’ve got to hand it to the jocks in the financial markets. My German co-author, who knows a bit about such things, tells me there’s already a spread trade going in credit default swaps (CDS). I won’t bore you with the details, but the trade amounts to an indirect bet, based on French sovereign debt, that Francois Hollande will be gone in 5 years time. Either that, or he’ll retreat into the safety of the pack.
Economists often talk about shocks, and in the next breath about impulse response functions, which is basically how an initial shock follows through over time to the rest of the economy. So this week’s article will describe how the Eurozone shock might be expected to flow through to the rest of the world and thence trickle down to us. I’ll conclude with a few general lessons for us, hopefully not too unctuous.