Robert MacCulloch
Robert MacCulloch is a native of New Zealand and worked at the Reserve Bank of NZ before he travelled to the UK to complete a PhD in Economics at Oxford University.
This blog costs me money – it generates no income. Is that a bad thing? As the third richest bloke in NZ once told me, because he likes putting folks like me down, “If I don’t pay for advice then I don’t value it.” So to end the year, let’s ask where the value lies, if any, in this blog, and even ask the question whether you can make money from it – even though we’re essentially non-for-profit. Has our blog offered insightful and accurate insights, applying the latest knowledge from the subject of economics, to the events of our times? Obviously my answers are biased – but here goes.
First, to address the insult my rich-lister friend handed me about free opinion like mine, here was DownToEarth Kiwi writing in May 2021:
Our prediction is that the cost-of-living is on the way up in NZ and interest rates will be going up up sooner rather than later.
Not bad, eh? No one else I know of in the country called it that way back then. We wrote in April 2021, “how the Reserve Bank seems blithely unaware of inflationary pressures erupting in the country”. To the extent any such pressures were acknowledged by its Monetary Policy Committee in 2021, it said that they are “near-term” and “temporary” .. that “medium-term inflation ... would likely remain below its remit targets [of 1-3%]” and that “Inflation expectations remain at or below the two per cent target midpoint.” That was just before rampant inflation blew up NZ over the 2022–2024 period. So, who do you trust more? The RBNZ or DownToEarth Kiwi?
Its a rhetorical question, really. At that same time, I helped the owner one of NZ’s biggest investment banks avoid losses when its owner was buying bonds. I warned him they would plummet in value when interest rates began to sky-rocket up.
On the note of monetary policy, whether on the blog or on radio, we did our best to avoid the awful stagnation NZ is currently experiencing. I argued a couple of years ago how the RBNZ should go for a “soft landing”. You can read on the web those views of ours being picked up by some Big Media outlets. What more could I do than call the excessive hikes in the OCR a “dangerous move”, as headlined by Newshub. The link doesn’t work anymore – they’re bankrupt.
Instead the RBNZ went for a hard landing – “engineering a recession” – for which there was never a requirement. Inflation and interest rates would have still have followed a downward trajectory – maybe not quite as fast – but the benefit of avoiding the stagnation would have been worth it. We got that call right – look at what has happened. Last year, Infometrics, often in the news since Brad Olsen uses the media to advertise his company, led the headlines saying the economy would grow by one per cent this year – we called that claim “silly” on national radio and have been vindicated.
Second, aside from monetary policy, here’s an example of our views on the regulatory state in NZ. Nine years ago we did a campaign against over-regulation and red-tape, before the blog had formally started. Back then, I sent articles to the Herald – now I just post them here – since the Herald started surreptitiously editing them. In 2015, it published my article called Red Tape Tripping Honest Kiwis, featuring over regulation of hairdressers and led it with this photo:
In a companion article, we stated, “[In the US, a White House department, the Office of Information and Regulatory Affairs, is dedicated to overseeing the rigorous implementation of cost-benefit-analysis (CBA) across all government agencies. No comparable agency exists in NZ.”
It took awhile, but nine years later ACT leader David Seymour created his new Department of Regulation, implemented CBA and focused on hairdressers to launch his campaign. David should know that a hairdresser emailed me – saying that since I wasn’t a hairdresser that I wouldn’t have a clue what I was talking about. Maybe he had a point? To be fair, the prize to the first economist in NZ to tirelessly champion CBA, a generation before me, was the outstanding Bryce Wilkinson.
Third, the main reason for this blog is not to help rich-listers make money, or even influence politics, but instead to keep in touch with my former students – they like to see what the Nutty Professor is up to – hear my views on things – watch me pick fights – way after they’ve graduated. Such a reason is common in the US for economists working at their universities, although is very uncommon in NZ. Although I’m not being modest at this point, students tell me they love the classes and that they’ve opened up the world of economics and politics to them. They love our guest speakers.
So, whether it’s former Reserve Bank governors and Treasury secretaries like Graeme Wheeler and Alan Bollard, or politicians like David Parker, Sir Roger Douglas, Judith Collins, Simon Bridges, Sir Bill English, David Seymour, Chloe Swarbrick – in spite of differences of opinion – right, left and center – these kinds of folks have all helped make the classes and this blog the better for it. Thank you to them all.
In summary, why is there probably value in a blog like this one? Aside from our contacts in business, politics and within the economics world, not a single business editor who works for the Big Media outlets in NZ has ever studied economics. Now their game is to subscribe to this blog and use it as a basis for many of their own stories, usually without acknowledgement. I don’t care. But it’s best to hear it from the horse’s mouth.
There is still a hugely important role for good reporting and opinion writing. It’s of tremendous value. I trust you will continue to enjoy the blog next year. We will try to write more optimistic ones.
And so on that note – in spite of all NZ’s issues – we have consistently ranked as one of the top 10 countries in the world in terms of overall life satisfaction – and overall quality of life. We just need to ensure we have the money to help pay the bills to keep that enjoyment happening. Our pressing problem, contrary to the endless articles written by many of my university colleagues, journalists, unionists and such like in NZ right now, is very much not equity – it is efficiency. Once that’s sorted out, we will be on our way up again.
This article was originally published by Down to Earth Kiwi.
