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  Reply # 1125585 10-Sep-2014 09:42
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joker97: i drove past a little town called Mataura.

to my horror a factory (or some work plant) that is just under 1km in length is being pulled down.


Not sure why this is a 'horror'?

Either it is not worth keeping because it is uneconomic/condemned due to non compliance (e.g. earthquake) or has been replaced with a newer one elsewhere....





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  Reply # 1126903 12-Sep-2014 07:34
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Geektastic: If we replace benefits with min income, what happens when a recipient spends it all on Woodys and the kids are starving?

Do they then get benefits on top?!



Typical FUD which has as much truth and validity as the anti-vaccine nutters.

Multiple states in the USA which increased the minimum wage found to their surprise Greater economic growth than those that did not.

Employers do NOT employ people for jobs that don't need doing , so a wage increase is NOT going to lead to mass unemployment

If the business is so uneconomic then eventually it will close anyway and a better once will replace it.

Here's how the right wing views it

YES a living wage is $20 an hour.
However if I pay that I will not be able to run my business, so what it "Fair" is that you can have $20/hr and then give the employer back $6/hr
to keep his business running.

Businesses have no automatic right to be profitable, go ask buggy whip makers.

Businesses have no automatic right to make the owner more money tun he pays his employees. Being the employer is a job just like any other and if they choose to enter business and run it where they make no money, that is their choice, they can alway close it down and work for the guy to replaces them.

Thousand of businesses close every year because the owners automatically think just because they like something everyone else will as well and the economics don't stack up.

 
 
 
 


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  Reply # 1127066 12-Sep-2014 10:38
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sir1963:
Geektastic: If we replace benefits with min income, what happens when a recipient spends it all on Woodys and the kids are starving?

Do they then get benefits on top?!



Typical FUD which has as much truth and validity as the anti-vaccine nutters.

Multiple states in the USA which increased the minimum wage found to their surprise Greater economic growth than those that did not.

Employers do NOT employ people for jobs that don't need doing , so a wage increase is NOT going to lead to mass unemployment

If the business is so uneconomic then eventually it will close anyway and a better once will replace it.

Here's how the right wing views it

YES a living wage is $20 an hour.
However if I pay that I will not be able to run my business, so what it "Fair" is that you can have $20/hr and then give the employer back $6/hr
to keep his business running.

Businesses have no automatic right to be profitable, go ask buggy whip makers.

Businesses have no automatic right to make the owner more money tun he pays his employees. Being the employer is a job just like any other and if they choose to enter business and run it where they make no money, that is their choice, they can alway close it down and work for the guy to replaces them.

Thousand of businesses close every year because the owners automatically think just because they like something everyone else will as well and the economics don't stack up.



Wage increase WILL be a factor in small businesses when they are deciding whether to increase staff. Especially a jump from $12 to $20 per hour. That amounts to $16,000 a year per employee for a 40 hour week. Plus Kiwi Saver etc.

Businesses DO have an automatic right to decide what staffing is right for them - and unless that $16,000 returns at least another $50,000 to the business they may well decide to keep staffing levels where they are.





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  Reply # 1127740 13-Sep-2014 11:39
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sir1963:
Geektastic: If we replace benefits with min income, what happens when a recipient spends it all on Woodys and the kids are starving?

Do they then get benefits on top?!



Typical FUD which has as much truth and validity as the anti-vaccine nutters.

Multiple states in the USA which increased the minimum wage found to their surprise Greater economic growth than those that did not.

Employers do NOT employ people for jobs that don't need doing , so a wage increase is NOT going to lead to mass unemployment

If the business is so uneconomic then eventually it will close anyway and a better once will replace it.

Here's how the right wing views it

YES a living wage is $20 an hour.
However if I pay that I will not be able to run my business, so what it "Fair" is that you can have $20/hr and then give the employer back $6/hr
to keep his business running.

Businesses have no automatic right to be profitable, go ask buggy whip makers.

Businesses have no automatic right to make the owner more money tun he pays his employees. Being the employer is a job just like any other and if they choose to enter business and run it where they make no money, that is their choice, they can alway close it down and work for the guy to replaces them.

Thousand of businesses close every year because the owners automatically think just because they like something everyone else will as well and the economics don't stack up.


Tried running your own small business have you?

Perhaps you could share your wealth of real world experience that says an increase in costs is no problem for business owners?

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  Reply # 1127838 13-Sep-2014 14:08
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sir1963:
Geektastic: If we replace benefits with min income, what happens when a recipient spends it all on Woodys and the kids are starving?

Do they then get benefits on top?!



Typical FUD which has as much truth and validity as the anti-vaccine nutters.

Multiple states in the USA which increased the minimum wage found to their surprise Greater economic growth than those that did not.

Employers do NOT employ people for jobs that don't need doing , so a wage increase is NOT going to lead to mass unemployment

If the business is so uneconomic then eventually it will close anyway and a better once will replace it.

Here's how the right wing views it

YES a living wage is $20 an hour.
However if I pay that I will not be able to run my business, so what it "Fair" is that you can have $20/hr and then give the employer back $6/hr
to keep his business running.

Businesses have no automatic right to be profitable, go ask buggy whip makers.

Businesses have no automatic right to make the owner more money tun he pays his employees. Being the employer is a job just like any other and if they choose to enter business and run it where they make no money, that is their choice, they can alway close it down and work for the guy to replaces them.

Thousand of businesses close every year because the owners automatically think just because they like something everyone else will as well and the economics don't stack up.


Have you ever actually tried running a business? Or, for that matter attended, let alone passed a proper economics course?

What you are spouting is pretty silly stuff.

Countries can't simply try and increase real wages through regulation and not expect there to be an employment impact.

 

  • Some businesses will decide it isn't worth hiring or replacing staff because the marginal economic value of what they produce is less than the cost of employing them
  • Some businesses will become uncompetitive because it means they aren't competitive any longer - against either domestic or foreign competition
  • It will change the relative merits of investing in capital instead of hiring labour to get a job done. Such as agriculture where rich countries use tractors and harvesters instead of peasants with scythes, because it's a cheaper way of harvesting. And yes, you can do this in other industries. Easily. Just look at self service checkouts in supermarkets.  And the same thing happens in other industries where it becomes to troublesome or expensive to hire labour - McDonalds in France springs to mind.
The only way to sustainably raise real wages is to raise the productivity of labour. That means skills, and investment in capital. It also needs a regulatory environment that lets businesses innovate, adapt to changing circumstances. As well as that it needs an environment where businesses specialise in what they do best and are under constant pressure to adapt and innovate - which is why tariff removal and free trade arrangements are so critical to prosperity.

You don't become wealthy and prosperous, with higher real wages, through the stroke of the Minister of Labour's pen. It only happens if the right choices to drive productivity and propserity in the economy are made.

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  Reply # 1127926 13-Sep-2014 16:18
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JimmyH:
sir1963:
Geektastic: If we replace benefits with min income, what happens when a recipient spends it all on Woodys and the kids are starving?

Do they then get benefits on top?!



Typical FUD which has as much truth and validity as the anti-vaccine nutters.

Multiple states in the USA which increased the minimum wage found to their surprise Greater economic growth than those that did not.

Employers do NOT employ people for jobs that don't need doing , so a wage increase is NOT going to lead to mass unemployment

If the business is so uneconomic then eventually it will close anyway and a better once will replace it.

Here's how the right wing views it

YES a living wage is $20 an hour.
However if I pay that I will not be able to run my business, so what it "Fair" is that you can have $20/hr and then give the employer back $6/hr
to keep his business running.

Businesses have no automatic right to be profitable, go ask buggy whip makers.

Businesses have no automatic right to make the owner more money tun he pays his employees. Being the employer is a job just like any other and if they choose to enter business and run it where they make no money, that is their choice, they can alway close it down and work for the guy to replaces them.

Thousand of businesses close every year because the owners automatically think just because they like something everyone else will as well and the economics don't stack up.


Have you ever actually tried running a business? Or, for that matter attended, let alone passed a proper economics course?

What you are spouting is pretty silly stuff.

Countries can't simply try and increase real wages through regulation and not expect there to be an employment impact.

 

  • Some businesses will decide it isn't worth hiring or replacing staff because the marginal economic value of what they produce is less than the cost of employing them
  • Some businesses will become uncompetitive because it means they aren't competitive any longer - against either domestic or foreign competition
  • It will change the relative merits of investing in capital instead of hiring labour to get a job done. Such as agriculture where rich countries use tractors and harvesters instead of peasants with scythes, because it's a cheaper way of harvesting. And yes, you can do this in other industries. Easily. Just look at self service checkouts in supermarkets.  And the same thing happens in other industries where it becomes to troublesome or expensive to hire labour - McDonalds in France springs to mind.
The only way to sustainably raise real wages is to raise the productivity of labour. That means skills, and investment in capital. It also needs a regulatory environment that lets businesses innovate, adapt to changing circumstances. As well as that it needs an environment where businesses specialise in what they do best and are under constant pressure to adapt and innovate - which is why tariff removal and free trade arrangements are so critical to prosperity.

You don't become wealthy and prosperous, with higher real wages, through the stroke of the Minister of Labour's pen. It only happens if the right choices to drive productivity and propserity in the economy are made.


Now if that were true then wages in NZ would already be much higher to match the much higher productivity.

Since the 80's productivity has increased by about 83% but real wages have fallen by about 25%

Employers don't employ people for fun, they are already replacing people with machines.

Employers don't invest or not based on wages or taxes, they invest on the basis of can they make money, will they have customers.

Ireland tried cheap taxes and their economy is a basket case.

The USA actually had far higher economic growth, far less unemployment and a significantly more vibrant economy when wages in real terms was higher and when taxes were higher.

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  Reply # 1128356 14-Sep-2014 15:36
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sir1963: Now if that were true then wages in NZ would already be much higher to match the much higher productivity.

Since the 80's productivity has increased by about 83% but real wages have fallen by about 25%


I don't know where you get either of those figures from, but I rather doubt that real wages have fallen by 25%.

Employers don't employ people for fun, they are already replacing people with machines.

Employers don't invest or not based on wages or taxes, they invest on the basis of can they make money, will they have customers.


Assuming I have followed your garbled logic train correctly, it's kind of correct and more or less what I said in the post you are responding to. Employers employ people where the value they add to the business is greater than their cost. If you raise their cost over their value to the business with the stroke of a Minister's pen, they won't be employed any longer. Employers decide whether to spend money on staff or machines based on their relative benefit and cost, if you make it more expensive to employ staff, then employers will look at whether it makes business sense to do the job with more machines or fewer staff.

Ireland tried cheap taxes and their economy is a basket case.


I'm not sure how international corporate tax comparisons crept into an analysis of minimum basic incomes, but I think your analysis here is superficial and wrong. You are falling into the old trap of attributing causation to correlation, if A happened then B happened does not always mean that A caused B. You need a chain of logic and evidence linking cause and effect for an argument like this to be taken seriously.

Ireland was actually doing quite well, and it's low business taxes were very successful in attracting businesses, employment and more tax revenue to Ireland. They fell over because of an insane decion to issue a guarantee that saw the government underwrite the liabilities of a relatively large banking system, and honouring that guarantee was more than it could sensibly afford. It was actually noting whatsoever to do with their company or personal income tax rates.

The USA actually had far higher economic growth, far less unemployment and a significantly more vibrant economy when wages in real terms was higher and when taxes were higher.


Again, your are conflating correlation and causality to reach a meaningless conclusion. There are a number of well documented reasons why US growth rates were higher in the 60s and 70s than now, but higher taxes isn't one of them. Plus, take out the blip due to the recession, and average US real wages haven't actually been on a declining trend. Real wages have fallen for some groups, but that's mostly because of changes in technology and the nature of US industry and workplaces - which mean that there is strong demand for people with high skills, and a rapid fall in demand for people with low skills. Reflecting this, skilled people have done pretty well, and the unskilled not so well. However, linking that to the fact that taxes have fallen is kind of odd.

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  Reply # 1128393 14-Sep-2014 16:30
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JimmyH:
sir1963: Now if that were true then wages in NZ would already be much higher to match the much higher productivity.

Since the 80's productivity has increased by about 83% but real wages have fallen by about 25%


I don't know where you get either of those figures from, but I rather doubt that real wages have fallen by 25%.

Employers don't employ people for fun, they are already replacing people with machines.

Employers don't invest or not based on wages or taxes, they invest on the basis of can they make money, will they have customers.


Assuming I have followed your garbled logic train correctly, it's kind of correct and more or less what I said in the post you are responding to. Employers employ people where the value they add to the business is greater than their cost. If you raise their cost over their value to the business with the stroke of a Minister's pen, they won't be employed any longer. Employers decide whether to spend money on staff or machines based on their relative benefit and cost, if you make it more expensive to employ staff, then employers will look at whether it makes business sense to do the job with more machines or fewer staff.

Ireland tried cheap taxes and their economy is a basket case.


I'm not sure how international corporate tax comparisons crept into an analysis of minimum basic incomes, but I think your analysis here is superficial and wrong. You are falling into the old trap of attributing causation to correlation, if A happened then B happened does not always mean that A caused B. You need a chain of logic and evidence linking cause and effect for an argument like this to be taken seriously.

Ireland was actually doing quite well, and it's low business taxes were very successful in attracting businesses, employment and more tax revenue to Ireland. They fell over because of an insane decion to issue a guarantee that saw the government underwrite the liabilities of a relatively large banking system, and honouring that guarantee was more than it could sensibly afford. It was actually noting whatsoever to do with their company or personal income tax rates.

The USA actually had far higher economic growth, far less unemployment and a significantly more vibrant economy when wages in real terms was higher and when taxes were higher.


Again, your are conflating correlation and causality to reach a meaningless conclusion. There are a number of well documented reasons why US growth rates were higher in the 60s and 70s than now, but higher taxes isn't one of them. Plus, take out the blip due to the recession, and average US real wages haven't actually been on a declining trend. Real wages have fallen for some groups, but that's mostly because of changes in technology and the nature of US industry and workplaces - which mean that there is strong demand for people with high skills, and a rapid fall in demand for people with low skills. Reflecting this, skilled people have done pretty well, and the unskilled not so well. However, linking that to the fact that taxes have fallen is kind of odd.


http://www.unite.org.nz/?q=node/704 
Official data on wage movements in New Zealand point to a real wage decline of around 25% between 1982 and the mid 90s that has never been recovered.

http://economistsview.typepad.com/economistsview/2012/10/does-taxing-the-wealthy-hurt-growth.html
While we cannot say that there is a robust significant positive relationship between tax rates and growth, it is still interesting that regardless of when we start the sample, higher top marginal tax rates are associated with higher not lower growth. Moreover, a narrative reading of postwar US economic history leads to the same conclusion. The period of highest growth in the United States was in the post-war era when top marginal tax rates were 94% (under President Truman) and 91% (through 1963). As top marginal rates dropped, so did growth.

http://eml.berkeley.edu/~saez/piketty-saez-stantcheva12thirdelasticity_nber_v2.pdf

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  Reply # 1128400 14-Sep-2014 16:50
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joker97: i drove past a little town called Mataura.

to my horror a factory (or some work plant) that is just under 1km in length is being pulled down.
I think thats the freezing works and I'm sure there are quite a few round Southland where they have probably moved to.

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  Reply # 1128412 14-Sep-2014 17:29
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sir1963:
JimmyH:
sir1963: Now if that were true then wages in NZ would already be much higher to match the much higher productivity.

Since the 80's productivity has increased by about 83% but real wages have fallen by about 25%


I don't know where you get either of those figures from, but I rather doubt that real wages have fallen by 25%.

Employers don't employ people for fun, they are already replacing people with machines.

Employers don't invest or not based on wages or taxes, they invest on the basis of can they make money, will they have customers.


Assuming I have followed your garbled logic train correctly, it's kind of correct and more or less what I said in the post you are responding to. Employers employ people where the value they add to the business is greater than their cost. If you raise their cost over their value to the business with the stroke of a Minister's pen, they won't be employed any longer. Employers decide whether to spend money on staff or machines based on their relative benefit and cost, if you make it more expensive to employ staff, then employers will look at whether it makes business sense to do the job with more machines or fewer staff.

Ireland tried cheap taxes and their economy is a basket case.


I'm not sure how international corporate tax comparisons crept into an analysis of minimum basic incomes, but I think your analysis here is superficial and wrong. You are falling into the old trap of attributing causation to correlation, if A happened then B happened does not always mean that A caused B. You need a chain of logic and evidence linking cause and effect for an argument like this to be taken seriously.

Ireland was actually doing quite well, and it's low business taxes were very successful in attracting businesses, employment and more tax revenue to Ireland. They fell over because of an insane decion to issue a guarantee that saw the government underwrite the liabilities of a relatively large banking system, and honouring that guarantee was more than it could sensibly afford. It was actually noting whatsoever to do with their company or personal income tax rates.

The USA actually had far higher economic growth, far less unemployment and a significantly more vibrant economy when wages in real terms was higher and when taxes were higher.


Again, your are conflating correlation and causality to reach a meaningless conclusion. There are a number of well documented reasons why US growth rates were higher in the 60s and 70s than now, but higher taxes isn't one of them. Plus, take out the blip due to the recession, and average US real wages haven't actually been on a declining trend. Real wages have fallen for some groups, but that's mostly because of changes in technology and the nature of US industry and workplaces - which mean that there is strong demand for people with high skills, and a rapid fall in demand for people with low skills. Reflecting this, skilled people have done pretty well, and the unskilled not so well. However, linking that to the fact that taxes have fallen is kind of odd.


http://www.unite.org.nz/?q=node/704 
Official data on wage movements in New Zealand point to a real wage decline of around 25% between 1982 and the mid 90s that has never been recovered.

http://economistsview.typepad.com/economistsview/2012/10/does-taxing-the-wealthy-hurt-growth.html
While we cannot say that there is a robust significant positive relationship between tax rates and growth, it is still interesting that regardless of when we start the sample, higher top marginal tax rates are associated with higher not lower growth. Moreover, a narrative reading of postwar US economic history leads to the same conclusion. The period of highest growth in the United States was in the post-war era when top marginal tax rates were 94% (under President Truman) and 91% (through 1963). As top marginal rates dropped, so did growth.

http://eml.berkeley.edu/~saez/piketty-saez-stantcheva12thirdelasticity_nber_v2.pdf

Singapore has cheap taxes. Their economy is good.

Our problem is that we seem not to accept that the world has changed around us and we can't go backwards to some allegedly halcyon past. As the saying goes, the past is a foreign country. They do things differently there.





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  Reply # 1128534 14-Sep-2014 20:13
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Geektastic:
sir1963:
JimmyH:
sir1963: Now if that were true then wages in NZ would already be much higher to match the much higher productivity.

Since the 80's productivity has increased by about 83% but real wages have fallen by about 25%


I don't know where you get either of those figures from, but I rather doubt that real wages have fallen by 25%.

Employers don't employ people for fun, they are already replacing people with machines.

Employers don't invest or not based on wages or taxes, they invest on the basis of can they make money, will they have customers.


Assuming I have followed your garbled logic train correctly, it's kind of correct and more or less what I said in the post you are responding to. Employers employ people where the value they add to the business is greater than their cost. If you raise their cost over their value to the business with the stroke of a Minister's pen, they won't be employed any longer. Employers decide whether to spend money on staff or machines based on their relative benefit and cost, if you make it more expensive to employ staff, then employers will look at whether it makes business sense to do the job with more machines or fewer staff.

Ireland tried cheap taxes and their economy is a basket case.


I'm not sure how international corporate tax comparisons crept into an analysis of minimum basic incomes, but I think your analysis here is superficial and wrong. You are falling into the old trap of attributing causation to correlation, if A happened then B happened does not always mean that A caused B. You need a chain of logic and evidence linking cause and effect for an argument like this to be taken seriously.

Ireland was actually doing quite well, and it's low business taxes were very successful in attracting businesses, employment and more tax revenue to Ireland. They fell over because of an insane decion to issue a guarantee that saw the government underwrite the liabilities of a relatively large banking system, and honouring that guarantee was more than it could sensibly afford. It was actually noting whatsoever to do with their company or personal income tax rates.

The USA actually had far higher economic growth, far less unemployment and a significantly more vibrant economy when wages in real terms was higher and when taxes were higher.


Again, your are conflating correlation and causality to reach a meaningless conclusion. There are a number of well documented reasons why US growth rates were higher in the 60s and 70s than now, but higher taxes isn't one of them. Plus, take out the blip due to the recession, and average US real wages haven't actually been on a declining trend. Real wages have fallen for some groups, but that's mostly because of changes in technology and the nature of US industry and workplaces - which mean that there is strong demand for people with high skills, and a rapid fall in demand for people with low skills. Reflecting this, skilled people have done pretty well, and the unskilled not so well. However, linking that to the fact that taxes have fallen is kind of odd.


http://www.unite.org.nz/?q=node/704 
Official data on wage movements in New Zealand point to a real wage decline of around 25% between 1982 and the mid 90s that has never been recovered.

http://economistsview.typepad.com/economistsview/2012/10/does-taxing-the-wealthy-hurt-growth.html
While we cannot say that there is a robust significant positive relationship between tax rates and growth, it is still interesting that regardless of when we start the sample, higher top marginal tax rates are associated with higher not lower growth. Moreover, a narrative reading of postwar US economic history leads to the same conclusion. The period of highest growth in the United States was in the post-war era when top marginal tax rates were 94% (under President Truman) and 91% (through 1963). As top marginal rates dropped, so did growth.

http://eml.berkeley.edu/~saez/piketty-saez-stantcheva12thirdelasticity_nber_v2.pdf

Singapore has cheap taxes. Their economy is good.

Our problem is that we seem not to accept that the world has changed around us and we can't go backwards to some allegedly halcyon past. As the saying goes, the past is a foreign country. They do things differently there.


Their economy is also a tax haven , lots of foreign nationals are based there for tax shelter  reasons, i.e. their economy is being subsidised by other economies.
They also have 1/1000th of our land area, infrastructure is much cheaper
The Government accounts for 22% of GDP, so they have a government that is investing in the economy and assets, as opposed to the NZ Government that sells off  income earning assets to overseas owners.
They are an economy that invests in R&D and high tech, NZ is still based on farming, we also export lots of our primary produce with little or no value added input (e.g. wool, Pine logs, iron sand)
Oil exports being 5% of GDP certainly helps too, in 2009 it generated 57 Billion Dollars US, Dairy in NZ accounted for 5 Billion

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  Reply # 1128608 14-Sep-2014 21:46
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sir1963:

http://www.unite.org.nz/?q=node/704 
Official data on wage movements in New Zealand point to a real wage decline of around 25% between 1982 and the mid 90s that has never been recovered.

http://economistsview.typepad.com/economistsview/2012/10/does-taxing-the-wealthy-hurt-growth.html
While we cannot say that there is a robust significant positive relationship between tax rates and growth, it is still interesting that regardless of when we start the sample, higher top marginal tax rates are associated with higher not lower growth. Moreover, a narrative reading of postwar US economic history leads to the same conclusion. The period of highest growth in the United States was in the post-war era when top marginal tax rates were 94% (under President Truman) and 91% (through 1963). As top marginal rates dropped, so did growth.

http://eml.berkeley.edu/~saez/piketty-saez-stantcheva12thirdelasticity_nber_v2.pdf


This discussion is starting to go around in circles, so I suspect this will be my last post in it.

The Unite study you quote isn't credible. It's a very biased 2009 media release from a lobbying organisation that is deliberately misusing statistics to try and create a media case for the changes they are advocating. It is simply incorrect to use the labour cost index the way they have - they purport to use the LCI to measure the wages that people earn, and it simply doesn't do that. Deflating the LCI by the PPI, which is what Unite seems to have done, estimates trends in the labour cost component of a unit of output, not trends in what an employee earns. The best way to look at what people are actually earning is the average & median cost series from the Quarterly Employment Survey. Even organisations like the CTU which have an axe to grind against the current government and labour market laws concede (top of page 2 and top of page 4 of This link) that real wages have gone up 11.5% since 1982 which, while hardly stellar, isn't remotely a 25% fall. It's also probably an material underestimate, because of the way the statistics are constructed, and the measures and period they have chosen.

The rest of the CTU article is, of course, a blatant opinion/lobbying exercise for the election. But at least, unlike Unite, they are honest in their use of official statistics.

The economistsview blog doesn't exactly conclude anything about anything. At best it finds a statistically insignificant weak correlation between two variables for a period in one economy. It doesn't attribute, or even claim to attribute, cause and effect. In fact, it explicitly claims that the information doesn't allow this.

Finally, I'm not sure what point you are trying to make by linking the NBER article. It's an interesting article and makes some interesting points - such as higher tax rates resulting in higher tax avoidance, people respond to incentives when bargaining, and economic changes mean that income distribution has become more unequal over recent years with higher shares going to some (skilled) groups. But I'm not sure why it is directly relevant to the current discussion?

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  Reply # 1128659 14-Sep-2014 23:16
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sir1963:
Geektastic:
sir1963:
JimmyH:
sir1963: Now if that were true then wages in NZ would already be much higher to match the much higher productivity.

Since the 80's productivity has increased by about 83% but real wages have fallen by about 25%


I don't know where you get either of those figures from, but I rather doubt that real wages have fallen by 25%.

Employers don't employ people for fun, they are already replacing people with machines.

Employers don't invest or not based on wages or taxes, they invest on the basis of can they make money, will they have customers.


Assuming I have followed your garbled logic train correctly, it's kind of correct and more or less what I said in the post you are responding to. Employers employ people where the value they add to the business is greater than their cost. If you raise their cost over their value to the business with the stroke of a Minister's pen, they won't be employed any longer. Employers decide whether to spend money on staff or machines based on their relative benefit and cost, if you make it more expensive to employ staff, then employers will look at whether it makes business sense to do the job with more machines or fewer staff.

Ireland tried cheap taxes and their economy is a basket case.


I'm not sure how international corporate tax comparisons crept into an analysis of minimum basic incomes, but I think your analysis here is superficial and wrong. You are falling into the old trap of attributing causation to correlation, if A happened then B happened does not always mean that A caused B. You need a chain of logic and evidence linking cause and effect for an argument like this to be taken seriously.

Ireland was actually doing quite well, and it's low business taxes were very successful in attracting businesses, employment and more tax revenue to Ireland. They fell over because of an insane decion to issue a guarantee that saw the government underwrite the liabilities of a relatively large banking system, and honouring that guarantee was more than it could sensibly afford. It was actually noting whatsoever to do with their company or personal income tax rates.

The USA actually had far higher economic growth, far less unemployment and a significantly more vibrant economy when wages in real terms was higher and when taxes were higher.


Again, your are conflating correlation and causality to reach a meaningless conclusion. There are a number of well documented reasons why US growth rates were higher in the 60s and 70s than now, but higher taxes isn't one of them. Plus, take out the blip due to the recession, and average US real wages haven't actually been on a declining trend. Real wages have fallen for some groups, but that's mostly because of changes in technology and the nature of US industry and workplaces - which mean that there is strong demand for people with high skills, and a rapid fall in demand for people with low skills. Reflecting this, skilled people have done pretty well, and the unskilled not so well. However, linking that to the fact that taxes have fallen is kind of odd.


http://www.unite.org.nz/?q=node/704 
Official data on wage movements in New Zealand point to a real wage decline of around 25% between 1982 and the mid 90s that has never been recovered.

http://economistsview.typepad.com/economistsview/2012/10/does-taxing-the-wealthy-hurt-growth.html
While we cannot say that there is a robust significant positive relationship between tax rates and growth, it is still interesting that regardless of when we start the sample, higher top marginal tax rates are associated with higher not lower growth. Moreover, a narrative reading of postwar US economic history leads to the same conclusion. The period of highest growth in the United States was in the post-war era when top marginal tax rates were 94% (under President Truman) and 91% (through 1963). As top marginal rates dropped, so did growth.

http://eml.berkeley.edu/~saez/piketty-saez-stantcheva12thirdelasticity_nber_v2.pdf

Singapore has cheap taxes. Their economy is good.

Our problem is that we seem not to accept that the world has changed around us and we can't go backwards to some allegedly halcyon past. As the saying goes, the past is a foreign country. They do things differently there.


Their economy is also a tax haven , lots of foreign nationals are based there for tax shelter  reasons, i.e. their economy is being subsidised by other economies.
They also have 1/1000th of our land area, infrastructure is much cheaper
The Government accounts for 22% of GDP, so they have a government that is investing in the economy and assets, as opposed to the NZ Government that sells off  income earning assets to overseas owners.
They are an economy that invests in R&D and high tech, NZ is still based on farming, we also export lots of our primary produce with little or no value added input (e.g. wool, Pine logs, iron sand)
Oil exports being 5% of GDP certainly helps too, in 2009 it generated 57 Billion Dollars US, Dairy in NZ accounted for 5 Billion


So being a tax haven is a good thing for your economy then?

Any reason we can't be one?





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  Reply # 1128726 15-Sep-2014 07:39
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According to certain groups, we already are......

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  Reply # 1128745 15-Sep-2014 08:15
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sen8or: According to certain groups, we already are......


We certainly should be. A flat tax of say 20% would see billions moved here I expect as well as making Auckland a more attractive place than Sydney when considering where to locate you Pacific regional HQ…





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