Results for “ruth richardson”
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Ruth Richardson and fiscal austerity in New Zealand

Responding to finance minister Ruth Richardson’s May 1991 budget which cut government spending, 15 academic economists from the University of Auckland wrote a letter to the editor of the New Zealand Herald on 6 June 1991. It read: “We wish to state in the strongest possible terms our view that in the present state of the economy, and in the midst of an international recession, the deficit-cutting strategy is fatally flawed. It can only depress the economy further and because of this it will be to a considerable extent self-defeating.”

In fact, strong real GDP and employment growth commenced from the time the letter was written. A 1995 article by Victoria University economists Kunhong Kim, Bob Buckle and Viv Hall dates the June quarter of 1991 as a trough in New Zealand’s business cycle for GDP. Real GDP in 1995 was 17% higher than in 1991. Unemployment fell from 11% of the labour force in September 1991 to 6.1% in September 1995.

Far from being self-defeating in fiscal terms, the outcome of the budget was to turn a deficit of 2.7% of GDP in the year to June 1991 into a surplus of 0.9% of GDP by the year ended June 1994.

That is from Roger Kerr.  For the pointer I thank Steve Hanke and Mark Skousen.  For a different point of view, here is Paul Krugman.

From the comments

…in 1981 Margaret Thatcher cut UK government spending in the middle of a recession, and against the advice of 391 economists that it would worsen the recession, and UK GDP started its recovery the same quarter. In 1991 Ruth Richardson in NZ cut government spending against the advice of 15 economists, and NZ GDP started its recovery the same quarter. There are a number of other cases of expansionary fiscal consolidations, and there's a causal theory to explain why this can happen – see http://ideas.repec.org/p/cpr/ceprdp/417.html (shortly, it's that cutting government spending improves people's expectations about the future of the economy and taxes, so they start investing more right now). Of course, correlation does not prove causation, and perhaps there is something about the EU countries now that is so different as to the cases I cite as to make those results no longer likely to hold, but Krugman writes as if he has forgotten entirely about the 1980s and 1990s.

That is by TracyW.  Later in the thread she refers us to this paper, on how "contractionary" fiscal policy can be expansionary, and vice versa.

What I’ve been reading

1. Richard J. Williams, Why Cities Look the Way They Do.  Mostly interesting, think of this as a humanities-laden approach to cities, but without too much mumbo-jumbo.  Excerpt: “As long ago as 1968, a British art critic, Lawrence Alloway, grasped something of this.  Writing about the Biennial, he argued that Venice wasn’t a city, but should be better understood as a cultural medium, like an exhibition or a newspaper, ‘compounded of famous architecture, recurrent festivals, and tourist industries’.  Venice, he wrote was ‘ a communicative pattern, a geo-temporal work of art’.”

2. Evan Thompson, Why I am Not a Buddhist.  For every view, there should be a book “Why I am not X.”  This gets us part of the way there.  That said, I have simpler reasons for not being a Buddhist, namely I do not think it is true.

3. Jonathan Eig, Ali: A Life.  Definitely recommended, this is an excellent boxing book, race relations book, 1960s and 70s book, and much more.

4. Mary Robinette Kowal, The Calculating Stars: A Lady Astronaut Novel.  Readable, with a clear and propulsive plot, but somehow it stopped being of interest to me about halfway through.  It is the recent Hugo and also Nebula Award winner for best novel.

5. Manjit Kumar, Quantum: Einstein, Bohr, and the Great Debate About the Nature of Reality.  A very good study of the developments of early 20th century physics, the parts about Rutherford and Planck being most novel to me.

6. Kashmir: The Case for Freedom, with essays by A. Roy, Mishra, and others.  You may or may not agree with the pro-Kashmiri take of this book, but some issues you learn best by reading the partisans on each side, who offer clarity if nothing else, and then drawing your own conclusions.  I suspect the Kashmir crisis falls into that bucket.  (Learning when to apply this trick is one good way to make your reading more productive.)

Richard M. Eaton, India in the Persianate Age 1000-1765 is a useful, non-partisan, and coherent take on exactly what the title suggests.

Daniel Markovits, The Meritocracy Trap: How America’s Foundational Myth Feeds Inequality, Dismantles the Middle Class, and Devours the Elite, has gotten good press on Twitter, but it reminds me of Churchill on democracy.

I started two very long novels — Edoardo Albinati’s The Catholic School and Lucy Ellmann’s Ducks, Newburyport, but neither clicked with me.  The former seems too simple/brutal/masculine for its 1300 pp. length, and the latter is a mix of American and obscure I don’t care about this kind of stuff.  Still, I will try them each again.

The new Stripe Press book is Bailey Richardson, Kevin Huynh, and Kai Elmer Sotto, Get Together: How to build a community with your people, a how-to guide.