Roger Kerr passes away

Here is the obituary, and here, this is very sad news for me.  Roger had a huge influence on my life.  I spent a good deal of time working for him and with him at the New Zealand Business Roundtable in Wellington and he was always up for a discussion and an argument.  He seemed to have boundless energy, and he played a key role in making New Zealand a sounder and better country.  A lot of my interest in economic policy comes from my time spent with Roger, most of all my interest in the institutional design of central banks but not just.  Roger expected you to be ready to discuss anything, at the drop of a hat, and I consider my time with Roger a major influence on my blogging.  He exposed me to the New Zealand classical liberal tradition and from that I saw a lot of deficiencies (and some strengths) of the North American traditions.  Roger will be missed but we all know that his influence extended far.


Well spoken Mr Cowen, the NBR did a good job of his obit unlike the rest of New Zealand's ubiquitously Luddite media.

It's always intrigued me that for a country of its size New Zealand seems to have extremely well developed academic institutions.

Why would size matter?

The second to last sentence sounds like a good topic for a post... Nudge nudge.

Agreed, would love to hear your analysis of the NZ vs. NA classical liberal tradition.

"he played a key role in making New Zealand a sounder and better country. "

As John Gray notes, the neoliberal reforms in New Zealand created, for the very first time, a New Zealand underclass. But annual GDP growth went up by a bit -- that justifies anything, doesn't it?

A little bit of extra GDP growth does not justify much. Not going broke (as New Zealand was in the process of doing without the reforms) justifies a lot more. If I recall correctly, it was the left of center party that started the reforms. And they did not start them because they woke up one morning deciding to create an underclass. Rather, they started them because they were in a financial bind.

The old system could only be considered good if it was self sustaining.

The great disappointment of NZ is that, despite the huge lift that the reforms provided (and Roger Kerr certainly played a role in bringing some of those about, and creating a climate to sustain them), the gap between NZ incomes/productivity and those of the US (or the rest of the OECD) have not narrowed at all in the last 20 years. Quite why that gap hasn't closed puzzles many of those who look closely at NZ, including the OECD itself. It is a surprise - although that is not something I could ever get Roger himself to accept.

Further to Michael's point, Roger's view was that those who expected a better performance than the actual outcome were misguided and unduly optimistic. As Michael is aware, Roger's own assessment of the magnitude of the likely pick up in labour productivity growth (of about 1 percent per annum as I recall) looks remarkably prescient with the wisdom of hindsight.

The NZBR's publications after 1993 endlessly make the case that further reforms were necessary and desirable if New Zealand was not to turn gain into pain, as any reader can readily ascertain just from the titles of its collected volumes papers here:

The title of Sir Roger Douglas's 1993 book, Unfinished Business, similarly speaks for itself. The Hon Ruth Richardson credo was to under-promise and over-achieve.

I have searched for any documented evidence in support of the OECD's secretariat's unsubstantiated claim in its last Economic Survey of New Zealand that the reformers in NZ over-promised the benefits of reform. I found none. I asked another OECD's authors who made this claim for his evidence. He had none. All he could cite was unsupported assertions by those hostile to the reforms. Very telling.

I have concluded that the historical record supports the opposite view - the most gross forecasting errors were actually made by those opposed to the reforms, perhaps most notably by fifteen University of Auckland academic economists who publicly predicted "in the strongest possible terms" that the June 1991 Budget cuts were "fatally flawed" and could "only depress the economy further". In fact New Zealand experienced one of its most prolonged periods of strong output and employment following this budget and research has identified the June quarter 1991 as a trough in New Zealand's business cycle.

Michael is right that empirical research sometimes finds that New Zealand's economic performance is 'below the regression line' in the sense that the actual growth rate has been below the predicted growth rate on the basis of New Zealand's (high) scores for explanatory variables such as the ease of doing business or economic freedom. As he observes, I don't think he could never persuade Roger, who was daily affronted by policy mediocrity or worse on multiple fronts, that these regressions were robust enough to be evidence of anything other than the need for New Zealand to be doing better on the policy front.

Roger will be greatly missed. His influence on the N.Z. economic and political scene was immense.

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