Listener 22 February, 2003.
Keywords: Business & Finance;
Economists have an ambiguous stance towards monopolies. Is the advantage of being one ‘the quiet life’ (John Hicks) or are they the key to technological innovation (Joseph Schumpeter)? Are the profits they make unfair, or is the problem that they distort the price system? There is a sort of compromise in the view that all businesses seek to be a monopoly, but the competitive process frustrates them. But what steps have to be taken to make sure the competitive process works?
Highly Concentrated (February 1981)
The Stock and Station Agent Industry (November 1995, but originally written in 1986)
The Public Interest in Competition Policy (October 1989)
Risking Dialogue: Electricity Outages Show How Consumers Are Powerless (August 1998)
Electric Rhetoric: Sneering Instead of Thinking (July 1999)
The Air New Zealand-QANTAS Merger: An Application in the Public Interest? (December 2002 )
Waccy Economics: Are there clear rules governing government investment? (September 2003)
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Footnote for Listener 13 March 1999
It was Watties
Twenty-five years ago a colleague, Tony Rayner (now, alas, dead), received a letter from a large New Zealand corporation complaining that he had described them as a “monopoly” in a first year economics lecture. We were not concerned by the reporting – lectures are public events, although students must distinguish between the presentation of an argument and the presenter’s views. We were aghast because surely Watties was a monopolist.
About the same time, Watties took on a young accountant, David Irving, who eventually rose to chief executive, retired, and has just written (with Kerr Inkson) a book about his time with the firm. The book, It Must Be Watties, reports Irving’s view that the company was indeed a national monopoly then. It goes on to describes the travails that the firm went through, as the economy opened up and firms became subject to the pressures of competition, here and in its new export markets. Eventually, intensely nationalist Watties was taken over by the giant transnational Heinz, which previously had been its main competitor. For those interested in the impact of market liberalisation, this business history is a must-read.
Diminishing Distance: New Zealand in a Globalising World
Keywords: Globalisation & Trade;
Globalisation is the greatest challenge that economies and nations in the world economy face today. It impacts on where people can work and live, what jobs are available, where investment occurs, and the ability of the nation state to control its destiny – the very foundations of nationhood. It generates both prosperity and disruption, with an uneven impact. Globalisation is not new. It was as significant – some argue moreso – in the nineteenth century international economy. New Zealand is a response to that globalisation, and its destiny is intimately tied in with future globalisation.
Listener 8 February, 2003.
Keywords: Globalisation & Trade; Growth & Innovation; Macroeconomics & Money;
Overseas economists visit New Zealand regularly, seeing politicians, officials, business people, and even independent commentators. One, late last year, began his session with me, by saying that New Zealand’s economic relativity in the OECD had deteriorated throughout the last half century. The government wanted to accelerate our economic growth, he said ,but since coming to office it had
- delayed unilateral tariff cuts;
- raised income tax rates;
- ruled out further privatisation;
- toughened regulation;
- introduced a more active industrial policy ;
- re-regulated the labour market.
He concluded that he did not see a single policy change which would contribute to increasing economic growth.
DRAFT: Comments welcome. (The origins of this paper are evident in the text, but its stimulus was a question arising from the interpretation of a standard textbook on international trade.)
The paper was revised in April 2003.
Keywords: Globalisation & Trade; Macroeconomics & Money;
Over a decade ago I investigated to what extent the CPI could be used to represent the prices of the economy of the whole (GDP), as a part of the study which led eventually to In Stormy Seas. In the process of reducing the vast quantity of material that was produced into the book for publication, the material was left out. (The first draft of the book was about twice as long.)
I must have thought the issue as a methodological curiosum at the time, but since the book’s publication on a number of occasion during public discussions I have wished the material had been publically available. As the next section explains, the section was an illustration of one of the general issues with which In Stormy Seas was concerned, and it is also – as a later section explains – crucial to the understanding how monetary policy works, and how the current management regime may inhibit economic growth.
