Brian Easton

Listener 23 December, 2000.

Keywords History of Ideas, Methodology & Philosophy

Take two people, A and B, who do not know one another. Give person A $100. A has to offer to B a share of the $100, say $x. If B accepts the offer, then each keeps their share (that is, B keeps $x and A keeps $100-$x). If B rejects the offer then neither gets any of the money. That is the ‘ultimatum game’.

A response to an Economist article of 30 November 2000.

Keywords: Growth & Innovation; Macroeconomics & Money; Political Economy & History;

A summary of The Economist’s position of the New Zealand economic reforms might be:

New Zealand had to change its economic policies from at least the early 1980s. The path of the reforms was riddled with ‘blunders’ and ‘hubris’. The Economist enthusiastically supported them at the time, despite warnings of the weaknesses that the microeconomic reforms were extremist and the macroeconomic reforms faulty. The outcome has been a much poorer performance than other countries – such as Australia – which tackled the same problems with a more thoughtful, incremental and technically competent approach. This conclusion applies even ignoring the rising inequality and the social distress. Nevertheless, The Economist thinks New Zealand should continue to pursue the policies which have failed in the past. Victory is about implementing ‘right’ policies, not getting better outcomes.