Saturday’s smiles


The driver loaded all of Pope Benedict’s luggage into the limo and noticed the Pontiff still standing on the curb..
 ‘Excuse me, Your Holiness,’ the driver said, ‘Would you please take your seat so we can leave?’
 ‘Well, to tell you the truth,’ the Pope said, ‘they never let me drive at the Vatican and I’d really like to drive today.’
 ‘I’m sorry, Your Holiness, but I can’t let you do that. I’d lose my job! What if something should happen?’ protested the driver.
 ‘Who’s going to tell?’ the Pope asked with a smile.

Reluctantly, the driver got in the back and the Pope climbed in behind the wheel. The driver quickly regretted his decision when, after exiting the airport, the Pontiff floored it, accelerating the limo to 205 kms.
 ‘Please slow down, Your Holiness!’  the worried driver begged, but the Pope kept up his speed until they heard sirens.
 ‘Oh, dear God, I’m going to lose my license — and my job!’ moaned the driver.
 The Pope pulled over and rolled down the window as the cop approached, but the cop took one look at him, went back to his motorcycle, and got on the radio.
 ‘I need to talk to the Chief,’ he said to the dispatcher.
 The Chief got on the radio and the cop told him that he’d stopped a limo going 155 kph.
 ‘So bust him,’  the Chief said.
 ‘I don’t think we want to do that, he’s really important,’ said the cop.
 The Chief exclaimed,’ All the more reason!’
 ‘No, I mean really important,’ said the cop.
 The Chief asked, ‘Who do you have there, the mayor?’

 Cop: ‘Bigger.’
 Chief: ‘ An MP?’

 Cop: ‘Bigger.’  
 Chief: ‘The Prime Minister?’

 Cop: ‘Bigger.’
 ‘Well,’ said the Chief, ‘who is it?’
 Cop: ‘I think it’s God!’
 The Chief asked, ‘What makes you think it’s God?’ 
 Cop: ‘His chauffeur is the Pope.’

Is Santa in training . . .


. . . or is he lost?

Does this make sense?


The grapevine reckons that thousands of lambs are being transported from the North Island to Central Otago.

At the same time Central Otago farmers are sending thousands of lambs to Canterbury for grazing because drought has left them short of feed.

There may be a reasonable explanation for that but I haven’t come up with one.

Putting the issue of carbon footprints to one side, wouldn’t it be less stressful for the stock and less expensive for North Island lambs to be grazed closer to home and for Central farmers with excess feed to sell grazing to their neighbours?

The right prescription?


Brian Fallow responded to the report of the 2025 Taskforce’s first report with a column headlined: Old precription unlikely to fix new ills.

Taskforce chair, Don Brash, wrote an op-ed in response which the Herald delcined to publish because “the debate is moving on”.

Just how far a debate moves in a day is a moot point. Understandably Brash wasn’t impressed so he emailed his response to several people and asked us to spread the word.

I think everyone has the right of reply so here it is:

Brian Fallow is one of New Zealand’s best economic journalists.  But his article on 10 December dismissing the report of the 2025 Taskforce as “1980s thinking”, under the headline “Old prescription unlikely to fix new ills”, misses the boat completely and demonstrates that he is out of touch with mainstream professional opinion.  The arguments for reducing the tax burden caused by low quality and poorly targeted government spending, for privatisation, and for better quality regulation are absolutely consistent, for example, with the OECD’s 2009 report on New Zealand.

In his article, he cites at length the work of the economic geographer Philip McCann.  McCann has argued that since the 1980s the world has changed profoundly – China has abandoned communism, India has abandoned autarky and the Soviet empire has collapsed.  McCann accepts that over the past century transport costs have fallen by some 95%, while telecommunication costs have fallen by that much in just three decades.  This has provided a huge advantage to “the geographical dispersion of activities which are not particularly knowledge-intensive and do not add a lot of value”.  By contrast, what McCann calls “spatial transaction costs” have, he argues, become more important for knowledge-intensive high value-added activities because of the premium attached to face-to-face contact.

He argues that the increased importance of “spatial transaction costs” means that economic growth and globalisation over the past 20 years have favoured large urban centres in almost every country (large and small).   But he goes on to argue that an implication of this is that, within the Australasian region, Sydney and possibly Melbourne are growing in wealth and size at the expense of the periphery – which in this case, he asserts, includes New Zealand.  The further implication is that at this stage in the development of the world economy there are factors which drive us inevitably to have incomes lower than those in Australia.

Professor McCann is a serious researcher, and deserves to be heard respectfully.  It is probably true that large urban centres attract a disproportionate share of a country’s innovation and entrepreneurship. 

But one implication of his argument is that small countries, and especially those which are distant from world markets, are inevitably doomed to grow more slowly than larger more densely populated countries – and that simply does not seem to be borne out by the facts.  Over the last 20 years during which Professor McCann claims the world has changed, small countries tended to perform a bit better than large countries – even New Zealand has grown slightly faster than the OECD average over that period. 

Compared with large countries like France, Italy and Japan – all countries with large conurbations – New Zealand has also done better, increasing from 82% of the simple average of the incomes of those three countries in 1989 to 87% in 2007.

Moreover, if geography were really an important part of the story, no one would have predicted Australia’s impressive performance relative to the rest of the developed world in the last couple of decades.

Professor McCann and Brian Fallow also suggest that in the brave new world after 1989 capital is likely to be flowing out of New Zealand to places like Australia.  In fact, of course, it is well-established that capital is flowing into New Zealand, especially from Australia.  Thus, we have one of the largest current account deficits around – and, by definition, one might expect us to be running surpluses if capital were leaving New Zealand for ever better opportunities abroad.

The report of the 2025 Taskforce acknowledges that smallness and distance may indeed be impediments to our growth.  But let’s suppose for the moment that our size and location have become a much more important barrier to the development of knowledge-intensive industries in the “periphery” than they were prior to 1989.  Do we have to wait until the global economy changes, until, as Brian Fallow suggests, we get the benefit of our “combination of ample rainfall, temperate climate and skilled farmers” as the world’s population climbs and more and more people move into income brackets which enable them to afford the foods of affluence?

Or are there things we can do to actively lift our living standards?  The 2025 Taskforce is in no doubt about the answer to that question. Distance is what it is.  Our population is what it is.  But we don’t need to have a company tax rate which is now well above the average of other OECD countries.  We don’t need to discourage people who have dependent children with effective marginal tax rates of well over 50%.  We don’t need to hobble our businesses with needless red-tape.  We don’t need to inflate the cost of housing by tightly constraining the supply of residential land.  Our government doesn’t need to squander capital in low-yielding but politically-popular projects.  And we don’t need a size of government that is materially larger than that in Australia.

Yes, Australia and other developed countries also do some of these dopey things.  But the Government has set a goal not just of holding our position on the OECD ladder – a position which has us well below the average of other developed countries – but of catching up with Australia by 2025.  We won’t do that with policies which are merely as good as the average of other developed countries; we will only do that with much better policies.  If distance is a significant impediment to our growth, that simply means that our policies have to be of absolutely top quality.  Right now, they are not, and in recent years they have gone backwards in several important areas even as other countries have continued to reform.  This slippage is totally omitted from Brian Fallow’s account. 

Do we need 1980s thinking?  Of course, where it is still relevant; absolutely not where it isn’t.  The recommendations of the 2025 Taskforce are absolutely consistent with orthodox economic thinking about how to accelerate economic growth and, as noted, are consistent in particular with the recommendations made by the OECD report on New Zealand a few months ago.

Meat demand to double


For several years sheep and beef returns have been well below those from dairying.

Last season meat prices were higher and dairy prices were lower but this season meat’s down again and dairying has regained a fair bit of ground.

There is however, hope for all food producers in an article in The Economist:

Between now and 2050 the world’s population will rise by a third, but demand for agricultural goods will rise by 70% and demand for meat will double. These increases are in a sense good news in that they are a result of rising wealth in poor and middle-income countries. But they will have to happen without farmers clearing large amounts of new land (there is some scope for expansion, but not much) or using up lots more water (in parts of the world, water supplies are stretched to their limit or beyond).

Dr David Hughes, Emeritus professor of food marketing at Imperial College London, who was here last month, pointed out that most people in the emerging markets don’t eat much red meat.

That provides us with the challenge of introducing the delights of beef and lamb to people more accustomed to eating fish and chicken.

It may not be easy, but if meat and three veg New Zealanders can be converted to sushi and other once exotic foods, surely it’s not impossible to convince people in other countries to enjoy our meat.

Hat Tip: Inquiring Mind.

December 12 in history


On December 12:

627 Battle of Nineveh: A Byzantine army under Emperor Heraclius defeats Emperor Khosrau II‘s Persian forces, commanded by General Rhahzadh.

Heraclius and his son Heraclius Constantine stamped on a gold Roman coin
Heraclius and his son Heraclius Constantine on a Roman coin

1769 French explorer Jean François Marie de Surville first sights New Zealand near Hokianga.

De Surville first sights NZ near Hokianga

1779 Madeleine Sophie Barat, French saint was born.


1805  Henry Wells, Founder of American Express, was born.

1812 The French invasion of Russia ended.

centuryNapoleon’s retreat from Moscow, painted by Adolph Northen.

1821 Gustave Flaubert, French writer, was born.

1862 USS Cairo sank on the Yazoo River, becoming the first armored ship to be sunk by an electrically detonated mine.

 USS Cairo

1863  Edvard Munch, Norwegian painter, was born.

Self Portrait with Skeleton Arm,

1893 Edward G. Robinson, American actor, was born.


1870  Joseph H. Rainey of South Carolina became the first black U.S. congressman.


1900 Sammy Davis, Sr., American dancer, was born.

1901 Guglielmo Marconi received the first transatlantic radio signal at Signal Hill in St John’s, Newfoundland.

1911 Delhi replaced Calcutta as the capital of India.

1915  Frank Sinatra, American singer and actor, was born.

 1927  Robert Noyce, American inventor of the microship, was born.

1929 John Osborne, English dramatist, was born.

 1935  Lebensborn Project, a Nazi reproduction programme, was founded by Heinrich Himmler.


A Lebensborn birth house

1936  Xi’an Incident: The Generalissimo of the Republic of China, Chiang Kai-shek was kidnapped by Zhang Xueliang.

Generalissimo Chiang Kai-shek and senior members of the KMT after their arrest.

1938  Connie Francis, American singer, was born.

1940 – Dionne Warwick, American singer, was born.

1941  Adolf Hitler announced the extermination of the Jews at a meeting in the Reich Chancellery.

1948 Batang Kali Massacre – 14 members of the Scots Guards stationed in Malaysia allegedly massacred 24 unarmed civilians and set fire to the village.

1949 – Bill Nighy, English actor, was born.

1950  Paula Ackerman, the first woman appointed to perform rabbinical functions in the United States, led the congregation in her first services.

1956 Irish Republican Army‘s “Border Campaign” began.

1961 The first Golden Kiwi draw took place.

First Golden Kiwi lottery draw

1963 Kenya gained its independence from the United Kingdom.

1964 Prime Minister Jomo Kenyatta became the first President of the Republic of Kenya.

1965 Will Carling, English rugby union footballer, was born.

1979  Rhodesia changed its name to Zimbabwe.

1982 Women’s peace protest at Greenham Common – 30,000 women held hands and formed a human chain around the 14.5 kilometres (9.0 mi) perimeter fence.

1985 Arrow Air Flight 1285 crashed after takeoff in Gander, Newfoundland killing 256, including 248 members of the United States Army‘s 101st Airborne Division.

1988 The Clapham Junction rail crash killed thirty-five and injures hundreds after two collisions of three commuter trains.

Clapham Junction Railway Accident - Hidden Report cover - HMSO.jpg

1991  Russian Federation gained independence from the USSR.

2006 Peugeot produced its last car at the Ryton Plant signalling the end of mass car production in Coventry, formerly a major centre of the British motor industry.

Sourced from NZ HIstory Online & Wikipedia.

P.S. – If you’ve got a feeling of deja vu, it’s because I must have typed 12 when searching for December 2 so most of the people and events mentioned today were noted 10 days ago.

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