David Thompson Posted:
So very, very true. It beggars belief that we consider ourselves to be a developed nation when so much of our economy is based on selling milk powder or logs. BTW, I own a Plinius amplifier (my second) that drives a set of Theophany speakers.
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David Thompson Posted:
A robust but sobering report. It concerns me that confidence is rising, yet sales and exports are down and "manufacturers and exporters are still lagging behind other sectors". Surely we should wait until we're earning more money before we start spending more?
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siemens Posted:
Yes true! The only thing that will never die in this world is the nature and its science behind it. Great post.
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Kieran Ormandy Posted:
Thanks for the question Steven, Germany has seen increases in manufacturing employment since 2009, and Switzerland has had stable manufacturing employment between 2006 – 2011, even in the face of ongoing Euro-zone issues. Korea has seen increases in manufacturing employment since 2008 and Israel experienced large increases since 1998, while being stable over the last 4 years. Singapore has had increases in manufacturing employment over the last two years. These countries all value their manufacturing sectors and work to protect them, this is reflected in the above numbers and their performance through the GFC. Note data around the above examples was sourced from OECD labour market stats.
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John Walley Posted:
Point one: you should have no doubt what our Association says publically represent the views of our members. Point two: we don’t knee jerk responses, if you trace back our comments around NZPower you will see them link all the way back to our research in 2004 and 2005. All that material is fully linked from our comments above. Point three: you will note our comments on major users, sadly the same advantage does not accrue to smaller industrial users. The perverse incentives of the LRMC approach in all this are well known. Point four: the NZMEA is not like any other Association in New Zealand we admit only manufacturers and exporters into membership, and our public expressions are the views of that restricted membership.
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Brian Fallow: Now is the time to de-Ponzi our pensions

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Brian Fallow points out that New Zealand's Superannuation scheme is essentially a Ponzi scheme without the taxpayers to support it in an article for the Herald:

Mark Twain said: "It ain't what you don't know that gets you in trouble. It's what you know for sure that just ain't so."

Among superannuitants it is a deeply cherished belief that they are only drawing out of the system what they have paid in over their working lives.

But some careful analysis by Andrew Coleman, an economist at the Wellington think tank Motu, shows that on average what we pay in as taxpayers only covers about half of what we can expect to get out as pensioners.

The rest is a transfer from each generation to the one before.

Like a Ponzi scheme it depends on an ever-growing number of people joining the scheme (taxpayers in this case) to fund an outsized payout to their predecessors.

But, as is well known, the combination of rising life expectancy and falling fertility is changing the age structure of the population, relentlessly raising the ratio of superannuitants to those of working age.

New Zealand is almost unique among developed countries in the extent to which it relies on a taxpayer-funded, one-size-fits-all, pay-as-you-go (PAYGO) scheme to fund retirement incomes and how little we rely on savings and investment.

In research outlined in a recent lecture, Coleman looked at whether the PAYGO system could over time be turned into a prefunded save-as-you-go (SAYGO) system which would deliver the same entitlements at a lower cost to future taxpayers.

"I'm not saying this is what we should do. But would it work? I'm saying it looks feasible and it probably isn't even unfair."

He argues that on some plausible assumptions about rates of return to capital (3 or 4 per cent per annum real) a SAYGO scheme, when mature, is about twice as efficient as PAYGO.

That is, it will fund the same pension at half the cost in taxes or twice the pension at the same cost.

Coleman's modelling suggests that under a wide range of circumstances the tax rate under a SAYGO system will eventually be lower than under PAYGO by between 2.5 and 5 per cent of GDP, or by 4.5 to 9 per cent of labour income.

"There is no real magic going on there. It's the power of compound interest," Coleman says.

"If prefunding were to happen the economy, or at least gross national product, would be larger because people are delaying their consumption and the capital stock will be increasing. There would be a larger pie, so a smaller slice of the pie would be required to fund retirement benefits."

tags: superannuation, savings, investment


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