Last Updated: Mar 25th, 2013 - 16:46:15 Newsletters : 2006 Newsletters : 28 July 2006 Thought for the Day I noticed in the newspaper the other day an article about the Peter Jackson phenomenon which went on to say that the Film Commission fulfilled a valuable role by helping overseas film companies negotiate their way around various government rules and regulations. And this helped them save millions of dollars in GST taxes. Perhaps we should establish a series of new government commissions to help other industries in New Zealand get around government regulations and legislation. More government departments making rules and regulations and more comissions helping business find ways around all these new rules and regulations - and not to mention various taxes. Unlimited opportunities for bureaucrats. Jul 25, 2006, 13:18 Newsletters : 2006 Newsletters : 28 July 2006 Why Have Kiwis Not Become Tigers This is from the speech to our Forum by Frederic Sautet as noted and summarised by Jan Hains. ***** ***** ***** ***** ***** Dr Frederic Sautet is author of the paper “Why have Kiwis not become tigers”. He talked about the answers to this question at a recent Forum of the Foundation for Economic Growth. Dr Sautet believes that entrepreneurship is the driving force of prosperity. Growth of an economy is achieved by improving the conditions for entrepreneurial activity. Entrepreneurship is the discovery of good ideas and good ideas precede all acts of production and trade. Entrepreneurship matters more than resources because good ideas put new capital goods into use, free up other resources and reduce scarcity. The entrepreneurial environment is as important as the moments of discovery of good ideas themselves. Only by guaranteeing the free emergence, discovery and exploitation of profit opportunities can countries improve their growth prospects over time. We need to relate entrepreneurship to the state of the economy through the causal chain of prosperity. All individuals can be creative, within existing businesses, starting new businesses, within families. The parts of the chain of prosperity are: · Institutions – policy fits in here and how it affects the entrepreneurial environment. · Entrepreneurship · Capital accumulation and division of labour · Better productivity · Higher incomes In NZ the entrepreneurial environment is not as good as it should be. When Government spending is around 40% of GDP it means that a large amount of activity is the transferring of resources rather than the creation of resources. In addition, over recent years, NZ has also gone down in the ranking of economic freedom. What can we do to improve this situation? · Reduce the size of Government by freezing its real per capita spending. · Improve the efficiency of the tax system by reducing high marginal rates of tax. Taxation affects entrepreneurial incentives by reducing the size of profit opportunities. · Continue opening the economy – especially in relation to immigration. More people mean a larger pool of entrepreneurs. · Improve the regulatory environment. These four types of measures would further improve the entrepreneurial environment and, over time, raise the prospects for economic growth. Experience around the world shows that “Tiger” economies grow at least 4% per annum. Although, this is an arbitrary figure, it is the level of growth New Zealand needs to move from the lower third of the OECD list of countries to the top third. A copy of Dr Sautet’s paper can be obtained by emailing phil@feg.org.nz. Jul 28, 2006, 10:01 Newsletters : 2006 Newsletters : 28 July 2006 The Impact of Government Spending on Economic Growth We keep saying that big government is bad for economic growth and Dr. Cullen keeps denying it. We also said that higher taxes is bad for growth and Dr. Cullen denied that as well. He now seems to be changing his mind and is saying that he is going to reduce taxes - a bit, a very small bit. Has he explained why he proposes a small tax decrease? Is it just fear of losing the 2008 election? Or has he started to bring his economic thinking into line with the rest of the world? Does he still think that big government is the solution to creating wealth and happiness in society? Perhaps he should start looking at some of the evidence - all of which points to small governments and low taxes producing wealth in the community. Does he still think that the Earth is flat? Have a look at this evidence: Jul 25, 2006, 13:47 Newsletters : 2006 Newsletters : 28 July 2006 The Welfare State's Attack on the Family We have seen the rise of the welfare state here in New Zealand coincide with the decline in our relative living standards over the last five decades. We have seen the rise in the welfare state give rise to a decline in family cohesion and the responsiblity for children. Socialism gives rise to lower economic standards and takes away responsibility for families from those members of the family so that they lose the incentive to work for and help their own family. Perhaps getting our standard of living back up into the top half of the OECD has something to do with the need to return to family values of responsibility for each other and the work ethic which seems to have declined somewhat in certain sections of the community. It is easy to pontificate from on high and perhaps not all that helpful to our cause of increasing the Kiwi economic growth rate but here is an interesting article from one who has been there and done that. We can learn a lot from other people and other countries. Jul 19, 2006, 14:20