Kelsey on Trade

March 17th, 2009 at 9:00 am by David Farrar

I was highly amused to see the headline at the NZ Herald:

: deal may not make sense in these hard times

Why this is so amusing is that Jane Kelsey has spent her life arguing against free trade deals at any time. Kelsey probably protested against CER with Australia.

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39 Responses to “Kelsey on Trade”

  1. stephen (4,063 comments) says:

    Link not working!

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  2. stephen (4,063 comments) says:

    http://www.nzherald.co.nz/opinion/news/article.cfm?c_id=466&objectid=10562003&pnum=0 for now

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  3. coventry (318 comments) says:

    WARNING HAS PIC OF SAID GRUFFALO…

    http://www.nzherald.co.nz/politics/news/article.cfm?c_id=280&objectid=10562003

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  4. stephen (4,063 comments) says:

    WARNING HAS PIC OF SAID GRUFFALO…

    And I thought I was inane.

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  5. Manolo (13,517 comments) says:

    “The rejection of the free market model recognises the urgent need for governments to address a tidal wave of financial and industrial collapses and skyrocketing unemployment, social distress and deepening poverty.”

    You can almost see the glee on her face when she was writing the above paragraph. This professor is another left-wing academic with a profound distate for the capitalist society in where she lives and “teaches”.

    In summary: bollocks.

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  6. Glutaemus Maximus (2,207 comments) says:

    Nice BUTCH hairdo, and love the level of magnification in her glasses.

    Proves how MYOPIC she really is.

    Why be positive and entrepreneurial when you actually get more column inches by being a N’eersayer.

    Probably the inches that she enjoys the most!

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  7. gd (2,286 comments) says:

    These are exactly the time the world needs free trade It aint going to help the people in 3rd world countries ( NZ?) if the trade barriers go up

    It always amuses me that the Socilaists and Communists bang on about helping the poor countries THEN advocate for the very things that will mean these people can never trade to improve their existence

    Same as the 2 faced arsehole USA Barry O is nothing more than a protecionat prick he speaks out of both sides of his mouth at the same time.

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  8. gazzmaniac (2,319 comments) says:

    Here’s a thought – if the government wants to attract foreign capital why doesn’t it slash the corporate and personal tax rates? Not good for Britain and USA, but they are protectionist against us anyway. Slash taxes and watch the money come rolling in. NZ could boom while the rest of the world burns.

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  9. Ross Miller (1,686 comments) says:

    I know that academia values the free exchange of ideas but to think my taxes go to support a died in the wool protectionist who articulates positions that would have 19th century Tory politicians (and 21st century NZ Firsters/Greenies) standing clapping in the aisles, spoils what was developing into a great Tuesday.

    Sigh

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  10. gd (2,286 comments) says:

    gazzmaniac

    Great idea but the YOU CANT DO morons will get in the way.

    At times like this NO IDEA should be off the table. In my organisation Ive told everyone that the scared cows are all getting their tails lifted No exceptions.

    This is when real leadership comes to the fore.

    We need to try new ideas NOT condemn everything out of hand because its out of our comfort zone

    And this applies in particular to the civil servants. they will just want to carry on like they did for the past 9 years

    You can bet they are twarting ever effort for change.

    The Sir Humphires will have 1001 excuses why it wont cant work.

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  11. LUCY (359 comments) says:

    Jane Kelsey. Ha ha ha ha ha ha. But hey its not funny its scary, she is in a position of power over the minds of her students (shudder)

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  12. stephen (4,063 comments) says:

    if the government wants to attract foreign capital why doesn’t it slash the corporate and personal tax rates?

    How would that immediately affect the other services government provides?

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  13. adamsmith1922 (890 comments) says:

    Yesterday I posted on an FT article by Nigel Lawson. He had an excellent defence of capitalism and of free trade.

    http://adamsmith.wordpress.com/2009/03/16/in-defence-of-capitalism/

    In my view Lawson would demolish Kelsey in any debate.

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  14. adamsmith1922 (890 comments) says:

    Stephen at 10:12 am

    I would suggest adopting legislation such as Singapore’s Pioneer Industry law. This gives/gave tax exemptions to companies that set up in Singapore for up to 25 years. The companies had to be primarily export focussed and have as employees mainly local personnel.

    By this means jobs were created, the employees paid taxes and local services were not disrupted because of the export focus. In Singapore’s case there was the added benefit that for each employee the company had to pay Provident Fund contributions thus contributing to the republic’s capital pool.

    I have long advocated something similar here.

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  15. brucehoult (199 comments) says:

    The thing I don’t get about these anti free-traders is … how do they decide where the boundaries of free trade should be drawn? THe model, presumably, is that you have a geographic region within which there is unrestricted free trade, but trade crossing the boundary is restricted.

    Why should there be free trade within NZ, but not between NZ and Australia, or NZ and the USA?

    Perhaps there should not be free trade between Auckland and Hamilton? Perhaps there should not be free trade between Papakura and Manukau City? Certainly I don’t know why they aren’t calling for inspections and tariffs and quotas in trade between the North and South islands.

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  16. stephen (4,063 comments) says:

    Well, ironically/misleadingly this isn’t even an article about ‘trade’ as we normally envision it (e.g. i’ll sell you wool, with which i will buy your computer chips), except for a tiny and token mention of agricultural products.

    She seems to focus on elements on the periphery (perhaps?) of international trade, as below:

    They include over-reaching privileges for foreign investors and their right to take governments to international arbitration; service sector privatisation and deregulation; limits on government procurement; and inadequate labour and environmental protections.

    and

    As the Public Citizen group told an inter-agency meeting held in Washington recently to hear views on the Trans-Pacific Partnership, “the last thing the United States needs now is any agreement that expands financial services liberalisation and deregulation”.

    None of the geniuses who commented earlier seem to address these issues, which may be because they are a little unfamiliar, as we’re very used to addressing issues of tariffs and subsidies, not international financial trading rules and the like…

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  17. stephen (4,063 comments) says:

    adamsmith1922, sounds like what they’ve done in China a bit too? However your idea is wasted on me, as I have no idea why that might be a bad idea…seems like a good one though, just as long as said companies were not going to set up in NZ anyway…

    Why should there be free trade within NZ, but not between NZ and Australia, or NZ and the USA?

    You raise some fine points (though i don’t think they were points raised by Kelsey?), but often enough people and organisations who express concern about ‘free trade’ are often very keen for developed world subsidies and tariffs to be done away with (maybe even Kelsey), but what concerns them might be stuff like what Bernard Hickey recently pointed out – the ‘ripple’ effects.

    trade isn’t simple!

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  18. Daniel Silva (10 comments) says:

    “Kelsey probably protested against CER with Australia.”

    Helen Clark did.

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  19. NZTed (42 comments) says:

    adamsmith1922 – as a matter of fact some years ago I attended a debate about free trade and globalisation at Auckland Uni between Kelsey and a visiting female East European economist. Kelsey got hammered by the European and came across like a raving lunatic. Even a couple of lefties I know after the debate agreed she was soundly beaten. Somehow an East European talking about their own experience in their country pre/post the Berlin wall, backed up with facts, is far more credible than a left wing hack-ademic from New Zealand screaming chicken little about free trade.

    I’ve never understood how Kelsey justifies commenting publically about economic issues when her (purported) field of expertise is in Law. Such recklessness discredits the institution that employs her. I don’t see leading economists passing comment about legal issues.

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  20. stephen (4,063 comments) says:

    You don’t seem to consider that there might be a myriad of legal issues surrounding trade.

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  21. gazzmaniac (2,319 comments) says:

    Stephen said:

    How would that immediately affect the other services government provides?

    The government could get rid of a lot of the bureaucracy that is around Wellington. I recently heard of the case of a spin doctor who (under the Labour government) turned down a job for $70 per hour because it was too low. I am led to believe that this was fairly normal. They could easily get rid of those sort of people from the public service and replace them with people who do actual work. The public doesn’t care about what the Government thinks of itself – they draw their own conclusions based on their experience anyway.
    Or of course they could get rid of the Tertiary Education Commission, the Family Comission, the Children’s Comission, the Electricity Comission… the list goes on.

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  22. adamsmith1922 (890 comments) says:

    Kelsey’s article was shallow with little regard for actuality, being an opinion piece so I found some counter-vailing argument and fisked it

    http://adamsmith.wordpress.com/2009/03/17/free-trade-makes-sense/

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  23. unaha-closp (1,155 comments) says:

    Here’s a thought – if the government wants to attract foreign capital why doesn’t it slash the corporate and personal tax rates?

    Because the government would have to borrow a lot of money to cover the immediate shortfall. And if insufficient investment came, our currency would crash and the investors that did arrive (& everyone living here) would be burnt.

    Not good for Britain and USA, but they are protectionist against us anyway. Slash taxes and watch the money come rolling in. NZ could boom while the rest of the world burns.

    Who’d come? What money?

    To benefit from a tax cut multinationals would have to be making a profit and very few are doing so currently. They would be better off to go to the USA where that government is giving out free money, billions at a time, to cover any losses.

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  24. unaha-closp (1,155 comments) says:

    You don’t seem to consider that there might be a myriad of legal issues surrounding trade.

    Kelsey’s idea is that if each nation generates another myriad layer upon existing myriad layer of legal complexity the issue will be “solved”.

    Call me cynical, but when an international trade lawyer tell us we should avoid simplifying international trade law, make more laws more complex and employ more international trade lawyers – she’ll be much richer, should we ever take up her suggestions – I smell a stench of self-interest.

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  25. stephen (4,063 comments) says:

    So gazzmaniac, what you were really suggesting was radical reform of the government apparatus as it stands…you should’ve just said that the first time! :-D

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  26. stephen (4,063 comments) says:

    Call me cynical, but when an international trade lawyer tell us we should avoid simplifying international trade law, make more laws more complex and employ more international trade lawyers – she’ll be much richer, should we ever take up her suggestions – I smell a stench of self-interest.

    It doesn’t look like she’s a practising trade lawyer though? Not even sure that is ever done – lecturing/teaching while practising at the same time that is – may be one of those ethics things.

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  27. Ryan Sproull (7,092 comments) says:

    stephen,

    Depending on what you mean by practising, I’m pretty sure there are law lecturers who do practise. Kelsey isn’t, to my knowledge, though.

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  28. unaha-closp (1,155 comments) says:

    It doesn’t look like she’s a practising trade lawyer though? Not even sure that is ever done – lecturing/teaching while practising at the same time that is – may be one of those ethics things.

    Ethics, is that east or west of London?

    Professors tend to be hired as consultants to government, multinationals, interested well-monied people for their area of expertise. But practising for themselves, that could be seen as unethical (besides paying less and requiring more work than consulting).

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  29. Ryan Sproull (7,092 comments) says:

    What Unaha said.

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  30. stephen (4,063 comments) says:

    Ethics, is that east or west of London?

    *eye roll thingy*

    Didn’t think of consulting I must admit.

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  31. stephen (4,063 comments) says:

    Now that I look closer at her personal page, she has indeed done consultancy work. Hardly proof that her whole career has been one long self-interested farce though.

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  32. gazzmaniac (2,319 comments) says:

    So gazzmaniac, what you were really suggesting was radical reform of the government apparatus as it stands…you should’ve just said that the first time! :-D

    No that’s not what I said. I suggested that taxes should be slashed to promote foreign investment. In my original post I made no comment about how it could be afforded. Not that cutting back the public service to its core would be a bad thing.

    Who’d come? What money?

    Believe it or not there are still people in the world with large amounts of capital. They are not putting it in to US or British banks because that sector is pretty risky right now. So they might look to put it elsewhere in the world. Which country’s banks have been the biggest winners from this crisis? Now if New Zealand wants to see any of that capital they will have to have a pretty big carrot to encourage investment in the New Zealand subsidaries of the Aussie banks rather than their parent comanies – that is where my suggestion about slashing tax rates comes about. If New Zealand has a lower tax regieme than Australia then a bigger piece of the pie will come our way. It will also serve to attract capital from the unstable US and UK to a more stable Australasian money market that might otherwise have stayed at home.

    Am I being simplistic? Maybe. But no more so than those who argue for protectionist policies or for the status quo. Nobody has tried that idea during a major recession or “depression” so maybe it is worth a go. It would certainly be better than closing the trade door.

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  33. stephen (4,063 comments) says:

    I suggested that taxes should be slashed to promote foreign investment.

    And by slashing taxes, one has to slash government, which is fairly “radical”, isn’t it (unless you want to borrow…in this environment)? I suppose you assume that more foreign investment = ‘more money for all’ (eventually, maybe) = ‘less government not really a problem’, but I do think it’s a tad simplistic, (as you allude) and that this reduction in services would present many problems for many people. However re: the Families Commission etc you’ve got a point – the nation is hardly going to collapse into anarchy if it goes!

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  34. gazzmaniac (2,319 comments) says:

    It is fair to say that money sitting in a New Zealand bank is better than money sitting in a foreign one (from a NZ point of view).
    As for a reduction in services – I have already alluded to the fact that there can be pretty big cuts without cutting services. Start at management/head office, policy making and the marketing (spin) divisions of the government services first. Because that is what has expanded under Labour, not frontline services. Why do we need policy makers and marketing divisions inside the departments when their policies should be written and promoted by the politicians?

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  35. gazzmaniac (2,319 comments) says:

    Oh yeah – one forgets to mention that interest rates are fairly low at the moment, and although the government may find it difficult to raise money through the debt markets a lot of companies are successfully issuing their own bonds at the moment (Fonterra springs to mind) so I don’t imagine that there will be too many problems if the government did decide to take on debt.

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  36. stephen (4,063 comments) says:

    re: 3:51 pm – Politicians are not superhumans! Esp the ones with local constituencies.

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  37. gazzmaniac (2,319 comments) says:

    Point taken. That is why the beehive employs enough spin doctors and policy makers for the whole public service.

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  38. unaha-closp (1,155 comments) says:

    Stephen,

    Yeah, it is hardly proof.

    She is theoretically correct, instituting varied restrictions and supports to trade could provide beneficial outcomes to world trade. And if anyone is going to construct a theoretical model of the various mechanisms to achieve that better outcome that person would be an international trade law prof. So there exists the possibility that she is working with the best possible intent.

    Theoretically possible, for someone of great technical expertise.

    However for such a theory to work in practice each nation must institute a set of altrusitic trade laws. That the nations do this knowing that if they should not be altruistic they will face no censure (for there will be no WTO). That the trade regulations will not be subject to political interference, even though politicians and the nation will face no censure for doing so. And that trade law experts exist of fine and unimpeachable ethics who would be able to agree on a best, most altruistic model and then be entrusted to implement it. These are insurmountable challenges to the theory.

    In practical application it would fail, anybody except an idiot can see that.

    An attempt to implement such a system would fail AND make conforming to trade regulations a much more complex task for multinational traders. Thus making trade law specialists sought after by multinationals.

    Either a well meaning savant/idiot or an self-interested person.

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  39. stephen (4,063 comments) says:

    I do somehow doubt she does much work for multinationals ;-)

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