From chairman Ann:

“Empathy,” in Liberalspeak, is nothing but raw political power

David Frum argues that the value of Liberal Arts degree is declining. I like this comment:

The entire American education establishment needs reform.

Maybe tough high school exit exams would serve the needs of employers who currently insist on a BA not for its own sake but as proof that a student was not too lazy or aimless to get one. Indeed, it could be that when the job market attaches less value to a piece of parchment, universities will at last lay aside their often ugly political preoccupations and rediscover their true mission: the pursuit of knowledge as a good in itself.

In NZ, we are told that we cannot afford no more tax cuts. The Prickly one instantly blogged

Well you don’t get any, but here in Hong Kong this week we have just been told that our $HK6,000 tax cut announced earlier this year has stimulused into $HK8,000.

Bernard Hickey comments.

New Zealand kept its AA+ credit rating, but the government has sailed very close to the wind by continuing to spend heavily. It could and probably should have been tougher. Its decision to use government spending to bolster the economy rather than tax cuts could prove self-defeating if mortgage rates rise sharply and the economy remains stuck in the mud of a recession because of a lack of tax cuts.

That’s because the picture painted in this budget is distinctly ugly, particularly over the longer term. The idea that the budget will be in deficit for another decade is astonishing. Our government will be borrowing upwards of NZ$50 billion over the next 5 years. To put that in context, New Zealanders built up their savings in bank accounts to around NZ$90 billion over the last 50 years.

This heavy borrowing will push up longer term interest rates, that will filter through in higher mortgage rates.

Unless there is a massive improvement in economic growth rates in the coming decade, New Zealanders can give up on the prospect of tax cuts and may not have enough money in the New Zealand Super Fund kitty to support reasonable pensions by 2020. There will have to be significantly stronger growth to see that happen.

If the economic outlook worsens, there may even need to be tax increases to avoid a credit rating downgrade and to fund the retirement of baby-boomers after 2025.

And then, to annoy the remaining one reader, Roger Douglas weighs in on the budget.

The best thing I can say about this Budget is that it’s as good as any of the nine that Labour’s Michael Cullen delivered. Then again, that’s hardly the standard any decent Finance Minister should hold themselves to.

After all, during Cullen’s term, total Government spending increased in real terms by over $5,500 for every person in New Zealand. That’s how much could have been left in your pocket every year had he not ramped up Government spending.

For a family of four that’s $400 a week.

And what did you get for Cullen’s spending?

Some of it was wasted on the bureaucratic health, education, and welfare empires.

Some of it was taken off you and then used to turn most New Zealand families into welfare beneficiaries under the Working for Families programme.
Mr English has continued in this vein, increasing health spending by over a billion dollars – an increase of around 6 percent.

And what happened to Bill English’s line by line review, which was meant to cut Government waste?

Well, he managed to find $301 million. Let’s put that in context. $301 million is just 0.4 percent of total Government spending. Was that seriously all he was able to find after Cullen increased Government spending by $18 billion?

National missed an opportunity to cut Government waste by scrapping some Government departments completely. The Families Commission, the Ministry of Economic Development, and the Charities Commission are obvious candidates for immediate abolition.

But what has Labour’s response been to modest cutbacks? Outrage.
To Labour, every area of Government is underfunded.
Having spent up large for nine years, it believes it can always find new projects to waste money on. I worry that Labour might be right.
When Labour say it would not cut spending, what it’s really saying is it wants higher taxes.

Over nine years Labour tried to tax the nation to prosperity. The only effect was to slash productivity growth, helping us slip further behind the other nations on the OECD ladder.

Our productivity growth under Labour was a third of what it was after the reforms implemented by the fourth Labour Government.
The difference to the average New Zealander is that they receive 25 percent lower wages today than they would have if productivity growth had been maintained.

I agree with Bernard and Roger. National has taken the politically expedient path. They want to remain in power. However, the correct thing to do would have been to cut harder, now. I’ve made some comments on this over at whale oil, where one of the resident trolls accused me of letting people starve.

For what it is worth, I consider any ad hominem attacks as a self admission that one has no argument, it is a corrollary of Gresham’s law.

New Zealand has been living beyond its means. One of the roles of recessionary cycles to to allow an examination of the budget cycle. We cannot blow this: we cannot afford Peronist populism, for it will bankrupt the future of our children. We have to cold bloodedly ask if we can keep the sacred idol of a paternalistic state with no barrier to entitlements. Historically, we cannot do this.