Books with Nevil Gibson

The Economic State of the Nation
Roger J Bowden
Kiwicap Research paperback $35

When it comes to election year, economists are usually the last people one asks for advice. For a start, as the author asserts, they are naturally gloomy.

But like the Biblical prophet Jeremiah, whom Roger Bowden, professor of economics and finance at Victoria University, acknowledges as the first economist, they are usually right — “for things did come unstuck and the Temple was destroyed”.

So with an election coming up and the economy at the end of a ten-year boom, what does Professor Bowden prescribe?

The bad news first: New Zealand has a bipolar economy; that is, it struggles to recognise realities and is often out of synch. Basically, its wealth producing sector is heavily constrained by a costly service sector and a growing burden of government.

But Bowden is no radical. His analysis is surprisingly mundane and his suggestions palatable to the most centrist of politicians.

It is based on looking a little into the future, with known trends in global demographics and consumption, and then working out how to get there.

Much of this is commonsense but can be remarkably elusive when concrete suggestions are forthcoming.

The topics range from an unstable currency, “deplorable” personal savings rates and narrow export base to the poorly performing education and health sectors. Then there is the enthusiasm for an energy policy that takes little account of how it will lower living standards.

Bowden’s solution to the volatile Kiwi dollar is a currency union with Australia. This would reduce interest rates without any loss of sovereignty. Another suggestion is using a stabilisation fund to profit from currency trading. Similarly, he urges the use of long-term debt and private-public partnerships to invest in future infrastructure.

Bowden has no illusions about the nature of his advice. He blames this on Adam Smith and his acolytes, who admired thrift and hard work.

Bowden’s pessimistic about health and education, mainly due to the costly growth of their bureaucratic structures and deviation from original missions.

He is understanding about other shortcomings, such as the low personal savings rate (mainly because high income taxes mean there is less to save).

But amid this gloom are several shafts of light, notably the growing world demand for dairy and wood products, which augur well for future export incomes.

Another is China and perhaps India emerging as major new sources of investment and capital in natural resource industries.

Also positive will be a fresh direction for science. The government’s new fund was announced after the book was written but mirrors Bowden’s prescription for a greater emphasis on the ‘hard’ sciences of physics, maths, chemistry, IT and electronics.


Unstoppable Global Warming
S Fred Singer and Dennis T Avery
Rowman & Littlefield paperback $37

Global warming sceptics are fighting back against claims they are loonies in scientific denial. This is the case for the defence — that climate change has a 1,500-year cycle of warming and cooling periods that occur regardless of human activity. This book explains the basics of climate cycles, exposes the flaws in greenhouse gas and global climate models, pours scorn on extreme weather events as man-made, and warns of the heavy costs and futility of Kyoto carbon emission limits. In the bigger schemes of things, humankind has adapted in the past and will do so in the future.

What Does China Think?
Mark Leonard
Harper Collins paperback $30

The recent anti-Chinese riots in Tibet and elections that brought a peaceful change of government in Taiwan are the stuff of nightmares for the communist rulers in Beijing. One demonstrates the difficulty of suppression by force in a globalised world, while the other indicates that Chinese culture and democracy are compatible. In Beijing, both are seen as threats to stability, and that freedom equates to chaos. Any description of the Chinese regime’s mindset is going to be controversial. But this excellent summary reveals the ideological tensions with the elite as well as the strength of opinion against change.

The three Trillion dollar War
Joseph Stiglitz and Linda Bilmes
Allen Lane paperback $40

The latest salvo among the critiques of the Iraq war is likely to be the most effective. As the conflict fades from the news, the huge human and economic cost will remain. The official figure is around US$500 billion so far, so the authors’ claim may be vastly exaggerated. They do their calculations by dragging in all possible costs, real ones as well as those extrapolated into the future (many of which would have occurred anyway). Their point is well made and, like all wars, the cost is likely to outweigh the benefits. But if Wall St can survive writing off US$1 billion in loans, the US will get over Iraq just as it did Vietnam.