Another mainstream economist, another idiot

News that government might be cutting bureaucrat numbers ever so slightly has summoned up idiocy from alleged economists and journalists alike. This morning’s Radio NZ report is representative. Take a look:

Finance Minister Bill English is defending the timing of further cuts to the public service amid warnings this may ultimately be bad for the economy.

What’s this about “further” cuts? What decent cuts have we seen? And how could cutting the unproductive be at all “bad” for producers?

Mr English announced on Tuesday there will be more consolidation of departments and agencies over the next two or three years…
    He said he has no master plan …

Well, that much at least has been evident for all of the last two or three years.

The chief economist at research firm BERL, Ganesh Nana, says the cuts should be made when the economy is strong and public servants have somewhere else to go to get another job…

So it is somehow wrong to make cuts when spending is unaffordable. Is this guy an idiot? It would seem so:

… Ganesh Nana says the cuts risk hurting the Government's accounts, rather than helping them and now is not the time for aggressive action… Cutting spending risks tipping the economy into a very long period of depressed activity and hurting the books even more, he says.

So let’s see if we can follow what passes for Mr Nana’s “reasoning.”

This alleged economist suggests that cutting spending when government debt is spiralling out of control (even by the timid amount Bill English might countenance) will somehow be worse for government accounts. How’s that again?

His argument for this seems to be based on the ridiculous “circular flow” model of the economy which looks only at how much money passes from person to person rather than how much productivity those transactions purchase.

At present, in a New Zealand weighed down with government debt and an over-abundance of grey ones, those transactions are far too often producing no productivity at all.  (And that’s when they’re not paying grey ones to hinder productivity.)

Cutting spending on bureaucrats so there are more scarce resources available for productivity could be considered a bad thing only to an alleged economist who’s never understood what transforms resources into real wealth. And that’s certainly not paying for offices full of bureaucrats to make that sort of productivity impossible.