McCarten paranoia (updated)

A few days ago a friend sent me a link to an article by Matt McCarten in the New Zealand Herald. I've only got around to reading the piece this afternoon. Now, it just may be that I'm an economist that I have trouble following McCarten's "logic" but in this article I feel he really has lost the plot. He opens by stating

Since Labour's been in power, we haven't heard a lot from the Business Roundtable.

When Roger Douglas and Ruth Richardson et al were running the country into the ground, the Roundtable was New Zealand's foremost right-wing think tank.

As far as I know the Business Roundtable has been no less active during the period of this Labour government than at other times. Just taking a look at their website shows they appear to have been doing a lot of work over the last 9 years. As to the Roundtable being New Zealand's foremost right-wing think tank, he is partially right. The NZBR is, in all likelihood, New Zealand's foremost think tank, this country lacks a good supply of think tanks. As to it being "rightwing", I've never been too sure what that term means - if anything - but my own take on the philosophy of the Roundtable would be that its classical liberal, if anything. But following in the footsteps of the likes of John Locke, David Hume, Adam Smith, J.S. Mill, Friedrich Hayek, Milton Friedman et al seems no bad thing.

McCarten goes on

Once its rabid dogma had been discredited for the nonsense it was, the Roundtable disappeared. The only reminder it still exists is when its director, Roger Kerr, announces dubious research findings.

What rabid dogma? Discredited by whom? When? For example, recently I blogged on the economics of sports stadiums. In the message I made mention of work done (pdf) for the NZBR on this topic by Tyler Cowen, professor of economics at George Mason University. Where is the rabid dogma in Cowens work? Who has discredited this work? Note that Cowens conclusions are basically the same as the views of Phil Miller, whose research and teaching are centered on sports economics at Minnesota State University, that I also note in my posting.

In another blog posting I discussed a recent newspaper article by Roger Kerr on Privatisation: New Zealand Swimming Against the Tide (pdf). Again I ask, Where is the rabid dogma? Who has discredited his views? Note that the views put forward by Kerr are in line with those of the majority of the privatisation literature. See for example, George Yarrow (1986). "Privatization in Theory and Practice". 'Economic Policy', 2 April: 324-77; World Bank (1995). "Bureaucrats in Business: The Economics and Politics of Government Ownership", Oxford: Oxford University; Mary M. Shirley, and Patrick Walsh, (2000). "Public versus Private Ownership: The Current State of the Debate". Policy Research Working Paper 2420, World Bank, Development Research Group, Washington D.C., August; Martin Ricketts, (2004). "Further Lessons From Privatisation". 'Economic Affairs', 24(3) September: 9-14; William L. Megginson (2005). The Financial Economics of Privatization. New York: Oxford University Press; John Nellis (2006) "Privatization—A Summary Assessment", Center for Global Development Working Paper Number 87 March; and many others.

In yet another message I commented on a ODT article by Roger Kerr on the importance of economic growth (pdf). The important point in the article is that it is the long run consequences of economic growth that matter for people, their wages, their overall standard of living. Kerr wrote,

... it is the long term that matters for increases in material standards of living for most people.

Productivity underlies economic growth and it is the increases in economic growth that drives increases in the standard of living. It takes time, but growth is the only way we have to improve the standard of living for people. I then quoted Paul Krugman to this effect

Economic history offers no example of a country that experienced long-term productivity growth without a roughly equal rise in real wages. In the 1950s, when European productivity was typically less than half of U.S. productivity, so were European wages; today average compensation measured in dollars is about the same. As Japan climbed the productivity ladder over the past 30 years, its wages also rose, from 10% to 110% of the U.S. level. South Korea's wages have also risen dramatically over time. ("Does Third World growth hurt First World Prosperity?" Harvard Business Review 72 n4, July-August 1994: 113-21.)

So Kerr agrees with Krugman. Thus where is the the rabid dogma? Who has discredited his views?

From what I have read of the NZBR's economics writing I would argue that most is in the mainstream of economic thought. Their authors apply ideas from standard macro and microeconomics including public choice, the new institutional economics, law and economics, contract theory and so on. And they have an impressive lineup of authors, the likes of Tyler Cowen, Richard Epstein, David Friedman, David Henderson, Wolfgang Kasper, Bjorn Lomborg and Martin Wolf, among others. Little of they have written seems dogmatic or outlandish. Their writings fall well within the boundaries of standard modern economic analysis. McCarten may not like what is being said, I'm sure a lot of people don't, but that doesn't make it dogma or nonsense. If he wants to make a case for it being so, he will have to show it by rational argument and evidence, not by mere assertion.

Update: Cactus Kate thinks McCarten In Wonderland II.