Keith Rankin: Rankinomics
RankinomicsKeith Rankin, 20 December 2001
I have a website called the Rankin File. The "brand" has now worn thin, however. There are too many Rankin files, as any internet search engine will reveal.
In 2001, I started to hear much more about Rankin files than ever before, thanks mainly to a former public servant whose second (of three) husbands was David Rankin. The NZ Herald compiled its own Rankin file, which it continues through Christine Rankin's Saturday columns.
Later in 2001, after Mrs Rankin had long left the headlines, the Alliance fracas broke out, between, we were told, Jim Anderton and the rank'n'file of his party. When are we going to hear about Act's rank'n'file? Probably never. The rank'n'file are the foot soldiers of the left.
Anyway, my website is due for rebranding. An economist with a reputation for being a bit radical, even left-wing, I am certainly no foot-soldier of the left. So, as time permits, my website will become Rankinomics.
Rankinomics is a new blend. Not so much a new economics, but a new interpretation. Rankinomics emphasises aspects of market economics that either dropped out of the mainstream many years ago, or never quite made it into the mainstream. Further, it de-emphasises the private property, minimal government, win-lose and globalisation paradigm that dominates the public perception of what market economics is all about.
Rankinomics has three central tenets: public property rights, extranationalism, and paradox.
PUBLIC PROPERTY RIGHTS
The focus here is firstly to examine what we mean by property, and the role of property as a (the?) means of production. Second, it is to show how public property can be both like private property but also very different to private property. Third, it is to attribute due economic rights to the owners of public property, arguing that both efficiency and equity are enhanced through the respect of the right of public proprietors to gain an income from the economic use of their property.
Important concepts that naturally emerge from an acknowledgement of public property rights include environmental accounting, the public domain, the gift economy, positive and negative externalities, social capital and universal basic income.
This theme represents both an extension of public property analysis beyond national boundaries, and a third way of approaching global economic issues that is neither the globalism associated with transnational corporations nor the internationalism emphasised by mainstream economic analysis.
The emphasis is on creating theoretical basis for inclusive extranational (otherwise ambiguously called "regional") governance structures, with a view to (i) solving the "north-south" problem by ensuring that each country is a part of an economically developed commonwealth , and (ii) curbing the economic power of the United States. I see that latter aim best being achieved through both a widening and deepening of NAFTA (North American Free Trade Agreement). This would oblige the United States to focus its attentions on its own region of the world (rather than treating the whole world as its plaything) while ensuring that the size of the US economy would be less than half of the size of the regional commonwealth of which it would be a member.
This theme notes that, in economic matters (as well as many non-economic matters) there is a poor correlation between outcomes and intentions. Further, some of the most profound ideas are oxymorons; such as the global localism offered by the green movement, and the idea that we might buy less if we demand more.
One paradox in particular relates to the fact that the growth of world trade over the last 150 years was a consequence of increased protection (which made industrialisation possible) and not a consequence of increased trade freedom. Commitment to free trade, a left-wing cause in imperial Britain, was one factor that caused Britain's share of world trade to fall. At that time, protectionist Germany and the USA made huge gains in their shares of world trade.
Another area of paradox is the environment. We tend to assume that more people means more environmental damage. Yet New Zealand did most damage to its environment in the years before it learned to value its environment. With more people we learned to value our environment more. The same story applies just about everywhere else. While huge environmental disasters happened (and happen) in places with low population densities, countries with very high population densities today (especially but not only in Europe) are learning to value their environments. Indeed, that's a case of public property rights at work.
Even the car may have contributed to cleaning up the environment. Just imagine the problem of fuelling our carriages and managing our exhausts if the horseless carriage had never been invented. That's not to say that the automobile is a paragon of environmental virtue. Far from it. Its just that certain technologies, in solving one environmental problem, make space for another. Not only does just about every problem have a solution; just about every solution has a problem.
Another paradox relates to a country's fiscal policy. A country in recession is likely to have a budget deficit. The way to reduce that deficit is for the government to spend more, not less. The result is a multiplier effect that results in tax receipts outstripping the growth of government spending.
The last paradox I'll mention here concerns aggregate demand and the labour market. It's called the added-worker effect, which leads to raised labour force participation rates during a recession. Here I'll consider its reverse, the subtracted worker effect. The more we earn, the greater the pressure to produce, the greater the price of labour. As wage rates rise, families can afford to work fewer hours. So, as the price of labour rises, total household disposable incomes do not rise and may even fall. When we feel secure, we look to doing other things with our time than just earning money to pay the bills. Further, when wages are high, we increase the productivity of production. We use technology and knowledge to make more from less. That is green growth. By way of contrast, the recessions induced by Roger Douglas, Margaret Thatcher and their ilk were cases of resource- depleting slowth.
So, under certain conditions, a prosperous high-demand economy places least pressure on our resources. Rankinomics seeks to specify those conditions under which the power of paradox works to both improve outcomes and decrease public costs.
There are global, extranational, national, provincial and local expressions of publicness. Now it is time to publicise; not privatise. Capitalism thrives best when its public dimensions are allowed to flourish. John Banks; ask Gary Moore. Don't ask Bill Birch.