There are other factors which are rather specific to the individual. If you happen to have, say, two children, then rent is going to be brutally expensive (which is no doubt true of Sydney too unless you want to live in trash-ville), and education isn’t cheap if your kids want to go to schools for white people/rich Chinese. Alternatively, you won’t need a car unless you want to show off, food is reasonable, and you can probably get cheap child care thanks to third-world domestic helpers.

So basically, it’s a a super deal if you are single and don’t mind living somewhere small, but it isn’t so good if you have kids and would have sent them to a public school in Aus even if you had to pay more to live in a decent neighborhood where such schools occasionally exist in Australia.

On this note, when I worked in HK, I was surprised by how many Australians I met — many (almost all in fact, excluding bankers) which worked in shortage occupations in Australia — these included all manner of medical staff, hard to find teachers (e.g., male primary school teachers), academics in shortage fields (e.g., engineering), etc. I imagine many of these people are very valuable if you consider the amount invested in them in terms of their education and so on. This is particularly so for those that got “star picked” from Australia — something which Singapore does with scientists I believe.

As far as whole companies go, I’d be more than happy to see increases on higher-end individual salaries combined with a reduction in corporate tax rates.

You are also not factoring in the increase in Clyne’s salary.

On Singapore I can’t really name anyone. But if it helps I am talking more about companies moving their entire board there. The actual residence of the directors/execs is another question.

Cameron Clyne, who moved here from New Zealand as head of Bank of NZ where he was paying 39c in the dollar for most of his salary, to take up the role of CEO of NAB, now paying over 45c in the dollar for most of his salary.

Sol Trujillo, who would have been paying around 35c in the dollar for most of his income back in the U.S.

John Stewart, who would have been paying about 40c in the dollar back in Scotland before moving here.

So almost certainly these three sacrificed some amount of cash in the pocket for the opportunity to work in Australia. Do you really think any of them *wouldn’t* have made the move if there was a 50% top marginal tax rate on any income not linked to performance assessments?

Yes, it’s true that super funds aren’t the greatest. But if you don’t like it you can at least manage your own super fund – which should be simpler and cheaper as I’ve suggested elsewhere. Super’s not perfect as an investment vehicle, but it’s a good, fair way of raising the savings rate. The alternative is improving ‘incentives to save’ which is, by definition highly regressive.

As for “hating” lower-middle class families, if it were up to me such a fee on credit cards would be combined with a significant rejig of the current tax scales to make them considerably more progressive, from which lower-middle-class families would be considerably better off overall. Even allowing for the fact that there won’t be any jobs for them once my new tax scales will cause all Australia’s top executives to leave for Singapore.

If Australian consenting adults borrow overseas, why worry? Its a good question, but as Pitchford himself said, its not the last word. Especially when crises threaten, some consenting adults financial transactions can unleash systemic shocks.

I would see that as a sign of the system being broken, not the debt itself. Having government step in to fill in the gap only makes the system more broken, the house of cards gets built even taller and people who did the right thing learn the stupidity of trying to be economically sensible when politics is the game.

With net foreign debt already around 90 percent of GDP, Standard and Poors have it on watch for a credit downgrade. The bad news is that if New Zealand is dumped by international markets, the contagion could spread here as screen jockeys genteelly poke through their goat entrails pondering which nearby economies are sufficiently similar to deserve similar treatment.

S&P demonstrated soundly that they had no particular crystal ball seeing the downturn any more than anyone else did. This convinces me that they have no real idea, and that their customers have even less idea. The concept that a single credit rating describes a whole nation of individual borrowers is so incredibly far fetched, it doesn’t even make sense.

I believe in the free market system enough to also believe that players with no idea of what they are doing will eventually come unstuck. If I didn’t believe that much then might as well sign up for the Red Army because there would be absolutely no point having a free market system (and yeah, an increasing number of people are coming to that decision from various angles).

Now converting investment into strong net export growth also requires higher saving which can be delivered with further increases in compulsory super. Doing so now would worsen the downturn. But committing now to doing it in two years would help address a question foreign lenders on whom were increasingly reliant must already be asking themselves.

Compulsory super is all about taking responsibility for investment selections away from the person who actually will reap the results and handing the decision to someone who just couldn’t care what happens. You make this sound like a question of investment versus no investment, but actually it is a question of who should decide what we invest in. I’ve yet to see even the slightest hint that the super funds have any particular skill when it comes to investment selections.

Indeed, let’s hope so.

It strikes me that an increase in compulsory saving would be more palatable if the uses could be sensibly widened beyond retirement. Perhaps at least part of the money could be allocated for home purchasing (using off-set accounts), home ownership being a boon in retirement, and also hard-times cushions. It would be awful to lose your house in a recession while keeping your super locked up. I wonder also whether the average person might not like having the option of simply putting their compulsory savings into a bank account with similar restrictions to super fund accounts.

Can you get your sister to elaborate her claim. I suspect we may be talking at cross purposes. Because when the markets get skittish any number of contagions become possible. For instance we now behave as if there was not much chance of us ‘catching’ the crisis from Indonesia. You’ve implied as much above. Well, you may recall that wasn’t what people were saying at the time. We were damn worried we might catch the contagion (and we did, but only in the small measure of the hit to our exchange rate which turned out to be good, rather than bad news. But the RBA was dead worried at the time.

So one doesn’t even have to be very similar to get a contagion. These things can leap tall buildings at a single bound. But similarity helps. And NZ is similar to us. It undersaves – only more than us – it’s had a property boom, it’s part of a profligate anglosphere which has been operating as the borrower of last resort for a while now. Its got very deregulated financial markets and its own floating exchange rate. It has a similar institutional structure and history.

The US would have its national currency down around its ankles if it wasn’t for its unique status as international reserve currency and so somewhere you can ‘fly to quality’ (cough cough!).

Not only that but New Zealand has a better national anthem than us and its more violent sporting teams do the Haka – what chance does that give us?

We use our credit card(s) for everything, literally. Interest bill to date – about $10 (one of our cards which we only use when all the others are maxed out does charge interest immediately).

It’s called cashflow management. Why would you want to tax us for that?

So I don’t disagree with being careful etc. I am not confident of the direction of our currency either let alone the magnitude of the movements. However I am fairly confident that the risk of contagion from NZ is very low.

Maybe I am just silly. In any case this is really just nit-picking on what seemed like the kind of silly argument that undermines the conclusion it is supposed to support.

I’m pleased to see you’re so confident.

Krugman is aware of the distinctions between the economies – as am I.

But have a read of the Krugman book – I’ll lend it to you if you like. It certainly brings out the way in which countries that are managing pretty well can suddenly be subjected to some almighty squeeze of one kind or another. Hong Kong is a good example. You can say that that was their dollar peg, and we don’t have one. That’s true – and in fact they staved off the run. But when your time comes and the hedge funds are pursuing some ‘theme’, going after some weakness or perceived weakness with a vengeance, nasty things happen, and feedback loops get amplified and turn very nasty.

The unpreparedness of international capital not to flee from countries that borrow to invest is one of the ingredients behind the imbalances we have now. After the Asian Crisis the Asians swung massively towards funding their development from their own savings (and then some) rather than taking the risk of using international capital. We shouldn’t be so confident that we’ll be treated so differently. Or to put it more carefully, why push your luck?

For further illustration consider the spreads on Euro-denominated national public debt of various EU governments. These are countries which are not only immediate neighbours but actually part of the same monetary zone and yet currency traders have no problem making 40 basis point distinctions between them.

I recall back in the 1980s John Dawkins telling me the Govt was going to do this – but they didn’t for some reason. I think they just jacked up FID – though that may have been the Fraser Govt. Can’t remember.