The visible hand in economics

National’s redundancy package

Posted on: October 31, 2008

So National’s redundancy package is out. It is different to my initial impression and slightly different to the Labour package.

As well as randomly asking banks to be generous National said it was increasing the accommodation allowance for people who are made unemployed and also increase working for families for people who are made unemployed – both temporarily.

Again, I don’t agree with temporary stimulus measures, as our high household borrowing levels suggest that we aren’t really suffering from “demand deficiency” IMO.

But how to the scheme compare? Well they cost (about) the same, but the Labour package is less targeted on those who will be struggling. The Labour scheme makes more sense as a long-run adjustment (which it is not) the National scheme makes more sense as a temporary stimulus methinks. However, the Labour scheme seems simpler – which means that it will probably distribute the funds more efficiently. I guess it ultimately depends on where you think any stimulus should go in the face of a recesssion – what you believe is equitable.

These are my first impressions, what do you guys think?

Update:  Kiwiblog gives an excellent breakdown (here).

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