Re: Cutting Edge Orthodoxy

[Doug Henwood <dhenwood@xxxxxxxxx>]

But wasn't this "cutting edge" reconstruction of NZ deflationary and
unemployment-boosting?

Doug

Doug Henwood [dhenwood@xxxxxxxxx]
Left Business Observer
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On Fri, 28 Oct 1994 mcclintockbrent%faculty%Carthage@xxxxxxxxxxxxxxxx wrote:

> Randy Wray asks: can anyone imagine cutting-edge orthodoxy being called in by
> policymakers?  -- Not only can I imagine it, I've seen it! Admittedly this
> was not in the dizzy heights of American economic policymaking but in the New
> Zealand context but we shouldn't get too nationalistic about these things...
>
> >From the early 1980s on, New Zealand Treasury officials adopted and applied
> the transaction economics of Coase, Williamson, and North to policy issues.
> Principal/agency theory, for example, was applied to the commercialization
> and privatization of state-owned enterprises. Another area was business law
> reform. Indeed, the lingua franca at the NZ Treasury from the early 1980s on
> was (is?) transaction cost jargon. Why, one of my former colleagues at the
> Treasury even consulted with North & Coase prior to their receipt of the
> Nobel! All this said, there was/is a heavy dose of orthodox monetarist
> thinking in Treasury policy advice to the detriment of the New Zealand
> populace. And U.S. Treasury economists on exchange in NZ in 1990 couldn't
> believe this use of transaction economics since it was too outside the
> mainstream thus wouldn't get the time of day in D.C.
>
> Cheers,
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