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A real economic plan

Written By: - Date published: 8:21 pm, October 12th, 2008 - 14 comments
Categories: economy - Tags:

One of the things that has pissed me off about MSM political analysis lately is the constant repetition of the idea that cutting taxes in a recession is all you need to do to be considered Keynesian. This is generally remarked upon in the context of National shifting their economic policy left (that “Keynesianism” and “left” are considered synonymous by the MSM is another bugbear of mine but I’ll address that at another time).

Today we got a real taste of proper Keynesianism. Clark has announced a far-reaching training policy which would ensure workers who lose their jobs in the upcoming economic downturn will get funded to increase their skills. She also talked about bringing infrastructure projects forward.

Labour’s economic plan is becoming obvious: use unemployment as an opportunity to upskill the country’s workforce and build infrastructure while the demand for the resources to do it is low in the private sector (and thus it’s cheap to do). The end result is twofold in that you moderate the impact of the recession by putting public money into long-term spending projects and into the pockets of people who are increasing their skills but you also create a more skilled and productive workforce and provide the infrastructure to support productive capital.

That means when the next boom comes the country is in a position to take full advantage of it through workers who are skilled and productive and infrastructure that has the capacity to facilitate increased growth.

The contrast of this approach is the way National dealt with the recession of the 1990’s. During that downturn they cut government spending, abolished the apprenticeship system and introduced the EFTs system and student loans. They also cut tax for the wealthiest New Zealanders.

By doing so they expected the market to provide and business to sustain itself through consumer spending (a similar view to G.W. Bush’s when, in the wake of 911, he claimed true patriots should get out and shop).

What the market provided was another story altogether. Workers didn’t have access to training. Tertiary education ended up heading down the path of twilight golf and the rich didn’t manage to shop us out of recession no matter how much they tried (in fact we grew a huge low-wage low-skill service sector, massive income disparity and whopping levels of private debt instead).

That meant that when the good times swung back around we didn’t have the skills to take advantage of them or the transport system to shift labour and goods efficently or the telecommunications system to engage in full e-commerce or even a reliable electrical network.

Looking at National this time around I don’t have much trust in them to do anything differently. On agenda this morning Bill English was espousing the same failed trickle-down theories they were so fond of last time and they have shown they are willing to cut investment in R&D and the capital fund that is Kiwisaver just to cut taxes for the rich. They’ve also banged the drum about reducing government spending so much that it would be extremely surprising if they didn’t use a deepened recession as an excuse to cut as deep as they could.

I don’t give Labour praise lightly but I think today Clark showed that they have the best answer for the hard times to come. National has only the failed policies of the past.

14 comments on “A real economic plan”

  1. randal 1

    Irishbill you must know by now that the meedia in new zealand are the worst educated meedia in the world and the laziest. they are handpicked for their hair and teeth at j school and need no other qualification that to be a right wing boilsucker. anywhere esle in the world they would be laughed out of the room. after the election I would think it is time for some of these hothouse flowers to get a real job. they have been hanging around for far too long without ever having done anything excpet shill for some foreign owner.

  2. milo 2

    So you’re saying that Labour wants to build more roads than National does?

    Have you told the Watermelons?

  3. my understanding is its mostly rail infrastructure, public transport, not just more roads – but they will also be speeding up existing road projects – transmission gully, the western ring route. Oh, they say they will speed up sewerage work, school building, announce some housing initiatives and give more to tackling erosion.

  4. randal 4

    milo, the most obvious thing about tory trolls is their unswerving ability to put words into other peoples mouths without ever saying anything themselves. do you have self adjusting tight underpants milo. have you told the beetroots?

  5. DSC 08 5

    Won’t work.
    Top down Keynesian job creation at this point will not get past the wealth consolidation that has built up in New Zealand society not eventaking into account the futileness of trying shape an economy with free-trade deals to China and America just landed.
    Even the benefit of being in a favoured position of a major war outcome wouldn’t give much buffer this time before the inevitable inflating your way out of debt and sell-off of New Zealand’s remaining assets with the resulting privitisation by large global/faceless corporations occurs.

    The only solution out of the current predicament is the Social Credit dividend based economy directly to all citizens. It is the only way to stop inflation while enabling us to utilise and reclaim New Zealand resources.

    Labour has destroyed New Zealand society, just a tad slower than National would prefer.

  6. lprent 6

    Ah DSC – that psuedonym is a cutting it a bit close to being an election advertisement. Which I don’t care about too much as this is a blog. However I tend to get a bit unhappy about commentators advertising here – it tends to escalate. You notice that this site doesn’t have any adverts.. However you didn’t give a web address and the party is a bit obscure these days so I’m not going to jump up and down as hard as I do when there is clear link-whoring.

    I’d prefer it if you picked another psuedonym though. Let your thoughts do the advertising.

  7. maxq 7

    Yawn – you still havent explained what you consider Keynesian economic policy to be irishbill but no matter, helen has made a non comment about worker training schemes.

    It worked well at the Wananga in Hamilton eh!

    Let it rest, labours time is over, the country are sick of their lies.

  8. T-rex 8

    “Let it rest, labours time is over, the country are sick of their lies.”

    Actually max, it appears to be Nationals lies that the country is sick of… which makes sense, given that they tell vastly more of them. But don’t let me stop you playing that tiny violin.

  9. r0b 9

    For those Gnats who have been claiming that “Labour has no policy”, welcome back to the real world. For those who are looking for leadership in these difficult times, the choice is now clear.

    John Armstrong gets it (excerpts):

    If actions speak louder than words, Labour was the winner on Day One of the official election campaign – game, set and match.

    Key’s earlier speech at National’s campaign opening in Auckland’s SkyCity Convention Centre said nothing new on economic policy. In fact, it said nothing new about anything.

    If that was not bad enough, Labour was getting ready to lay out something really meaty just a few blocks away in the Auckland Town Hall.

    There, Helen Clark trumped Key by delivering the recovery package he had been demanding, including contingency plans to save jobs and the promise of a mini-budget in December.

    The upshot was that Labour looked like it was governing; National looked complacent and flat-footed.

  10. T-rex 10

    “the choice is now clear.”

    As opposed to yesterday, when…

    It reminds me of this cartoon: Overcompensating

    which I may have already linked to on account of it being awesome.

    .

    I think what you point out above rOb highlights what has been said from the start, which is that National (particularly Key) were NEVER going to be any damn good at governing because they don’t actually have any vision, values, or plan of their own – they were just giving people what focus groups told them they wanted (and ignoring the cost).

    Did you see McCain the other night? “I know how to fix the economy. I know how. I do. And I’ll do it. And Osama Bin Laden? I know how to catch him too. I’ll get it done”. Then Bush comes on to reassure all by “Vowing” to stabilise the economy. As you’ll recall from previous exploits, George Bushes vows are money in the bank.

    A turn of phrase that, curiously, is actually accurate in the present financial market 😉

    I’m going to go and buy some shares on Clark as PM.

  11. lprent 12

    😉 too late

  12. T-rex 13

    Yeah… the only time I really considered it was back in late June. I mean people selling at 30% were just dumb, I think there may have been some confusion over the difference between “likely share of the vote” and “likelyhood of forming the government”. Couldn’t be bothered getting involved for the sums in play (especially since I’ve got much better things to do with my time than get involved in zero-sum games, especially fantasy ones where the liquidity added serves no useful purpose), but still interesting to look at.

    I just went to look at kiwiblog to see if there was anything on the rightydoompolls, couldn’t see anything. Stunner. Has anyone told Farrar that his logo looks almost EXACTLY like a steaming pile of sh*t when it’s shrunk to taskbar size? I mean he MUST know, right? It’s not like the resemblance is subtle. I, of course, think it’s highly appropriate, but… weird.

  13. bill brown 14

    T-rex,

    Sorry mate, I sucked up all those cheap shares months ago.

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    4 days ago
  • Kiwifruit winner in TPP Agreement
    The Trans-Pacific Partnership (TPP) Agreement will generate significant value for the New Zealand kiwifruit industry and Zespri welcomes the signing of the Agreement today in Auckland. Zespri Chief Executive Lain Jager explains the TPP will eliminate ...
    4 days ago
  • Waihi Dam Update
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    4 days ago
  • Waihi Dam Update
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    4 days ago
  • Campaigners vow “final battle” to prevent massive deal
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  • Paddling Cape to Cape for a Cause
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  • Trust applauds $4m government funding for art centre
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  • Horticulture Welcomes TPP Signing
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  • Attitude change to sexual violence needed, council says
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  • Hundertwasser Art Centre receives Government boost
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  • National Policy Statement a powerful tool under the RMA
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  • TPPA – The People Prefer Accountability
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    4 days ago
  • TPP casino signing gambles with our future
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    4 days ago
  • TPPA Still Needs an Independent Health Impact Assessment
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    4 days ago
  • Neo-Kalashnikovs join TPPA protest
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    4 days ago
  • Neo-Kalashnikovs join TPPA protest
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    4 days ago
  • Federated Farmers welcomes TPP signing
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    4 days ago

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