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The Standard

Some good vision

Written By: - Date published: 8:07 am, April 30th, 2012 - 251 comments
Categories: Economy - Tags:

David Cunliffe delivered a solid speech yesterday in New Lynn laying out some good thoughts on the state of New Zealand.

In it he’s been very clear on what’s happened to New Zealand. in the last thirty years.

You hear the National government talking about the need to sell assets because we have so little money in this country. Do you know why we have so little money in this country? It’s because a large percentage of our economic assets are overseas-owned. For example, when the Australian-owned banks make billions in profits here (and it’s up a quarter to a third this year alone). That money isn’t returned to New Zealanders. The money goes straight back overseas.

Danyl’s got the whole speech over at the dimpost (apparently the only other place it’s been published is behind the facebook sign-in).

251 comments on “Some good vision”

  1. Carol 1

    Micky has put a link to the speech on a NewLynn website on open mike.

    And this is a repeat of part of a comment I just put on open mike:

    Inspirational stuff. Although, I’m unhappy about his continuing use of the term “growth”. Sustainable economics, that produce a society where everyone can not only survive, but have a reasonable life, should be the aim, IMO.

    And I like this metaphor:

    When the right-wing party says that it’s going to cut your leg off, voters want the left-wing party to say that it’s not going to cut your leg off. Voters don’t want to be told that the left-wing party is also going to cut your leg off, but cut it off a bit lower down and give you some anesthetic.

    And I like his attacks on “austerity” measures.

    And, to add to Cunliffe’s egs and arguments, the BBC reported a day or so ago, that, in these times of austerity, the rich have got richer.

    http://www.bbc.co.uk/news/uk-17883101

  2. It is also up at the New Lynn Labour experimental website.  Feel free to have a look around and make a few comments.

  3. Bill 3

    Good to read that at least one Labour mp ‘get’s it’. Now if only he (and others within Labour) could move beyond conflating ‘community’ with ‘state’, we’d be on a road worth travelling.

    He says… (correctly)

    Left-wing generally means community ownership and or control and/or responsibility.

    But then goes on to say…

    New Zealanders wisely accepted that it was the government’s job to…(own and excercise control and/or a degree of responsibility)

    As I tried to express in a recent post, the only worthwhile project for a left wing government that could lay reasonable claim to being left wing is to decentralise political and economic power…give up the reigns of power and encourage communities (workplaces, those who use various services etc) to take them up and develop more direct and immediate democratic forms of control.

    Otherwise we get two results.

    Firstly, expensive, inefficient and generally self serving bureaucracies that no-one likes build up over time and secondly, future governments can always dismantle those government structures intended to manage assets and resources under state ownership on behalf of communities and ‘give it away’ to private individuals/concerns.

    • Bored 3.1

      Bill that is an entirely sensible approach. The Bassett local government reforms were a classic example of what you describe, it should be a total priority of the next Labour government to repeal these and get rid of the super cities etc.

      • Colonial Viper 3.1.1

        Undoing the agenda of the Right is insufficient. In the act of repealing Right Wing legislation Labour needs to lay down a clear and firm alternative view of the future…not just sparing the patient a tad by cutting the limb off a bit lower down.

        • Carol 3.1.1.1

          The supercity wasn’t a bad idea, but the undemocratic way it was structured is the problem. Also, spare a thought for the poor workers who have been through a big upheaval with the change. Yes, any changes should be well thought out and be looking to being in place for a long time into the future.

          • Bill 3.1.1.1.1

            Even if a ‘left’ inspired restructuring had taken place, the fundamental question of where real economic and political power lay, and where it would flourish and grow in the future would have to be asked. And I believe the answer would have shown power was to be vested in bureaucracies and not citizens. And that’s not any more satisfactory than power lying with individuals or entities acting from a market position. Either position leaves the citizenry, to a greater or lesser degree, swinging in the wind.

            • Bored 3.1.1.1.1.1

              On Local Bodies I would try to find a way to go back to the pre Bassett days which featured much more local smaller organisations with more representatives per citizen. When the citizen is only one step removed and lives just round the corner it is far harder for “power” to become faceless and hidden behind miror glass.

              • Bill

                Even where the territories of local bodies are smaller there is still a tendency for cliques or ‘old boys’ networks to develop. I can see this in my own locality (pop: about 3-4000) where various community trusts/incorporated societies… who have a fair amount of money and community assets at their disposal… have the same people from a fairly narrow demographic( in terms of age, background, income etc) in ‘executive’or ‘office bearer’ positions and any ordinary members of the societies or trusts tend to be from that same demographic or share the same [in this instance] socially conservative mind set.

                So yup, in my locality, everyone knows who everyone is. But it doesn’t get around problems associated with the excercise of power and the general disempowerment of the bulk of the population or the disconnect exhibited by those who control community monies and assets and the projects they pursue/concerns they elevate.

                I know trusts and societies are not quite the same as local bodies elected by the general populace, but the dynamics of power and the ‘gatekeeper’ mentality apply to both scenarios.

  4. just saying 4

    Politics is so interesting at the moment.
    Looks like there is the potential for another Alliance-type breakway party.
    Is Cunnliffe a die-hard social-conservative dinosaur dicator like Anderton was? Hope not.
    Could be good.

  5. Stephen Doyle 5

    The great thing about speeches like this is that it encourages proper debate about where we want our society to be, and how we are going to get there.

  6. Dr Terry 6

    Well, surely this is exactly the kind of stuff we want to hear from Labour at this moment – Cunliffe is about to become increasingly explicit. When I am critical of Shearer, please note that I am NOT “attacking” him personally, I am sure he is a fine person. Surely, though, we must be discerning about leadership styles and abilities, and on this score I think Cunliffe is a shining light. Moreover, I give Cunliffe high points for speaking loyally about the Leader (Shearer).

  7. Olwyn 7

    It is a very long time since I have felt so heartened by a speech by a politician. Great stuff, David Cunliffe – I only wish I had been there to hear it.

    • ad 7.1

      I understand there’s another speech coming up from David on the economy and the environment.

      It will naturally be a fine line positioning against both the Greens and National, but it has to be done. The media were pretty soft on any critique of the Green’s numbers in their election manifesto.

      But hopefully as the idea of an alternative government with Labour and the Greens in a really substantive partnership, the Greens will need to get sharper and sharper about exactly how much money they are going to have at their disposal potentially to get what they are seeking.

      So will Labour, of course, but they are used to that knid of scrutiny, even if Goff failed at it.

      If the environment is your thing, why not email Cunliffe your thoughts?

      • Draco T Bastard 7.1.1

        It will naturally be a fine line positioning against both the Greens and National, but it has to be done.

        Why does he have to position against both? If he was getting even close to reality he would be siding with the Greens and not against them.

        • ad 7.1.1.1

          That would be a political innovation worth watching. Email him and give him your thoughts on how it would happen.

        • Colonial Viper 7.1.1.2

          The Greens strategy for the future sustainability of the nation is approximately 5% less fail than Labour’s and perhaps 10% less fail than National.

          Setting them as the benchmark is not a good idea.

  8. Johnm 8

    Cunliffe is the defacto Leader of the Labour Party.

    My opinion the Labour Party has to stop pandering to the middle and openly move to the left, thereby showing the actual class divide that is now new Zealand. Shearer can go back to a corporate do-gooder role he really belongs in-maybe join Helen in the U.N.?

    • Te Reo Putake 8.1

      You do realise that at the last election Labour put up its most left leaning policies in decades and still got done over at the polls?
       
      The point is to get a balance of policy that motivates a broad swathe of people to vote for the party, not find some technically perfect left policy that excites the politically motivated, but leaves the electorate cold.

      • Uturn 8.1.1

        Then vote National. You seem to be arguing that the Left isn’t allowed to be the Left. The Right is allowed to say what it is; all the hate, all the misogynist, racist, bigotry. But if the Left utters a word of their origins, whoa boy, that’s just not done, too impolite.

        Anyway, it doesn’t matter in this context because Cunliffe just crossed the line. He is either now officially challenging Shearer or he has just betrayed the activists that have so much faith in him. How else can you interpret his “Labour now has a new leader” comments, in light of the final paragraph? Either he is calling for activists to back the Shearer people, whose intent is completely opposite to this (not even very “leftist”) speech and their outlook, or he is announcing his run at the job himself.

        Face facts, this speech contradicts the Shearer leadership speeches. Game on, or game over.

        • just saying 8.1.1.1

          When I read it I immediately contrasted it with David Parker yesterday.
          Same reaction. Cunliffe is miles away from the path being set by the current leadership. This is Cunliffe challenging the status quo.

        • Te Reo Putake 8.1.1.2

          P1ss off, U-turn. I’m arguing that the Labour party is part of the left, but it doesn’t have to be the left. Try and get your head around MMP, pal, we need a broad coalition and policies from at least three parties that have broad appeal. If you want idealogical purity, then the Alliance will be happy for you to waste your vote on them.
           
          As for your comments on Cunliffe, you’ve managed to miss the point of his speech completely. Well done, player. Nil points, insert more coins if you want to play again.

          • Olwyn 8.1.1.2.1

            The truth is, the orientation of this speech is actually quite centrist. To quote from it:

            “You know, there’s not much difference between a Wellington school teacher struggling to find an affordable home and a Northland freezing worker who’s just lost his job. Whether we earn our living by our hands or by our words, we’re all working people, whose lives have grown harder and whose world has grown steadily darker. We’re all in this together.”

            Centrism has recently become code for not seriously challenging the status quo; to feed into and on the prejudices cultivated by right wing propagandists. This speech manages to challenge the status quo while remaining broadly inclusive. What Cunliffe has done here is define a position. This places pressure on others in Labour to consider where they stand in relation to it. At the same time, it undermines attempts to sidestep revealing a position by making non-committal sympathetic noises. For that, I thank him.

            • just saying 8.1.1.2.1.1

              It certainly wasn’t radically left by any stretch of the imagination. But it was well to the left of the stated positions of Shearer, Parker, and Robertson.

              It puts me in mind of the article that saw Harawira kicked out of the Maori Party. I’m not saying that anything like that will happen with this speech. But if Cunliffe continues to contradict the official soundbites, as mealy-mouthed and deliberately obtuse as they usually are, eventually something is going to happen.

              This assumes that Cunliffe’s epiphany isn’t a stage-managed strategy to hold onto the left of Labour. But it’s hard to imagine the current leadership and strategists showing that kind of sophistication, and to imagine Cunliffe being happy to be the in-house maverick all the way to the next election.

              • ad

                There’s very little maverick about Cunliffe. He did a fairly long stint as a diplomat, and also as a business consultant.

                The point is to give the base something meaty to chew on, and do it regularly. Could we say that about Shearer’s positioning speeches?

                There needs to be at lest one person in Labour who can:
                – work well with business and be acceptable to many (not all) of them
                – and be sufficiently left to electrify the base
                – and also be clearly distinct from the Greens while being willing to work with them
                – and also be a clear break from the past in their ideology
                – and bring in donors ready for a party campaign again.
                – and command the media’s attention

                And cure hunger and stop airlines from crashing.

                This is one speech, but it’s the speech we’ve been waiting for.

                • just saying

                  I’m a bit confused. Are you saying you think this speech is part of a strategy (ordained by the leadership) to hold onto Labour’s base?

            • seeker 8.1.1.2.1.2

              Hear hear Olwyn!

            • darkhorse 8.1.1.2.1.3

              Actually heading towards the political centre is challenging the status quo.  That is where good old common sense and moral rectitude live and looking around politics at present that place is largely unoccupied.

        • TheContrarian 8.1.1.3

          “The Right is allowed to say what it is; all the hate, all the misogynist, racist, bigotry.”

          You do know the right does not have the monopoly on “all the hate, all the misogynist, racist, bigotry”.
          This black and white thinking completely incorrect and antithetical to reasoned political discourse.

      • Draco T Bastard 8.1.2

        You do realise that at the last election Labour put up its most left leaning policies in decades and still got done over at the polls?

        That’s probably because those policies were still hard right.

      • Colonial Viper 8.1.3

        You do realise that at the last election Labour put up its most left leaning policies in decades and still got done over at the polls?

        Yep.

        The electorate guessed that Labour didn’t really mean what it said, its conviction was only skin deep, and that most of its caucus weren’t comfortable being that far Left.

        The electorate was correct, it seems.

      • Vicky32 8.1.4

        You do realise that at the last election Labour put up its most left leaning policies in decades and still got done over at the polls?

        True that! :)

    • Bored 8.2

      You may be right about de facto leader. He who leads the way in the dark whilst others sit still will be the one followed.

  9. vto 9

    Good stuff.

    Move heavily in this direction and quickish smartish and leave the Nats and their unthinking thinking floundering on the tidal shallows.

  10. Rosie 10

    Wow, awesome speech! If Labour really took the essence of this speech, its truth (epseically in regard to abandoning the neo liberal model) and its hope and held it as a core vision I would feel a lot of new found respect for them. It would mean my support for them as a voter would be meaningful.

    • ad 10.1

      If you liked the text, you will love the delivery as well. He has plenty of passion and rhetorical style, without that unfortuante habit from Goff of a vein throbbing on his temples like a migrane.

      The emotion I think can be missing from politics when it shouldn’t be – on the day there were plenty of sprinklings of words like “betrayed” and “sold out” in the delivered words when speaking of the last thirty years, particularly in the Q and A session afterwards. We all need that acknowledged.

      Make sure you are there for the next one. It’s going to keep electrifying the base, and at some point these kinds of these will be launched into broader audiences as well.

  11. DH 11

    I’m hopeful that Cunliffes recent form is part of Shearers leadership approach rather than a play at the leadership. As a democracy we don’t need or want a messiah character, we need good governance and a charismatic leader doesn’t automatically bring that. Indeed a smooth talking leader is usually good at talking and not much else, vis a vis Lange, Shipley and now Key.

    If Cunliffe is to be the finance minister of a Labour Govt then it should be Cunliffe doing all the talking about our economy. Same applies for all the other portfolios. A good leader knows how to delegate and that’s something Labour has been badly lacking in IMO.

    Some on the left have a strange attitude towards party leadership. The left are traditionally anti-monarchist yet many seem to want a new King or Queen to rule them.

    • Vicky32 11.1

      Some on the left have a strange attitude towards party leadership. The left are traditionally anti-monarchist yet many seem to want a new King or Queen to rule them.

      They also seem to want the King or Queen to be good at sound-bites!

  12. BLiP 12

    ” . . . We can move forward to a future that rewards hard work and stops rewarding dishonesty. That gives the poorest of our citizens the chance to a decent life. That gives us all a chance to live in a nation that was once called ‘God’s own country.”

    We can become God’s own country again . . . “

    إن شاء الله‎,

  13. Slap Shot 13

    Can someone explain how the profits “go overseas”?

    Presumably the profits that the New Zealand banks make are in New Zealand dollars (I don’t pay my mortgage in $AU)), which can only ultimately be spent in New Zealand. If they want to spend the profits in Australia, they’ll have to find someone with Australian dollars who wants to buy New Zealand goods, and so on.

    This doesn’t seem to be like the worries over the Crafar farms where products will be paid for in a foreign currency and shipped out of New Zealand with no expectation of anything coming back (excl. labour costs and suchlike, which will have to be paid in $NZ).

    I’m not an economist, but what Cunliffe is saying sounds quite odd to me. It’s as if someone was complaining about foreigners taking Whitcoulls vouchers out of NZ.

    Can anyone explain?

    • Bored 13.1

      Slap, are you taking the piss? If you are not aware that foreign dollar/ capitals that are allowed top buy / invest / operate in NZ dont repatriate their cash to somewhere else (Cayman Islands etc, anywhere with the least tax) then you should be placed in the stocks until you wise up. Why the hell else would they invest?

      • Colonial Viper 13.1.1

        It’s laughable isn’t it.

        Perhaps Slap Shot should learn what a “freely market convertible currency” is before he spouts off more shite.

      • Bill 13.1.2

        You guys could have just explained…answered the question that seemed to have genuinely asked, without the jibes. Making people feel stupid when they don’t know something, or can’t figure it, isn’t exactly helpful and only serves to ‘shut people down’ who might otherwise have learned something through asking a question. Getting off the high horse now.

        • Bored 13.1.2.1

          Good point Bill, I did ask the question whether Slap was taking the proverbial. If Slap was not my humblest apologies to Slap.

          • Colonial Viper 13.1.2.1.1

            Slap explained some of the currency dynamics of international trade yet somehow doesn’t know about the market convertibility of currencies?

            Not bloody likely.

      • Slap Shot 13.1.3

        That’s not answering my question. I’m perfectly aware that corporations use tax havens, and that is a reasonable argument for better tax laws pertaining to companies operating in New Zealand. That has nothing to do with foreign ownership per se.

    • DH 13.2

      It is a reasonable question. The counter argument is that the banks will need to sell $NZD to transfer their profits back to Aus and the ultimate buyer of the $NZD will eventually turn around & spend it back in NZ, meaning the money will still be spent here and not in Aus. Now that’s not necessarily how it goes, I’m thinking the cash may just end up circulating in the forex markets, but I’d be interested in a clear explanation myself so we can see the whole money trail.

      • Colonial Viper 13.2.1

        You’ve basically hit the nail on the head; most of the money which exists in the world is not being used for trade (only a tiny fraction of those NZD will be ‘spent’ back into the NZ real economy).

        Instead it is being hoarded and used to purchase financialised assets and trading instruments (stocks, bonds, derivatives, debt…)

        NZD are in demand as a safe haven and highly speculable (predictable) currency, which is the main reason our currency is so strong. Australian banks have no problems converting NZD to USD currently as the market is flooded with freshly printed USD.

      • Slap Shot 13.2.2

        Your counter argument was my original argument. It assumes freely convertible currencies. Hence my saying:

        “If they want to spend the profits in Australia, they’ll have to find someone with Australian dollars who wants to buy New Zealand goods, and so on.”.

        I don’t see why we should care if other people want to hold on to $NZ. The Americans have done well out of people holding their currency as a safe haven.

        Some of you appear to have lots of bluster, but no convincing answer to the actual question.

    • “Can someone explain how the profits “go overseas”?”

      Let us assume for a moment that some foreigners make a NZ$1 profit which they wish to take it back to, say, China. How do they do it? Clearly a New Zealand dollar isn’t worth anything in China so the Chinese holder of NZ currency will have to sell their NZ$1 to buy Yuan. But why would anyone want to buy said NZ$1? The only use for a NZ$s is to buy something made in NZ. Thus the buyer of the NZ$s must want it to buy a NZ export of some kind. What is Michael Fry’s problem with this? The NZ$1 doesn’t go overseas in any meaningful way, it gets spent on New Zealand produced goods and services no matter who gets the profits from the ownership of local firms. If a New Zealander gets the profits they spend them on New Zealand made goods and services, if a foreigners gets the profits they sell the NZ$s to someone who wants to buy New Zealand made goods and services.

      • KJT 13.3.1

        No. In most cases they sell NZ dollars to someone who wants to speculate in NZ dollars.

        • Paul Walker 13.3.1.1

          And just why would someone “speculate in NZ dollars”? Afterall we do have a floating exchange rate.

          • KJT 13.3.1.1.1

            Duh

            • McFlock 13.3.1.1.1.1

              yeah.
                  
              That’s about the only reasonable response to an economist who thinks that frequent changes in value based on supply and demand is a reason that people won’t speculate on a commodity’s future value.

              • “That’s about the only reasonable response to an economist who thinks that frequent changes in value based on supply and demand is a reason that people won’t speculate on a commodity’s future value.”

                But the very act of speculation would do away with the reason for the speculation. Let us assume you think that the dollar will fall in the future. Let us assume that the current price is NZ$1=US$1. You think it will go down to NZ$2=US$1, that is, US$s cost more in terms of NZ$s so the value of the NZ$ has fallen. So you sell NZ$ to buy US$s. But this forces down the value of the NZ$ so instead of buy US$s at NZ$1 you have to pay NZ$1.25, say, as you keep buying US$s the price goes up to, say, NZ$1.5, then $1.75 …. then NZ$2. So you end up paying NZ$2 for US$1 and thus have removed the very profit you were hoping to make. Now if lots of people agree with you then the rise in price of the US$ will happen basically at once and thus you will lose the profits even on intra-marginal trades.If the amount of trade is so small as to not move the exchange rate then the profits to be made are also small since obviously profits depend on the amount of US$s you hold. Thus making money from a floating exchange is harder than under fixed exchange rates.

    • darkhorse 13.4

      That would be all very fine if we were earning as many dollars overseas as we are spending but we are not and we have not for years. 
      Our income is our overseas earnings minus the profits and interest on foreign investment in NZ sent over seas. Our income doesn’t come close to our purchases overseas so we borrow and we borrow and we borrow. 
      Meantime people like John Key and his ilk play lotto with our currency (95% of all foreign currency transactions are for speculative purposes).  Our trade competitors do all sorts of things to make the playfield as un-level as they can and we as mugs have an open access policy to purchasing our assets – worse we give them away at a discount because we don’t realise how valuable they are. We are innocents in a nasty world – meanwhile those we trade with won’t let us buy theirs, they swindle us at every turn – and that is our best mates the Australians I am talking about there and the rest are worse.
      So no different than it is at household level – you can’t spend more than you earn for too long before you are dispossessed.  We are as a nation in the process of being dispossessed and we have leaders who are only interested in making a commission on the sale.

      • Paul Walker 13.4.1

        “That would be all very fine if we were earning as many dollars overseas as we are spending but we are not and we have not for years.”

        No. The point about profits “leaving NZ” is that they don’t , NZ money is worthless anywhere but NZ. NZ dollars are only useful in NZ and thus they can ultimately only be spent on NZ good and services. There simply is no other use for them.

        “Our income is our overseas earnings minus the profits and interest on foreign investment in NZ sent over seas.”

        Our real income – which is what matters – is the sum of the goods and services produced in NZ and foreign investment increases that and thus we are better off.

        • darkhorse 13.4.1.1

          I f that is the case why are we broke = as foreign investment is as high as it has ever been.

          You obviously have a pretty thin grasp of economics

          • Paul Walker 13.4.1.1.1

            “I f that is the case why are we broke = as foreign investment is as high as it has ever been.”

            Simple, we are not broke.

            “You obviously have a pretty thin grasp of economics”

            I’ve got 3 degrees in the subject, including a PhD. What about you?

            • darkhorse 13.4.1.1.1.1

              Two masters degrees if that makes you any less smug.

              Your’s must be from one of those mail order places going by your weird view of the effect of foreign ownership and capital on our domestic economy. Or do you work for one of those outfits profiting from selling our future and are blinded by your own greed.  

              I wrote this one with you in mind
              http://howdaft.blogspot.co.nz/2011/08/quack-science.html

              I challenge you to name one good foreign investment that has added great value to the NZ economy. 

              Most of it you will find to be either vertical integration, anticompetitive stuff, or some of our “freetrade’ partners who can make more money exporting to their home markets than a NZ owned business because the Kiwis don’t have the “home advantage”.  Nonme of these add much to NZ’s wellbeing.  

              Much of the rest is likely to be ill gotten gains being hidden in real assets in NZ. Dotcom is your idol no doubt – just like he was for that twit John Banks.

              • “Two masters degrees if that makes you any less smug.”

                Neither of which is in economics obviously.

                “Your’s must be from one of those mail order places”

                As far as I know the University of Canterbury doesn’t do mail order. Lord Rutherford seemed to do ok with a degree from there so I guess the Uni can’t be all bad.

                “going by your weird view of the effect of foreign ownership and capital on our domestic economy. Or do you work for one of those outfits profiting from selling our future and are blinded by your own greed.”

                My views on foreign ownership and capital are pretty standard views in economics.

                • Lord Rutherford seemed to do ok with a degree from there…
                  Are all your comments this factual? Rutherford’s undergrad degree was from the University of New Zealand.

                  • “Rutherford’s undergrad degree was from the University of New Zealand.”

                    Studied for at Canterbury University College which is now called the University of Canterbury. Given that the University of New Zealand was New Zealand’s sole degree-granting university from 1874 to 1961 formally all degrees in NZ over that period would be from there.

                    • “Studied for at Canterbury University College which is now called the University of Canterbury.”

                      That should read

                      Studied for at Canterbury College which is now called the University of Canterbury.

                      It was only in 1933 that Canterbury College became Canterbury University College.

                    • darkhorse

                      Rutherford got his primary education at Riwaka I gather a school with six other kids -I wonder how many other nuclear physicists came from Riwaka – (or any other type of genius for that matter) if some higher intellectual status is conferred by attending the same institution as him surely there should be some anomalous population of geniuses living in the hills between Nelson and Blenheim.  

                • McFlock

                  As far as I know the University of Canterbury doesn’t do mail order. Lord Rutherford seemed to do ok with a degree from there so I guess the Uni can’t be all bad.

                  He obviously didn’t study economics there.

                  • Gosman

                    Simply because he is articulating economic truths which you find unpalatable is hardly reason to diss his qualifications.

                    • McFlock

                      Simply because he follows the same religious obsession that you do is no reason to suck his cock.

                    • Gosman

                      You might like to define studying market fundamentals as a religious obsession. I prefer to term it a legitimate academic pursuit.

                      Regardless of the personal attacks you make doesn’t detract from the fact that your views on the subject don’t seem to reflect the reality of what actually happens and you don’t seem to be able to explain this in any coherent manner.

                    • McFlock

                      Gos,
                             
                      Economics in general, especially what you refer to as “market fundamentals”, are neither demonstrable nor repeatable. So it’s damn sure not what one would call a science. Given, however, that it insists on making bold claims about what will happen based on the non-demonstrable and unrepeatable theories about economic mechanisms, and given that these predictions almost always result in being untrue unless the definition of “accuracy” is made insanely wide, and given intense your faith in this non-demonstrable, unrepeatable, unreliable discipline, then yeah, it is essentially a “religion”. 

                    • “Economics in general, especially what you refer to as “market fundamentals”, are neither demonstrable nor repeatable. So it’s damn sure not what one would call a science. Given, however, that it insists on making bold claims about what will happen based on the non-demonstrable and unrepeatable theories about economic mechanisms, and given that these predictions almost always result in being untrue unless the definition of “accuracy” is made insanely wide, and given intense your faith in this non-demonstrable, unrepeatable, unreliable discipline, then yeah, it is essentially a “religion.”

                      I’m not sure what you think the “non-demonstrable and unrepeatable theories”. Can you give some explanation and examples?

                      I would add that empirical work is a common, if not the most common, part of economics as carried out today. Just look at any of the major economics journal, the all carry empirical work. Also I would had that you should consider looking at the amount of experimental work being on today. Such experiments are indeed repeatable. That is one of the advantages of experiments. Canterbury has formed the New Zealand Experimental Economics Laboratory to further work in this area.

                      So can you explain exactly what is “non-demonstrable, unrepeatable, unreliable” about economics.

                    • McFlock

                      Every theory on economics is unrepeatable and undemonstrable, simply because whenever the economy screws up someone like Gos comes and says “well, they should have done X” or “I know you think they did X, but the X they did suddenly fails to meet the criteria I define for X”. 
                           
                      Oh, it’s an industry, I grant you. But it’s bullshit.  Let’s compare economics with physics – hypothesis, repeated demonstrations by experiment, adjustment of the model, validation of the theory within known and defined parameters, application of the theory in the real world.
                             
                      Economics: constantly changing parameters, large-scale applications frequently fall down, and the latest theory is hailed as brilliant until the next bubble bursts.
                         
                      If the wings fell off aircraft as frequently as people are screwed by economic management, air travel would be banned as being too unsafe. 
                           
                      If the Metservice was as inaccurate as treasury forecasts, they’d be predicting golden weather whenever national was in power and floods and lightening under Labour. 

                    • Gosman

                      Hang on here. You are creating a giant strawman to knock down. Where is your evidence that people are changing the goalposts all the time in relation to Economics?

                      An example of where economic theory provides an explanation for our current situation is the increase in youth unemployment. That is exactly what you would expect from the removal of the youth minimum wage. Now whether the increase can be entirely attributed to the change in policy is obviously harder to define but the theory is sound.

                      Where problems occur is when complex relationships are not fully understood. Hence the Tax changes in 2010 were designed to be fiscally neutral but because of various other factors, have not been (i.e. consumption fell more than anticipated). It is harder to argue that they weren’t designed to be fiscally neutral though.

                      Economics is far more like Climatology than weather forecasting. We are aware that increased CO2 levels are associated with increased global temperatures yet forecasting excatly what the change is going to be is difficult. That is the same with Economics. Increasing labour market rigidities will tend to increase unemployment but by how much is not usually clear.

                    • McFlock

                      Gos, you are the perfect example of someone who frequently asserts that their “solutions” should be followed even though there is absolutely no empirical evidence that they will work. Particularly when people start criticizing “neoliberal” governments.
                                 
                             
                      And consensus on climatology is still lightyears ahead of economics.  

                  • “He obviously didn’t study economics there.”

                    At the time I don’t think he could. James High was the first professor of History and Economics and he didn’t take up the position till after Rutherford had left.

                  • “Every theory on economics is Every theory on economics is unrepeatable and undemonstrable,,”

                    Can you give some examples? What makes a given theory “unrepeatable and undemonstrable”? How does the empirical work in economics fit into your to “unrepeatable and undemonstrable” view? What are we to make of the experimental economics? Are these experiments and the empirical work “unrepeatable and undemonstrable”? If so why.

                    • McFlock

                      Can you give some examples?

                      Housing bubbles. Government debt problems.
                      If economics were a science, these would not occur, or be controversial.

                      What makes a given theory “unrepeatable and undemonstrable”?
                      The fact that it is impossible to ensure all contributing parameters occur or are accounted for when the theory is applied in the real world.   

                      How does the empirical work in economics fit into your to “unrepeatable and undemonstrable” view?
                      Retrospective pattern-matching based on the observers’ bias.

                      What are we to make of the experimental economics?
                      It’s a joke. Throw me a couple of examples and I’ll tell you why.

                      Are these experiments and the empirical work “unrepeatable and undemonstrable”? If so why.

                    • “Can you give some examples?

                      Housing bubbles. Government debt problems.”

                      How do these things show that “Every theory on economics is unrepeatable and undemonstrable” What exactly about these things makes economics unrepeatable and undemonstrable? Just saying “Housing bubbles. Government debt problems” doesn’t show anything.

                      “If economics were a science, these would not occur, or be controversial.”

                      Now this is just crap. Its like saying if medicine was a science there would be no sickness. In every subject, science and non-science, there are things experts don’t know or disagree on.

                      “What makes a given theory “unrepeatable and undemonstrable”?
                      The fact that it is impossible to ensure all contributing parameters occur or are accounted for when the theory is applied in the real world.”

                      Really? Ok show with an example of, say, an empirical paper on housing bubbles how all parameters are not accounted or.

                      “How does the empirical work in economics fit into your to “unrepeatable and undemonstrable” view?
                      Retrospective pattern-matching based on the observers’ bias.”

                      And you do realise that in experiments, or example, the experimental design is such that biases are controlled for. This is one advantage of experiments, you can control for confounding factors.

                      “What are we to make of the experimental economics?
                      It’s a joke. Throw me a couple of examples and I’ll tell you why.”

                      Give you a couple of examples?! You know it’s a joke, so you must have lots of examples that YOU can give to show this.

                      Also how does behavioural economics fit into your “unrepeatable and undemonstrable” world? Its all about looking at how people make decisions and the systematic errors they make. And what of neuroeconomics? It seeks to explain human decision making, the ability to process multiple alternatives and to choose an optimal course of action. It studies how economic behaviour can shape our understanding of the brain, and how neuroscientific discoveries can constrain and guide models of economics.

                    • McFlock
                       
                       

                      Can you give some examples?
                       Housing bubbles. Government debt problems.”
                       
                      How do these things show that “Every theory on economics is unrepeatable and undemonstrable” What exactly about these things makes economics unrepeatable and undemonstrable? Just saying “Housing bubbles. Government debt problems” doesn’t show anything.

                       
                      Each and every one is an example that economists don’t know half as much as they think they do. You asked for examples.
                       
                       

                      “If economics were a science, these would not occur, or be controversial.”
                       
                      Now this is just crap. Its like saying if medicine was a science there would be no sickness. In every subject, science and non-science, there are things experts don’t know or disagree on.

                      Nope.
                      It’s like saying that if medecine was a science there would be disagreement at the edges of knowlege, which is then resolved by experimentation where all factors can be replicated by other experimenters, and case:control studies that are repeatable (and repeated), and consensus about how to measure population factors and a clear pregressions from the individual case to the population picture.
                           
                      Feel free to show that economics has those factors. I’ve never seen them – but I’ve seen a lot of people applying slide-rules to comples systems and predending their predictions are based on logic.
                       

                      “What makes a given theory “unrepeatable and undemonstrable”?
                      The fact that it is impossible to ensure all contributing parameters occur or are accounted for when the theory is applied in the real world.”
                       
                      Really? Ok show with an example of, say, an empirical paper on housing bubbles how all parameters are not accounted or.

                       Nope. Even if I bothered, you’d say I was cherry-picking. And yeah, I’m obviousy biased, so I might be.
                          
                      But if economics were a science and you have a phd in it, surey you could cite a single paper that has no scientific shortcomings whatsoever.
                       

                      “How does the empirical work in economics fit into your to “unrepeatable and undemonstrable” view?
                      Retrospective pattern-matching based on the observers’ bias.”
                       
                      And you do realise that in experiments, or example, the experimental design is such that biases are controlled for. This is one advantage of experiments, you can control for confounding factors.

                       
                      Sure. Example?
                       

                      “What are we to make of the experimental economics?
                      It’s a joke. Throw me a couple of examples and I’ll tell you why.”
                       Give you a couple of examples?! You know it’s a joke, so you must have lots of examples that YOU can give to show this.

                      See above.

                      Also how does behavioural economics fit into your “unrepeatable and undemonstrable” world? Its all about looking at how people make decisions and the systematic errors they make. And what of neuroeconomics? It seeks to explain human decision making, the ability to process multiple alternatives and to choose an optimal course of action. It studies how economic behaviour can shape our understanding of the brain, and how neuroscientific discoveries can constrain and guide models of economics.

                       
                       Lovely. Gizza glimpse – I’m basing my judgement on the real-world applications of economics, particularly in NZ over the last 40 years.
                       
                       

                       
                    • darkhorse

                      For the simple reason that economics is an attempt to predict or find patterns (rules0 in the consequences of humans pursuing self interested ends mixed with human fear of being scared to do anything too risky all mixed with the rather random complexities of the whole of society.  

                      It is actually an attempt at the impossible because what it is describing is essentially chaotic.  The point where economics left the rails was when it moved from a philosophical art (Adam Smith and Karl Marx’s territory – the great thinkers) to being a pseudo-science. When it shifted from explaining to predicting.

                      Anyone trying to predict where the world will head next is kidding themselves or suffering from terminal conceit and to think that it will head there according to some infallible rule is beyond delusional.  

                    • It is actually an attempt at the impossible because what it is describing is essentially chaotic. The point where economics left the rails was when it moved from a philosophical art (Adam Smith and Karl Marx’s territory – the great thinkers) to being a pseudo-science. When it shifted from explaining to predicting.
                      There are some nice parallels between predicting the climate and weather, and economics as a *cough cough* science. Currently economists can have a hack at the long term general trends, in the same vein that it can be predicted that summer will be warm, winter cool, spring changeable etc. However at that level, it’s hardly a subject worthy of a PhD.
                      Thing is, weather and climate forecasts rely on physical systems that are non-sentient and although they may be non-linear, are predictable within identifiable bounds. Identifying unusual or extreme events, especially more than a week or two out, is difficult.
                      Markets are much more chaotic.

                    • Colonial Viper

                      The financial markets appear chaotic. But they are heavily manipulated now, and real chaos it definitely is not.

                      http://www.zerohedge.com/contributed/2012-17-26/84-all-stock-trades-are-high-frequency-computers-%E2%80%A6-only-16-are-done-human-tra

              • “I wrote this one with you in mind
                http://howdaft.blogspot.co.nz/2011/08/quack-science.html

                Hang on, you wrote something in August last year with me in mind?! Now that is what I call perfect foresight.

                • darkhorse

                  A you are a twit – and putting yourself up against Lord Rutherford only suggests you suffer from a wider range of delusions than your posts initially indicated – you are a hair splitter not an atom splitter

                  and unfortunately there are a lot of you around (economists I think they call them) so it didn’t need a lot of foresight to see that I would encounter your drivel some day – there is so much of it out there.  Not an orignal thought to your name.

                • darkhorse

                  PS I didn’t see that list of exemplars of the benefits of foreign ownership anywhere in your response – can’t think of any?  Is that the problem?

            • KJT 13.4.1.1.1.2

              You should ask for your tuition fees back.

            • Colonial Viper 13.4.1.1.1.3

              I’ve got 3 degrees in the subject, including a PhD. What about you?

              I don’t know whether to laugh or to cry. Either you got them from boxes of cornflakes (and I do not mean the Kellogg School of Management), or you are completely and professionally indoctrinated into the wrong-headed pseudo-science of economics.

        • McFlock 13.4.1.2

          More to the point, if profits don’t go overseas then why do overseas investors bother investing in NZ companies?
               
          At best the “profits stay in NZ” argument is reduced to the idea that profits made in NZ are exported via changes in relative exchange rates and thereby distorting the international purchasing power of real people. So the NZ dollar value *might* stay in NZ (and I’m not so sure of that, having just bought a phone app via credit card), but we still feel the effects of lower local demand because we can’t buy as much.

          • Paul Walker 13.4.1.2.1

            “More to the point, if profits don’t go overseas then why do overseas investors bother investing in NZ companies?”

            Follow the story I told, foreign investors will sell their NZ$s to get their local currency. They will have increased holdings of their local currency.

            “At best the “profits stay in NZ” argument is reduced to the idea that profits made in NZ are exported via changes in relative exchange rates and thereby distorting the international purchasing power of real people.”

            A large sell off of NZ$s would force the exchange rate down, that is, it would reduce the price of NZ$s or increase the price of foreign $s

            So the NZ dollar value *might* stay in NZ (and I’m not so sure of that, having just bought a phone app via credit card), but we still feel the effects of lower local demand because we can’t buy as much.

            By using your credit card you have in effect sold NZ$s, but my point is that someone, somewhere will have bought those dollars. Using the credit card just make the transaction less transparent.

            • McFlock 13.4.1.2.1.1

              Point being that the “profits” (as an abstract ball of value) do go overseas, even if the actual dollars come back.
                  
              Someone who argues that profits don’t really go overseas is essentially arguing that the entire principle of the profit motive cannot apply to investment of capital.

              • A $1 of profit doesn’t go overseas in any meaningful way, it gets spent on New Zealand produced goods and services no matter who gets the profits from the ownership of local firms. If a New Zealander gets the profits they spend them on New Zealand made goods and services, if a foreigners gets the profits they sell the NZ$s to someone who wants to buy New Zealand made goods and services. So the $1 get spent on NZ stuff no matter who gets it and thus is not lost to NZ.

                • McFlock

                  But the NZ$1 doesn’t have the same value as before, does it?
                     
                  The profits still go overseas, the mechanism just happens to be exchange rate fluctuations rather than physically shipping bags of cash overseas.

                  • “But the NZ$1 doesn’t have the same value as before, does it?”

                    Yes it does. (assume inflation in NZ is zero) It is one NZ$. If a New Zealander gets the profits from a firm they spend them on New Zealand made goods and services, if a foreigners gets the profits they sell the NZ$s to someone who wants to buy New Zealand made goods and services. In each case one NZ$ is spent on New Zealand good and services. What will change is the amount a foreigner has to pay to get the NZS. But given he buys the S1 he has this to spend on goods from New Zealand and the exchange rate will adjust to ensure that supply = demand for foreign exchange in the same way it does or all goods and services.

                    • McFlock

                      What will change is the amount a foreigner has to pay to get the NZS.

                       
                      And the amount of NZ$ a New Zealander has to pay to import goods or services. And the cost of debt our beloved leader likes to accrue in our name. And so on.
                         
                      Saying an NZ$ will always be worth 1 NZ$ is trite – as a means of exchange its value is in what you can buy with it.

                  • “Saying an NZ$ will always be worth 1 NZ$ is trite – as a means of exchange its value is in what you can buy with it.”

                    Which is why I said assume inflation to be zero, I was holding the purchasing power of the NZ dollar in NZ constraint.

                    • Gosman

                      Paul, the left don’t really understand how international trade works. They keep thinking NZ dollars are somehow shipped offshore and stashed under a bed or something. That can’t grasp that the NZ money people earn here has to be converted into other currencies to be spent on goods and services in those places.

                    • felix

                      Gosman if you read the discussion you’d know that I’m not saying anything of the sort. But don’t let that stop you pretending I am.

                    • Colonial Viper

                      Gossie you’re funny mate, supporting a guy whose theories are totally wrong headed.

                    • Gosman

                      That’s good felic, I was more meaning stipi comments like this one from McChuck

                      ‘The profits still go overseas, the mechanism just happens to be exchange rate fluctuations rather than physically shipping bags of cash overseas.’

                    • McFlock

                      Which is why I said assume inflation to be zero, I was holding the purchasing power of the NZ dollar in NZ constraint.

                       
                      Which certainly wouldn’t apply to imported goods if a whole bunch of foreign owners were trying to offload their NZ$.

        • Colonial Viper 13.4.1.3

          No. The point about profits “leaving NZ” is that they don’t , NZ money is worthless anywhere but NZ. NZ dollars are only useful in NZ and thus they can ultimately only be spent on NZ good and services. There simply is no other use for them.

          What a fucking moron.

          The NZ dollar is a fully convertible currency. Which means that the couple of hundred billion NZ dollars in the money supply now can be exchanged easily, immediately, and freely for other currencies (eg euros, yen and USD) without ever needing to be spent in NZ.

          For a highly qualified PhD, you sure are dumb.

          • darkhorse 13.4.1.3.1

            CV your are most efficiently succinct in your summation of Paul’s analytical skills.  Unfortunately Paul’s syndrome is more complex than that and it is one that plagues the whole world = indeed it is at the root of most of our problems.  In Muslim countries Paul would be strapping 10kg of explosives to his body and heading to the local market place to destroy a few innocents in the unshakeable belief that he would be with allah and his own ration of virgins in reward for his zealotry.  You see he is a Dogmatist not a thinker.  Dogmatists find it very easy to get PhD’s because they are very capable at rote learning and reciting mantras – now thinking that is another matter.  It is a lesson I have learnt from long years of dealing with the over qualified is that thinking and learning are entirely different intellectual traits and one seems often to preclude the other (If they didn’t there wouldn’t be any economists as any thinking mind could see the claptrap that economic theory mostly is).  Bill English is a great example of something that can learn but not think – seen an original idea in that head in the last while?

            What you will find in arguing with Paul is that you are actually arguing with something that is nothing more than a highly trained parrot.  Not an original through in its head and not the wit to question its own belief system.   As with a conversation with a parrot no useful progress or development of intellectual concepts will occur.

            He must also have a mirror in his cage because he is obviously loves admiring himself.  Im Polly I’ve got A PHD Polly want a cracker.

            • Colonial Viper 13.4.1.3.1.1

              I finally see what you mean. A highly trained parrot? Nah perhaps just a mediocre one.

              • darkhorse

                I’d agree – if I had a parrot that tedious I would have it stuffed and mounted – save on feed and not have to endure the irritation of its monotonous blather 

          • Paul Walker 13.4.1.3.2

            CV You are right the NZ dollar is a fully convertible currency but I have noted this fact from the start. For someone to sell a NZ$1 someone must buy that $1 and what use is the dollar to the buyer? The NZ$ is of no use outside New Zealand so if someone is buying they must want the dollar to buy NZ made goods and services. That is the only thing NZ$ are good for.

            • felix 13.4.1.3.2.1

              “That is the only thing NZ$ are good for.”

              Not so. I regularly spend NZ$ in NZ on goods and services produced elsewhere, owned by people and companies from elsewhere.

              • Yes but the point is you are buying those goods in NZ and thus NZ$s are used. Whoever bought the goods into NZ will have had to pay the seller of them in their local currency, eg Aus$, US$ etc.

                • felix

                  So what?

                  The fact that the currency used is NZ$ has no bearing whatsoever on whether they’re spent on NZ produced goods and services or not.

                  • But it has a bearing on the fact that the transaction must take place in NZ or be of a good make in NZ. A trancation involving a foriegn made good in NZ will still show up in our GDP figures. Thus the NZ$s are not lost to the NZ economy, they do not “go overseas”, which is the point I made in the first place..

                    • felix

                      No, you said the profits don’t go overseas.

                      You’re correct that in an entirely meaningless sense the actual dollars can’t technically “leave NZ” but that’s moot.

                      What matters in the sense of the argument about “profits going overseas” is the question of who controls our economy, i.e. who is in a position to make decisions that affect our choices, our businesses, our assets, our wealth, our resources, and our lives.

                    • “No, you said the profits don’t go overseas.”

                      And they don’t. Profits don’t go overseas in any meaningful way, they get spent in New Zealand or on New Zealand produced goods and services no matter who gets the profits from the ownership of local firms.

                      Who controls the assets here in NZ is another question. What we want is for those assets to be in the hands of whoever will use them most efficiently. If that is a foreigner, so be it.

                    • McFlock

                      Oi vey.
                      The profits do go overseas.
                      The NZ$ don’t.
                              
                      But the capital that would have been reinvested in the economy had the profits stayed in NZ would have also showed up in GDP (crude measure though it is) in subsequent years, rather than just in the year the profits were taken.

                    • “But the capital that would have been reinvested in the economy had the profits stayed in NZ would have also showed up in GDP (crude measure though it is) in subsequent years, rather than just in the year the profits were taken.”

                      May be not. What is to stop a New Zealander from taking the profits and investing them overseas or just consuming them? If a foreign investor can find a better investment overseas to use the profits on, why can’t a New Zealand investor do the same thing? If reinvesting the profits in New Zealand is the best option for the New Zealander, why isn’t it the best option for a foreign investor? Given the international nature of investment markets who gets the profits won’t matter for how they are used.

                    • McFlock
                       
                       

                      Because NZ investors have greater knowledge about NZ markets than overseas investors.
                            
                      Because it’s easier to monitor an investment when you know what it is.
                         
                      Because people have an inherent bias towards what they know.
                           
                      Because NZ investors (because they want to be paid in NZ$) are less likely to view exchange rate fluctuations as a barrier to investments in NZ.
                         
                      Because only a small portion of the global population are international investors.
                       

                       
                    • “Because NZ investors have greater knowledge about NZ markets than overseas investors.

                      Because it’s easier to monitor an investment when you know what it is.”

                      Asymmetric information could be a factor but if you are a big investor making a big investment you have a big incentive to learn about local conditions and issues. Also asymmetric information could go the other way. An international company could know more about a business given its experience overseas.

                      “Because people have an inherent bias towards what they know.”

                      Yes, in fact this is basically the point Adam Smith made when he was talking about the “invisible hand”. But see my point above about international firms knowing more about some business.

                      “Because NZ investors (because they want to be paid in NZ$) are less likely to view exchange rate fluctuations as a barrier to investments in NZ.”

                      Exchange rate risk will have to be factored into any investment decision. Whether this is enough to stop an investment would have to be looked at on a case-by-case basis.

                      “Because only a small portion of the global population are international investors.”

                      But for this discussion they are the important group.

                    • Colonial Viper

                      Paul Walker – people do not trade currencies any more. High frequency algorithm systems do. And they don’t care in the least about learning “local issues”.

                    • McFlock

                      Asymmetric information could be a factor but if you are a big investor making a big investment you have a big incentive to learn about local conditions and issues. Also asymmetric information could go the other way. An international company could know more about a business given its experience overseas.

                       
                       
                       
                       
                       
                      Just to recap, we seemed to have moved away from the debate as to whether “profits go overseas”, now we’re discussing whether it matters?

                    • felix

                      “What we want is for those assets to be in the hands of whoever will use them most efficiently. If that is a foreigner, so be it.”

                      Wrong, that’s what you want.

                      What I want is for us to have as much control over decisions that affect us as possible.

                    • “Just to recap, we seemed to have moved away from the debate as to whether “profits go overseas”, now we’re discussing whether it matters?”

                      I was just trying to answer the points you raised. But to recap: profits don’t go overseas and it doesn’t matter that foreigners own assets in NZ, anymore than it matter that NZers own assets overseas.

                    • McFlock

                      Well, you brought up GDP.
                        
                      Question – if profits don’t go overseas, how do overseas investors make a profit from their NZ investments?
                       

                    • “Question – if profits don’t go overseas, how do overseas investors make a profit from their NZ investments?”

                      How do overseas investors make a profit? The same way as NZ investors, by having revenues greater than costs. As I have noted somewhere above foreigners will hold greater amounts of their local currency. They have to sell the NZ$s since they are of no use to them. But to sell them someone has to buy them and its this fact that counts. People do not buy NZ$s just for fun. This is what I have been saying all alone: “Let us assume for a moment that some foreigners make a NZ$1 profit which they wish to take it back to, say, China. How do they do it? Clearly a New Zealand dollar isn’t worth anything in China so the Chinese holder of NZ currency will have to sell their NZ$1 to buy Yuan. But why would anyone want to buy said NZ$1? The only use for a NZ$s is to buy something made in NZ. Thus the buyer of the NZ$s must want it to buy a NZ export of some kind. The NZ$1 doesn’t go overseas in any meaningful way, it gets spent on New Zealand produced goods and services no matter who gets the profits from the ownership of local firms. If a New Zealander gets the profits they spend them on New Zealand made goods and services, if a foreigners gets the profits they sell the NZ$s to someone who wants to buy New Zealand made goods and services.”

                      That is to say that the NZ economy doesn’t lose the dollar, it ends up being spent in NZ or on NZ goods. Unless of course the foreigners just burn the NZ$s they have. But even here this would help NZ since it would reduce the money supply by a little and thus be anti-inflationary!

                    • Gosman

                      I’m surprised you are bothering to renter the debate about exchange rate McFluck considering how you embarrassed yorself last time trying to argue that rectifying an overvalued exchange rate hurt NZ importers. You really are a glutton for punishment.

                    • felix

                      Paul, money is power in a very real sense. It’s the power to make decisions.

                      Do you disagree?

                    • McFlock

                      Gos, you were on serious drugs that day. Go back and read the discussion again, and see whether what you read was the same as what had been written down.

                      [edit]P.S. you must be seriously pissed that you turned up so late to begin trolling. Catch your own gaze in the mirror and got trapped for a couple of days, did you?

                    • Gosman

                      Come on McChuck. You jumped into a dicussion about the so called damage to the NZ economy that betting against an overvalued currency caused. You leaped from one position saying the overvalued dollar caused NZ exporters harm to stating that devaluing it caused NZ importers harm. You took two contradictory postions in the space of about three posts and and you accuse me of being on drugs. It is quite clear you don’t have much of a grasp about basic market fundamentals. Stick with your statistics.

                    • McFlock

                      Paul,
                          
                      You are consistently restricting “profit” to mean the currency of payment, rather than the capital taken by the owners.
                      Odd interpretation.
                           
                      Secondly, if currency to equal international value were autommatically returned to NZ after the overseas investors converted their NZ$, government and private debt would not be a problem for an economy.
                       

                    • McFlock

                      Gos, these little snapshots into your warped perspective and soulless, self obsessed ego are fascinating, but grownups are talking.

                    • McFlock

                      “You are consistently restricting “profit” to mean the currency of payment, rather than the capital taken by the owners.
                      Odd interpretation.”

                      Let me be clear what I mean by profit: it is the difference between revenue and costs. This is the standard definition used by accountants and economics. They do however differ in the way they think about costs.

                      “Secondly, if currency to equal international value were autommatically returned to NZ after the overseas investors converted their NZ$, government and private debt would not be a problem for an economy.”

                      Private debt isn’t a problem for the economy. It could of course be a big problem for person who runs up the debt. Government debt is more of a problem in that repayment does fall to all taxpayers in the economy. At the very lest higher debt today means higher taxes tommorrow.

                    • McFlock
                       
                       

                       

                      “You are consistently restricting “profit” to mean the currency of payment, rather than the capital taken by the owners.
                      Odd interpretation.”
                      Let me be clear what I mean by profit: it is the difference between revenue and costs. This is the standard definition used by accountants and economics. They do however differ in the way they think about costs.

                       
                      Agreed. So given that currency is simply a means of exchange for that profit, why the fixation on whether NZ$ end up back in the NZ economy? 
                       
                       

                      Private debt isn’t a problem for the economy. It could of course be a big problem for person who runs up the debt.

                       
                      That’s what Bush thought. Then the housing market crashed and suddenly private debt was a massive problem. Whether bailing out the banks was a good idea is another matter I don’t want to get into – the global economy still had(has) a problem.

                       
                    • “Agreed. So given that currency is simply a means of exchange for that profit, why the fixation on whether NZ$ end up back in the NZ economy?”

                      Don’t follow the “currency is simply a means of exchange for that profit” bit. The NZ$ coming back to NZ just mean that they are not lost to the NZ economy as people like Michael Fry and David Cunliffe both claim.

                      “Private debt isn’t a problem for the economy. It could of course be a big problem for person who runs up the debt.”

                      “That’s what Bush thought. Then the housing market crashed and suddenly private debt was a massive problem.”

                      No the government made it a massive problem.

                      “Whether bailing out the banks was a good idea is another matter I don’t want to get into – the global economy still had(has) a problem.” ”

                      In short the bank bailouts were a very bad idea. It was just corporate welfareism at its worst.

                    • Colonial Viper

                      Yep. The bank bailouts were just another way of extorting money from the state to gift to the top 0.01%. The financial speculators and bankers.

                    • McFlock
                       
                       

                      “Agreed. So given that currency is simply a means of exchange for that profit, why the fixation on whether NZ$ end up back in the NZ economy?”
                      Don’t follow the “currency is simply a means of exchange for that profit” bit. The NZ$ coming back to NZ just mean that they are not lost to the NZ economy as people like Michael Fry and David Cunliffe both claim.

                       
                      At the absolute least, surely an overseas investor trying to convert NZ$ into local currency increases the supply of NZ$ for sale on the international market, thus affecting the exchange rate?
                       

                      “Private debt isn’t a problem for the economy. It could of course be a big problem for person who runs up the debt.”
                      “That’s what Bush thought. Then the housing market crashed and suddenly private debt was a massive problem.”
                      No the government made it a massive problem.

                      Silly them, perceiving that the collapse of the banking sector might be an issue for the wider economy.
                       

                    • “At the absolute least, surely an overseas investor trying to convert NZ$ into local currency increases the supply of NZ$ for sale on the international market, thus affecting the exchange rate?”

                      Yes, if they are supplying enough NZ$s. What they would do is lower the price that someone has to pay to buy a NZ$1.

                      “Silly them, perceiving that the collapse of the banking sector might be an issue for the wider economy.”

                      My argument would be that there would not have been a collapse of the banking sector. There would have been problems obviously, but the banking sector would have survived. As I said before this was just corporate welfarism.

                    • Colonial Viper

                      How would you have unfrozen the credit markets and unfrozen interbank lending?

                      Those were the major issues.

                      Too big to fail = too big to exist.

                    • “Too big to fail = too big to exist.”

                      One of the biggest problems with the financial sector is the idea of Too Big to Fail. Nothing is too big to fail and people thinking that banks are just causes moral hazard problems.

                    • Colonial Viper

                      All large banks should be broken up and their proprietary trading arms fully isolated from their banking functions.

                      Further the Government should provide citizens with basic banking to allow most people the option of leaving the private banking system.

                    • “Yeah but as YOU used it in your comment, WHICH revenue stream and WHICH set of costs were YOU referring to.”

                      Yes I did use the word profit in a number of my comments. That is right. What I meant by it was the price of whatever good was being produced times the number of units of that good sold minus the costs of producing those units. I don’t think I ever mentioned any particular good or service in any of my postings.

                      I have to say I don’t see what your problem is here.

                    • Colonial Viper

                      The problem is your bullshit assertion that profits can’t leave NZ which shows you don’t understand what profits are and you don’t understand why foreign owners benefit from taking those profits out of NZ.

                      NZ wealth is being pumped out overseas and you are pretending its not happening.

                    • “NZ wealth is being pumped out overseas and you are pretending its not happening.”

                      That’s because it’s not happening. The (real) wealth of a country is, to put it simply, the amount of goods and services that the country produces, this is not going down, goods and services are not “being pumped out overseas”.

                    • McFlock

                      “At the absolute least, surely an overseas investor trying to convert NZ$ into local currency increases the supply of NZ$ for sale on the international market, thus affecting the exchange rate?”
                      Yes, if they are supplying enough NZ$s. What they would do is lower the price that someone has to pay to buy a NZ$1.

                      But we are not talking about individual investors – we’re talking about the aggregate results of all profit-taking. So that lowers the exchange rate (which can be a good thing, but that’s another discussion). So the profit DOES leave the country, because it’s transferred into the investors’ local currencies with a corresponding decline in the value of the dollar.
                          
                      And that capital which does leave the country to overseas investors is less likely to be invested in NZ in subsequent years because as we’ve discussed local NZ investors are more likely to vote locally: although international investors might reinvest in NZ (which they wouldn’t be planning on if they were selling their NZD), NZ is competing globally for their investment dollar. This is not an issue for local investors.
                              
                      SO overseas investment does take capital out of NZ, which might boost GDP in one year but it is less likely to be reinvested within NZ than if  locals owned the enterprise.

                    • Gosman

                      If your theory was correct, (which it isn’t because your failure to appreciate the was markets work), then the NZ dollar would have be steadily depreciating over the past decades as a result of the increased foreign investment and repatriation of profits. The fact that this isn’t happening suggests your theory has a serious flaw in it somewhere. Perhaps you should think about why what you are suggesting should happen hasn’t in fact been happening.

                    • McFlock

                      Shh Gosman.
                      Grownups are talking.
                           
                      If your suggestion about the consequences of my theory took place in a complete vacuum devoid of other circumstances, we might expect to see that. But the real world is not as simple as you are, so we wouldn’t. 

                      For example: key currencies that we measure against have had their own currency devaluations, rising food prices have helped some export sectors (while the high dollar has hurt others), and of course there are a whole bunch of forex speculators trying to psych each other out. 
                           

                    • “But we are not talking about individual investors – we’re talking about the aggregate results of all profit-taking. So that lowers the exchange rate (which can be a good thing, but that’s another discussion).”

                      Ok think of all profits as coming from one big firm. If the total amount of NZ$s being sold is large enough it could lower the exchange rate.

                      “So the profit DOES leave the country, because it’s transferred into the investors’ local currencies with a corresponding decline in the value of the dollar.”

                      No. If NZ’s inflation rate is zero, as I assumed, then what NZ$1 buys in New Zealand is still the same. What changes is how much local currency the overseas investor get for his NZ$1. So if there is NZ$1 sold then the buyer of that dollar can buy NZ$1 worth of goods in New Zealand. So, put simply, NZ$1 leaves New Zealand but NZ$1 dollar also comes back. The exchange rate does not determine how much NZ$1 buys in New Zealand, it will determine how much NZ$1 will buy in foreign countries. May be that’s the way to think about it.

                      “And that capital which does leave the country to overseas investors is less likely to be invested in NZ in subsequent years because as we’ve discussed local NZ investors are more likely to vote locally: although international investors might reinvest in NZ (which they wouldn’t be planning on if they were selling their NZD), NZ is competing globally for their investment dollar. This is not an issue for local investors.”

                      But if there are good enough investment opportunities overseas then even NZ investor will invest there. What this is asking is just how risk adverse are NZ investors.

                      “SO overseas investment does take capital out of NZ, which might boost GDP in one year but it is less likely to be reinvested within NZ than if locals owned the enterprise.”

                      Again, it depends. As I said before, if there are better (risk adjusted) investment opportunities here you will get more investment here and if the opportunities are better overseas you will get investment there. It’s the same anywhere. If there are better investments to be made in the North Island than the South you will get more investment in the north. If things are better in the South Island then investment in more likely there. Risk is just one factor that investors have to take into account. And risk could work the other way round. If you were living in Iraq, would you want to invest locally or in the US., for example?

                    • McFlock

                      No. If NZ’s inflation rate is zero, as I assumed, then what NZ$1 buys in New Zealand is still the same. What changes is how much local currency the overseas investor get for his NZ$1. So if there is NZ$1 sold then the buyer of that dollar can buy NZ$1 worth of goods in New Zealand. So, put simply, NZ$1 leaves New Zealand but NZ$1 dollar also comes back. The exchange rate does not determine how much NZ$1 buys in New Zealand, it will determine how much NZ$1 will buy in foreign countries. May be that’s the way to think about it.

                      But that’s just a shallow way to shift the goalposts. In a global market with imports and exports you’re arguing that increasing the cost of imports by lowering the currency value will not have an inflationary effect if you assume there is no inflationary effect. Well d’uh.

                      But if there are good enough investment opportunities overseas then even NZ investor will invest there. What this is asking is just how risk adverse are NZ investors.

                      Indeed. And what percentage of NZ investors invest how much of their investment capital within NZ? How much of NZ is funded by overseas investment? That would give you the ratio right there of the amount of local investment that results when the enterprise is NZ owned.

                      “SO overseas investment does take capital out of NZ, which might boost GDP in one year but it is less likely to be reinvested within NZ than if locals owned the enterprise.”

                      Again, it depends. As I said before, if there are better (risk adjusted) investment opportunities here you will get more investment here and if the opportunities are better overseas you will get investment there. It’s the same anywhere. If there are better investments to be made in the North Island than the South you will get more investment in the north. If things are better in the South Island then investment in more likely there. Risk is just one factor that investors have to take into account. And risk could work the other way round. If you were living in Iraq, would you want to invest locally or in the US., for example?

                      So given your phd in economics, any idea on the how much NZ investors are biased towards NZ investments? Or is every single person with a bit of capital a perfectly rational investment robot with excellent information about all investment opportunities across the planet, with neither fear nor favour, malice nor ill-will?
                           
                      Come on, this is a real-world situation. You must have actual data to back up your position.

                    • “But that’s just a shallow way to shift the goalposts. In a global market with imports and exports you’re arguing that increasing the cost of imports by lowering the currency value will not have an inflationary effect if you assume there is no inflationary effect. Well d’uh.”

                      No I saying, as I always have been, that you have a dollar to spend on or in New Zealand on good and services under both situations where either a NZer get the profits from firms or a foreigner gets the profits. If the exchange was moved enough to increase inflation (unlikely) then the Reserve Bank would have to deal with this. The inflationary effect of profits on the exchange would be small compared to other effects like growth in the money supply.

                      “Indeed. And what percentage of NZ investors invest how much of their investment capital within NZ? How much of NZ is funded by overseas investment? That would give you the ratio right there of the amount of local investment that results when the enterprise is NZ owned.”

                      A lot of people invest overseas since most people invest indirectly via things like pension funds, superannuation funds etc

                      “So given your phd in economics, any idea on the how much NZ investors are biased towards NZ investments? Or is every single person with a bit of capital a perfectly rational investment robot with excellent information about all investment opportunities across the planet, with neither fear nor favour, malice nor ill-will?”

                      Most individuals doesn’t have be rational investor since as already noted they don’t invest directly and the likes of pension funds and superannuation funds are very rational investors with a lot of information about investment opportunities.

                    • McFlock

                       If the exchange was moved enough to increase inflation (unlikely) then the Reserve Bank would have to deal with this. The inflationary effect of profits on the exchange would be small compared to other effects like growth in the money supply.

                      “would be”. That “would be” a guesstimate. Any supporting data? I mean, the US trade deficit certainly hasn’t helped the USD against the RMB.

                      Apart from the fact that CPI inflation includes domestically produced goods as well, so that would absorb some of the inflationary effects right there. But then your imported goods would still be more expensive, as are those which already routinely serve the global market (like cheese).
                       

                      “Indeed. And what percentage of NZ investors invest how much of their investment capital within NZ? How much of NZ is funded by overseas investment? That would give you the ratio right there of the amount of local investment that results when the enterprise is NZ owned.”
                      A lot of people invest overseas since most people invest indirectly via things like pension funds, superannuation funds etc

                      “A lot”. Yes indeed. Gotta love your scientific use of ratios and percentages.
                       

                      “So given your phd in economics, any idea on the how much NZ investors are biased towards NZ investments? Or is every single person with a bit of capital a perfectly rational investment robot with excellent information about all investment opportunities across the planet, with neither fear nor favour, malice nor ill-will?”

                      Most individuals doesn’t have be rational investor since as already noted they don’t invest directly and the likes of pension funds and superannuation funds are very rational investors with a lot of information about investment opportunities.

                      Okay then, let me rephrase:
                      “So given your phd in economics, any idea on the how much NZ investment capital is biased towards NZ investment opportunities?  Or is every single  investment  decision perfectly rational and based on excellent information about all investment opportunities across the planet, with neither fear nor favour, malice nor ill-will”? 
                       

                  • ““would be”. That “would be” a guesstimate. Any supporting data? I mean, the US trade deficit certainly hasn’t helped the USD against the RMB.”

                    “Any sopporting data” You mean you want some “unrepeatable and undemonstrable” data? Why? Obviously to you its worthless.

                    “Indeed. And what percentage of NZ investors invest how much of their investment capital within NZ? How much of NZ is funded by overseas investment? That would give you the ratio right there of the amount of local investment that results when the enterprise is NZ owned.”

                    Who knows and for that matter why would they care?

                    “A lot of people invest overseas since most people invest indirectly via things like pension funds, superannuation funds etc”

                    “A lot”. Yes indeed. Gotta love your scientific use of ratios and percentages.

                    Yes but remmber for rato adn percentages are just “unrepeatable and undemonstrable” data.

                    “So given your phd in economics, any idea on the how much NZ investors are biased towards NZ investments? Or is every single person with a bit of capital a perfectly rational investment robot with excellent information about all investment opportunities across the planet, with neither fear nor favour, malice nor ill-will?”

                    Most individuals doesn’t have be rational investor since as already noted they don’t invest directly and the likes of pension funds and superannuation funds are very rational investors with a lot of information about investment opportunities.

                    Okay then, let me rephrase:
                    “So given your phd in economics, any idea on the how much NZ investment capital is biased towards NZ investment opportunities? Or is every single investment decision perfectly rational and based on excellent information about all investment opportunities across the planet, with neither fear nor favour, malice nor ill-will”?

                    • McFlock
                       
                       

                      ““would be”. That “would be” a guesstimate. Any supporting data? I mean, the US trade deficit certainly hasn’t helped the USD against the RMB.”
                      “Any sopporting data” You mean you want some “unrepeatable and undemonstrable” data? Why? Obviously to you its worthless.

                      Nah mate, it just shows correlation on a macro-scale, which can be useful. But sadly it doesn’t show causal relationships and all that other good stuff that science likes.
                       

                      “Indeed. And what percentage of NZ investors invest how much of their investment capital within NZ? How much of NZ is funded by overseas investment? That would give you the ratio right there of the amount of local investment that results when the enterprise is NZ owned.”
                      Who knows and for that matter why would they care?

                      Well, someone wanting to look at the effects of overseas investment, of course. I mean, even just to see whether there is a bias towards domestic investment as opposed to international speculation.
                        
                      But if they were just taking it as part of their catechism that it wasn’t an issue, they probably wouldn’t bother looking.

                      “A lot of people invest overseas since most people invest indirectly via things like pension funds, superannuation funds etc”
                      “A lot”. Yes indeed. Gotta love your scientific use of ratios and percentages.
                      Yes but remmber for rato adn percentages are just “unrepeatable and undemonstrable” data.

                      Too true. But most sciences have something up their sleeve other than population-based observation in complex environments. And the population statistics verify the analyses.
                       

                      “So given your phd in economics, any idea on the how much NZ investors are biased towards NZ investments? Or is every single person with a bit of capital a perfectly rational investment robot with excellent information about all investment opportunities across the planet, with neither fear nor favour, malice nor ill-will?”

                      Most individuals doesn’t have be rational investor since as already noted they don’t invest directly and the likes of pension funds and superannuation funds are very rational investors with a lot of information about investment opportunities.

                      Okay then, let me rephrase:
                      “So given your phd in economics, any idea on the how much NZ investment capital is biased towards NZ investment opportunities? Or is every single investment decision perfectly rational and based on excellent information about all investment opportunities across the planet, with neither fear nor favour, malice nor ill-will”?

                      ….
                       

                • Colonial Viper

                  PhD in Moronic.

                  NZD don’t have to be used to buy NZ goods, they can be used to buy international currencies without having to ever come back to NZ.

                  You know this of course, but are being deliberately obtuse.

                  The more lies you spread the dumber you get BTW. Just a warning.

                  • “NZD don’t have to be used to buy NZ goods, they can be used to buy international currencies without having to ever come back to NZ.”

                    Yes they can buy international currencies but each transaction has to have a buyer and a seller. We sell NZ$s to get foreign currencies and someone buys the NZ$s we sell. The buyer of the NZ$s can only use them to buy something in or from NZ.

                    • felix

                      “The buyer of the NZ$s can only use them to buy something from NZ.”

                      Nonsense, they can use them to buy anything from anywhere in the world sold by any of the many overseas owned companies currently trading in NZ.

                    • “Nonsense, they can use them to buy anything from anywhere in the world sold by any of the many overseas owned companies currently trading in NZ.”

                      Read what I have been saying. We sell the NZ$1, the buyer of that dollar uses it to by something from or in NZ. What else would he buy the dollar in the first place?

                    • felix

                      I’m in no doubt about what you’ve been saying and it has changed considerably. Just a few comments back you were insisting that the only thing NZ dollars could ever be used for was to buy NZ made goods and services.

                      I note you’ve backed off from that position somewhat and are now acknowledging that NZ dollars can be used to buy things made anywhere, by anyone, from any body trading in NZ.

                      I realise you’re an economist so I’m being very patient with you but don’t start taking the piss now Paul.

                    • “I note you’ve backed off from that position somewhat and are now acknowledging that NZ dollars can be used to buy things made anywhere, by anyone, from any body trading in NZ.”

                      No my position now is the same as it has always been. In short, profits don’t go overseas in so much as they get spent in New Zealand or on New Zealand produced goods and services no matter who gets the profits from the ownership of local firms. That is, profits are not lost to the New Zealand economy.

                    • darkhorse

                      A simple thing called debt is the difference between what we earn and what we spend.  Profits being repatriated can be funded by debt back in NZ – profits being the price we pay for the capital invested in NZ – there is no free lunch.  For some 90% of the past three decades our overseas expenditures have exceeded our overseas earnings.  We are broke and getting broker mostly thanks to foreign owned banks inflating various assets through debt and through asset sales to foreign interests.

                       

                    • Colonial Viper

                      Paul Walker. You’re spreading idiocy faster than the speed of light.

                      Read what I have been saying. We sell the NZ$1, the buyer of that dollar uses it to by something from or in NZ. What else would he buy the dollar in the first place?

                      For the purposes of FINANCIAL SPECULATION, not for trade.

                      FFS

                    • CV

                      “For the purposes of FINANCIAL SPECULATION, not for trade.”

                      Explain how keeping in mind we have a floating exchange rate.

                    • Colonial Viper

                      You seem to be labouring under the mistaken impression that the NZD is not manipulated simply because there is a ‘free market’.

                      Apparently speculators move the NZD all the time e.g.

                      http://www.scoop.co.nz/stories/BU1204/S00350/nz-dollar-rises-on-speculation-ecb-will-help-spain-fed.htm

                    • felix

                      Paul, you’re being dishonest.

                      You did change your stance.

                      First you insisted that NZ$ could only be used to pay for NZ products. You said this is all they’re good for. You were very precise in your wording.

                      You have now abandoned that (obviously nonsensical) position and have admitted that NZ$ can buy anything from any body trading in NZ, which is an entirely different matter.

                    • “You have now abandoned that (obviously nonsensical) position and have admitted that NZ$ can buy anything from any body trading in NZ, which is an entirely different matter.”

                      It is the same matter since the point I have been making all along is that profits are not lost to NZ. This is simply because no matter who get the profits they end up being spent in NZ or on NZ goods. As for foreign made goods being sold in NZ, such sales are still part of NZ’s GDP – as noted before – but also the services that go with the sale and intermediation services produced here are also being paid for. Both of these are NZ produced.

                    • felix

                      No it’s not the same matter.

                      A body buying goods produced in NZ by NZers is beneficial to those NZers, and that’s what this discussion is about.

                      You now seem to be arguing that it doesn’t matter whether a NZer benefits from a transaction or a foreigner benefits from a transaction, as long as someone does.

                      And that’s exactly what you were denying with your initial argument about profits never leaving NZ.

                      Congrats Paul, you’ve come 180 degrees.

                    • Colonial Viper

                      It is the same matter since the point I have been making all along is that profits are not lost to NZ. This is simply because no matter who get the profits they end up being spent in NZ or on NZ goods.

                      What are you, 14?

                      Why are you pretending that we didn’t have the conversation around the full market convertibility of NZD?

                      And that they can be used to buy other currencies (yen, USD, Euro) and NEVER have to be spent in NZ?

                      Don’t waste my fucking time.

                      in addition you just used the word “profit” in the most dodgy bullshit manner.

                    • CV

                      “Why are you pretending that we didn’t have the conversation around the full market convertibility of NZD?

                      And that they can be used to buy other currencies (yen, USD, Euro) and NEVER have to be spent in NZ?”

                      Yes we can sell NZ$s but someone has to buy those dollars and what does the buyer so with the dollars. They can only buy NZ produced goods or come to NZ and spend them here.

                      “Don’t waste my fucking time.”

                      I’m not but you are increasingly wasting mine.

                      “in addition you just used the word “profit” in the most dodgy bullshit manner.”

                      I use the word profit to mean revenue minus costs, which is as it turns out, the definition of profit.

                    • “A body buying goods produced in NZ by NZers is beneficial to those NZers, and that’s what this discussion is about.”

                      Yes and the point felix is that no matter who gets the profits from a NZ firm NZers do benefit. If a NZer gets the profits let us assume they spend the money on NZ made goods. NZers gain. If a foreigner get the money they have to sell the NZ$s and buy their local currency and someone has to buy those NZ$s. What can the buyer do with the dollars? They can buy NZ made products (ie exports) or come to NZ and spend the money here. In both cases NZers gain.

                    • felix

                      That’s not enough though Paul. They must in both gain at least to the same degree for that particular argument to hold.

                      But it’s a sideshow anyhow. What matters is who gains the power to make the decisions in the economy.

                    • “Actually the painful bit is getting economists to understand the place of the market in society.”

                      No I’m with Gosman on this one. People (including some of those from the left*) trying to understand the market is just so painful to watch. I mean the mercantilism that Adam Smith attacked is still with us, albeit in a slightly different form. Many people still don’t seem to get the idea that both parties gain from trade. If they didn’t why do they trade? How many people get the idea of comparative advantage? I could go on. But there seem to be many basic economic issues that people don’t understand.

                      * Not all of those on the left however. Reading economists like John Roemer, for example, is always worthwhile. His book “Analytical Foundations of Marxian Economic Theory”, 1981, Cambridge: Cambridge University Press is worth the trouble of reading. I’m a bit pissed off since I seem to have lost my copy. Jon Elster is a political scientist also worth reading.

                    • “That’s not enough though Paul. They must in both gain at least to the same degree for that particular argument to hold”

                      Sorry felix I honestly don’t follow you here.

                    • felix

                      I’m not particularly interested in what you or Gosman think about “people on the left”.

                      What I am interested in is seeing you address the matter of decision-making power in the economy.

                      Not holding my breath though.

                    • “What I mean is that having money is having the power to make decisions.

                      Do you disagree?”

                      In the sense that having money means you can buy assets and thus gain control rights over them then yes I agree.

                    • Colonial Viper

                      Paul. The important thing about money is that it controls people, not assets. But you already know this.

                    • felix

                      Well that’s part of it, but it goes further than that Paul.

                      With my money I can make spending decisions that affect what other bodies can do.

                      Do you disagree?

                    • “Well that’s part of it, but it goes further than that Paul.

                      With my money I can make spending decisions that affect what other bodies can do.

                      Do you disagree?”

                      In the sense that this must be true for all private goods, I agree. If I buy an ice-cream you can’t buy the same ice-cream. Or in more general terms, if I buy the control rights over an asset, I have them and you don’t.

                      In the case of public goods, I disagree. They are by definition non rival.

                    • “Sorry for asking twice Paul, I just noticed that you’ve responded to the same question above. My mistake.”

                      Don’t woryy I’m now completely lost as to who has replied to who. There are just too many postings to keep track.

                    • “Sorry for asking twice Paul, I just noticed that you’ve responded to the same question above. My mistake.”

                      Don’t worry I’m now completely lost as to who has replied to who. There are just too many postings to keep track.

                    • Colonial Viper

                      I use the word profit to mean revenue minus costs, which is as it turns out, the definition of profit.

                      Oh you did, did you?

                      Then tell me which revenue stream you were referring to, and which set of costs you were referring to.

                      Or, you might just be obfuscating and making shit up.

                    • “I use the word profit to mean revenue minus costs, which is as it turns out, the definition of profit.

                      Oh you did, did you?

                      Then tell me which revenue stream you were referring to, and which set of costs you were referring to.

                      Or, you might just be obfuscating and making shit up.”

                      Look at any accounting or economics textbook, the definition of profit is revenue minus costs. Revenue is just the price of the good times the quantity sold and the costs refer to the costs of production. That is, the cost of the labour and capital used to produce the good.

                    • Colonial Viper

                      Yeah but as YOU used it in your comment, WHICH revenue stream and WHICH set of costs were YOU referring to.

                      Don’t waste my time by reciting the dictionary definition at me. Give me specifics.

                    • Colonial Viper

                      Paul Walker – you seem to think that everyone around is thick and cannot read up the page to see what you have already written.

                      Your contention that forex trading in NZD must always result in goods and services being bought in NZ, and your contention that profits never really leave NZ, are BULLSHIT of the highest order.

                    • “Paul Walker – you seem to think that everyone around is thick and cannot read up the page to see what you have already written.”

                      Yes I do hope that people will go back and see what I have written so that they will know how wrong you are in what you say.

                      “Your contention that forex trading in NZD must always result in goods and services being bought in NZ, and your contention that profits never really leave NZ, are BULLSHIT of the highest order.”

                      What I actually said was that its doesn’t matter who gets the profits from NZ firms in the sense that if the owners are overseas then they have to sell the NZ$s they get and whoever buys those dollars can either buy NZ produced goods or services with them or come to NZ and spend them here. Should a NZer get the profits they will I assume spend them here.Thus the NZ$s get spent here either way and therefore there is no loss to the NZ economy if overseas investors gets the profits.

                    • Gosman

                      Paul, a lot of leftists, (including the ones on display here), can’t grasp the concept that all trade is by definition balanced. Anybody who accumulates a surplus of currency cannot do anything with that currency except destroy it, (irrational), spend it, or trade it to someone else who is faced with the same situation.

                      Even if they spent the money buying up all the farmland in NZ, for example, then they would still be faced with the dilemma that they would have currency they needed to spend to be of any use. It wouldn’t be in their interests to impoverish NZ as essentially that is like destroying the value of their money.

                      In a sense the countries accumulating profits in nZ are taking a bet that the NZ economy will produce goods and services that they would eventually want. They want NZ to increase it’s wealth so they can use their accumulated wealth.

                      People like felix have a power fixation whereas power in this equation is essentially meaningless.

                  • Gosman

                    Gawd. Leftist trying to understand the market is just so painful to watch.

                    • felix

                      Actually the painful bit is getting economists to understand the place of the market in society.

                    • Gosman

                      Yeah, just tell that market where it’s place is. It needs to be told that it can’t cause problems and must submit to the will of the people as represented by the Government. Where have I seen such idiotic thinking before? Oh that’s right, just every screwed up left wing country like Cuba or Zimbabwe.

                    • felix

                      I prefer democratic control, thanks.

                    • Gosman

                      That’s nice. Democratic control is as ineffective as undemocratic control when it comes to the market. Simply because the ‘will of the people’ deem it so doesn’t make it so.

                    • felix

                      That’s the very definition of “begging the question” there Gosman.

                    • Gosman

                      Explain please.

                    • felix

                      You want me to explain what “begging the question” means? FFS Gos.

                      You offered your belief in the supremecy of the market as evidence for your contention that the market is supreme.

                    • Colonial Viper

                      Democratic control is as ineffective as undemocratic control when it comes to the market.

                      its very easy to regulate/replace markets to serve the wider interests of society, as opposed to just serving the private interests of a few.

                    • Gosman

                      Where did I mentiona anything about the supremacy of the market? These are your words not mine.

                    • felix

                      Where, Gos? Why just a few comments up where you effectively said that the will of the people expressed democratically is of less worth than the will of the market.

                  • “What I am interested in is seeing you address the matter of decision-making power in the economy.”

                    That depends on what you mean. Decision-making power, if you mean by this control rights, is ownership. Control rights come with ownership. In fact the 1986 Hart and Moore approach to the theory of the firm (often called the property rights approach) define ownership to be the holding of residual control rights. In their approach the owner of an asset is whoever get to make decisions in situations not covered by a previous contract.

                    • felix

                      What I mean is that having money is having the power to make decisions.

                      Do you disagree?

                    • Colonial Viper

                      Paul. The vast majority of currency transactions are for the purposes of financial speculation, not for the purposes of settling import/export trades.

                      And yes you are wasting my fucking time.

                    • felix

                      Sorry for asking twice Paul, I just noticed that you’ve responded to the same question above. My mistake.

                  • CV

                    “Paul. The important thing about money is that it controls people, not assets. But you already know this.”

                    In a way you are right. Having control rights over non-human assets gives you control over humans insofar as the humans need the non-human assets to be productive. Having money lets you buy the non-human assets.

                    • Colonial Viper

                      You know fuck all about people, their motivations and desires, their greed and their fear, it seems.

                • KJT

                  It is not being used for goods. It is being used as a speculative commodity.

                  Those dollars may well never be spent back in NZ.

                  • Gosman

                    Highly improbable I would suggest. If you remove currency outside an economy it has no real value. You can only really benefit from holding on to it if other people are wanting it at a trade price more advantageous to you than at the time you came into it.

  14. Tanz 14

    Freaking brilliant speech. Pulled far more punters than Winston. Good stuff from Cunliffe. Key doesn’t take questions from the floor, ever.

  15. prism 15

    What a great discussion with lots of thoughtful, and some pithy comments. Lots of wide thoughts about Labour and Cunliffe – plenty to think about. It seems very dynamic without lots of tosh from they who mustn’t be named.

  16. Investment banker Rob Cameron a key player in the lead-up to the Government’s decision to float stakes in State enterprises says the attempts to sell that to the public have been a disaster. Radio NZ

    These “assets” aren’t assets they are essential services. They are fundamental to the growth and dynamism of the economy. They are owned by the public for good reason and that good reason is that they are monopoly services that need to be run as a single system for the benefit of the whole economy. These essential services exist to provide the whole economy with electricity. They do not exist to subsidise or to provide secure shelter for private capital. If they are to be run to maximise returns to shareholders they will not be run to maximise the benefit to the whole economy.

    more on this at … http://howdaft.blogspot.co.nz/2012/05/subsidising-capital-markets-though.html

    • good to see you posting at howdaft again, darkhorse

    • Gosman 16.2

      When did Air NZ become a monopoly again? Also don’t we already have a privatly owned energy company? Wouldn’t that suggest there isn’t a monopoly in that market as well?

      • darkhorse 16.2.1

        In both cases “competition” is very limited, what does exist is contrived and their public service benefit has been forgotten to the detriment of a large part of the economy, particularly economic growth.  

        Also “competition” in these areas tends to be unstable as a monopoly is the efficient form for such a function – note the US and global airline industry for chronic profitability problems, destructive competition and huge state subsidies keeping things flying – so to speak.

        Also these activities provide services to communities that have more value to the economy than the service value itself – that is they enable economic activity to occur that wouldn’t exist if the service didn’t exist.  For proof of this go no further than the Queenstown tourism market – the market is determined by the airline services provided to it.  The airlines make little profit on this service but this entire community/economy is utterly dependent on the continued existence of those services.  The airlines are gate keeper to an entire community/economy.  That economy would be even bigger if the airlines could be induced to put more flights into the town.

        The marginal value of an airline seat into Queenstown is much higher for the  local economy than it is for the airlines.  In this case the optimum level of service for the whole economy would be much higher than the optimum profitable service for the airline.  The economy loses because there is no mechanism for funding that gap between the two optima. 

        • Gosman 16.2.1.1

          I’d say Russia’s Balance of Payments surplus has more to do with the price of oil rather than anything to do with throwing Goldman Sachs out of the country (which it hasn’t done by the way see http://www.goldmansachs.com/worldwide/russia/index.html). You are also terribly naiive if you think Russia is outside the global economic financial system.

          Regardless is your view that a Balance of Payments surplus is a positive, (and the corrollary of that position being that a Balance of Payments deficit is bad). That isn’t necessarily the case at all. If it was then all countries would be fighting to have a surplus which is obviously an impossibility. Whether a Balance of Payments surplus or deficit is good or bad is dependent on the situation of the economy at one particular time.

          • Paul Walker 16.2.1.1.1

            Don’t think in terms of the balance of payments since it is always zero. Think about the individual accounts that make up the BoP. The state of the capital account is not a problem as such. With a floating exchange rate there is an automatic adjustment mechanism in place. This is one advantage of a floating exchange rate, current/capital account deficits/surpluses are self-correcting.

            What may be more troubling is that the capital account surplus may be a signal of problems in the wider economy. But the answer here is not to attempt to intervene in the exchange rate – as some would have us do -but to find and fix the actual problem. At worst a deficit is a symptom of a disease but it is not the disease itself.

            But it is also common for countries that are growing rapidly to run capital account surpluses. This is simply because of the amount of capital coming into the country to fund the growth.

            • Gosman 16.2.1.1.1.1

              Yeah, when I stated BOP I meant the current account, which is what many people taken to mean by BOP now. However I agree that the Balance of Payments is by definition always in balance.

              BTW Paul, it is refreshing to see someone with such an understanding of the fundamentals of the market. This applies across the political spectrum as many on the right fail to understand these concepts as well.

            • KJT 16.2.1.1.1.2

              “With a floating exchange rate there is an automatic adjustment mechanism in place. This is one advantage of a floating exchange rate, current/capital account deficits/surpluses are self-correcting”.

              Another simplistic economic meme to go with comparative advantage.

              It does not work in practice.

              The theory is every currency will find a natural level so that currency deficits/surpluses between countries even out over time.

              Recent events have shown the fallacy of that meme.

              Speculative currency flows and financial and invisibles movements prevent a “natural balance”.

              Reality has shown it is not “self correcting”.

              • Gosman

                Ummmm…how exactly hasn’t it been shown to balance out over time? Even the example touted by some hard core leftists here as evidence (sic) of John Key’s involvement in economic sabotage, (i.e. the Banker’s Trust short selling of the NZ dollar in the late 80’s), shows that the market rebalances from a position of over or under valuation. The great benefit of the market is you can’t stay out of market equilibrium for very long.

                • KJT

                  What bankers trust did is morally and ethically the same as robbing bank.
                  It should be illegal. It is significant because it says a lot about the currency speculation industry and the amorality of those involved, including Key.

                  The whole point is our exchange rate is not in equilibrium, with regards to the exchange of goods and services, because of demand for our currency, for speculation, which is totally unrelated to demand for NZ goods and services.

                  95% of NZ dollar transactions are simply currency speculation.

                  • Gosman

                    “What bankers trust did is morally and ethically the same as robbing bank”

                    No it is not. Identifying something that under or over valued in your view and then making an investment decision based on your analysis is a complex task and completely legitimate. Many people who trade on TradeMe do this all the time.

                    Do you think buying something cheap and then selling at a higher price is wrong? Strange if you do.

                    • KJT

                      OK. So if I find an undervalued stack of heroin it is fine if I buy it and then sell it on. Yeah right.

                    • Colonial Viper

                      No it is not. Identifying something that under or over valued in your view and then making an investment decision based on your analysis is a complex task and completely legitimate.

                      These investment banks aren’t just passive analysts, they actively manipulate the circumstances and nature of their investment and if market behaviour!

                    • Gosman

                      Are you comparing the NZ dollar to Heroin??? Do you object to currencies full stop?

                      It is a valid position to take admittedly just not one that seems to make much sense.

                      I suppose you could revert to a barter economy to avoid currencies. Can you make change for a sheep?

                    • Colonial Viper

                      Yeah bankers, financiers and other ticket clippers draining capital out of the real economy, into their pockets and into the financialised unproductive economy.

                    • Gosman

                      It is highly difficult to manipulate markets long term. Sure you can do it on a short term basis but if it is going against the fundamental nature of the market eventually you will get burnt and lose.

                    • Colonial Viper

                      I suppose you could revert to a barter economy to avoid currencies. Can you make change for a sheep?

                      All you need are locally or Govt issued currencies which create no debt and attract no interest, as opposed to private bank issued money.

                  • KJT

                    I am saying that if your making 50 million dollars on speculation is going to seriously damage a lot of people.

                    And you do not care.

                    Then it says a lot about you.

                    No different from a drug dealer.

                    • Gosman

                      Making money from trading is not wrong KJT. It is the basics of our economy after all. What does a retailer do if not buying something cheap and selling it at a higher price with little in the way of value add? Do you have a fundamental problem with retailers?

              • No. Adjustment take time but you can’t run capital account surpluses forever, your exchange rate will fall under floating exchange rates, or you will be forced to devalue under a fixed exchange rate.

                You don’t move towards a natural balance you move towards an equilibrium where supply equals demand.

                • Gosman

                  I think where many leftists have trouble with this area is that they mistake short term capital flow as having the effect of a long term impact on the ‘true’ valuation of the dollar. While it is true that they can distort the market the effects diminsh over time. There could be a case made for discouraging this sort of short term ‘speculation’, especially on an economy which is heavily reliant on international trade for it’s wealth. However the impact of such speculation can be mitigated with the use of various FX derivative products and there are other problems that arise when you distinguish between different types of capital flows and treat them differently.

                  • KJT

                    You want to mitigate burglary by doing more of it.

                    The “short term” speculation means that supply and demand for NZ dollars is totally uncoupled from real goods and services. To the detriment of the NZ economy.

                    And private debt, including that of offshore speculators in NZ dollars, became a problem the second our Government made it clear they would bail out banks.

                    You almost hit the nail on your head when you said someone will only hold something if they expect to sell it for more.

                    That is why demand for NZ dollars has no connection to the NZ economy.

                    It is the most speculated currency in the world. Speculators hang onto NZ dollars because they can make a killing on it.

                    • Gosman

                      “That is why demand for NZ dollars has no connection to the NZ economy.”

                      This is evidence of how you just can’t grasp the concepts that Paul and myself are articulating. If the demand for NZ dollars becomes disconnected from what is happening in the economy then there become a great opportunity to make money via speculation because it will soon move back to the equilibrium level.

                • Colonial Viper

                  1) Market equilibrium models of financial markets do not work, never have.
                  2) Devaluation of the NZD would be very helpful for our economy.

                  • Gosman

                    1) That seems to be just your opinion. Where is the reasoned argument backing this up?

                    2) Devaluation is normally only a stop gap measure. No country can continue to devalue for ever and a day. Remember devaluing a currency means the revaluation of others.

        • Gosman 16.2.1.2

          Your understanding of monopolies is also faulty. The fact that nations have to prop up their ‘National’ carriers or subsidise the airline industry is indicative that it should be open to competition rather than controlled by the State.

          • Colonial Viper 16.2.1.2.1

            Why? if private airlines were competitive they would have entered the market by themselves. Truth of the matter is that airline usage is going to become the sole preserve of the wealthy and the elite once more.

            • Gosman 16.2.1.2.1.1

              That’s the market. The question you don’t answer is why should someone in Auckland subsidise the Queenstown economy via their Taxation? If people want to live in Queenstown they should not expect subsidies from the rest of the country for airlines flying in.

              • Colonial Viper

                I know Righties despise the idea of an interdependent community and society, but that’s where we live so get used to it.

                We’re just lucky that the South Island haven’t decided to cut off power to us at the Cook Strait cable, by thinking the way you do.

                • Gosman

                  Is the power that the South Island transfers north not being bought in a market CV? Are the northern consumers being subsidised by those in the South? If so, where is your evidence for this view?

  17. Colonial Viper 17

    Paul Walker, trained parrot – thanks for wasting my time. You seem educated yet deliberately dumb at the same time. Why not put your intellect to good use for our country instead of letting it rot going around in ever decreasing circles of pointless misdirection.

    • Gosman 17.1

      States the person who lives off his girlfriend’s parents money and won’t get off his backside to actually put in to practice that which he advocates.

      • Colonial Viper 17.1.1

        Can I get back to you after I’ve finished my Mediterranean Brunch Plate and bubbly.

        • Gosman 17.1.1.1

          Doesn’t bother me either way. I mean it would be interesting to see you actually do something rather than just talk about it but alternatively if there are less people doing something practical against our system that makes the system safer from being replaced by something idiotic. Your choice but I think it is a win-win for me whatever you decide to do.

  18. If the left are so economically challenged how come that the worlds biggest creditor is China?  They would have to be as left as it gets for a serious government these days

    Simple reason is that they have seen the fallacies of the right’s orthodoxy and the right’s inability to move from that position and are exploiting it to the maximum.

    Not everyday you see a mug like Paul turn up in the global market place willing to mortgage his family’s future so he can afford the luxury of three degrees and a PhD and an indolent lifestyle – for Paul is all of us – stupid arrogant and lazy – and doomed by his vanity and his belief system. 

    And while we are at it bagging the left it seems Russia has a balance of payments surplus ever since it threw Goldman Sachs out of the country and the plague of Pauls that were visited upon it by them (not saying that Russia or China are wonderful here either just smarter than us) and so do Saudi Arabia and a whole lot of other authoritarian and left wing regimes.  

    Meanwhile the free market democracies like Greece and NZ and the US are all seriously broke.  The US and Europe now resorting to printing money to escape that reality (temporarily).

     

    • Gosman 18.1

      China is hardly as left as it gets. I can think of countries like Cuba, North Korea, and even Venezuela which follow more left wing economics. China started to grow economically once they unshackled the private sector in the late 1970’s. It is a state controlled capitalism it is true but it is still capitalist.

      • Colonial Viper 18.1.1

        An endorsement of state controlled capitalism then? It seems that economic growth in state capitalist nations like Russia and China have far outpaced that of neoliberal capitalist nations.

        • Gosman 18.1.1.1

          Russian wealth generation has been almost solely focused on the oil sector. If you want us to follow that model then we will have to open up the country for increased exploration, which might be problematic for Greenies. Chinese growth has been good it is true but eventually they will come up against the fundamental weaknesses of their model. The Japanese discovered this during the 1990’s. Anyway I thought you were against Capitalism full stop especially the sort of crony capitalism that is best represented by China and Russia.

      • darkhorse 18.1.2

        I did qualify the comment by saying “serious” governments.

        You sound like you might be acknowledging that state controlled capitalism – which is still far to the left of where the NZ Labour Party or the greens currently are – is a good thing.  It must be – because it is working.

        There are whole raft of other things for why it works

        It exploits its own people, it cheats at all of the normal conventions of commerce, it has an undervalued currency – a point lost on Polly the Parrot.  China has not got a floating currency – it manages it to give an advantage to its exporters and a penalty against importers – an undervalued currency is no different in effect than a tariff on imports and a subsidy on exports. Dear old Mug Kiwi aided by Polly the Parrot instead run an over-valued currency so we subsidize imports (through borrowing to fund our huge accumulated deficit) and penalize exports.

        As an illustration the NZ Dollar has appreciated by some 50% over the past three years against the US Dollar – why is that – did we strike oil, are our business leaders endowed with spectacular ability?  No Just stupid Polly and his mates allowing speculative cash to flow into the country, vast debt to be run up while the poor exporter who struggles to keep prats like Polly in the comfortable manner in which his obvious spare time suggests he lives.  Sure you can hedge – but that only fuels the speculative disease that has got us into this mess in the first place – and for every winner at a hedge there has to be a loser – minus the bankers commission both ways.

        • Gosman 18.1.2.1

          You quite obviously missed what I wrote about ‘State Capitalism’. I mentioned that the countries following it will eventually run in to it’s limits as it doesn’t tend to be very innovative or flexible. Also if you complain about the problems of crony capitalism in Western nations then this is writ large in countries following the ‘State Capitalism’ model.

          As to why the NZ dollar has appreciated, I think you will find that has more to do with what investors think about the US currency than the Kiwi. We tend to follow closely the Australian dollar and that has shot up due to Chinese demand for raw materials. Very little to do with speculation but then you would know that if you understood markets beyond the superficial level you have shown.

          BTW you never responded to my pointing out about how Goldman Sachs is still active in Russia. Do you now acknowledge that your view they were thrown out is inaccurate?

          • darkhorse 18.1.2.1.1

            By the time china runs into its limits we will have well and truly exceeded ours – it will own us.  I think you will also find that China’s leadership is far more assertive, forward looking and managerial than anything in the west and if things aren’t working out for it it will just go to war.  You see Gosman you are a narrow thinker – they are not.  China has won all of the (proxy) wars (Vietnam Korea) it has been in the past half century simply because it can win by attrition, the same way Stalin won the second world war over a pile of russian bodies.  If China can’t get what it wants the easy way it will take it the hard way.  They have no scruples and do not believe in your foolish dogma =- they use the bits that work for them and discard the rest – or more craftily because they are both clever and cunning they use the fatal flaws in your dogma to their advantage,

            As an example our indebted currency which should be folowoing the drachma down the drain soared as you note while Chinas which should be through the roof is still as steady as ever

            I am also not an advocate for chinese state capitalism or the post soviet model either – just pointing out that these two entities are at present in ascendance while we are not – they are buying us out at a staggering rate. 

            And Goldman Sachs is a metaphor for reform – sure they still have a presence in Russia but not the influence that they exercised in the 80’s and 90’s which was the point I was making = apologies if it was too subtle for you.

            And as for lacking proof I haven’t seen Polly’s list of beneficial foreign investments in NZ yet and you haven’t provided one either and if it was so blindingly obvious that such investment was so good that would be easy. 

    • Gosman 18.2

      BTW, as stated above, Russia never threw Goldman Sachs out. Goldman Sachs has a continued precence in the country. You need to check your facts before regurgitating them on here.

  19. captain hook 19

    doesn’t matter what sort of garbage you espouse the major concerns are:
    paying off the debt.
    heavy metal.
    nuclear contamination.
    species extinction.
    more war?
    you name it.
    up against the wall muthas…

    • Gosman 19.1

      ???

      I think you might need a lie down for a minute or so Captain hook.

  20. Eric Roy quoted in today’s Southland Times

    We’re making good progress in putting the economy on a more productive and competitive footing. And we’ve made early progress dealing with the long-term challenges facing many countries around the world.
    We are breaking our old habits around debt and consumption that marked much of the first decade of the 21st century.
    We are building our future around innovation, higher savings and exports.
    As one of the most indebted developed economies in the world, we don’t have a choice about that. Global markets will remain extremely nervous about debt for years to come and banks won’t be prepared to lend on the scale of the previous decade.

    He must be a raving socialist as Paul and Gosman are both convinced that we don’t have a debt problem and that free trade and corporate ownership of everything will solve all of our problems.  Arch-Trotskyist Eric clearly disagrees with these doyens of the free market.

    He goes on to say …

    Our economy would be affected if global growth weakened and export markets slowed further; or if growth in China slowed.  

    Heaven help us but our miraculously wonderful free market economy is utterly dependent on the continued strong performance of the socialist state-capitalist model in China.  But what happens when China hits the wall as Gosman so blithely predicts.  

    When this happens where do we, as a dag on the bum of the mighty beast China, end up?  I will leave that to your imagination but I could suggest it would be a dark place not far from the beast’s tail.

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    Its our futureBy ScoopBlogPush
    1 day ago
  • A Free Trade Deal must include Free Trade
    Press Release – Federated Farmers Federated Farmers says the Government must hold firm on a deal for agriculture at the Trans Pacific Partnership talks in Hawaii.31 July 2015 A Free Trade Deal must include Free Trade Federated Farmers says the… ...
    Its our futureBy ScoopBlogPush
    1 day ago
  • Will poor TPP dairy outcome stop National selling our homes?
    Press Release – New Zealand Labour Party After failing to protect the right to stop foreign speculators buying our houses its clear the Government is not going to get wins on dairy in their TPP negotiations either, Labours Trade and… ...
    Its our futureBy ScoopBlogPush
    1 day ago
  • More Farmland Falling into Foreign Hands
    Press Release – New Zealand First Party More Farmland Falling into Foreign Hands, Despite English Saying Only Kiwi Farmers Can Make a ProfitMore Farmland Falling into Foreign Hands, Despite English Saying Only Kiwi Farmers Can Make a Profit Finance… ...
    Its our futureBy ScoopBlogPush
    1 day ago
  • Government Tilts the Playing Fields
    The most shocking example of Government bias can be seen when comparing the treatment of the Problem Gambling Foundation and Relationships Aotearoa with how they bail out failing private and Charter Schools.Wanganui Collegiate is an elite Private School of around… ...
    1 day ago
  • Gordon Campbell on Tim Groser missing in action on the TPP
    While rapid change is always possible in trade talks as they approach the deadline, lets assume that the offers on the table for dairy at the TPP talks in Maui won’t improve much beyond the “appallingly bad” level currently being… ...
    2 days ago
  • Gordon Campbell on Tim Groser missing in action on the TPP
    Column – Gordon Campbell While rapid change is always possibl e in trade talks as they approach the deadline, lets assume that the offers on the table for dairy at the TPP talks in Maui wont improve much beyond… ...
    Its our futureBy ScoopBlogPush
    2 days ago
  • Gordon Campbell on Tim Groser missing in action on the TPP
    Column – Gordon Campbell While rapid change is always possibl e in trade talks as they approach the deadline, lets assume that the offers on the table for dairy at the TPP talks in Maui wont improve much beyond… ...
    Its our futureBy ScoopBlogPush
    2 days ago
  • Hone Harawira’s Open Letter to Barack Obama
    Press Release – Hone Harawira Heard you were able to get back to your dads turangawaewae last week. Mean hope you had a good catch up with the whanau. I also hear youre getting ready to endorse the Trans-Pacific Partnership… ...
    Its our futureBy ScoopBlogPush
    2 days ago
  • The Old Man’s Back Again (Dedicated To The Neo-Stalinist Regime)
    Read into this what you will. ...
    2 days ago
  • Top 10 stories of the month – July 2015
    In case you missed something, here are our most read stories for the month.   1 - THE PENCILSWORD: WHO'S AFRAID OF THE TPPA? Laws are made to serve people, not profits, says Toby Morris. So what does… ...
    2 days ago
  • Wynyard Quarter’s fourth birthday
    Given how successful it’s been and how cherished it already is by Aucklanders, we often forget Wynyard Quarter is only four years old. After years of planning and construction it opened to the public in August 2011 just before the… ...
    2 days ago
  • Wynyard Quarter’s fourth birthday
    Given how successful it’s been and how cherished it already is by Aucklanders, we often forget Wynyard Quarter is only four years old. After years of planning and construction it opened to the public in August 2011 just before the… ...
    2 days ago
  • National ignores fraud at charter school
    So, in addition to ignoring poor attendance, bullying, drug use and management infighting at charter schools, National is also ignoring apparent fraud by staff:Staff who withdrew $4000 in cash from a school's account and failed to explain what they spent… ...
    No Right TurnBy Idiot/Savant
    2 days ago
  • National ignores fraud at charter school
    So, in addition to ignoring poor attendance, bullying, drug use and management infighting at charter schools, National is also ignoring apparent fraud by staff:Staff who withdrew $4000 in cash from a school's account and failed to explain what they spent… ...
    No Right TurnBy Idiot/Savant
    2 days ago
  • Government report on sexual & family violence a good first step
    Yesterday the Government released the cabinet paper on progress on the work programme of the Ministerial Group on Family Violence and Sexual Violence. Along with the Human Rights Commissioner and Women’s Refuge, I really welcome the report. I’m relieved that… ...
    frogblogBy Jan Logie
    2 days ago
  • Kick Out The Jams: Beatcomber
    Beatcomber are “a crazy, noisy, psychedelic, super-delayed, saturated, gear orientated, band from Wellington.” That’s how guitarist/vocalist Trent Williams describes them anyway. He says that he modelled his sound off surf music, which he was listening to a lot of when… ...
    2 days ago
  • Weekly Reading: Best longreads on the web
    Our weekly recap highlighting the best feature stories from around the internet.   She's So Rad. The true cost of streaming: Spotify paid Kiwi band with five-star reviews and 90,000 streams just $130 – by Lydia Jenkin,… ...
    2 days ago
  • Honouring Erima Henare – a lasting legacy
    Tamāki Makaurau MP Peeni Henare is proud to have been the “first Te Kōhanga Reo baby” elected to Parliament. All who follow in his footsteps and all Kōhanga Reo students and their families, past and present owe a debt… ...
    2 days ago
  • Honouring Erima Henare – a lasting legacy
    Tamāki Makaurau MP Peeni Henare is proud to have been the “first Te Kōhanga Reo baby” elected to Parliament. All who follow in his footsteps and all Kōhanga Reo students and their families, past and present owe a debt… ...
    2 days ago

  • Will poor TPP dairy outcome stop National selling out our homes?
    After failing to protect the right to stop foreign speculators buying our houses it’s clear the Government is not going to get wins on dairy in their TPP negotiations either, Labour’s Trade and Export spokesperson David Parker says. “Labour has… ...
    21 hours ago
  • Feeling aspirational
    Yesterday the Rich List showed the number of people who have over 50 million of wealth had increased by another 15 people since last year. Collectively this group are now worth 55 billion, an increase of over 7% since last… ...
    GreensBy Jan Logie MP
    22 hours ago
  • Feeling aspirational
    Yesterday the Rich List showed the number of people who have over 50 million of wealth had increased by another 15 people since last year. Collectively this group are now worth 55 billion, an increase of over 7% since last… ...
    GreensBy Jan Logie MP
    22 hours ago
  • Feeling aspirational
    Yesterday the Rich List showed the number of people who have over 50 million of wealth had increased by another 15 people since last year. Collectively this group are now worth 55 billion, an increase of over 7% since last… ...
    GreensBy Jan Logie MP
    22 hours ago
  • Bennett’s legacy a test for Tolley
    Former Social Development Minister Paula Bennett has been thrown under the bus by her successor after its been suggested that Ms Bennett gave the green light to an ‘unethical’ observational study of high-risk children, Labour Children’s spokesperson Jacinda Ardern says.… ...
    23 hours ago
  • Submission to Greater Christchurch Earthquake Recovery: Transition to Rege...
    Thank you for the opportunity to contribute to the Draft Transition Recovery Plan on behalf of the New Zealand Labour Party.  It is important that the citizens of Canterbury have a voice in the governance of the next step of… ...
    1 day ago
  • Troubled school wanted $25,000 dollars to fence farm
    The troubled Whangaruru charter school asked Hekia Parata for $25,000 to fence the school farm at the expense of spending on teaching, Labour’s Education spokesperson Chris Hipkins says. “This unbelievable revelation comes hard on the heels of Hekia Parata’s decision to… ...
    2 days ago
  • Troubled school wanted $25,000 dollars to fence farm
    The troubled Whangaruru charter school asked Hekia Parata for $25,000 to fence the school farm at the expense of spending on teaching, Labour’s Education spokesperson Chris Hipkins says. “This unbelievable revelation comes hard on the heels of Hekia Parata’s decision to… ...
    2 days ago
  • Government report on sexual & family violence a good first step
    Yesterday the Government released the cabinet paper on progress on the work programme of the Ministerial Group on Family Violence and Sexual Violence. Along with the Human Rights Commissioner and Women’s Refuge, I really welcome the report. I’m relieved that… ...
    GreensBy Jan Logie MP
    2 days ago
  • Government report on sexual & family violence a good first step
    Yesterday the Government released the cabinet paper on progress on the work programme of the Ministerial Group on Family Violence and Sexual Violence. Along with the Human Rights Commissioner and Women’s Refuge, I really welcome the report. I’m relieved that… ...
    GreensBy Jan Logie MP
    2 days ago
  • Prisoner voting disqualification and the Bill of Rights Act
    In 2010, National rammed the Electoral (Disqualification of Sentenced Prisoners) Amendment Bill through Parliament. Paul Quinn’s Member’s Bill existed because Paul Quinn thought anyone who’d been imprisoned was a serious offender, and serious offenders had ‘forfeited’ their right to vote.… ...
    GreensBy David Clendon MP
    2 days ago
  • Mainfreight ‘appalled’ by Government’s rail madness
    The Government has been given a serve by New Zealand-based international trucking and logistics firm Mainfreight which says it lacks a national transport strategy, and has treated rail badly, Labour's Transport spokesperson Phil Twyford says. The company has told shareholders it… ...
    3 days ago
  • National’s Health and Safety Reform Bill: less safety and fewer rights at...
    The New Zealand Council of Trade Unions is embarking on a campaign to fight the changes that weaken the Health and Safety Reform bill. As part of the campaign the CTU has organised vigils with the display of 291 crosses… ...
    GreensBy Denise Roche MP
    3 days ago
  • All options need to be put on meat sector table
    Farmers must be given every assurance that all potential risks have been considered before Silver Fern Farms opens its door to foreign equity, Labour’s Primary Industries spokesperson Damien O’Connor says. “The ongoing saga involving the meat sector and amalgamation has… ...
    3 days ago
  • Flag the referendum if 50% or more don’t vote
    Labour has moved to have the second flag referendum canned if the first attracts fewer than half the eligible number of voters, Opposition Leader Andrew Little says. “John Key has already wasted more than $8 million on his vanity project… ...
    3 days ago
  • 90,000 cars reclassified in botched ACC ratings
    New figures obtained by Labour show the ACC Minister’s botched motor vehicle levy system has resulted in 90,000 vehicles having to be reclassified so far – at a cost of $6 million, Labour’s ACC spokesperson Sue Moroney says. “Nikki Kaye’s… ...
    3 days ago
  • Brutal health cuts confirmed, crucial services suffer
    Chronic under-funding by National has seen the health budget slashed by $1.7 billion in just five years, Labour’s Health spokesperson Annette King says. A report by Infometrics, commissioned by Labour, shows health funding has been cut in four of the… ...
    4 days ago
  • Meth ring under Serco’s nose
    The news that two Serco inmates have been arrested for helping to run a methamphetamine ring from prison should be the final straw and see their contract cancelled, says Labour’s Corrections Spokesperson Kelvin Davis. “National has stood by Serco despite… ...
    4 days ago
  • Ministers failing women and their own targets
    New figures showing just five Ministers have met the Government’s own reduced targets for appointing women to state sector boards is evidence National is failing Kiwi women, Labour’s Women’s Affairs spokesperson Sue Moroney says. “The Ministry for Women’s 2015 Gender… ...
    4 days ago
  • Charges up for some as funding up for grabs
    A proposal being considered by the Government would see some people having to pay more for health care and district health boards forced to fight amongst themselves to fund regional health services, Labour’s Health spokesperson Annette King says “Information leaked… ...
    4 days ago
  • Stop experimenting on kids
    The trouble with the Charter school model is that it is a publicly funded experiment on children. The National Government has consistently put its desire to open charter schools ahead of the safety of the children in them, ignoring repeated… ...
    GreensBy Catherine Delahunty MP
    5 days ago
  • Bank puts the squeeze on mid Canterbury farmers
    News that an unnamed bank in Ashburton has put a receiver on notice over financially vulnerable farmers will send a chill through rural New Zealand, says Labour’s Finance Spokesperson Grant Robertson. “The Government needs to work with  New Zealand’s banks… ...
    5 days ago
  • Key is trading away New Zealand land and homes
    John Key yesterday admitted what National dishonestly refused to confirm in Parliament last week – he is trading away New Zealand’s right to control who buys our homes and land, says Opposition leader Andrew Little. “The Prime Minister must now… ...
    5 days ago
  • Razor gang takes scalpel to health
    Plans by the Government to take a scalpel to democratically elected health boards are deceitful and underhand, coming just months after an election during which they were never signalled, Labour’s Health spokesperson Annette King says “Leaked documents reveals a radical… ...
    5 days ago
  • Spin lines show a department in chaos
    Corrections Spin Doctors sending their place holder lines to journalists instead of responding to serious allegations shows the scale of chaos at the department over the Serco scandal, says Labour’s Corrections Spokesperson Kelvin Davis. “As more and more serious allegations… ...
    1 week ago
  • Court ruling shows law should never have been passed
    A High Court ruling that a law banning prisoners from voting is inconsistent with a properly functioning democracy should be a wake-up call for the Government, Labour’s Justice spokesperson Jacinda Ardern says. In an unprecedented ruling Justice Paul Heath has… ...
    1 week ago
  • Judicial Review Gamble Pays Off for Problem Gambling Foundation
    Congratulations are due to the Problem Gambling Foundation (PGFNZ) who have won their legal case around how the Ministry of Health decided to award their contracts for problem gambling services to another service provider. Congratulations are due not just for… ...
    GreensBy Denise Roche MP
    1 week ago
  • Environmental Protection Agency appoints GE advocate as new CEO
    This week, the Environmental Protection Authority Amendment Bill passed its first reading in Parliament. The Bill puts protection of the environment into the core purpose of the Environmental Protection Authority. This month, Dr Allan Freeth, the former Chief Executive of… ...
    GreensBy Steffan Browning MP
    1 week ago
  • Charanpreet Dhaliwal death demands genuine health and safety reform
    The killing of a security guard on his first night on the job is exactly the kind of incident that National’s watered-down health and safety bill won’t prevent, says Te Atatu MP Phil Twyford. The coronial inquest into 22-year-old Charanpreet… ...
    1 week ago
  • Arbitrary sanctions hit children hardest
    Increasing numbers of single parents are being penalised under a regime that is overly focussed on sanctions rather than getting more people into work, Labour’s Social Development spokesperson Carmel Sepuloni says. “Figures, obtained through Parliamentary questions show 3000 more sanctions,… ...
    1 week ago
  • Hekia just won’t face the facts
    Hekia Parata’s decision to keep troubled Whangaruru Charter school open despite being presented with a catalogue of failure defies belief, goes against official advice and breaks a Government promise to close these schools if they were failing, says Labour’s Education… ...
    1 week ago
  • No more silent witnesses
    Yesterday I attended the launch of a new initiative developed by and for Asian, Middle eastern and African youth to support young people to name and get support if there is domestic violence at home. The impact on children of… ...
    GreensBy Jan Logie MP
    1 week ago
  • Single Use Plastic Bags campaign – Some wins and some green-washing
    As we near the end of Plastic Free July I’m nearing the conclusion of my Say No To Plastic Bag tour when I will have completed all 30 of my public meetings. The campaign was designed to work with community… ...
    GreensBy Denise Roche MP
    1 week ago
  • Single Use Plastic Bags campaign – Some wins and some green-washing
    As we near the end of Plastic Free July I’m nearing the conclusion of my Say No To Plastic Bag tour when I will have completed all 30 of my public meetings. The campaign was designed to work with community… ...
    GreensBy Denise Roche MP
    1 week ago
  • Minister must take responsibility for problem gambling debacle
    The Government’s handling of the Problem Gambling Foundation’s axing in a cost-cutting exercise has been ham-fisted and harmful to some of the most vulnerable people in society, Associate Health Labour spokesperson David Clark says.“Today’s court ruling overturning the axing of… ...
    1 week ago
  • Labour will not support TPP if it undermines NZ sovereignty
    The Labour Party will not support the Trans Pacific Partnership Agreement unless key protections for New Zealanders are met, Opposition leader Andrew Little says.“Labour supports free trade. However, we will not support a TPP agreement that undermines New Zealand’s sovereignty. ...
    1 week ago
  • Coleman can’t ignore latest warnings
    Resident doctors have advised that a severe staffing shortage at North Shore Hospital is putting patients’ lives at risk, Labour’s Health spokesperson Annette King says. “They say a mismatch between staffing levels and patient workloads at North Shore has… ...
    1 week ago
  • ACC must remove barriers to appeals
    The Government must prioritise removing barriers to justice for ACC claimants following a damning report by Acclaim Otago, Labour’s ACC spokesperson Sue Moroney says. “ACC Minister Nikki Kaye must urgently scrap her flawed plan to remove claimant’s right to redress… ...
    1 week ago
  • Six months’ paid parental leave back on the agenda
    Six months’ paid parental leave is back on the agenda and a step closer to reality for Kiwi parents after Labour’s new Member’s Bill was pulled from today’s ballot, the Bill’s sponsor and Labour MP Sue Moroney says. “My Bill… ...
    1 week ago
  • Sole parents at risk of having no income
    New requirements for sole parents to undertake a reapplication process after a year is likely to mean a large number will face benefit cancellations, but not because they have obtained work, Labour’s Social Development spokesperson Carmel Sepuloni says. “Increasing numbers… ...
    1 week ago
  • Juking the Welfare Stats Again
    Last week the government’s major initiative to combat child poverty (a paltry $25 increase) was exposed for what it is, a lie. The Government, through the Budget this year, claims to be engaging in the child poverty debate, but instead,… ...
    GreensBy Jan Logie MP
    1 week ago
  • OCR rate cut a result of flagging economy
    The Reserve Bank's decision to cut the Official Cash Rate to 3 per cent shows there is no encore for the so-called 'rock star' economy, says Labour's Finance Spokesperson Grant Robertson.   "Today's interest rate cut comes off the back… ...
    1 week ago
  • Reboot to an innovation economy, an Internet economy and a clean economy
    In my short 33 years on this planet we’ve seen phenomenal technological, economic and social change, and it’s realistic to expect the next 33 will see even more, even faster change. You can see it in the non-descript warehouse near… ...
    GreensBy Gareth Hughes MP
    1 week ago
  • Bill that puts the environment into the EPA passes first hurdle
    A Bill that puts the environment squarely into legislation governing the Environmental Protection Authority passed its first reading today, says Meka Whaitiri.  “I introduced this member’s bill as the current law doesn’t actually make protecting the environment a goal of… ...
    1 week ago
  • Key’s KiwiSaver deception exposed
    KiwiSaver statistics released today expose John Key's claim that the cutting of the kickstart payment "will not make a blind bit of difference to the number of people who join KiwiSaver” to be duplicitous, says Labour Finance Spokesperson Grant Robertson.  “Official… ...
    1 week ago
  • Minimum Wage Amendment Bill to protect contractors
    All New Zealanders should be treated fairly at work. Currently, the law allows non-employment relationships to be used to get around the minimum wage. This is unfair, says Labour MP David Parker. “The Minimum Wage (Contractor Remuneration) Amendment Bill, a… ...
    1 week ago
  • Bill raises bar to protect Kiwi farmland
    The Government’s rubber-stamping of every one of the nearly 400 applications from overseas investors to buy New Zealand farm land over the last three years proves tougher laws are needed, Labour MP Phil Goff says. “In the last term of… ...
    1 week ago
  • Costly flag referendum should be dumped
    John Key must ditch the flag referendum before any more taxpayer money is wasted, Opposition Leader Andrew Little says. “Millions of dollars could be saved if the Prime Minister called a halt to this hugely expensive, and highly unpopular, vanity… ...
    1 week ago
  • Nats letting Serco off scot free
    Government members have prevented Parliament’s Law and Order select committee from getting answers out of a senior Serco director about the fight clubs being run at Mt Eden prisons, says Labour’s Corrections Spokesperson Kelvin Davis. “At today’s Law and Order… ...
    1 week ago
  • Charter school experiment turns into shambles
    The National Government’s charter school experiment has descended into chaos and it’s time for Hekia Parata to stop trying to cover up the full extent of the problems, Labour’s Education spokesperson Chris Hipkins says. “The Education Minister must release all… ...
    1 week ago

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