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A bribe is not a plan

Written By: - Date published: 11:55 am, June 15th, 2009 - 39 comments
Categories: national - Tags:

As recently posted here, there is a vast gulf between National’s rhetoric and the reality on tax cuts. Before the election National sold its tax cut programme as the answer to every question. Tax cuts were the centrepiece of National’s economic plan and its response to the economic crisis:

Key: Tax cuts are a top priority for National. They are an essential part of our five-point plan for the economy to make New Zealand a wealthier, more successful country.

National never truly believed this rhetoric or it would never have cancelled tax cuts in the budget. The reality is that tax cuts were just an election bribe.

Tax cuts don’t cause growth (though they may sometimes be coincidentally correlated with it, allowing this specious claim to continue). The April 1st tax cuts (which National did not cancel) certainly did not cause any growth in NZ:

Tax cuts leave retailers cold

Tax cuts were an April Fool’s joke for retailers – sales went down, not up.

Statistics New Zealand figures showed core retail sales, excluding vehicles and fuel, dipped 0.1 per cent in April despite the tax cuts. The benefit from tax cuts, falling mortgage interest rates in the past year, rising migration, and a pick-up in housing sales in recent weeks have come to less than nought.

People are being more cautious, saving their tax cuts or paying down debt because of rising unemployment, economists said.

Some economists had expected a 1 per cent lift in core sales figures because of tax cuts from the start of April. But the positives had been overwhelmed by the negatives of rising unemployment and lower wage growth, economists said.

The benefits of the April 1 tax cuts went to the wrong people, the better off, who put the money in the bank. Tax cuts in and of themselves don’t cause growth, and National knows this, which is why it cancelled the future cuts when they became unaffordable. The way to get growth is to invest in jobs and wages, education and training, research and development, export incentives and other forms of targeted stimulus – and on these terms the 2009 budget was a whole heap of fail.

So what is National’s plan for the economy? It isn’t the tax cuts – that bribe got cancelled. It isn’t real investment in growth – the budget cupboard was bare. So what is it? Does National have a plan at all?

39 comments on “A bribe is not a plan ”

  1. Maynard J 1

    At least they cancelled the proposed ones, knowing they will be ineffectual. They could have carried on regardless and on an ideological bent, so credit to English and National for doing the right thing there – even if it was clearly one round of tax cuts too late.

    • r0b 1.1

      I quite agree!

      But now what? Once you’ve chucked away “an essential part” of your “five-point plan for the economy”, what happens next? What’s the new plan?

  2. Kevin Welsh 2

    Maynard J, I do not believe for one minute that they EVER planned for them to go ahead.

    This was good old vote buying at its best. If not, then Bill English and John Key are probably the two stupidest financial people in the world. The writing was on the wall before the 2008 General Election only they chose to ignore it.

    If someone like me can read the signs that were appearing on an almost daily basis, why couldn’t they?

  3. OhPlease 3

    “tax cuts don’t cause growth”. I am disappointed at TheStandard’s continuing push that economic growth is the be all and end all. The highest growing regions are China and India – go live there and see how it feels. Whether tax cuts cause or retard growth is not the issue. Tax cuts undermine social security- that’s the problem.

    [lprent: “The Standard” is a dumb machine – it doesn’t have either brains or an opinion. This site has a hell of a lot of people posting under either pseudonyms or Guest Posts. It’d be rare to find more than a few with a common opinion on anything.

    You could talk to the author of the post(s), but I’d suggest that talking to a dumb machine is just likely to diminish peoples opinion of your intelligence. Please read the about and policy. ]

    • Lanthanide 3.1

      China and India are the highest growing areas because they have the most growth left to do. Duh.

    • r0b 3.2

      Lynn, or one of the posters here, would probably remind you that the views of individual posters are not the views of “The Standard” (whatever that means!).

      But I agree that the growth fixation is a bad thing. See what’s wrong with GDP as a measure, and stuff on the alternative measure of GPI (here here).

      Now that’s a debate I’d love to see in this country!

    • Anthony Karinski 3.3

      “”The Standard” is a dumb machine – it doesn’t have either brains or an opinion. This site has a hell of a lot of people posting under either pseudonyms or Guest Posts. It’d be rare to find more than a few with a common opinion on anything. ”

      The “dumb” Standard machine must be showing some signs of AI as I’ve seen it write several posts lately. such as this: http://www.thestandard.org.nz/boniface-hits-the-mark/ You guys should get ready for a trip to Stockholm and collect that Nobel price 😉

      [lprent: So what you are saying is that you have no ability to observe.

      It you did have, then you’d have noticed that what goes up under “The Standard” are public notices or direct intact copies of material from elsewhere on the web.

      The authors on this site don’t want to take credit for other peoples work. We seldom even do an “Indeed” level comment on those types of posts so they go up under a generic poster name “The Standard”. So there is not real content from people on this site.

      We failed to find a better name for the task so that is what it defaulted to. ]

      • jarbury 3.3.1

        I’m not a particularly big fan of anonymous guest posts. Generally if someone takes the time and effort to put together a post for The Standard (as I did once) then chances are they are a regular commenter here and should have the guts to put their name to what they write.

        Just my 2c

        • lprent 3.3.1.1

          That is pretty much a matter of personal preference. I’d prefer that they used a pseudonym to distinguish themselves from the other guest posts. But I’m not a great believer in “real names” simply because I’ve been around the nets for decades, and whatever you say persists. It simply aids the stalkers and refuse eaters like Whaledreck. However a good pseudonym carries weight after you’ve built it up through sheer force of good opinions.

          But really I’m more interested in presenting the content and ideas. The comments section will analyze it to death anyway. There have only been a few times that we have amended a post and those were not for being objectionable. They were for being offensive in the eyes of the moderators.

          People cannot try to say what the authors should be writing about. But they analyze (ie using brains to criticize) why the author was daft to write what they did. A bit of a training exercise for the author.

        • r0b 3.3.1.2

          I’m not a particularly big fan of anonymous guest posts.

          I’m interested in other people’s opinions on this.

          I’ve written quite a few unsigned guest posts. My reasoning is that its good to have a fair volume of such posts going through the system so that other people, who might feel more shy about writing, might be encouraged by example to make their own contributions.

          I don’t feel any need to put the name “r0b” on these things because its the ideas and the debate that matter to me, not the name attached to them (and of course the name is pretty meaningless in my case anyway – a “tribute” to Muldoon, who got me in to politics, “bless him”).

          But if the majority feel, like Jarbury, that this is copping out in some way, then I’d think again about my position on this.

          • jarbury 3.3.1.2.1

            I think where I’m coming from is that an opinion piece (which blog posts clearly are) is someone’s opinion on a matter, so I think it is quite important to work out whose opinion it actually is.

            I do understand the thinking behind wanting to make the issue the big deal, rather than who posted it, but generally as people aren’t using their real names I doubt that the identity of the poster will end up being the focus of the conversation.

            In fact you could end up with a situation where I read a guest post, don’t really agree with it but get to the end and find out that it was written by someone whose comments I usually do agree with. That might make me think twice about my original interpretation of the post and really try to understand the point they were getting across. Furthermore, if I have a question on the post it’s quite good to know who of the commenters is actually going to respond to it.

      • Anthony Karinski 3.3.2

        Fair enough. But I think most people would say that the usage of the moniker “The Standard’ implies a bit more than bits and bytes on a server. Presumably it’s used collectively by several authors on paste and copy pieces. As such I would consider it akin to a newspaper editorial, which often is anonymous and authored by different journalists and editors over time. The editorial thus conveys the “collective’ opinion of several jurnos (although a number of them are likely to disagree with other jurnos’ editorials) that together make up a paper like the NZ Herald.

        We’re well aware that the printing machines at the Herald don’t write the editorials themselves. Still the Heralds editorials, just as the Standard pieces, are considered by most readers the views of an entity representing the collective voice of the people using the moniker. Thus the pieces “The Standard’ chooses to highlight, and to some extent comment on, communicate messages you as a group are comfortable publishing under the same name.

        • Eddie 3.3.2.1

          I’ll put it this way:

          Where an opinion piece is marked with “The Standard” as the author it is the editorial line of The Standard. However, I think we’ve only done that once, when we called for a referendum on the super city.

          Where a copy and paste job of someone else’s work is marked as “The Standard” all you can really read into that is that an author at The Standard thinks it’s worth passing on.

          Anything else is the personal opinion of the individual author it’s been attributed to.

          • r0b 3.3.2.1.1

            I think you’d have to agree that those two uses of “The Standard” can be confusing Eddie, and there was also that bunch of posts on “the standard line” a while back – I can see how its all very confusing to newcomers.

            I wonder if, as The Standard grows and evolves, the writing team want to revisit this and editorial policy in general every now and again, see if they want to make any changes, and make sure everyone is on the same page.

  4. Maynard J 4

    “I do not believe for one minute that they EVER planned for them to go ahead.”

    It is hard to prove a negative – but remember that they could have found a way if they really wanted to. Only (“only”..oh well, anyway) $500m was cut from Crown expenditure. If they really wanted to, they could have found a lot more, to find tax cuts.

    I also think that people’s recollection of events can become somewhat compressed. At the time of the egenral election things were bad, but it was a very fluid and rapidly worsening picture – National would have had to change their policy in mid-campaign. Realistically, that would be virtually impossible and I am not sure it was as bad as you suggest at election time.

    You could be right, but I would not be confident in making that call myself.

    rob, that is indeed the question. It shows what reliance on tax-cuts as a platform does – and makes you wonder why people wanted a long-term (virtually permanent) solution to a short term problem (if you consider surpluses a ‘problem’). Labour countered that argument poorly, but it was a simple one – “there is extra money, now give us some”. Counter: “there will not always be extra money” or “while there is extra money now, if we give you some that will expose us in the future” and so on.

    The other four points, and are they as flawed as the one already discarded:

    Bringing discipline to government spending.
    Tackling bureaucracy and red tape.
    An unwavering focus on lifting education standards.
    Boosting infrastructure to help this country grow.

    1 – rhetoric and lip-service to the right.
    2 – economic growth at the expense of society and the environment. So 1800s
    3 – Like adult education? Or forcing focus on kids passing exams, not actual teaching? Hmmm.
    4 – Seven big roads. National cycleway. So a few jobs in construction, eventually, and maybe some tourism a few years down the track, so to speak.

    Looks like a half-point plan to me.

    What about education for the newly unemployed? A new green deal? Investing in people, instead of some tar-seal?

    • r0b 4.1

      Nice summary!

      A green new deal – oh yes please. One thing that Obama is at least starting to get right.

      The Obama administration is using Earth Day for launching another all-out effort to sell the American public and key lawmakers on “green jobs” as the solution for the United States’ environmental and economic woes.

      It has become increasingly clear that the administration’s central theme — not to mention its pitch to key lawmakers — is that energy-related legislative priorities are based not only on environmental merits but on their ability to create jobs.

      Both Obama’s allies and his critics say such a message is aimed at broadening the constituency for such initiatives — rallying the traditional “green” vote as well as blue-collar workers and the U.S. manufacturing base.

      “This is the kind of ‘for everybody Earth Day agenda’ that the Obama administration stands for,” White House Council on Environmental Quality adviser Van Jones said yesterday. “There’s a wingspan on these jobs goes from GED to Ph.D.”

      Jones added, “The administration is committed that green jobs be good jobs, and there’s a strong commitment to make sure that it actually happens.”

      Full credit to our own Greens on this:

      The Green New Deal


      Now that’s what a plan looks like!

      • Maynard J 4.1.1

        That document from the greens was a piece of work alright. I was disappointed there was no shadow budget from Labour, or at least a few suggested policies. I guess that they are unlikely to have been able to forumulate something detailed so soon after being relegated to the opposition (and the inevitable “but you had nine years rigamarole”), and hope for more next budget. It is just a shame that there was nothing, given the special circumstances of this budget.

  5. Lew 5

    Is it redundant to point out that a tax cut is no more a “bribe” than interest-free student loans or regular minimum wage increases?

    ‘Bribe’ is just a propaganda term in this usage; it clouds the policy issue rather than making it clearer.

    L

    • r0b 5.1

      Is it redundant to point out that a tax cut is no more a “bribe’ than interest-free student loans or regular minimum wage increases?

      Not at all, it’s point well worth discussing. Two important differences I think between (A) tax cuts and (B) loans / wages.

      First, I think the case for the social and economic benefits of B are much clearer than the benefits of A.

      Second, B was actually delivered, and A was not (at least not fully). The promise of A going in to the 08 election was unrealistic.

      ‘Bribe’ is just a propaganda term in this usage; it clouds the policy issue rather than making it clearer.

      I disagree. Let’s call a spade a spade. When you promise something with no realistic chance of delivering it, which is what National did with tax cuts, it isn’t a real policy, it’s an election bribe. Propaganda is what National did with it’s unrealistic promises, it isn’t propaganda to point that out.

      • Maynard J 5.1.1

        I also point out that A is a direct payment from the Government to people, B is not. that makes a difference as to whether it is a ‘bribe’.

        “When you promise something with no realistic chance of delivering it, which is what National did with tax cuts, it isn’t a real policy, it’s an election bribe. ”

        I am not sure this criteria is right, r0b. Would a bribe not be a bribe whether it is paid out or not?

        I see Lew’s point – there are differences between the two, and I agree that there are social benefits from B that are not received from A, but the term ‘bribe’ might not help – would working for families count?

        So, the connotations of a bribe are an illegal (or morally dubious) payment as an inducement for a favour. This was merely a promise of a stupid payment for a favour, and perfectly above board in a legal sense. Morally dubious? Debatable (endlessly) – but does that make it a bribe? Grey area emergning in my mind. Adopting a fence sitting position for time being.

        • r0b 5.1.1.1

          Well no it’s not a “bribe” in the sense of an illegal secretive payment, but isn’t “election bribe” a general enough concept?

          • Maynard J 5.1.1.1.1

            Maybe I am taking a too literal view. But I am coming from the direction of it being a term that promotes a cynicism in politics – anything that a party wants to do for you is just a bribe to get your vote so that they can get power, their real goal.

            Kind of like PC – there is a correct application for the term that got lost years ago. You could argue this specific case either way really (well that is stating the obvious isn’t it, since that is what is happening right here!).

          • r0b 5.1.1.1.2

            But I am coming from the direction of it being a term that promotes a cynicism in politics

            I think that’s a really interesting point – you should do a guest post. What is the role of cynicism in politics? Is it something we on the left should rise above, or something that we have to use of we want to win elections? Do we have to fight fire with fire?

            Watching the way the last Labour government was eventually brought down by 1000 little cynical lies I must admit that my attitudes have hardened considerably in the “cynacism with cynacism” direction (not lies, but robust language and debate). Perhaps I’m wrong. Convince me!

          • Lew 5.1.1.1.3

            MJ,

            a term that promotes a cynicism in politics … Kind of like PC there is a correct application for the term that got lost years ago.

            This is exactly what I mean by ‘propaganda term’ – a term whose actual meaning is so divorced from its usage as to confuse an issue or render it less easy to understand, rather than clarifying it. A term where you come away with the valence (positive or negative) but no actual understanding of what’s being discussed.

            I’ve been meaning to do a post on common propaganda terms in NZ discourse for ages – I just haven’t had time as yet. A good start would be a list.

            L

        • vto 5.1.1.2

          Maynard “I also point out that A is a direct payment from the Government to people”

          How wrong, how wrong.

          It is in fact the complete opposite, but the perception of A as how you describe it Mr Maynard undercuts the whole debate about tax and its place. This is a Cullen view of tax.

          People need to learn that tax cuts are not a payment by the govt. Until that is understood all debate is rather pointless on this issue.

          • Maynard J 5.1.1.2.1

            yeah yeah, I was arguing the difference between a direct transfer of wealth versus indirect.

            If you pay a phone bill and your line rental is reduced, then it is not a ‘payment by the phone company’. I am sure we agree there.

            You are arguing that it is as simple with the government. It is not. The term was one that brooks objection such as yours, but there is plenty of room for debate here and it is not something the left (sorry, “people”) needs to realise, as you suggest. Also wrong.

            Suggesting that until people see things your way there is no point having the debate is a touch of the absurd, is it not?

          • vto 5.1.1.2.2

            Sorry, sometimes I only get time for a quick snap at someone’s heels and interfere annoyingly with a bigger debate… Feel free to ignore.

            But I would be interested mr maynard to hear what the argument is for tax cuts in any way being a payment from the govt to the taxpayer. You disagreed with me but offered no support for that disagreement.

          • Maynard J 5.1.1.2.3

            That is ok vto. Was not trying to respond fully, just say that a payment from government might not be the correct term, but nor is the converse (letting people keep their own money). The latter implies that your whole pay packet is yours, and that it is wrong to have any of it taken in tax but it sort of has to happen.

            Given that we are paying for various services over the course of our working life, neither is strictly true. I like to think that what is taxed is the correct amount due for living in society, and since I would not have that money without society, it woul be wrong to think of it as all ‘my’ money in the first place. I appreciate how truly abhorrent that view is to some people!

          • vto 5.1.1.2.4

            Partial, partial M J. You say “The latter implies that your whole pay packet is yours, and that it is wrong to have any of it taken in tax but it sort of has to happen.”

            The second part of that sentence of yours does not necessarily follow. I think most people would consider the first part correct but not the second and are in fact happy to pay to the govt an amount for the necessary services.

            I imagine most people consider themselves part of society and that they need to (and want to) contribute. But that does not mean that their daily toil is not their own. Contribution is made by the simple act of going about daily business as well as all other forms of contribution such as taxation.

            Anyway, perhaps I getting all tanglemangled in pedantry…

            (Tho I do stand by my original point that tax cuts are not a payment by govt)

          • Pascal's bookie 5.1.1.2.5

            vto, would you agree, perhaps, that when ‘tax cuts’ are implemented without a cutting of spending to compensate the crown accounts for the foregone revenue, then that could be classed as a ‘payment by the government’?

            Or rather, a tax on the future taxpayers for the benefit of those who get tax cuts today. A transfer payment if you like, from our grandkids to ourselves.

            Not saying this in relation to the here and now, necessarily, but just as a principle.

      • Lew 5.1.2

        r0b, heh, an early draft contained a similar sort of discussion of the relative merits, but then I thought the relative merits redundant : )

        Let’s call a spade a spade. When you promise something with no realistic chance of delivering it, which is what National did with tax cuts, it isn’t a real policy, it’s an election bribe.

        So is a characteristic of an ‘election bribe’ that it not be delivered? I’m not so sure about that. I don’t think this is so much calling a spade a spade as calling a shovel a fork.

        L

        • r0b 5.1.2.1

          So is a characteristic of an ‘election bribe’ that it not be delivered?

          I wouldn’t have thought so – some election bribes get delivered and some don’t. But when you promise something and don’t deliver it, I think that raises the odds that it was a bribe, that you weren’t committed to it.

          Anyway, if you’re looking for Labour’s bribes, I think their tax cuts is a much more obvious example than loans / wages.

          • Lew 5.1.2.1.1

            r0b,

            But when you promise something and don’t deliver it, I think that raises the odds that it was a bribe, that you weren’t committed to it.

            Ok. So a bribe in this usage is something offered as a convenience or inducement to the electorate, rather than for its policy value. Need something have no policy value to be a bribe, or is it a matter of intent on the campaigning party? Because I can roll out plenty of people who reckon the tax cuts had legitimate policy value, and the examples I cited for Labour’s side (and WFF) all have manifest policy value as well. I think this is what makes ‘bribe’ a propaganda term – it contains implicit speculation as to the motives of a political actor, which commonly run counter to their stated motives or their motives in principle. That’s contentious, and a political question of judgement rather than one of actual factual fact.

            L

          • r0b 5.1.2.1.2

            That’s contentious, and a political question of judgement rather than one of actual factual fact.

            Well yes, of course. Pedantio ad absurdium?

            As per most discussion on political blogs, you can make a case, but ultimately the “facts” are largely unknown or unknowable. Pending the release of a time machine to go back and listen in on National in 2008, or a mind reading machine, then we are indeed speculating “as to the motives of a political actor”.

            But some speculations are sounder than others. If tax cuts really were an “essential part” of an economic and recovery plan, if they really did provably cause desirable growth, then you’d have to be mad to cut them. The gap between the rhetoric and the reality here is too big (at least for me) to believe that the rhetoric was ever sincere.

            Got to go for now…

          • Lew 5.1.2.1.3

            r0b,

            But some speculations are sounder than others. If tax cuts really were an “essential part’ of an economic and recovery plan, if they really did provably cause desirable growth, then you’d have to be mad to cut them. The gap between the rhetoric and the reality here is too big (at least for me) to believe that the rhetoric was ever sincere.

            Right. But that gap doesn’t make it a bribe, it makes it a broken election promise and deliberate misleading of the electorate.
            The definition is important: ‘bribe’ implies the bribed got something for their trouble. That isn’t the case here, so it obscures the facts of the policy and the nature of the deception behind it.

            I can see why ‘bribe’ is being used because it’s a nice shorthand for a lot of bad stuff which folk would like to tag National – a stronger propaganda term to use here than ‘broken promise’ because the latter puts Labour and its supporters in a bind as they can be seen to now be calling for the tax cuts they opposed. In fact, they’re not, they’re calling for truth in campaigning and calling attention to wider matter of National’s cynical politics and the lack of trustworthiness – but that message has been pretty well lost because the tactical matter of tax cuts being wrongly framed confuses the issue.

            L

  6. OhPlease 6

    Oops! Sorry – my mistake. New to this. Should have rephrased as “my problem with the poster’s argument is that he/she assumes that if tax cuts were growth enhancing, then they would be acceptable. I disagree. “

  7. r0b 7

    Oops! Sorry my mistake. New to this

    No worries, good on you for joining the debate. I for one think your point is perfectly valid, hence the GPI links above.

  8. Akldnut 8

    Well I believe that a bribe is not dependent on whether or not you get the amount or item that is offered, as long as the person/organisation gets from the “seduced” a result from the offer. (Not necessarily the result that they were after)

    When there is no payout it is then deemed
    1. A Lie
    2. Fraud
    3. A Bribe
    4. Politicing

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