Can’t help won’t help

Written By: - Date published: 7:01 am, April 20th, 2011 - 108 comments
Categories: class war, cost of living, economy, john key - Tags: ,

Once upon a time John Key was promising great things to the “underclass”, and to New Zealanders in general. But now that he’s in government he reckons that he can’t help after all:

Key: We can’t help your price pain

Prime Minister John Key yesterday acknowledged New Zealanders were “feeling the pinch” as prices rose at their fastest rate in two years led by fuel costs, something he said the Government could do little about.

Stop right there John. Around half of the current inflation rate is driven by your GST increase (you remember, the GST that you promised not raise). Lower GST and raise taxes at the top end of personal income (or better still, bring in a Tobin Tax). That will reduce the price pain.

Then you can really get stuck in. Raise the minimum wage and the benefits, withdraw the anti-worker legislation that helps keep wages down. That will reduce the price pain. Get to work now on a proper public transport system so that people can start to wean themselves off their unaffordable cars. That will reduce the price pain. Bring in price controls on staple foodstuffs like milk (because on NZ wages we can’t afford to pay international prices for the foods that we produce here at home). That will reduce the price pain. Stop bailing out your very good buddies in failing finance companies and put some of the money in to reversing the early childhood education cuts. That will reduce the price pain.

In fact, why not just stop screwing up the economy in general. Stop under investing in productive assets like the super fund. Stop strangling the recovery by cutting expenditure and driving up unemployment. Stop threatening to sell long term productive assets for short term gain. Stop the financial bungling that is driving us to an all time record budget deficit. I reckon that will reduce the price pain.

Engineers sometimes use the phrase “broken by design”. John Key’s National government is helpless by design. There’s plenty that they could be doing to assist the ever increasing number of Kiwis who are struggling with rising costs. It’s not that they can’t help. It’s that they won’t.

Update: Don’t miss RobC’s comment @ 4.

108 comments on “Can’t help won’t help ”

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  1. PeteG 1
    20 April 2011 at 7:35 am

    Raising the minimum wage will also raise wages above that which will push up costs and prices and inflation which will bring pressure on raising minimum wages which will…

    • mickysavage 1.1
      20 April 2011 at 7:52 am

      … also increase disposable income amongst the poorer who will then buy better food and clothing thereby improving business conditions for local businesses who will employ more people who will then spend more …

      PeteG  we have a government who is loving seeing wages drop.  Do you have a skerret of proof that this is helping the economy?

    • IrishBill 1.2
      20 April 2011 at 7:54 am

      There’s an easy fix for that, Pete. Tax the wage-inflation out at the top end. Problem solved.

      • PeteG 1.2.1
        20 April 2011 at 8:39 am

        Taxing more at the top end won’t limit wages or costs, if anything it may push them up even more. Anyway, most businesses are small and medium sized, and will have few if any top bracket incomes.
         
        If wage costs go up prices will go up, as will inflation. It’s a fairly simple principle to understand.

        • Colonial Viper 1.2.1.1
          20 April 2011 at 9:02 am

          What a load of bollocks
           
          So if we want inflation to fall to 0% how much should we cut the minimum wage by PeteG?
           
          Especially when you consider that Key and English have been bleating on about how all these price rises are due to exogenous effects? (not wage levels)
           
          Oh doesn’t work that way does it? Except when you are running your wage suppression routine.
           
          Funny how you never mentioned before how big tax cuts for the top 10% of earners would be inflationary.
           
          Working against your fellow countrymen, you are a little shit
           
           

          • RobC 1.2.1.1.1
            20 April 2011 at 9:14 am

            Beat me to it CV. PeteG your argument is overly-simplistic, even by your own standards.

            The far bigger problem to perhaps ponder is prices are going up despite low/zero wage growth.

            Or, to put it another way, how much would petrol increase if the minimum wage was lifted to $15/hr?

            • Colonial Viper 1.2.1.1.1.1
              20 April 2011 at 9:16 am

              Heh gotta be fast in this game mate 🙂
               
              Actually its a team effort and nice having you on the team 🙂

            • PeteG 1.2.1.1.1.2
              20 April 2011 at 12:58 pm

              Of course price rises with low wage growth is the problem now.
               
              If there was higher wage growth price rises would be more of a problem – on top of things like unrelated petrol price increases (I thought you would have known that).
               

              • Colonial Viper …
                21 April 2011 at 1:06 am

                Don;t be a condescending shit

                Of course price rises with low wage growth is the problem now.

                No, Mr Economics Brainiac, this is not the problem now, this is merely the symptom.

                The problem now is that your best mates Key and English, both of whom think you are a resource to be used and discarded, have placed NZ in the unenviable economic position of stagflation.

                Also you are a little creep for thinking that inflation is a real problem, when in fact hungry kids and cold families are the real problem.
                 
                And if certain sectors of the market insist on profiteering while delivering no additional value, simply slap them with punitive tax rates until they behave.

          • infused 1.2.1.1.2
            20 April 2011 at 11:25 am

            It’s quite simple really. Min wage goes up, prices go up. Slim margins out there boys and girls. It’s just a circle.

            • McFlock 1.2.1.1.2.1
              20 April 2011 at 3:32 pm

              Actually, it’s a velodrome.
              There are two cyclists on the velodrome, one called “wages” and another called “prices”. The farther wages pull ahead of prices, the better off we are. But prices then pedals harder to try to catch up.
              And the faster they both go the greater the chance of an accident.
              At the moment, prices are moving sluggishly forward but are still pulling away from wages. As the gap widens, we are worse off. The GST increase and other government policies give prices a shove, but hold down wages. This is good for the 1%ers. Sucks to everyone else. What the rest of us need is a government that will encourage wages to pedal harder, but also know when to slow both riders down so there’s not a huge crash.
               

              • Drakula …
                20 April 2011 at 10:40 pm

                McFlock that is a very good analogy and it is probably the best way of teaching economics to folk like me.

                So what you are saying is that the Nat/Act are 100% for the 1% I am all for higher wages, but the wages could be static and the working man could have a much higher standard of living if the speculative market at the top end is reigned in.

                As Irish Bill suggests tax the top 10%

                My analogy here is a pack of cards; even before the quakes rental accommodation in Christchurch was unaffordable because of the lack of accommodation.

                The Green Party want to put a Capital Gains Tax  on say the top 5% of the developers, that money can then be shuffled down to build state housing thereby providing affordable accommodation.

                • McFlock …
                  21 April 2011 at 12:27 am

                  Anyone who says that Key is putting the interests of the majority of NZers ahead of his own should explain how this fits in with the tax cut of $thousands he gave himself while the bulk of NZ (i.e. the poor and working poor) are worse off. So yeah, he favours the 1% over everyone else (coincidentally “1%er” is the expression some bikers use to describe themselves as outside the laws and behaviours of decent society. Notably the criminal biker gangs.).
                  As for the Greens, if they are looking at a capital gains tax do they have a reason to distinguish between “top 5% property developers” and any owner of a property they don’t live in but rent to others? If not then it’s a straw policy to be bartered away.
                   
                   
                   

    • The Voice of Reason 1.3
      20 April 2011 at 7:56 am

      Er, no. Lifting the minimum wage has no effect on wage rates above the minimum. There is no linkage between the two things at all, Pete. Check the detail on your talking points email, there’ll be better arguments than that to use.

      • PeteG 1.3.1
        20 April 2011 at 8:48 am

        I presume you mean above the new minimum, if the minimum was raised to $15 per hour then at the very least you have increased substantially the number of people earning the minimum.
         
        But maybe you’re right, unions with workers now on the new minimum wage would be happy to just stay at the bottom and not try and push above it. No incentive to be more productive wouldn’t be a problem either. The employment gulag.

        • Colonial Viper 1.3.1.1
          20 April 2011 at 9:04 am

          Minimum wage should be at least $16/hr. That will begin to resemble a living wage.
           
          Also workers should have 5 weeks holidays annually.
           
          And dont be fucking stupid, managers and CEOs have far greater power over increasing “workplace productivity” than the person manning the checkout.
           
          Higher wages will force managers and CEOs to actually use people productively instead of using them like serf labour.

          Advocating for a country full of cheap wage slaves, shame on you

          • RobC 1.3.1.1.1
            20 April 2011 at 9:09 am

            C’mon CV – cheap wages gives us a competitive advantage. Get with the times. 😀

            • Colonial Viper 1.3.1.1.1.1
              20 April 2011 at 9:13 am

              Did I mention that both men and women should have access to 20 weeks maternity/paternity leave? That’ll soak up a bit more of that excess labour pool as well as helping families better bond with their young children.
               
              🙂

          • PeteG 1.3.1.1.2
            20 April 2011 at 9:22 am

            Shame on you for advocating for a wage/price spiral – inflation hurts those on lower wages more than anyone.
             
            Shame on you for advocating for even more young and unskilled workers to be shut out of getting into the workforce.
             
            I think high end incomes have become obscenely high. I’d like to see low income workers and most beneficiaries have more money. But simplistic measures with adverse flow on effects is a stupid approach.

            • Colonial Viper 1.3.1.1.2.1
              20 April 2011 at 9:26 am

              LOL mate you have no understanding of economics, didn’t you hear English and Key, inflation we are seeing now is EXOGENOUS not INDOGENOUS
               
              Or are you calling them liars?
               
              Shame on you for working for the wealthy against the worse off!
               

              Shame on you for advocating for even more young and unskilled workers to be shut out of getting into the workforce.
               

              They can always go to Australia mate, a country which looks after its workers and knows how to keep talent.
               
              You are laughable

            • felix 1.3.1.1.2.2
              20 April 2011 at 10:31 am

              Pete Whatshisface: “simplistic measures with adverse flow on effects is a stupid approach.”
               
              Like massively cutting taxes for the richest people in society while simultaneously raising the cost of all goods and services for everybody.

            • Draco T Bastard 1.3.1.1.2.3
              20 April 2011 at 12:13 pm

              …inflation hurts those on lower wages more than anyone.

              Nope, inflation most hurts those with money in the bank.
               
              And there’s an easy way to preclude the, supposed (it’s never been proven to exist), wage/price spiral – enact legislation that forces wages up at the rate of the CPI every quarter or, even better, every 6 weeks.

          • infused 1.3.1.1.3
            20 April 2011 at 11:26 am

            Yes, because it’s hard enough paying 4 weeks out now eh? Fuck 5 weeks.

            • Colonial Viper 1.3.1.1.3.1
              21 April 2011 at 1:09 am

              Five weeks annual leave, and we need another stat day in the second half of the year.
               
              And don’t forget that Anzac day is getting Mondayised.

        • The Voice of Reason 1.3.1.2
          20 April 2011 at 10:06 am

          Doh! You can’t even remember your own argument, pete. It was you that said lifting ther minimum would have an effect on the wages above it. It’s comment 1 on this thread, go back and have a look. Idiot.

          • PeteG 1.3.1.2.1
            20 April 2011 at 10:27 am

            That was a sarcastic comment. Would it help if I highlighted any sarcasm?

            • The Voice of Reason 1.3.1.2.1.1
              20 April 2011 at 12:18 pm

              Well, sarcasm is the lowest form of wit, so I suppose it’s appropriate for someone as humour deprived as yourself, pete. Still, it’s nice that you acknowlege that you make shit up for effect.

    • ianmac 1.4
      20 April 2011 at 10:27 am

      Pete. There is evidence that raising the minimum wage does not have a noticeable effect on unemployment. Read the stats recently but don’t know where. Your comment is simply a NAct call of misdirection.

      • PeteG 1.4.1
        20 April 2011 at 10:31 am

        What are the stats on the effects of raising the minimum wage by 15-25% during the worst recession in nearly a century?

        • felix 1.4.1.1
          20 April 2011 at 10:33 am

          I don’t know, why don’t you just make something up like you usually do. Then we can waste our time handing you your ass all day.

        • Draco T Bastard 1.4.1.2
          20 April 2011 at 12:18 pm

          Well, research suggests it would increase employment. Well, that’s what’s happened elsewhere when the minimum wages were increased.

          • PeteG 1.4.1.2.1
            20 April 2011 at 1:37 pm

            DTB’s link on increasing minimum wages closes with this:

            Most studies have found that the entire net effect of an increase in minimum wage results in a slight decrease in employment. A 10 percent increase would most likely lead to only a 1 percent reduction in employment….
            Over 24 cities throughout the United States have enacted a livable wage requirement, in order that people are able to meet their basic needs, such as food, shelter, heat, and clothing. This requirement has resulted in a minor cost increase for employers and a 2.2 percent decrease in employment.

            “Only” 1% and 2.2% decreases in employment? Even in NZ that’s a lot of people out of work.

            • Draco T Bastard 1.4.1.2.1.1
              20 April 2011 at 3:42 pm

              The whole point is that it’s not cut and dried. ATM, I’d say increasing minimum wages in NZ would increase employment because it would increase demand.
               
              Nice to see you focussing on that bit which reinforces your ideology though.

  2. illuminatedtiger 2
    20 April 2011 at 7:51 am

    And yet many NZ voters are still taking it, “Please Sir, may I have another?”. About time they woke up.

  3. joe90 3
    20 April 2011 at 7:59 am

    The owner of an Auckland cleaning company admits that his staff are worse off than they ever were and laments that if he were to raise his workers minimum wage larger companies would force him out of business.

    Of course Laidlaw missed the opportunity to remind the owner that the employees of the larger company will earn the higher minimum wage and that the only loss would be his and his profit margin.

  4. RobC 4
    20 April 2011 at 8:03 am

    From John Key’s 2008 State of the Nation address:

    Well, I’ve got a challenge for the Prime Minister.  Before she asks for another three years, why doesn’t she answer the questions Kiwis are really asking, like:
    … why are grocery and petrol prices going through the roof?

    Nice to see after nearly three years in charge he’s found the answer:

    It’s something “the Government could do little about”

    Some other gems from 2008:

    “When the going gets this tough, is it any wonder that Kiwis look longingly at our Aussie cousins?  Our Aussie cousins, who get paid a third more than us for doing the same job.”

    “My message to Kiwis is that under National you will come first – not the fanciful whims of big-spending Ministers who have long since stopped worrying about how to make ends meet.”

  5. Colonial Viper 5
    20 April 2011 at 9:06 am

    New Zealanders: Abandoned by the National Government.

    LAB – you have got to attack National’s completely wrong headed free-market neoliberalism, an economic philosophy which has been proven to be wrong time and time again over the last 30 years, and which has been driven by the very wealthy to become even richer.

    • RobC 5.1
      20 April 2011 at 9:19 am

      All Labour need to do is get Key’s sound bites from the 2008 election campaign and line them up against his comments since and let people see for themselves the duplicity. Ain’t that hard to find them.

  6. Colonial Viper 6
    20 April 2011 at 9:12 am

    by the way, economists have no idea how to generate inflation, so PeteG is talking out of the wrong hole when he claims that he knows anything about it.
     
    Notice how he didn’t claim that tax cuts of $80/week plus for high earners would be inflationary?
     
    Because increases in take home pay are not.

    • PeteG 6.1
      20 April 2011 at 9:28 am

      You’re sounding very confused or confusing. Probably both.
       
      Increases in take home pay are not directly inflationary.
      Increases in wage costs in businesses (and SOEs) are inflationary.
      You don’t need to be an economist to understand that.

      • Colonial Viper 6.1.1
        20 April 2011 at 9:31 am

        You’re sounding like a science ficition man
         
        All you are doing is suppressing wages for the many and saying its Ok for the rich to get higher and higher incomes
         
        If businesses can’t deal with higher wage costs, they should fail.

        BTW: 99.5% of economists know jackshit why are you still kowtowing to them

        • infused 6.1.1.1
          20 April 2011 at 11:29 am

          Such a simple man CV. The world doesn’t work that way.

          • Draco T Bastard 6.1.1.1.1
            20 April 2011 at 3:43 pm

            The world doesn’t work the way the neo-liberal economists say nor how the psychopaths in NACT say.

          • Colonial Viper 6.1.1.1.2
            21 April 2011 at 1:12 am

            You are right infused, I am a simple man.
             
            Because I’ve taken a long hard look at where all your bullshit Nobel-prize winning mathematised free market economic theories have got us:
             
            Deep in an economic hole with no way up, with John Key and Bill English pissing on our heads calling it “trickle down” and asking us to be “grateful”.

  7. Bill 7
    20 April 2011 at 9:25 am

    Can’t put in price controls without running foul of legal fish hooks in those stupid ‘free trade’ deals.
     
    Can’t raise wages etc, ’cause that would be betraying the people and institutions of ‘globalisation’. And the proponents of globalisation are who really matter to governments (both Labour led and National led). Still.
     
    Anyway. From the ‘proper’ perspective, the economy isn’t being screwed up. It is bleeding out just nice and pooling just fine below where international financiers and institutions meet.
     
    We (the likes of you and I) are here to sustain the privilege and power of those elites. And thanks to globalisation, the level of power and privilege enjoyed by elites is no longer determined or contained within the relative positioning of ‘their’ country’s national economy in an international context of competing economies. And so, neither is poverty and hardship.
     
    Remember how ‘you and I’ enjoyed a certain level of prosperity on the back of the ‘third world’ being bled dry when the ‘third world’ was ‘over there’? Previous generations ( depending on their place of birth) did quite well out of that arrangement. But today every country is increasingly viewed as having a ‘third world’ component and a ‘first world’ component.
     
    So ask yourself. What did those with their hands on the levers of power do to alleviate the circumstances of those in the ‘third world’ when the ‘third world’ was demarcated by geographical location? And what do you expect them to do now that the ‘third world’ is demarcated by ones position in society no matter where in the world one’s society is located?

    • r0b 7.1
      20 April 2011 at 9:32 am

      Uncomfortable truths Bill.  You should get back to writing the odd post or two – you’ve got one right there I reckon.

      • Bill 7.1.1
        20 April 2011 at 9:40 am

        Haven’t given up on writing posts r0b. Just been too busy this past wee while. Truth be told, I shouldn’t be spending time commenting at the moment.
         
        Thanks for the encouragement. I’ll be back to posting anon.

    • Bright Red 7.2
      20 April 2011 at 11:04 am

      well, we can’t put price controls on petrol because if we do then the oil importers won’t be able to afford to buy the oil from overseas to make it.
      We don’t make enough oil to supply our needs, therefore, we have to pay the price that others are willing to sell it to us for. And that’s the world price.

      • higherstandard 7.2.1
        20 April 2011 at 11:13 am

        But we do put indirect price controls on petrol.

        National Land Transport Fund tax
        ACC motor Vehicle account
        Local Authorities Fuel tax 
        Petroleum or Engine Fuels Monitoring levy 
        ETS charge 

        and then GST on top

        • Bright Red 7.2.1.1
          20 April 2011 at 3:05 pm

          that’s not what a price control is.
          If we get rid of the taxation on petrol then either we have to raise more revenue somehwere else in the economy, cut more spending, or borrow more.
          I prefer to tax the stuff that’s killing the planet, myself.

  8. PeteG 8
    20 April 2011 at 9:38 am

    We (the likes of you and I) are here to sustain the privilege and power of those elites.

    And we (the likes of you and I) willingly sustain the privilege and power of those elites by taking on more debt than we need to and paying excessive interest, and by buying far more stuff than we need, often with money borrowed off the elites.

    One of our biggest problems is expecting government to fix all our problems while we blindly continue over consuming, absolving ourselves of any responsibility.

    • Bill 8.1
      20 April 2011 at 9:46 am

      I don’t see that we willingly sustain the people who control all the resources and who control the distribution of those resources and who will violently defend their ‘right’ to do so.
       
      And mainstream modes of communication and information don’t exactly over run us with discussion or analysis of possible alternatives.
       
      The earth is flat. And everything is in it’s rightful, natural  place.
       
       

    • uke 8.2
      20 April 2011 at 10:00 am

      …by buying far more stuff than we need…

      Agree with this bit. But isn’t the global economy based on consumer capitalism? And aren’t we constantly told that if consumer spending contracted, the whole shebang might come tumbling down?

      Tocqueville was probably right when he identified materialism as the central value in a modern democracy, the one measure of success that everybody could respect and aspire too. Unfortunately, he also seems to have assumed that economic growth could be unending and infinite.

      • PeteG 8.2.1
        20 April 2011 at 10:09 am

        And aren’t we constantly told that if consumer spending contracted, the whole shebang might come tumbling down?

        Yes, that’s the bind we are in.
         
        Waiting for and expecting governments to wake up and do something about it means we will all sleepwalk to eventual disaster, we just aren\’t sure which generation will hit the wall.

        Revolutionary ideas and actions don’t come from governments. They come from the people, when they see a big enough need or a forced into forcing something diferent.

        • Puddleglum 8.2.1.1
          20 April 2011 at 11:18 am

          PeteG! You’re a closet revolutionary. Me too, though I vacillate between keeping the ‘r’ there and taking it out.

          The problem with hoping for an ‘evolutionary’ (incrementalist/gradualist) approach is that it involves knowingly consigning large numbers of people to considerable suffering for an indeterminate length of time. You could only do that if you had some surety that ‘all’s well that ends well’ or are able to let yourself off the moral hook of doing something now (as clumsy and hamfisted as those attempts might seem, in a technical sense).

          The problem, of course, with hoping for a revolutionary approach is what economists smugly call ‘unintended consequences’, such as co-option of the revolution for other purposes. They point out that there’s a danger of simply ‘shifting’ the suffering (Pareto optimality and all that). Well, distributing suffering more widely (and thinly) sounds pretty good to me.

          The fact is that the history of life on this planet involves both revolution and evolution, completely interwoven to the point where it’s pretty hard to disentangle.

          I’ve come to the conclusion that I can’t personally consign people to suffering if I am, now, able to respond to it (i.e., I see myself as ‘response-able’ in relation to the suffering – that’s the kind of ‘personal responsibility’ I’m hot on). I might make mistakes (‘unintended consequences’) but, if I’m still focused on relieving suffering, I’ll respond quickly to remedy them as best as I can.

          In a democracy (of limited sorts), part of that response is to cast my vote in particular ways. And I admit that I make my own judgments about ‘suffering’. Someone on a high income might ‘suffer’ when they are taxed more, but there’s suffering and then there’s suffering. We can’t eradicate all suffering but we can work, together, to alleviate its most egregious forms.

          That’s why I’m less concerned about the size of the pie (and ‘growing’ it) and far more concerned about how it is distributed, both in terms of material well-being and power (which are two sides to the same coin). In fact, if evolution is any indication, growth that doesn’t arise from a reasonably stable arrangement of ‘parts’, each getting what they need, is very unstable growth (e.g., cancer, population explosions and collapses).

          I’m looking for some sort of hybrid (r)evolutionary approach, but – as the song goes – I still haven’t found what I’m looking for.

          Then again, a social democratic option seems like the best on offer, at present. Get that underway, in a 21st century form, and who knows what might evolve (or what revolutions it might trigger)?

    • Colonial Viper 8.3
      20 April 2011 at 10:01 am

      One of our biggest problems is expecting government to fix all our problems while we blindly continue over consuming, absolving ourselves of any responsibility.

      1) We expect Govt not to add to the problems of the Many while helping out the Few. Someone should tell National.
       
      2) Many are getting into higher debt because of price asset speculation by the rich, and because they are not being paid enough to enjoy the higher standards of living they have been come to expect.
       
      3) Responsibility for the Poor, largesse for the Rich: more of the same eh PeteG?

      PeteG pays lip service to not increasing wealth inequality in NZ but of course that is what his Masters are hard at work accomplishing

      • infused 8.3.1
        20 April 2011 at 11:36 am

        1) We expect Govt not to add to the problems of the Many while helping out the Few. Someone should tell National.

        They are not adding to the problems.

        2) Many are getting into higher debt because of price asset speculation by the rich, and because they are not being paid enough to enjoy the higher standards of living they have been come to expect.

        How is price and asset speculation a National problem? It’s being driven from overseas.

        • Colonial Viper 8.3.1.1
          20 April 2011 at 11:55 am

          1) National blew inflation out with GST increases that they decided. That’s National’s problem.
          2) National kowtows to free market ideology and is happy to let foreigners do the driving from overseas. That’s National’s problem.

          • Jim Nald 8.3.1.1.1
            20 April 2011 at 12:05 pm

            Aaahhh, is that what Nationals’ hands-off free market ideology is about?
            They take Kiwi taxpayers’ hands off
            And get foreigners do the driving

            Guess who said this:
            “I always felt I had a stake in New Zealand. I saw a ladder to take me higher and I made my own way up the rungs.”

            Yeah right. Now we don’t have a stake in New Zealand, thanks to you kicking away the ladder.

  9. Steve Withers 9
    20 April 2011 at 9:44 am

    PeteG: National normally resorts to wage supression combined with higher unemployment (to maintain wage suppression). Unemployment always goes up when National is in office. It can’t be regarded as an accident. The problem they have now is costs are rising, wages are static…and taxes can’t rise to meet inflation. So they cut spending…and wages stay flat and tax revenue falls…..and so on. It’s a death spiral. Paul Krugman talks about it a lot…and the evidence he is correct is everywhere to be seen. 

    • PeteG 9.1
      20 April 2011 at 10:01 am

      National took office this time as the biggest financial shock since the Great Depression hit, resulting in an increase in unemployment. Unemployment also increased in many other countries – like the US where a leftish President had just taken over. You can’t reasonably blame National for increased unemployment this time.
       
      You can argue that there may have been a smaller increase in unempoyment if National had reacted differently, or if Labour had remained in power, but that’s all hypothetical. If Labour had remained in power and put the minimum wage up to $15 unempoyment would most likely have increased more, and more businesses would probably have failed (also increasing unemployment).

      • felix 9.1.1
        20 April 2011 at 10:22 am

        Hypothetical? Everything in your last sentence is hypothetical, and furthermore based on untested hypothesis. Essentially pure opinion.
         
        Unlike “unemployment always goes up when National is in office” which is a statement of empirical fact.

        • infused 9.1.1.1
          20 April 2011 at 11:37 am

          Except it’s not fact this time.

          • felix 9.1.1.1.1
            20 April 2011 at 3:53 pm

            Unemployment hasn’t gone up under National but somehow infused is the only person in the country who knows it.

            • McFlock 9.1.1.1.1.1
              20 April 2011 at 4:07 pm

              That’s not a demonstrated fact – at the moment it’s a “nil comprehension” hypothesis…

      • ianmac 9.1.2
        20 April 2011 at 10:41 am

        PeteG: “If Labour had remained in power and put the minimum wage up to $15 unempoyment would most likely have increased more, and more businesses would probably have failed (also increasing unemployment).”

        That has been proven recently to be not so. In spite of constant calls from Key/English that what you say is true, the research published recently shows minimal effect on unemployment and that many social advantages flow on from higher min wages north of $15 per hour as in Australia. (Someone else must have read that research in last week or so?)

      • Draco T Bastard 9.1.3
        20 April 2011 at 12:48 pm

        National took office this time as the biggest financial shock since the Great Depression hit,

        And that great big shock was caused by the same method as the Great Depression – Laissez-faire or what we now call neo-liberalism. Hell, the US government even cut taxes on the rich just a few years before (in 1925 to be precise) the stock market crash of 1929 and for the same reason that Jonkey and NACT cut taxes on the rich this time – to “boost” growth. I think we can be pretty certain that the same thing will happen again – another depression.
         
        Giving all the wealth to the rich always results in the economy collapsing.

      • Colonial Viper 9.1.4
        21 April 2011 at 1:15 am

        and put the minimum wage up to $15 unempoyment would most likely have increased more, and more businesses would probably have failed (also increasing unemployment).
         

        Businesses and business owners who can’t hack it in the market place SHOULD FAIL and make room for better companies and managers.
         
        Its a simple law of the market economy.
         
        Oh, except when John Key and Bill English ride in on white stallions, wasting hundreds of millions of tax payer dollars on bailouts, socialising the losses of the wealthy.

  10. Anthony 10
    20 April 2011 at 10:16 am

    Key can pretty much say whatever he wants at the moment….

  11. mikesh 11
    20 April 2011 at 10:54 am

    Agree with this bit. But isn’t the global economy based on consumer capitalism? And aren’t we constantly told that if consumer spending contracted, the whole shebang might come tumbling down?

    We seem to be on a treadmill in which we have to keep on consuming in order to stave off depressions. At one time Labour espoused socialism, which would have involved using the resources of the state, which doesn’t imply state ownership, to promote economic activity so as to ensure that there would be enough for everybody.

    • uke 11.1
      20 April 2011 at 11:54 am

      Aside from the matter of how wealth is distributed, there is a dangerous assumption that seems to inform by liberal capitalism and (traditional) socialism: the unquestioned value of growth and progress. That everything is on an unstoppable escalator to an ever bigger and better “future”. Or rather than Bigger is the only Better. Whether private or state-owned.

      On RNZ last night, there was an excellent BBC doco about the future of energy. One interviewee proposed that all economic growth to this point in history has been built on the presumption of unlimited energy supply and a cost of energy production always economical viz demand. Now that accessible energy is increasingly insecure, we will have to find a new driver for the growth of human civilisation. And there are no obvious alternatives. (The interviewer rather lamely suggested “imagination”.) Finally, the guy said, we will probably have to learn to live in no-growth economies.

      The mainstream Left must address this difficult challenge. Unfortunately, it would seem from current polls that NZ voters are in a form of denial called “aspiration” or “I want to be like John Key”, which makes this an uninviting prospect.

  12. Afewknowthetruth 12
    20 April 2011 at 11:12 am

    Bill outlined most of the pertinent points. The ‘good old days’ were a product of stealing resources from poor nations and transferring the wealth to rich nations.

    What Bill omitted to say is that the world is now running out of easily extractable resources  – copper, phosphate rock, oil, good quality coal, fish, old forest timber, fresh water, and a mulitude of others, and even soil is being lost at a phenomenal rate in many parts of the world. Meanwhile the world population keeps going up, meaning we have more people chasing declining resources, especially food. It’s a no win game for most people on this planet, but the elites will manage to make handsome profits from the predicament we are in. Key and his buddies are just part of the international looting gang, of course.  

    The entire economic system is funadamentally flawed and is progressing towards the point of complete collapse. During the lead up to complete collapse we should anticipate ever more resouirce wars, higher prices for practically everything and a stampede to ‘loot the till’ amongst the elites.  

    Needless to say, the Labour movement will continue to ignore all the elephants in the room -peak oil, climate instability, species extinction, acidification of the oceans etc.- and pretend they can do so much better by tweaking the system slightly. 

    We actually need a complete rethink. However, the general public are so grossly uninformed/misinformed they keep voting for ‘dinosurs’, and most candidates are both uninformed and gutless.

    These are ‘interesting times’ in the sense of the Chinese curse: ‘May you live in interesting times’.

    This will all end very badly, I’m afraid.

  13. randal 13
    20 April 2011 at 11:45 am

    the economic prospects for this country were outlined in the world bank report of 1968.
    nothing has changed.
    every change of government just brings a new gang of manques looking for preferment and patronage and pandering to the electorate.
    there is no limit to the STUFF that governments promise and the degree of resentment and hostility it can encourage to keep itself inpower by organising immature differences among the sections of society.
    I hesitate to call them classes because in the long run we are all peasants growing food for rich people somewhere else.
    to keep the system going is the tricky bit without causing a meltdwon in social cohesion.
    Key figures at the moment that he can afford to ignore the poor but his day is coming.
    meanwhile its flat out promising overseas trips at a discount, leaf blowers, happy places, angle grinders, orbital sanders, and crap teevee, etc etc etc ad naseum.
    it doesnt have to do anything else.

  14. Draco T Bastard 14
    20 April 2011 at 12:05 pm

    Stop the financial bungling that is driving us to an all time record budget deficit.

    It’s not financial bungling – John Key and the NACTS are doing the damage to the economy on purpose so as to transfer our wealth into their and their rich mates hands.

  15. joe90 15
    20 April 2011 at 12:06 pm

    sigh…. the great global financial crash was so bad that U.S execs were rewarded with an average 23% pay rise..poor lambs..

    In 2010, Standard & Poor’s 500 Index company CEOs received, on average, $11.4 million in total compensation.[1] Based on 299 companies’ most recent pay data for 2010, their combined total CEO pay of $3.4 billion could support 102,325 median workers’ jobs.[2]

    • PeteG 15.1
      20 April 2011 at 1:21 pm

      That points to one of our biggest problems – no matter what great ideas we might come up with here in New Zealand to establish a more equitable and sustainable society we are likely to get dragged down by the financial and consumer and political mess of the US regardless. If other parts of the world don’t stuff things before then.
       
      Is every society that grows destined to boom and bust?
      Can we invent something more important than replacement energy sources – a sustainable society plateau. It would require a major mindset overhaul.
      Or do we just shrug our shoulders and carry on, hoping it won’t crash completely while we are still alive.

      • The Voice of Reason 15.1.1
        20 April 2011 at 1:34 pm

        There is a name for what you propose, pete. Socialism. A planned economy is central to all left wing economics and the key to avoiding the boom/bust cycle. Welcome to the revolution, comrade, it’s great to have you aboard.

        • PeteG 15.1.1.1
          20 April 2011 at 1:44 pm

          The problem is, Socialism hasn’t worked successfully anywhere yet. Apart from the ideological arguments, there is one serious flaw – human nature.
          That can be split into three things – greed, laziness, power.
          Humans are not wired to live happily with everyone putting in and taking out equal amounts without anyone trying to exert control.

          • The Voice of Reason 15.1.1.1.1
            20 April 2011 at 1:59 pm

            Again, you are very very wrong. Apart from the last 250 years, most human society has been extremely co-operative. Until the advent of the industrial revolution, most communities (families, tribes, villages) had a fair division of labour and spoils. The ultimate sanction for the lazy, greedy or power hungry was expulsion from the group.  

            • PeteG 15.1.1.1.1.1
              20 April 2011 at 2:21 pm

              Co-operative? Like, if the peasants co-operate they won’t starve or suffer too much?
              Village societies were often co-operative but still with uneven levels of society. For all of known human history there has been a tendency for there to be leading classes. Some people want to lead, most people want to be led.

              • Colonial Viper …
                20 April 2011 at 6:40 pm

                Yeah buddy but show me the society where people want their leaders to eat $7000 suppers, and their poor followers to eat cat food.

          • Bill 15.1.1.1.2
            20 April 2011 at 2:43 pm

            PeteG. Does it not cross your mind that the economic system we operate within rewards selfishness and greed and so encourages those facets of human nature to come to the fore?
             
            And does it not cross your mind that the economic system we operate within offers no tangible reward for selflessness and altruism and so discourages those facets of human nature?
             
            And so does it not cross your mind that over time with a skewed system of reward that more and more people elevate undesirable aspects of human nature within themselves because that is what is required to be a ‘successful’ person in our current economic context or even to merely survive in some degree of material comfort?

            • PeteG 15.1.1.1.2.1
              20 April 2011 at 3:00 pm

              We have also generally rewarded power and status for a long time too.
               
              It’s a programmed mindset – but it’s not universal* and presumably not irreversible.
               
              * I know I’m not the only one who is happy to live comfortably but basically rather than aspire to richness (which has plenty of it’s own down sides)
              * I’m not entirely selfish, although I guess being selfless could ultimately be a form of selfishness, depends on what pushes ones buttons
              * I don’t seek power over others, nor do I go ga-ga at the sight of the powerful, the celebrities, the rich, I’m more likley to scoff at the limitations of their high bubbles

              • Puddleglum …
                20 April 2011 at 3:46 pm

                Probably one of Richard Dawkins’ most unfortunate legacies that remains as a tarry residue in popular understandings of the evolutionary bases of human nature is the idea that humans are essentially selfish. He came to regret the famous passage in the Selfish Gene where he claimed that those – like him – looking to establish a cooperative society will receive no help from nature:

                “I hope that takes care of the more serious misunderstandings. Nevertheless, I do with hindsight notice lapses of my own on the very same subject. These are to be found especially in Chapter 1, epitomised by the sentence ‘Let us try to teach generosity and altruism because we are born selfish’. There is nothing wrong with teaching generosity and altruism, but ‘born selfish’ is misleading.”

                It’s actually a big leap from understanding the logic of natural selection to claiming that humans are, by their nature, selfish, lazy, etc.. There’s more than one way to skin a cat and natural selection has explored a number of those ways when it comes to humans. 

                He even suggests an alternative title:

                “Another good alternative to The Selfish Gene would have been The Cooperative Gene. It sounds paradoxically opposite, but a central part of the book argues for a form of cooperation among self-interested genes.”

                Cooperation is just another way of achieving replication. But notice that doesn’t make the people who cooperate ‘selfish’ – it makes them cooperative.

                Our emotional make up (e.g., the good feelings we get from helping others – in fact that’s one of the surest ways to boost your ‘subjective well-being’; feelings of gratitude, etc.) testifies to the extremely natural predisposition we have to be cooperative and contribute to society. That it is based on a metaphorically ‘selfish’ process (natural selection) is neither here nor there.

                • Puddleglum …
                  20 April 2011 at 3:47 pm

                  The link for the above quotes is here.

                • PeteG …
                  20 April 2011 at 4:07 pm

                  “The Cooperative Gene” sounds fine to me, that’s important in small groups, to village level anyway. But competition for resources brings “The Competitve Gene” into play, inter-village, inter-region, inter-country.
                   
                  Modern satellite societies are far removed from the co-operative village level, therefore competition dominates, for possessions, for status, for partners, on the road, in education, in the workplace, on blogs etc.
                  If that is a reasonable assumption then the continued massing of populations into more congested but more impersonal living conditions means competition will override co-operation more and more.
                   
                  Is it simply a natural inclination or can something turn us back to co-operation?

                  • Bill …
                    20 April 2011 at 4:29 pm

                    If we had an economy that promoted cooperation and that was structured in such a way that competition became a liability rather than an asset, then yes. No problem.
                     
                    The idea that resources are, or become a focus of competition is true only insofar as resource use and distribution is controlled by market mechanisms. And market mechanisms are intrinsically competitive.

                    • Draco T Bastard …
                      20 April 2011 at 6:00 pm

                      The idea that resources are, or become a focus of competition is true only insofar as resource use and distribution is controlled by market mechanisms.

                      Resources also become a source of “competition” once they become scarce. The over population of the world together with the natural over-use of resources that the profit driven free-market encourages creates far more scarcity and pushes this conflict further into war. Cooperation along with strict population controls could eliminate this excess resource use as we would be able to live within the Renewable Resource Base.

                • MrSmith …
                  20 April 2011 at 6:19 pm

                  I would argue the reason we cooperate is because we now understand that there is more benefit to ourselves by doing so, meaning we are basically selfish. So we cooperate because we are selfish.

                  • Colonial Viper …
                    20 April 2011 at 6:36 pm

                    The English language is so imprecise.
                    If I dig a well for the village so my family has fresh water every day – but so do all the other villagers – is that being selfish? Or is it being generous?
                    Basically people have complex motives.
                    But the motive to put others down in order to elevate oneself – that’s a very Right Wing one.

                    • MrSmith …
                      20 April 2011 at 7:07 pm

                      Agreed mostly CV, but the person that dug the well will generally receive some status for his/her deed. Yes the community is better off so the well digger is better off. so it was a selfish act after all to my mind.

                    • felix …
                      20 April 2011 at 7:22 pm

                      Mr Smith,

                      A truly selfish well-digger would put down his well so as to drain water away from the wells of others and toward his own.
                       
                      This gives him an advantage over his fellow citizens. He gets more/better quality water for himself while others have to make do with less – unless they want to buy some of course.
                       
                      He has made his own life more luxurious at the expense of others, a reality which he expresses as “I dug it all by myself with no handouts or help.”

                      OTOH what you describe is “selfish” only in the sense that your self interest is aligned with that of your neighbours, not in competition with them. Which is quite a different animal really.
                       

                    • Draco T Bastard …
                      20 April 2011 at 9:56 pm

                      That’s incorrect felix. What a truly selfish “well-digger” would do is get someone else to dig it then charge them for drinking from it. They’d also surround the well with razor wire and sue anyone else that put down a well.

                  • Puddleglum …
                    21 April 2011 at 11:00 am

                    Mr Smith, as I pointed out above, the way that nature (in some structural settings) gets us to survive and reproduce better is actually to make us genuinely altruistic/cooperative. That is, the motive of the individual person is to cooperate. Incidentally, that leads to us, as individuals, doing better. Notice that the motive can be genuinely altruistic, but the outcome can meet self-interest. Don’t confuse those levels in making generalisations about the motives of people.

                    [Aside: This is what Adam Smith got wrong in his example of the brewer, baker, etc. doing things out of their own interest. (If evolutionary theory had been around in its present form, I have no doubt he would have modified that comment along the lines of Dawkins’ ‘retraction’ I mentioned above. After all, Adam Smith was a good thinker and quite an honest one too.)]

                    So, nothing about human nature (as a set of motives, behavioural dispositions, emotions, etc.) suggests that people are selfish, fundamentally. All it means is that we will tend to act in ways that, in the social environment within which our species largely evolved, our basic interests as individuals (survival, reproduction) have the best chance of being met. That happens to be a ‘strategy’ of being psychologically inclined to genuine cooperativeness, given the right environmental ‘settings’.

                    What Bill has pointed out – and what is actually perfectly compatible with evolutionary thinking and multi-level selection theory – is that when material and social conditions are structured along the abstract lines of those that prevailed during much of our evolutionary history then cooperation will arise, ‘miraculously’, as a natural consequence of that environment.

                    You might also want to think about Marx’s famous phrase, ‘from each according to his ability, to each according to his need’. With a twist from evolutionary theory – and with Dawkins’ points in mind from that link – it could be understood as ‘cooperation from each individual, meeting the interests of each individual’. So long as the ‘alignment’ of interests works out, people will genuinely cooperate.

                    Our society doesn’t have that alignment. Neo-liberalism assumes that people are fundamentally and irremediably ‘selfish’. They aren’t. It’s just that in the socioeconomic system neo-liberalism has created, cooperation is very often not in the interests of individuals. Surprise, surprise, people therefore increasingly act as if they were fundamentally selfish. (This explains many things including issues that right-wngers are often concerned about, such as people supposedly expecting others to do everything for them. That attitude is consistent with neo-liberal self-interest.)

                    For most of our evolution, baseline cooperation worked for individuals. Since then, only the environment has changed.

                    • PeteG …
                      21 April 2011 at 8:40 pm

                      Why do we tolerate so much arrogance/antagonism and competition in our politics then? Fundamental selfishness seems to be the norm.
                       
                      I don’t know if wider society follows the selfish self righteousness of our politicians but I’m sure political blogs and blog posters do to an extent at least. That’s a shame.

                      “Can’t help won’t help” seems to be a common political motto.

          • Colonial Viper 15.1.1.1.3
            20 April 2011 at 6:41 pm

            The problem is PeteG that free market neoliberalism hasn’t worked succesfully anywhere yet.
             
            Well, except if you are in the top 1% of rich pricks

            • MrSmith 15.1.1.1.3.1
              20 April 2011 at 10:25 pm

              For some reason I can’t reply to felix so I will throw it on here CV.

              Felix
               
              I never said the well digger was bigburv’s brother, I was trying to point out that the well digger received some reward for his/her actions and even if it was a selfless/nobel gesture will still benefit from the well, so weather the well digger likes it or not it was selfish in so far as he/her benefitted from it.
               
              My point was that we cooperate because we see the benefit in that for ourselves, apposed to not cooperating, now the well digger could then go and dig wells for other villages and in return the other villages could say build him a house or give him some food but essentially we cooperate because there is some benefit to ourselves, ourselves being selfish.

        • Bill 15.1.1.2
          20 April 2011 at 2:50 pm

          “A planned economy is central to all left wing economics…”

          If by that you mean a centrally planned economy, then no. What you say isn’t true.

          And there are left wing economics that don’t merely reject central planning, but reject the market as a mechanism for determining resource use and distribution.

      • MrSmith 15.1.2
        20 April 2011 at 2:02 pm

        Well there you go peteG is a closet socialist, there is hope for us yet.

  16. randal 16
    20 April 2011 at 1:44 pm

    there is nothing that politicians like more than watching people beat their heads against a brickwall when they dont know how to operate the levers of power.
    its cheapa than going to the pickchas.
    Of course their is more the government could be doing but that means getting of their fat asses and doing some work instead of letting treasury call the shots and every proposal being given the once over by deloittes for social utility.
    welcome to the 21st century.

  17. rosy 17
    20 April 2011 at 7:55 pm

    Full socialism hasn’t worked properly anywhere yet, maybe. But having a socialist agenda rather than a market-led one does have it’s advantages. For example take a quick look at this graph and see which countries are not bleeding out financially…. and the answer is – the ones that are most equal in wage distribution and the ones that are social-democrats.

    I’m living in one of them – apparently the 15th richest country in the world. I have to put up with shops not opening on Sundays and no huge supermarkets and some quite strict banking controls (a bit backward, don’t you think?) but in return unemployment is making worrying headlines at around 4% and workers have 5 weeks hols + the largest number of stats after Spain. Environmental initiatives are way ahead on NZ’s and there is a remarkable cultural life. What’s not to like? It makes me incredibly sad that we gave up on a social path just to be hip, cool and trendy in the neo-lib club.

    • ianmac 17.1
      20 April 2011 at 11:50 pm

      Where are you Rosy?
      Interesting graph. I am going to Turkey in July and don’t understand why it is so high on the inequality list. Will think about it.
      Wonder if Mexico and Turkey are up there because they have a huge very very poor population?

      • rosy 17.1.1
        20 April 2011 at 11:59 pm

        Yes, it’s interesting to have a little socio-ec background before visiting a new place, it helps get beyond the tourist traps. I’m in Austria – Vienna, for a couple of years – and it’s easy to see why it’s right up there in good places to live.

  18. Jenny 18
    20 April 2011 at 8:09 pm

    ‘
    It is not true that Key can not help those in need.

    When John Key was in dire need of a black tie dinner in Auckland and a car race in Hamilton, no taxpayers money was spared for an airforce helicopter to fly him about.

    No money for the public need. Key’s needs are much more important.

    In misusing public money to fund his privileged lifestyle, this elitist filth, shows his true colours.