Looks like the RWC might not be quite the economic salvation that we hoped. Some have profited, but others have not, see: Restaurants starve amid Rugby World Cup joy, and Smarting retailers hope for late surge during Rugby World Cup. Overall the news is not great:
RWC economic fillip ‘just tiny’
A leading economist has labelled the Rugby World Cup’s effect on economic growth a “red herring”, dismissing expectations that there will be a widespread boost as “hopium”.
Shamubeel Eaqub, principal economist at the New Zealand Institute of Economic Research, said that while tourists would increase spending, business was being displaced from the main centres, and that he believed New Zealanders were spending less overall.
The effect would be “minuscule”, he said . “From a GDP point of view it should be marginally positive, but we’re talking 0.1 per cent – margin-of-error stuff.”
No magic bullet then. Unfortunately that long shot was all we had. We’re stuck in the doldrums, and the government isn’t going to get us out.
In April I wrote a post about expansionary austerity, the daft economic “theory” that the right response to recession is cutbacks to government spending, which supposedly stimulates economic growth. The problem with this theory is that it is bollocks. It hasn’t worked historically. It isn’t working in England (with their massive cuts in public spending):
UK economic growth cut to 0.1% for April to June
The UK economy barely grew in the second quarter as consumers cut spending, compounding more downbeat news from the eurozone and fuelling fears that Britain could soon slip back into recession.
Official data also showed the 2008-09 recession was deeper than originally thought and the worst downturn since the second world war. Revising previous numbers, the Office for National Statistics (ONS) halved its GDP estimate for April to June this year to just 0.1%, suggesting the economy had already ground to a halt before the European debt crisis escalated in the summer.
It isn’t working here (our cuts are more modest but are accumulating over time):
Economy stagnates, dollar dives
New Zealand’s economic growth slowed more than expected in the second quarter and the dollar dropped straight after the low number came out.
Gross domestic product (GDP) grew 0.1% in the three months ended June 30, according to Statistics New Zealand, hurt by a slowdown in the construction and mining sectors.
Same right wing governments in both countries. Same austerity programs in both countries. Same non-existent 0.1% (margin of error) “growth” in both countries. It’s almost as if the facts were trying to whisper us a message. Listen very carefully – can you hear it? “Keynes was right. Governments should spend counter-cyclically. You can’t cut your way to prosperity…”.
Stupid facts, who cares about them, right? Hit me again bartender, double downgrade on the rocks.