For richer

Written By: - Date published: 12:17 pm, December 30th, 2008 - 27 comments
Categories: economy - Tags:

I’ve spent the last week touring around the provinces and catching up with old friends and family I haven’t seen for years and part of this has meant traveling to places I haven’t been in over a decade.

Nearly every town big or small that I’ve past through has been bigger and seemed far more wealthy than I remember it and the people I talk to far happier. I guess that’s the result of the economic boom we’ve had for the last decade and, although some of it will be funded from debt, it’s pretty clear that the sick nation of the 80’s and 90’s has been usurped by something much better.

Of course the depth of this change is about to be tested. The last government has left us with a low debt to GDP ratio so we have a better capacity to cope than a lot of other OECD countries but with limited public control of our economy a lot of what is done can only be reaction rather than an active determination of our economic situation. Over the next three years we’ll find out how good that reaction will be.

Update: Colin James has written on a similar theme (but much better than I have) in his final column for the Herald. As much as we have a love hate relationship with the media at the Standard I’ve always appreciated James’ long view of politics and can only say the ending of his column is a loss to New Zealand’s political discourse.

27 comments on “For richer”

  1. lprent 1

    One more reason to read the Herald gone. It is unlikely that they will find anyone of his caliber to write for the slot.

    I went down to Otaki for Xmas for Xmas at my brother’s. It was quite noticeable that the towns and farmsteads had improved from the frumpy appearance of a decade ago.

    It is interesting the number of people who have decided to evacuate the country for a few years in the last couple of months. My brother is heading to the UAE. I keep feeling the urge to leave myself as I watch the inept hands at the helm. Looks like Colin feels the same

    “The new Government seems frozen in the headlights, presiding, on its own admission, over nearly the biggest fiscal stimulus in the “rich” world but scared to rein it in.
    It takes comfort from today’s low government debt. But as the debt rises, the hard questions will crowd in. Its track record pre- and post-election does not yet suggest it will match the hard questions with hard answers. (But give it time.)”
    I keep getting the feeling that the government is just as vacuous in terms of direction and intent as its meaningless election slogans.

  2. IrishBill 2

    That may be so Lynn. I honestly hope that they do a decent job of handling the economy but if they don’t then I can only hope they make a short sharp hash of it and then have to hand over the reins to the adults.

  3. lprent 3

    Yeah. It is a corundum.

    In the current times as a citizen, you want the government to be effective. As a opposition supporter you’d like them to be effective enough to at least not screw things up too badly.

    Problem is that they don’t appear to be capable of either. Instead they seem to just want to stage stunts. It will be interesting to see if they rise to the challenge next year. But so far they look more likely to do something daft because it fits a slogan like a “100 days of action”. It is always a problem when you get government being run by its PR.

    Anyway, off to destruction gully for a swim.

    captcha: checks debate

  4. Johnty Rhodes 4

    The adults – Labour/Green? What a laugh, the Greens are the largest load of numpties going on economics. Labour will be governed by the tail wagging the dog syndrone. They think a building boom after a hurricane is good for an economy.

    Labour fucked the economy up fast over the past year and left the coffers empty. Even with greater spend no positive outcomes came of it for health.

    As Bill Ralston said;

    ‘I have the horrible feeling that Labour, had it still been in government, would have cancelled the tax cuts and thrashed the exhausted middle class for more revenue while continuing to spend big on its pet policies and boosting the bureaucracy to cope the effects of a recession. That would be a sure recipe for disaster. we would of had tax decreases cancelled and higher taxes , mainly for the middle classes to pay of course.’

    I bet he is very close to the truth here. Remember the Greens would have forced this as well, they want more money than is reasonable.

    This recession, which has been caused by Labour as well needs for drastic action. We will either need to do the following:
    1. Decrease spending or
    2. Increase revenue
    This is a real crisis, none of which Labour had to deal with, much like when Holyoake was PM in the good times.

    I propose that a lot of feel good money wasting policy be scrapped:
    1. Make students pay interest for loans. Make some exceptions for targeted graduates, medical, science, engineering as these skills are needed more than arts. You want to do an arts degree, fine, you will pay more to do it.
    2. Cut WFF, this is a policy that gives no incentive to get ahead as it imposes punitive tax increases on increased incomes.
    3. Freeze/cut benefit levels. Especially for the lazy non-productives. No work, no pay.
    4. Make arts, sports etc fund their own destiny.
    5. Local council responsibility to be to supply essential services on a user pays basis. Supply water, collect my rubbish and process my excrement, like the old days.
    6. Build NO more prisons. Add to existing prisons.

    For once, we need to get tough as the dosh will not be there to throw around in the next 2 years.

    Get used to it as the children have spent all of the dosh.

  5. ak 5

    Johnty: Local council responsibility to be to … collect my rubbish and process my excrement…

    Jolly good idea Johnty. Would save our scrolling fingers from performing that function here.

    Re Colin James escaping the Tory Organ: does anyone know how copyright applies to blogs? What’s to stop some enterprising soul scanning a local rag and posting it on the net?

    International coverage and commentary is already vastly superior here – if I could get my local news and the “hatched matched and dispatched” columns on this screen, the paper would stay on the trees.

    I see Colin’s offering to email his weekly column: chuck in a weekly blurb by the likes of Campbell, Welch, Trotter, Pierson, Prentice, Redlogix and add the above daily features and I’d happily pay double the subscription I am now.

  6. IrishBill 6

    Johnty, you’ve made more factual errors than I care to correct on a nice day like this. You’ve also shown you’ve no grasp of economics. Pretty much every policy you’ve advocated would deepen the recession (and did so demonstrably in the 1990’s). To round off your display of ignorance by quoting Bill Ralston as an economic and political authority seems somehow fitting.

    Lynn, I must say the contributions of the right in the blogosphere give me little hope for sensible action from their parliamentary representatives. Children indeed.

  7. Good post IrishBill

    I try to spend christmas travelling around the country and I agree that I have not seen the provinces cleaner or more polished than during the past few years.

    There is a saying from the 1940s that the people walked to the polls to vote Labour in and they drove to the polls to vote them out. The recent election felt the same. The country felt like it was in a fundamentally sound condition but people wanted all of that and more. National’s “Labour lite” campaign worked because swinging voters thought they could have the best of both worlds. National spent two years throwing bile and when Labour continued for the last 6 months the nats stood back and suggested that it was all one sided. They relied on the short memories of swinging voters.

    I am not sure what to say about Jonty. Reading his post made me think that he was regurgitating a right wing wish list. I wonder how he feels about what National said they would do during the campaign? Is he happy to disagree with them or did he just want them to gain power no matter what so that his agenda could be put into action? It seems to me there is a fundamental conflict between what National said during the campaign and what their followers want. I never felt that way about what Helen promised when she was seeking a mandate from the country.

  8. mike 8

    These are the same provinces that overwelmingly voted for a change of Govt so they obvoiusly don’t think labour did them any favours.

    “The last government has left us with a low debt to GDP ratio”

    This revsionist stuff is laughable – the last govt left 10 years in the red and with massive blow-outs in ACC and pet projects costing millions not budgeted for.

    It will take at least 2 terms to undo the damage but I am confident National will get there eventually.

  9. lprent 9

    mike: All it requires to prevent the budget blowout is to stop the tax cuts.

    Exactly who is being revisionist? To me it looks like you are. Basically you are repeating a stupid and pathetic lie by the great tradition of dipshit para-economists of the right.

    Micheal Cullen spent about 6 years saying that the budget ‘surpluses’ were illusionary and that the NACTs were being selective with their reading of the budgets. Hey, he was right – in hard economic times the budget gets caught by decreasing revenues and increasing costs simultaneously. So Michael Cullen ignored all of the dipshit para-economists (like you), and concentrated on killing the debt from those other dipshit para-economists, Muldoon. Douglas, and Richardson.

    However the NACT’s have convinced their supporters that there are and were massive surpluses. So they will not do what any responsible government would do. If you have decreased revenue and increased costs, then you raise costs or go out of business. So far this government look like a useless set of gutless cretins – too afraid of their own PR and the pile of bullshit that they sold the electorate to make any serious attempt at being a government.

    Face it, you dipshit para-economist – the reason that there are future deficits is because you are too ignorant to understand economics or governmental accounts. You pushed this pile of jelly into government. They are your problem.

    Now if you extract my annoyed abuse out of that – perhaps you’d say why you expect the government to give you tax-cuts? You haven’t earned them – businesses in NZ have been growing, but still under pay taxes compared to the income tax. Income tax could do with a bracket shift – but basically the higher taxed haven’t increased the export businesses in NZ enough to pay more tax. Right now the the tax tax is finely balanced with the costs after 9 years. All it takes is recession to start them into accumulating debt.

    If the government wants to reduce the tax-take, they should start by reducing the costs. However that isn’t what the promised. They promised to increase governmental costs with pork. In fact far more so than Labour. Now they’re caught by their own PR. They should break their over-promises (ie bribes) to the electorate, including tax-cuts – but that’d mean saying that Cullen was right all along.

    Instead they going to stick it to the kids to pay for your arsehole tax cuts. Do you feel proud of yourself? Passing your debts to a 5 year old? You voted for the government – you are responsible.

  10. Johnty Rhodes 10

    Iprent – Helen did not promise abolition of S59, but she made it a party vote in 2007, not a conscience vote as it should have been. Broken promise, just a taste of Green tail wagging Labour dog of what may of happened.

    Also, Ken was not a caged lion when he koshed a protestor last year. You are just a 2 faced liar.

  11. dave 11

    johnty, i don’t see how that last comment has anything at all to do with economics and your lack of understanding on the topic…

    Don’t change the topic because you are to ignorant to debate

  12. Mike

    I see that you have the Crosby Textor lines down pat. Instead of complimenting Labour for running surplusses and paying off debt blame it for future projections future projections and claim that they have left us with deficits. And at the same time ignore completely that the predictions are based on overseas events such as George Bush’s USA imploding on itself because of the same sort of right wing approach that National is now advocating for NZ. Give tax cuts to the wealthy and watch that deficit grow with no corresponding benefit.

    Talk continuously about “wasted opportunity” when unemployment is at historically low terms and more people are employed than ever before. I am not quite sure what it means, if it means that there should have been tax curs for the rich because, well somehow they deserve it.

    And you call us lefties revisionists? We use solid analysis of the past, not dog whistle lines.

  13. higherstandard 13

    Back to blaming each others teams for the economic outlook quelle bore !

  14. RedLogix 14

    Brian Gaynor’s superb article that was linked in the previous “Debt” thread should not be skimmed over lightly. In his understated manner Gaynor lets the cat out of the bag:

    However, in the last two quarters, we have had to sell assets to fund the deficit. In the June quarter, the bulk of the current-account deficit was funded through the sale of “other investments”, and in the latest quarter the country’s overseas reserves, mainly foreign exchange holdings, were reduced by $5.5 billion.

    In other words the NZ dollar is currently being held up because the RB is selling off it’s overseas investments. Any ideas on how long they can keep that up for? Because when there is nothing left to hock from among the shards of the broken piggy bank the NZ dollar becomes worthless.

    My pick is that right now there are some very senior Australian bank executives pondering very hard what do, because they have an awfully big exposure to NZ assets, and the last thing they want is to see their operations destabilised because they have to write down enormous currency-driven losses from their trans-Tasman operations. (We tend to forget that the NZ economy in terms of states comes in at about #2, between NSW and Victoria.) Personally I’m thinking that Key will be presented with some very hard choices, and the one favoured by the banks will be for NZ to abandon it’s defunct dollar and be absorbed into the Australian one.

    We sold off our economic sovereignty long ago for trinkets and baubles; the piper is coming to demand payment.

  15. Janet 15

    I’m really sorry to hear that Colin James is being pushed out of the Herald. I didn’t always agree with some of his interpretations over the years but he is a scholar and historian of politics, and a skilled journalist. If he is replaced with just another opinionated ego columnist it will be yet more cause to despair of the anti-intellectualism now gaining traction in NZ.

  16. Janet 16

    Been away for a few days – has anyone commented on that brilliant post on climate change by seer Steve Maharey on pundit? It has angered many righties who are too lazy or ignorant to see what is in front of their eyes.

  17. mike 17

    “All it requires to prevent the budget blowout is to stop the tax cuts.”

    Thanks for confirming the worst fears of most NZers had the labour party managed to bribe enough unwitting peasants to vote for them again. Of course cullen would have cancelled the cuts – he thinks other peoples money is his and the more the better.

    What this country needs is incentive to get ahead not hand outs for breeding more lazy no-hopers.

    The reason labour got tossed out was because people were sick of being told what to do, being robbed blind with high taxes while our health and crime stats worsened.

    Hopefully people won’t forgive them for a long time

  18. Clarke 18

    In other words the NZ dollar is currently being held up because the RB is selling off it’s overseas investments. Any ideas on how long they can keep that up for? Because when there is nothing left to hock from among the shards of the broken piggy bank the NZ dollar becomes worthless.

    I have no view as to the prudence of the currency sell-off, but it’s worth noting that most of the sales occurred after our dollar took a dive against the USD and the Euro … which leads to the conclusion that the RB may well have thought it was a good time to take some profits on the foreign exchange market. If they had bought when the NZD was expensive then sold when it was cheap, some 20% of the $5.5 billion could well be in windfall profit.

  19. Ag 19

    The reason labour got tossed out was because people were sick of being told what to do, being robbed blind with high taxes while our health and crime stats worsened.

    The reason for that is that people aren’t paying enough tax.

    You probably don’t even know why we pay tax, which is why you write such silly things.

  20. jake 20

    Most of this arguing comes down to central premises, it seems to me. If you really believe that more central control is good then no construction of evidence to the contrary is persuasive. For me, that central premise is false – and so the way I look at the “facts” will automatically lead to different conclusions. No Crosby-Textor required.

  21. RedLogix 21

    Jake,

    What do you specifically mean by ‘central control’? I’m assuming that you really mean the notion of central government.

    Do you mean ‘no central government’? That is a fairly extreme position that few people take.

    Do you mean ‘less central government’? How much less, and which bits do you think should be discarded? Your argument would have more weight if you could be more specific.

    Do you really mean something else?

  22. RedLogix 22

    Totally OTT, but this is:

    1. Essential reading for anyone with any interest in the fundamentals of democracy.

    2. Impressively researched, brilliantly written and carefully argued.

    Prosecuting the Bush Administration

    Americans may wish to avoid what is necessary. We may believe that concerns about presidential lawbreaking are naive. That all presidents commit crimes. We may pretend that George W. Bush and his senior officers could not have committed crimes significantly worse than those of their predecessors. We may fear what it would mean to acknowledge such crimes, much less to punish them. But avoiding this task, simply “moving on,’ is not possible.

    I’ver read a lot of stuff in the past few years, but this is dynamite.

  23. Janet 23

    The issue is governance, not control. Transparent, accountable governance. We are talking about a sovereign country, not some overseas owned widget making company.

  24. jake 24

    Steve Maharey a seer ………ha ha ha ha

  25. Draco T Bastard 25

    2. Cut WFF, this is a policy that gives no incentive to get ahead as it imposes punitive tax increases on increased incomes.

    In the free-market anything and everything has a minimum price. We’ll call this minimum price Cost Price. If the income that is brought by selling anything for less than cost price then it is obvious that commodity won’t be supplied.

    WFF is a recognition that the supply of labour has a minimum cost but, instead of putting that full price on the capitalists, it’s spread across the tax base. So, yes, lets get rid of WFF but also raise the minimum wage to $60k/year on a forty hour week.

    WFF is a subsidy for the capitalists.

  26. Ag 26

    For me, that central premise is false – and so the way I look at the “facts’ will automatically lead to different conclusions.

    That’s called “being wrong” in the real world.

  27. DeeDub 27

    “Facts” in quotation marks? Reminds me of the kind of “thinkers” who put “reality” in quotation marks…. Post-modernism is a lovely literary style, but it gets scary when people start applying it to the sciences, or politics and economics.

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