40 jobs in a hi-tech business repairing jet engines are set to be lost. The business’s profits are being slaughtered by the high dollar. The Bluff smelter could close – 900 jobs directly on the line, plus thousands more in the local economy – as Rio Tinto can’t make a profit with the dollar so high and aluminum prices down. How much longer will we do nothing?
Everyone else is breaking the old, neoliberal rules, which New Zealand signed up to so completely in the 80s and 90s. Everyone else is intervening in their currencies, using tools, printing money to drive their exchange rates down.
It’s beggar thy neighbour stuff. And it’s working. We’re shedding manufacturing at an alarming rate – 40,000 jobs in four years, 200 jobs every week. The US, contrary to popular belief, is gaining manufacturing jobs as it drives its currency down. It’s actually starting to re-import jobs that it lost to China that got the jobs in the first place by, you guessed it, driving its currency down.
And here we are, playing the good little boy, following all the rules… and getting the shit kicked out of us.
Not only does National not want to do anything, they’re trying to pretend that it’s all OK. They say the jobs we’re losing aren’t real jobs, or are in dying industries. They say that if the currency was lower, we would be poorer – despite the fact that when the currency was lower, just a few years ago, we were richer.
The crazy thing is we say we can’t even lower our official interest rates to low levels like the rest of the world because we’re afraid of sparking another housing boom. And that means all those people in Japan and the US, borrowing printed government money at 0% interest are sending it over here to earn interest lending to our banks. It drives up the dollar and, ironically, gives our banks the credit to create housing bubbles.
What we need is policies that limit the amount of mortgage lending banks can do and capital gains tax – that way we can lower the official interest rate, which will bring down the dollar, without triggering a bubble. That’s what other countries do.
In fact, I reckon that, contrary to the neoliberal myth, bringing down interest rates is the best way to stop the current housing boom. If our interest rates were lower, then those foreigners wouldn’t bother to lend to us and the banks wouldn’t have enough credit to lend to fuel a house price bubble. Then you could just use those other tools to ensure lending goes to productive investment, rather than housing speculation.
But none of that will happen while we have a government that insists that nothing can be done and nothing needs to be done.