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NRT: 43,000 unemployed under National

Written By: - Date published: 11:50 am, August 5th, 2015 - 93 comments
Categories: Economy, employment, national, same old national - Tags: ,

no-right-turn-256Reposted from No Right Turn.

The latest Household Labour Force Survey was released today, showing that despite Treasury projections of a fall, unemployment had risen for the second quarter in a row. There are now 148,000 people unemployed, 43,000 more than when National took office.

So much for the “recovery” – unemployment bottomed out at 5.5% in September last year, and is now going back up, so it doesn’t look like we’ll be seeing kiwis back in jobs anytime soon. Instead, unemployment seems to be structurally a full 2% higher under National than under Labour. Which is 40,000 more people out of work, their families scraping to get by on a pittance. As for National’s “something special”, we blinked and missed it. Unless you’re a rich MP owning multiple houses in Auckland, of course, in which case you’re rolling in it while the peasants starve…

93 comments on “NRT: 43,000 unemployed under National”

  1. b waghorn 2

    Between the above article and the fact that rural nz is about to hit a brick wall things could get rough over the next few years.

    • Pat 2.1

      aint that the truth….the productive land bubble has been overshadowed and under reported the last few years due to Aucklands woes….

  2. maui 3

    Also, how long have employment stats been tweaked for? I heard that you only need to be working for 1 hour per week to be counted as employed. Has this sort of manipulation been going on for decades in Government? Or only under the current Government? If anyone knows.

    • Charles 3.1

      1 hour… “paid”… or not. Ghost Cash, living on Ghost Chips?

    • dukeofurl 3.2

      Thats right

      “All people in the working-age population who, during the reference week:

      worked for one hour or more for pay or profit in the context of an employee/employer relationship or self-employment”


      • maui 3.2.1

        Thanks duke, I just found this international resolution that suggests this definition could have been around since the early 1980s.

        (2) For operational purposes, the notion “some work” may be interpreted as work for at least one hour.

        I think it’s a fair accusation that this Government pushes people into underemployment from WINZ, more so than the previous Government. Meaning employment figures are going to look better than they should.

        • greywarshark

          I think that ’employment’ stats advice should be constantly repeated and be up on billboards.

          It is only a fraction away from volunteer labour, which the right wing resolutely decline to accept as ‘work’ in their narrow, calculator minds. It is a convenient statistical device, a line in the sand for them, but is trotted out as if it is a relevant statistic that gives a factual view of the numbers working or not.

          A useful figure would be the number of jobs with full-time or near (and I think even that gives a false view of a week’s earnings being only 30 hours, not 37 or 40.) Anyone who is better informed please correct. Also would need to know the number who are working at multiple jobs to cover near to the 30 hours.

          Then there are the categories of ratios of EFT or Equivalent to Full Time – can be FTE. One explanation about FTE went like this: 0.8 FTE = four days a week, or 30 hours’ work per week (eg. you may work five days a week, but only 6 hours a day, for example).

    • Draco T Bastard 3.3

      Decades. The new ways of measuring unemployment were brought in by the 4th Labour government.

    • Bob (Northland) 3.4

      I researched this subject over 10 years ago and tried to no avail to get this matter into the public forum (before blog sites such as this one.
      I wrote many letters to the NZ Herald Editor to raise this matter but never succeeded in having “any” of my correspondence published.
      (I have retained copies of this correspondence)
      I was and remain convinced “actual” unemployment numbers are hidden for political purposes.

      The Household Labour Force Survey questions 16000 “selected” households on a quarterly basis over a two year period.

      Household members over 15 years of age who meet the definition of being “employed” or “unemployed” are counted as a percentage of the total work force. As can be seen in the official Statistics Department definition of “Employed” is people who “worked” for 1 hour or more per week, including “work for no pay!”

      NZ Department of Statistics NZ Household Labour Force Survey

      People employed
      “All people in the working-age population who, during the reference week:

      worked for one hour or more for pay or profit in the context of an employee/employer relationship or self-employment
      worked without pay for one hour or more in work that contributed directly to a farm, business, or professional practice operation owned or operated by a relative
      had a job but were not at work due to: their own illness or injury, personal or family responsibilities, bad weather or mechanical breakdown, direct involvement in an industrial dispute, or leave or holiday.”

      All politicians of whatever political leaning have been complicit in this cover up.
      These toe rags have always known full well the actual number of people “unemployed”.
      (FFS, they pay the unemployment benefit to the “unemployed, they know full well how much money is paid out, how many people are receiving, let alone claiming the “Unemployment Benefit” or whatever other “benefit description title” they use to hide the unemployment numbers !”)

      This Gubbermint “knows” the actual total workforce numbers from information obtained from the IRD.
      (they don’t need carry out a household survey to find the Work Force number!)

      They then use this Total Work Force number with their “Survey” numbers of “unemployed” to “calculate” (read “manipulate”) the percentage unemployment rate.

      This “statistical” smoke and mirrors rort is long overdue to be exposed for the political propaganda that it is.

  3. RedLogix 4

    Just keep selling the country off. Cash flow is king.

    • Colonial Rawshark 4.1

      yep, converting the balance sheet of the country into cash, and walking off with it. This is what passes for “leadership” from our elite classes nowadays.

  4. Sabine 5

    let’s talk the referendum on the flag chance.

    see, all is good again.

  5. Tracey 6

    the rockstar is just an impersonator. ..

  6. Tracey 7

    “… new research from the 2015 New Zealand Association of Economists conference at the beginning of this month.

    CEO pay went up by 85% between 1995 and 2014 after taking account of firm size and inflation, and “management bloat” increased too. Real average wages increased at a quarter of the rate – just 22% in the same period.”


    Probably should just be grateful they got any rise at all and still had jobs

  7. infused 8

    After going through a gfc, that’s not a bad number id say.

    • Sabine 8.1

      mate that GFC was so 2008, like ages ago, like super super ages ago.

      • infused 8.1.1

        and yet it’s effects continue.

        • Lanthanide

          Yes, because of this National government. That’s what the post is about.

        • Sabine

          but but i thought that Daddy English is gonna save us all, rock star economy, super star dairy prices, sky rocketing house prices, all the poor people cut of the benefit, every one working a 0 hour contract.

          Your comment leaves me confused, you are saying that Uncle John and Daddy English are not gonna fix it….not in the last eight years and not in the next eight years?

          • Colonial Rawshark

            At the same time I’m glad we had English at the helm over this period and not Richardson, Douglas or Osborne for that matter.

            English has kept spending into the economy, in a big way. He didn’t need to.

            • Sabine

              I know that we have 100 billion dollar in debt now, so clearly Bill English spend money, but on what other then the bail out of the Southern Finance Fiasko, the CHCH re-build (which to a large extend was/is funded by insurance payouts) and ……………………?

              • Colonial Rawshark

                He hasn’t cut welfare payments and he has left the core of public spending in health and education intact. No significant austerity under English, although he occasionally cracks the whip to make it look like there is some.

                He could have done what many RW finance ministers do – close the budget deficit by slashing slashing slashing.

                • Stuart Munro

                  I don’t think the way English has been squeezing funding out of public services and SEOs – visably Solid Energy & health – can be described as anything other than austerity.

                  Nor can denying benefits to out-of-work people be described as anything other than extreme.

                  The lesser of evils is the best claim that can be made in respect of English – not successful, not even competent. In short a typical Gnat fraudster – a pretender to economic competence he has never displayed.

                  • Colonial Rawshark

                    Oh yes he is squeezing a bit on the margins, but on the magnitude of 1% or less of government spending. He is willing to keep deficit funding the country at the rate of $40M or $50M per week to try and make up for all the dollars we are losing overseas.

                    • Stuart Munro

                      Let us not forget the tax cuts that, as expected, failed to create growth. They just get reinvested in real estate – no economic benefit at all.

                • sabine

                  no significant cuts, ok, so the DHB’s have not had their funds cut? The refuges for domestic violence victims did not have their funds cut? The councelling services for abuse victims have not been cut?
                  The amount of benefits paid out have not been cut? The evening courses for adult learners have not been cut? The funds for schools have not been cut? The people that lost their jobs to governmental re-structuring have not really lost their jobs to cutting in funds, but other stuff? HNZ is not starved of funds to keep the state houses in good shape to provide healthy living for families in them?
                  No significant cuts?
                  i shall move along then, cause there is nothing to see here.

                  thanks. muchly.

                • Macro

                  He might not have cut spending in dollar terms but Health, Education, and Welfare benefits have had substantial reductions in real terms when inflation and population growth are taken into account. These have been going backwards for the past 7 years. Furthermore in terms of benefits the Nats have other ways to ensure that they don’t pay people what they are entitled to, by making it more difficult to access their entitlements. So effectively a cut in Welfare without appearing to do so.

        • Lara


          The global economy has been in recovery since the GFC ended in 2009.

          We’ve had FOUR years for this government to get their shit together and leverage a global economic recovery to produce more jobs in New Zealand.

          They have been found to be witless and idealess. They literally have no clue.

          • Colonial Rawshark

            The global economy has been in recovery since the GFC ended in 2009.

            The financial markets have been propped up with QE and low interest rates.

            But there has been minimal Main St recovery in the USA or UK, or in most countries in Europe. Australia which was kept floating by China – that is over now.

            • Lara

              Quite true.

              I was using that word “recovery” in terms of GDP and growth, modern economist terms.

              Not the reality for regular people.

              And therein lies the problem. Those who govern us are not managing to spread the fruits of the recovery around.

              And I make no comment on what is to come next because very few would believe me. Even here.

    • Paul 8.2

      You would defend anything.

      • greywarshark 8.2.1

        You already know that. That is infused’s job. No surprise. You only encourage him with little put downs. I think in transactional analysis it counts as a stroke. Anything that acknowledges someone else is performing a stroke.

      • greywarshark 8.2.2

        You already know that. That is infused’s job. You encourage him with little put downs. I think in transactional analysis it counts as a stroke. Anything that acknowledges someone else is performing a stroke.

        • infused

          Yeah, ok.

          tinfoil aside, I comment here because somethings, like this post are just stupid.

          Lets take a copy of kiwiblog:

          Who remembers the claims on a manufacturing crisis?

          The changes are:

          Employment up 7,000 for the quarter and 68,000 for the year
          Unemployment up 2,000 for the quarter and 10,000 for the year
          Labour force up 10,000 for the quarter and up 79,000 for the year
          Manufacturing jobs up 10,000 for the quarter and 22,000 for the year!

          Despite the increase in the unemployment rate NZ has gone from 13th= to 12= in the OECD. Our rate remains lower than Australia and Canada but higher than UK and US.

          • Colonial Rawshark

            what are the figures over a 10 year period or are you too ashamed to bring them up.

            • infused

              Well you can try and kid yourself that labour had anything to do with those figures. The rest of us that had a clue knew the country was at the high of a bubble.

              The conservative party could have been in power and had the same numbers.

    • McFlock 8.3

      but National took office at the depths of the GFC. Shouldn’t we be doing better than that?

      • infused 8.3.1

        Well the gfc isn’t really over is it. it’s like dropping a stone in a pond. The ripples last for some time even if the stone was dropped ages ago.

        • Lanthanide

          A strong current gets rid of the ripples pretty quickly.

          If we had a strong economy under this government, we wouldn’t still be feeling the ripples.

          • Colonial Rawshark

            What would Labour do differently though? Would Labour really spend much more money into the economy (on the order of an extra $500M pa) in order to create that number of jobs?

            • lprent

              …in order to create that number of jobs?

              Not the right way of looking at it, which is probably where you are mistaken about economic rationales.

              Most of the people who drop off the benefits don’t just disappear from the employment market, they disappear off the roll of the taxpayers as well. Often permanently. Some wind up getting supported by family. But a lot wind up in the grey to black labour markets paying no tax. The longer people stay on benefits of the grey/black employment markets, the less likely they are to ever rejoin society and pay taxes. They wind up as being a near permanent sea anchor on the economy, forever causing it to slow and stall.

              What would Labour pay now to get people back to work and paying taxes, so that there are better opportunities for everyone in the future? That is the question you want to ask, because that is what will resonate with both Labour and damn near every taxpayer with a level of intelligent self-interest.

              We have no real problems supporting people who are unable to work. However we’d prefer that those who can work have the opportunity to work – and pay taxes.

              Of course it won’t help with the amoral short-sighted idiots. But hey, they tend to support National or Act anyway when they are pushed.

              • Colonial Rawshark

                Most of the people who drop off the benefits don’t just disappear from the employment market

                In the US they try and track this with their labour force participation statistic, but I don’t know of of any similar thing here in NZ.

                • Nic the NZer


                  Statistics NZ tracks a ‘labour force participation rate’. Wasn’t even particularly well hidden, they decided to put it in with their other labour market statistics. Dun dun dah.

                • lprent

                  Household survey isn’t bad at it. Look at their methodology.

                  • Nic the NZer

                    Yes, but you were saying something about people dropping off the political spectrum and falling out of unemployment statistics or something…

                    Labour needs to stop promising to run a budget surplus and start promising to spend more and explaining why that will create more jobs.

                    • lprent

                      …you were saying something about people dropping off the political spectrum…

                      You need to read more closely. That statement makes you look like Nic the Illiterate Fuckwit who can’t read.

                      …explaining why that will create more jobs.

                      And that does rather prove the point. Perhaps you should try reading Labour’s web site – http://labour.org.nz ? Like National’s site it says how they are planning to create jobs in the economy. Unlike National, they have a track record in actually doing that faster than the rate of growth in the workforce over multiple terms in office. National during my working life has only managed to spill people from the workforce as a technique for making their unemployment figures to look better – a grand tradition that this government is continuing.

                      Perhaps if you spent less time being a self-pleasuring puller and more time exercising your brain, you’d understand these little subtleties of the differences between National’s ideological stupidity (that you so clearly participate in) and Labour’s track record of success in creating real employment opportunities.

                      Now I’d expect some whining about how I should be polite to lazy fuckwits…

                    • Nic the NZer

                      “Like National’s site it says how they are planning to create jobs in the economy.”

                      As you indicated Labour’s promise ‘conveys no information’, every (virtually) political party promises to create jobs in the economy. The fact that a political party promises this tells us next to nothing.

                      “Unlike National, they have a track record in actually doing that faster than the rate of growth in the workforce over multiple terms in office”

                      However in order to look at this we will need to discuss a dirty little political secret of the country. The country uses unemployment to target inflation, it does this under both Labour and National governments and has been since at least the 1984 government. If you need any actual evidence of this claim I suggest you look at the Treasury budget documents where you will find a reference to the Non-Accelerating Inflation Rate of Unemployment (NAIRU).

                      The fact that the country keeps 100’s of 1000’s of people unemployed in order to target its inflation rate, is obviously not something which can easily be discussed openly. Partly as a result of this the message consistently given to the public is that there is little to nothing which can be done about the unemployment rate, and we just need to try to export more (or hope that the housing bubble accelerates) if we want it to fall. Meanwhile there is the accompanying myth that the budget deficit is too high and surplus is a useful goal for the country.

                      Reality is a damn sight simpler than this and it is that if there is excess unemployment then running a higher budget deficit (the government spending more) can always be used to employ people and reduce unemployment. The Labour party needs to start explaining this to people in simple terms because almost every single comment you will see about this (including yours and many others on this page) are based on a fiction that there is little to nothing that a government can do about unemployment. As you will see my comment at the bottom of this thread also explains other details about the reality.

                      What we have observed however from the Labour party is not promising at all. The primary focus of a lot of their politicking has been on the government failing to achieve surplus, and running too high a budget deficit. Your comments to CV appear to indicate you are focused on the unemployed’s ability to pay tax (maybe eventually), not the simple fact that there needs to be enough jobs created for them to become employed.

                      As you can observe following through the logic of my comment further down then this all indicates that they will likely have similar unemployment outcomes to National if they get into office. I see no indications that the Labour party understands this issue or has any interest in explaining it to the public and having that conversation.

                      The actual unemployment outcomes which Labour achieved over their terms are largely a result of good fortune more than one of good management. Labour was fortunate enough to have a stonking great housing bubble inflating right through the middle of their last term. This meant they had a lot fewer worries about unemployment, but this doesn’t indicate they were actually particularly concerned about it and prioritized it.

        • McFlock

          Yes, but the ripples get smaller as time progresses.

          They don’t get 29% worse.

          • Colonial Rawshark

            The FIRE economy is still sucking more life out of the real economy than at any other time, I suspect.

    • freedom 8.4

      Speaking of numbers infused, have you had a chance to reflect on the number 1300 yet?

      Jumped tripped or fell

  8. Richard Christie 9

    There are now 148,000 people unemployed, 43,000 more than when National took office.

    That means unemployment has gone up 41% under National, that’s colossal.

    • infused 9.1

      I think you need to learn to math.

      • Tricledrown 9.1.1

        Confused you need to construct your prpropaganda better.

      • McFlock 9.1.2


        • mac1

          148,000 minus 43,000 gives 103,000. A 43,000 gain over the original 103,000 is 41%. There has been a 41% increase in unemployed since National took office.

          • McFlock

            lol my maths is as bad as infused’s when I wing it.

            Edit: although even at 21% it’s fucked and national have no excuse. At 41% it’s uber-fucked.

            • mac1

              I remember this as a mantra learned at primary school. “Gain or loss over cost price multiplied by a hundred over one.” That’s the formula for ascertaining profit (my father was a grocer, so it was important to know) but it works for % increases/decreases.

              I notice that government ministers don’t talk percentages in this area but instead say “We have created **,000 new jobs since 20**.” That way, you can have negative growth (which is itself bullshit! A decline, a decrease, a fall) as a percentage and still claim something that seems a positive gain.

              • Lanthanide

                Jesus christ, you learned that at primary school?

                • mac1

                  Probably without the need for performance target indicators, or PISA, and definitely without the aid of computers, screens, white boards, photocopiers and audio-visual aids.

                  We did have books, though…. and chalk.

      • Richard Christie 9.1.3

        148K is 43K more than number unemployed when National took office.

        105K when National came to power.

        43/105 is approx 41% increase on the number of unemployed when National came to power.

        Who needs to learn math?

    • Weepus beard 9.2

      Wow 41%, that is terrible.

      This must be the brighter future we were told about.

      • mac1 9.2.1

        Did you see the pamphlet that Ted Heath had on a recent TV item, entitled
        “A Brighter Tomorrow”. It seems that this ‘brighter future’ is a Tory marketing tool, very effective for ‘aspirayshunull’ conservative voters.

        Bill English (Budget 2015 releases) would rather talk about the 145,000 new jobs he will create than the 41% increase in the numbers of unemployed…. currently…. now….. in the present.

        This talk of brighter futures of course does not focus on the present reality, but also triggers the hope in poor and not so well off people that they too can/will share in the Dream, be it American, British or Kiwi.

  9. greywarshark 10

    I wonder about “despite Treasury projections”. What is projecting, and which way, up, down or sideways? It all sounds very loose. What are these figures they are playing around with? Do we misunderstand the tenor of their working environment, which perhaps is more frivolous than we imagine?

    And further, they do not seem to hit the spot very often. Someone had spare time to wonder if we should start getting rid of infrastructure that appears to be required well into the century.

    I think that is make-work, and they need to look at efficiencies and multi-tasking. Perhaps they could take up running the TAB and practice their risk-taking analysis on something that will earn for the country and cover their pi-in-the-sky research.

    • Colonial Rawshark 10.1

      I wonder about “despite Treasury projections”. What is projecting, and which way, up, down or sideways? It all sounds very loose. What are these figures they are playing around with?

      Yes it is all designed to be “loose” and opaque.

      It indicates that the modelling that Treasury does is utterly disconnected from the reality of the actual economy. Makes sense of course, as Treasury is full of neolib mathematical economists who no doubt wonder why reality refuses to conform to their ways of looking at the nation.

      • RedLogix 10.1.1

        NZ no longer has an economy.

        We’ve been played – splash enough cash to raise dairy prices, build up a 3 – 4 year dairy mountain, crash the price – and then walk in to snap up the actual productive land and assets at fire sale price.

        No need to invade – just use capitalism against itself.

  10. Mike the Savage One 11

    Let us get this right, we are here talking about the OFFICIAL statistics for those without jobs. As we know, any person working at least one hour a week is deemed to be “employed” according to the Household Labour Survey. WINZ also only keeps those on file that meet their requirements and manage to get a benefit (after stringent pre benefit obligations, after endless pages of forms to be filled in, and lots of evidence being provided). There is ongoing work testing going on, there are social and other obligations, and only those that put up with it all, and that do not fall through the cracks, they show up in the MSD statistics.

    But as the CTU revealed not long ago, barely a month ago, about half of the people dropping out of, or leaving the benefit, are apparently NOT going into employment or any other officially observed activity.

    So the actual unemployment numbers are much higher than what the new monthly data reveals. This may explain a bit for those not understanding what I mean:



  11. Draco T Bastard 13

    We need to update the measure:

    Employed: Worked all the hours wanted
    Under-employed: Worked but less than hours wanted/needed
    Unemployed: Wanted to work but didn’t

    Paid: Y/N

    Then we start making some sense of the employment stats that the government dishes out.

    • Nic the NZer 13.1

      All those statistics are collected, the problem is people (in the media) don’t generally discuss the problem of under-employment separately to unemployment.

  12. Nic the NZer 14

    This was and is entirely predictable, the government has prioritized its political goal a surplus over the useful economic goal of reducing the unemployment rate following the recession.

    The Labour party (in particular the caucus) can get off their high horse about it however because one of their main promises was also to run a budget surplus. Labour would also have had similar unemployed outcomes to the extent that they pursued their promise.

    The country seriously needs to discuss its economic priorities, particularly why its trying to run a budget surplus when there is higher than 5% unemployment. A question in particular is why the left does not open the debate and explain to the country that a government deficit (surplus) can be used to reduce (increase) unemployment at times of deficient (too much) spending. Why has the left taken on the neo-liberal framing of the debate and continues to insist that the governments destructive and wasteful policy is necessary or good for the country.

    • Lara 14.1

      Were National trying to achieve a surplus?

      They’ve been quite spectacularly unsuccessful.

      • Nic the NZer 14.1.1

        Case in point of the left’s self destructive tendencies. Unemployment would be higher again had they tried harder or succeeded. The left needs to state this plainly, not keep harping on about their failure.

        • ropata

          The reason for critiquing the Govt is that a) it’s the duty of the Opposition b) it was one of FJK’s campaign promises c) “sound economic management” is a Nat party PR mirage that needs to be dispelled.

          Maybe you should try and read Labour’s fully costed alternative budget before making shit up.

          • Nic the NZer

            The duty of the opposition is not actually to cheer on the governments self selected economic goals while they impose a destructive economic program on the economy. This is in fact playing into and re-enforcing the PR image which the National party use and rely on.

            Had Labour’s ‘fully costed’ (meaning a small deficit or surplus target I presume) alternative budget been enacted then no doubt there would be broadly similar unemployment resulting. You don’t need to know any of the budget details to see this in fact, its very basic macroeconomics, and to do with the size of the budget deficit not the content of the budget.

            • ropata

              still making shit up i see. carry on then
              … “you don’t need to know any of the budget details” oh dear.

              • Nic the NZer

                “still making shit up i see”, I will take that as a request for details.

                As you would no doubt be aware for unemployment to be lower we will need GDP to be higher. The increase in GDP will create more jobs, which will no doubt be filled by those looking for work. In the opposite direction when GDP falls unemployment very typically increases.

                One measure of GDP is calculated as the sum C + I + G + (X – M) = GDP where,
                C is private sector consumption spending.
                I is private sector investment spending.
                G is government spending.
                X is spending on exported goods (from overseas).
                M is spending on imported goods.

                This is called the expenditures measure of GDP, as it counts expenditure. So as can be observed from the GDP statistics, if the government spent more then GDP would be higher, and there would be lower unemployment.

                Another measure of GDP is calculated as the sum S + C + T = GDP where,
                S is private sector saving.
                C is the same as before.
                T is government taxation.

                This is called the uses of income measure of GDP, as it counts how the private sector uses its income. As can be observed from this measure if the government taxes less then people will have more opportunity to save or consume their income.

                These measures can be combined into a further identity (S – I) = (G – T) + (X – M) which by accounting always holds true. In this, if the budget deficit (G – T) becomes smaller (and all the other components remain the same) then GDP will be lower over all. If the (G-T) component increases then (other components remaining the same) GDP will be higher over all.

                What this indicates is that if Labour wants to run a ‘fully costed’ budget and try to achieve budget surplus, then the outcomes for unemployment will be roughly the same. They are simply making empty promises. If Labour wants to do more about unemployment than National then they need to run a larger budget deficit than National.

                • McFlock

                  Unless, of course, government taxation goes towards paying down overseas debt in the short term (no further effect on C or S or unemployment) rather than employing NZers to build and manage long term public assets (more work in NZ, more C, more S).

                  Aggregate counts are always only half the story. But you’ve further illustrated why economics is more religion than a science.

                • lprent

                  Why would I need to know the arithmetic version of economics? They teach it better in the year 11 secondary school curriculum these days.

                  Linear progressions are what poor accountants use. Most of economics is based on various curves (demand, supply, whatever) looking at the marginal costs and advantages. The precept that I was describing (and that you are obviously not prepared to understand) is that people who have work are usually more productive for an economy than those who are not. People who have been out of work for too long get progressively less able to be productive if they ever do find work.

                  You need to model the costs vs expenditures looking at the marginal utility projected over time (usually in some kind of discounted cash analysis against alternate uses of resources). You do that with models that are rather more complex than your simple minded cost accounting (and really even 30 years ago when I did cost accounting, they were a lot more sophisticated than you are).

                  The problem is that Treasury and their National party masters tend to massively over-estimate the marginal utility to the country of giving taxcuts and giving gifts to their mates – which is why we went from having a little government debt to being heavily indebted.

                  They also massively under estimate the value of providing work by bringing particular types of government investment forward that kept people working. Which is in a large part is why Labour managed to get to a surplus so easily in their first term after the asian flu. More people in work and working meant that there were more taxes being collected, and that the nett drain on productivity that having non-productive subsisting on benefits, grey/black market jobs, or handouts from family causes. This effect is cumulative because people get better at being productive the more work they do.

                  But mindless fools like yourself and National appear to be too stupid to understand these basics….. You prefer to just unproductively throw people under a bus as you mindlessly go off to lynching parties screaming “beneficiaries” as you clutch your testicles rather than using your brains.

                  • Nic the NZer

                    Your comment, and the previous one, both fail to recognize that what I presented are accounting identities not linear progressions. The difference is that the accounting identities are exact (in accounting terms) but don’t tell you anything about the causation. A linear progression might, but that depends on a tangible measurable causation effect.

                    What this means is that the comment “Unless, of course, government taxation goes towards paying down overseas debt in the short term”, is demonstrably factually incorrect! Paying down the government debt will dollar for dollar remove income available to the private sector. You would need some kind of linear equation to forecast if that will likely result in a decrease in S or C, but if the government deficit decreases, the private balance stays the same (S-I), and the current account (X-M) balance stays the same then dollar for dollar GDP goes down by that amount. This is not to say that a decision to reduce the deficit by spending less will necessarily result in a smaller deficit, the governments change might reduce GDP by so much that the fall in turnover and tax revenue overruns their spending reduction and the net result is the deficit goes up.

                    “You need to model the costs vs expenditures looking at the marginal utility projected over time (usually in some kind of discounted cash analysis against alternate uses of resources).”

                    Yes, this is exactly on point. There are presently 140,000 odd persons unemployed in the country. This is a tremendous waste of resources, at present they are not being used (working) at all despite registering as wanting to work. This kind of cost-benefit analysis might be appropriate if the country was fully employed at present, but given there are 140,000 persons registering as unemployed the country is very, very far from fully employed.

                    As I indicated in my further up comment, the fact that Labour believes this kind of analysis is appropriate is to do with the use of unemployment to meet inflation targets of the country. The National and Labour parties are both happy for the NAIRU rate of unemployment to be the low water mark of unemployment in NZ. Because this is politically unpalatable message neither party will talk about it or explain to the country that in order for there to be fewer wasted resources, 1) the deficit should be larger and 2) the government can reduce the unemployment rate by such quite direct means.

                    “This effect is cumulative because people get better at being productive the more work they do.”
                    Yes, there would be a number of other benefits to having a significantly lower unemployment rate. These would include lowering inequality (higher wages), higher savings rates and yes general increases in productivity. But as your comment on the need for ‘cost-benefit’ analysis shows Labour is far from committed to providing these benefits to the country.

                    Your remaining comments (to lprent) are a collection of appeals to authority or typically comically far off the mark, and my criticism is coming from far to the left of the Labour party. Its shows a high degree of ignorance that you didn’t notice that fact. I think it would be appropriate at this point to show you actually have some of the relevant background knowledge. So question, what is going to happen if the government brings down the unemployment rate below the current NAIRU rate (in the treasury model)? and what evidence is the existence of such a NAIRU rate actually based on (so we can evaluate the likely hood the forecast is correct)?

                    Unless you can justify that then there is no reason for keeping people unnecessarily unemployed (even while using sophisticated cost-benefit analysis to hide the fact this is being done).

                    • ropata

                      Thanks for the very detailed reply, unfortunately I’m no accountant so you lost me a while back. McFlock’s analysis “economics is more religion than science” has been borne out by its embarrassing failures from 2008 onwards. The goal of fiscal responsibility isn’t to screw over the poor, as you seem to think. Getting rid of Bill English’s corporate cronyism, rebalancing the tax system, and a stronger CGT would go a long way to resolving the deficit.

                    • Nic the NZer

                      “McFlock’s analysis “economics is more religion than science” has been borne out by its embarrassing failures from 2008 onwards.”

                      An embarrassing failure which you will continue to be perpetuated if we don’t recognize its flaws and improve our understanding.

                      One of the key shifts of the neo-liberal era has been a transition to using unemployment to target inflation and the abandonment of ‘full-employment’ as a political goal. These days the country settles for the much higher NAIRU rate as being the target. This means by the way that the country is within a hairs breath of being full-employment right now (which is absurd).

                      The discussion between lprent and I has shown that people in and around the Labour party have completely adopted this position, and as a result there is no question when they use cost-benefit analysis to determine spending or as you say being fiscally responsible. But analyzing unemployment problems using cost-benefit analysis is completely ridiculous because there is no cost, only benefit to employing them (they are presently doing nothing, but want to be employed). This results in tremendous waste and does quite tangibly “screw over the poor” by keeping them unemployed, turning them into long term unemployed and by creating a shift in the employment market where low wage conditions are an outcome.

                      There are two arguments against using the deficit to target unemployment, both would introduce a ‘cost’ if they were valid. First the government might supposedly run out of money, this argument is factually incorrect the government can’t ever run out of the money it issues for itself.

                      Second this might result in inflation (which is the NAIRU argument). But even the existence of a NAIRU rate depends on many of the more ridiculous suppositions of economic theory. In theory the NAIRU rate is a long term rate, not subject to short term market trends, but when measured tracks the recent unemployment rate closely (the treasury estimate for it went up about 2% following the recession). The confidence bounds on these estimates is very wide anyway. It seems highly improbable scientifically that there is a NAIRU rate of unemployment. Countries have run unemployment rates lower than their NAIRU before and no measurable inflation resulted.

                      “Getting rid of Bill English’s corporate cronyism, rebalancing the tax system, and a stronger CGT would go a long way to resolving the deficit.”

                      Why have you adopted a quasi religious belief we want to ‘resolve’ the deficit under these circumstances. It needs to be larger! The only people who have adopted a strong faith in failed main-stream economics are on the other side of this discussion to me (even if that is through ignorance).

  13. Murray 15

    I was in Australia when the Whitlam government was sacked and replaced by an interim Fraser government. It was a Fraser government that was elected shortly afterwards that replaced the existing Keynesian economic management with what was then called monetarist economic management. In his effort to discredit Keynesian economic theory Malcom Fraser described the then unemployment rate a national disgrace.
    That unemployment is in the year book as 4.7% It is a measure of the total failure of what is now called neo-liberal economic management that unemployment has never been below what was then called a national disgrace since in either Australia or NZ and that was over forty years ago.

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