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notices and features - Date published:
6:00 am, January 31st, 2012 - 54 comments
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The current rise of populism challenges the way we think about people’s relationship to the economy.We seem to be entering an era of populism, in which leadership in a democracy is based on preferences of the population which do not seem entirely rational nor serving their longer interests. ...
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Is the local MSM and opposition giving this subject the coverage it deserves?
The World Economic Forum has just named severe income inequality a top global risk.
A recent OECD report showed the gap between New Zealand’s rich and poor is growing faster than any other developed nation, yet many in this country fail to comprehend the severity of the problem.
There’s a widespread misconception that there has, and always will be, a divide between rich and poor, hence many believe there is no problem. Wrong.
It’s not that there has always been a gap, it’s the fact that the gap is growing to unsustainable levels.
This is having a dire effect on global economies.
Another misconception is that the poor aren’t that bad off in New Zealand.
However, it’s not the the poor aren’t that bad off, it’s the growing number of the working population lack the disposable income to sustain the demand local businesses require to survive.
Businesses depend on the demand of the average wage earner to sell their goods.
A lack of jobs and low wages equals low demand, which equals falling profits.
Over the years, credit has come to fill that void and help boost demand, but the growing debt is now becoming critical.
A recovery requires the benefits of new growth to be better shared, which will stimulate more growth and create a sustainable economy for all to prosper.
Balancing inequality is vital to our economic recovery, but voters and Government seem to be overlooking this fact.
It’s the media and oppositions job to inform the public and hold the Government to account.
Are the local MSM and opposition sufficiently highlighting and pushing the importance of this issue?
The cost of credit card credit is very expensive in terms of interest, as also is hire purchase; though of course many retailers are now offering “interest free” terms. But as the cost cost of providing credit must be built into the selling price somewhere this probably means that we are all paying for it, whether or not we actually take advantage of “easy credit ” terms.
Indeed .
And easy credit is not the way to a ‘brighter future’, but will we ever learn?
Credit demand spikes:
http://www.stuff.co.nz/business/money/6318995/Credit-demand-spikes-among-young-and-old
Capitalist owners build up their own capital by paying workers substandard wages.
Capitalist owners can then take the capital they made from paying substandard wages, and loan that capital out as credit to workers who are on substandard wages.
Capitalist owners can then charge those workers interest and fees, clawing back additional money from workers’ substandard wages.
Brilliant system.
The unsustainable “middle classes” (top earning quartile of the population) appear quite happy with the way income inequality is going. While the bottom quartile have given up on voting in their own best interests.
I mean seriously, who does not vote for first $5K in income, tax free?
Even the wealthy end up worse off in an unequal and divided society
Bryan Gould sums it up nicely:
All too often, the market’s apparent recognition of merit simply reflects the dominant position of those who walk away with the spoils. The best-paid people set each other’s salaries and they are adept at ensuring that, while the global economy demands that working people’s wages are driven down to third-world levels, it requires that top people are paid the huge salaries that are now the norm in the international marketplace.
No one begrudges appropriate rewards for those whose efforts add to the general welfare. But many big earners do not create new wealth; they merely manipulate existing assets. Bankers, property speculators and even (dare one say) foreign exchange dealers cream their fortunes off the top of assets that others have created, thereby siphoning off wealth for themselves that might otherwise have been more fairly distributed.
Growing inequality of course means that the wealthy lead quite separate lives, buying themselves out of life as the rest of us live it. We gain little from them and they know even less of us. While few now give credence to the “trickle-down” theory, the flipside of the market as moral arbiter – invariably rewarding the deserving – is the belief that the poor have no one to blame but themselves.
Those who manipulate the market to their own advantage enjoy not only material rewards but a sense of moral superiority.
What the apologists for inequality do not grasp is that we are all, including the wealthy, made worse off, not only because we live in a more divided and less cohesive society, but also because – by diverting so much national wealth into so few pockets – we thereby undervalue and make poor use of the productive potential of the rest of us, so that we produce less as a country than we should.
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10778102
The problem really is that there’s a gap – any gap is unsustainable). The poor are at subsistence level and can’t save (this isn’t the problem) while the better off can (which is). The problem that makes the gap unsustainable is the interest that’s paid on those savings which increases the gap by increasing the income of the better off and by decreasing the income of the poor.
The only problem with this is that we can’t afford any more growth. As Peak Oil progresses the economy will shrink. Growth requires resources and we just don’t have any more.
To reward the various different inputs the labour force produce, and to provide a fiscal incentive for one to exceed, a gap of sorts is required.
Interest on savings is largely offset by inflation and is taxed.
Inflation coupled with population growth necessitates the need for growth.
Limited resources is another challenge that the globe faces, but improved structures and new technologies will help.
Nevertheless, our resources are secure for some time yet – and New Zealand itself is rather well placed for this mad max scenario – as long as we ‘own our own future’.
Money doesn’t motivate us to exceed – purpose does.
Cancel interest, cancel inflation, keep the value of money static – no growth required.
Population growth also needs to be cancelled.
No amount of “improved structures and new technologies” will offset declining resources if population continues to grow.
We’re quite well off if we rationalise our economy and only produce what we need rather than, as now, produce far more than we need.
Speaking of the NZ economy, we need to build up the capability to produce virtually everything we will need in future. Many NZ factories were shut down in the 1980’s and 90’s – we now rely almost solely on foreign suppliers for some categories of goods.
And the really stupid thing about that is that we export the raw resources to make the items which we then import.
While Fran was busy gloating, Brian gets into it.
Brian Gaynor: Shareholders must battle inequality (highlights)
Excessive executive remuneration and income inequality will continue to be major issues this year as they are at the heart of growing criticism of our capitalist system.
The OECD advocates economic policies that have a strong emphasis on reducing income inequality as well as achieving economic growth.
According to its chief economist “Rising inequality is one of the major risks to our future prosperity and security.
The main challenge facing governments is implementing reforms that get growth back on track, put people to work and reduce the widening income gap.”
Listed companies are major contributors to income inequality because there has been a significant transformation from owner capitalism to manager capitalism over the past few decades.
By this we mean that managers, rather than owners, are controlling major enterprises and these managers are granting themselves huge pay increases. These then flow on to other organisations, including the public sector.
The problem starts in the US, where income inequality is the greatest.
The share registries of most large companies are dominated by institutions, many of which are short-term holders. The talking heads on CNBC – who buy, sell, and short shares on a daily basis – generally have no interest in monitoring these companies from an ownership point of view.
Consequently, many US boards which have the same individuals as chairman and chief ex ecutive, overpay their chief ex ecutives and give them generous stock options.
Thus there has been a big switch from owner capitalism to manager capitalism, mainly because boards are dominated by an ex ecutive chairman, the non-ex ecutive directors are acquiescent, and institutions are disinterested.
The US sets a precedent for the rest of the world because boards of directors in other countries employ consultants to look at international salaries when assessing the remuneration of their senior ex ecutives.
So US senior ex ecutive pay levels quickly set a precedent for the rest of the world because consultants take these into account when advising non-US boards.
This process ratchets-up salaries in other countries, with Australia being a good example of this. As a result, income inequality across the Tasman, as defined by the OECD, has escalated dramatically over the past 30 years.
Australian directors argue that they have to pay international salaries to keep their top ex ecutives and this means they follow US trends. In addition, the share registries of nearly all the major Australian companies are dominated by institutions, rather than individuals. Many of these institutions are not long-term owners, as demonstrated by their aggressive selling of shares in Billabong, Kathmandu, and other companies when these ASX-listed entities announced recent profit downgrades.
New Zealand follows Australia and the remunerations of our senior ex ecutives are rapidly ascending as a result.
A number of countries are looking at higher income tax rates for top earners as a solution to growing inequality. Greater shareholder vigilance is a much better option than higher taxes.
It is extremely important that New Zealand shareholders, both individuals and institutions, exercise their full rights and wrestle control back from managers who have put themselves ahead of other stakeholders.
Shareholders have a powerful role to play in reducing income inequality. This power needs to be used more aggressively as it is highly unlikely the New Zealand government will introduce the same reforms as were proposed in London this week.
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10781666
According to our free trade agreement with China, it appears the government could have faced an international lawsuit if it hadn’t proceeded with the sale of the Crafar farms to Pengxin.
Now, which government signed that free trade agreement? And which party is now belly-aching about the outcome? Hmmmm.
“The Government could not treat applications from Chinese investors differently from similar applications from other countries’ investors under what was known as the “most-favoured nation” of MFN rule.”
The idea is that we don’t want any foreigners buying up this land. It doesn’t matter whether they’re Chinese or not.
The proposed law by Labour, that all sales over 5 hectares to foreigners would have a default position of “decline”, wouldn’t breach the free trade agreement with China because it would apply equally to all foreigners.
http://labour.org.nz/news/government-wrong-to-blame-fta-for-crafar-sales
The spin must be coming out of C/T as NAct realise just how much the people of NZ don’t want to sell our assets.
Great debate on BBC world the other night.
World Debate Reinventing Capitalism.
Bernard Hickey would have loved it and it’s the type of discussion this nation should be having.
http://www.bbc.co.uk/iplayer/episode/p00nb3cp/The_World_Debate_Reinventing_Capitalism#programme-info
Sarkozy is planning to introduce a financial transactions tax – with or without other European support:
When’s the presidential election?
If Sarkozy does impose a Financial Transaction tax as he proposes he will lose so many Billions to London and Frankfurt who will not bring such a tax.
Frankly France cannot afford it, irrespective of the idea.
Maybe. But then France seeks to have real industries, not just be a tax haven,
The City of London is a casino for legalised theft, scammers and ponzi schemes. Its lax regulation meant that its not a coincidence that the epicentre of problems at AIG, MF Global, Lehman Brothers and others was in their London operations.
Spain has 25% unemployment and 50% for the 18- 25year olds. Spai Air has collapsed.The grim prospects must have a flow-on effect.
What effect would there be for a New Zealand tourist visiting Spain?
I heard those grim statistics this morning on the news. The report went on to tell of the enormous numbers of unemployed youth in Greece, Italy and France. May other European nations are struggling with this issue as well.
However, in many of these countries there exists a huge shadow economy whereby goods and services are supplied, but are not taxed or regulated. A Financial Times report on 08/06/2011 illustrates how pervasive it is. Spain’s grey market economy is estimated to be nearly 20% of the nation’s GDP.
I’d say that although the official figures are alarming (yikes! 1/2 of 16 to 24 year-olds are out of work), the reality is that as a New Zealand tourist you won’t be too inconvenienced.
That was great thanks happynz. And I suppose Tourism would be welcomed especially by the unregistered “unemployed.” And congratulations on your search skills.
Here is one trend to look out for: as the “official” economy disowns more and more of the population, more and more of the population is going to disown the official economy. People are going to go grey market and black market to survive.
Its already happening in NZ.
Yep and youth unemployment in Greece is now over 45%.
Frakking dangerous territory this is. The stuff of facism and white spremacy movements.
Civic Square in Wellington is now the property of the 100% again. No trouble. No fuss. lets all move on to a brighter future.
Most would love to move on to a ‘brighter future’, but the Government seem unwilling to play their part.
For various reasons (that you should be aware of) the local private sector is unable to produce the national growth required.
The high number of unemployed is just one example of the private sector (and this current Government’s) failure.
The ‘Cycle Track’ was a feeble attempt that failed to cut it.
We require Government to play a far larger role in commerce, increasing our offshore return. This will help fill the current market void and help stimulate the economy.
The new wealth generated (being generated offshore and attained through Government) can be far better distributed to the local workforce and contractors employed.
Sir Peter Gluckman: Science key to a richer country (highlights below)
The government, while critical, cannot do it all: local government must take a major role.
There is a need to promote, plan and incentivise an “innovation city”.
It needs the development of technology parks, clustering academia, entrepreneurs and support services.
It needs the hospitals, universities, technical institutes and crown research institutes to co-operate rather than compete.
More here: http://www.nzherald.co.nz/economy/news/article.cfm?c_id=34&objectid=10779810
We’re trying to, unfortunately you RWNJs keep getting in the way and stealing all the wealth.
I missed this Campbell Live account of the Occupy Wellington protest which aired last week. Unusually for mainstream media the reporter and cameraman both stayed overnight and tried to find out what it was all about. It is worth watching again in the light of the eviction this morning.
http://www.3news.co.nz/Occupy-Wellington—behind-the-scenes/tabid/367/articleID/240960/Default.aspx
Prepare for climate change
It seems every few days we hear about more instances of flooding. South East Asia, Southern Pakistan, Northwestern Australia and Southern Brazil all experienced severe flooding in January this year alone… with the cost for such events often massive.
We’re far from done on that score this summer with the pattern pushing the wet systems up against others acting like a giant sponge over us.
Golbal warming can’t be denied, debating why is neither here nor there, moisture goes up in ever larger volumes and comes down so you hardly need a Phd to figure out the impact on land and life.
Probably about time to remove the electoral authorisation, Lynn?
Also the edit function is broken.
It seems that the Prime Minister did not end up talking to “someone important” at TVNZ over the Coronation Street scheduling issue last year.
This is because, as his spokesperson clarifies:
“his comments were “light-hearted banter””
And
“It is not appropriate for the Prime Minister to intervene in TVNZ’s programming decisions.”
It’s presumably far more appropriate that his electorate chair make such interventions, via NZOA.
Remember too, that this was the single question that Key said was worth bothering to reply to. He hand-picked it and then made a promise to speak to someone about it.
Given the context and the way he framed it, I don’t believe that “anyone listening to the programme would have realised his comments were “light-hearted banter”.”.
The fight to stop the privatisation of the Port of Auckland just ratcheted up a notch. MUNZ will be taking limited strike action for a week, starting in the middle of February. They will be targeting the already casualised Conlinxx container delivery service.
From the press release:
Mr Parsloe says this is legal and protective action to protect jobs and family livelihoods from outsourcing and casualization.
He says the industrial action was taken with reluctance, but was necessary as port management refused to negotiate.
“It is aimed at getting management to negotiate rather than dictate. The Union is prepared to work through productivity and other issues but not under the type of threats the management are holding over its employees.”
I’m a bit surprised, too, that the Prime Minister was – in a lighthearted, banterish sort of way – making a play for a demographic that he apparently believed to be, at least in part, “dying off”.
Ooops! Was meant to be an addition to comment 11.
Who’s paying for the cows that Labour Corp will need to buy when new overseas owners take over? NZ Tax payer?
Costs in running the business will be split between LandCorp and Pengxin. Presumably this would include startup capital such as diary herds. I believe that the farms are currently being operated as a going concern and will therefore likely come with some cows already.
LandCorp is an SOE of the crown and the core part of the act is that SOEs must act as if they are purely commercial operations. The crown/taxpayers paying for cows for LandCorp would be no different than the bailout of any other privately-owned company, something that generally the government avoids doing at all costs.
As far as I know, LandCorp runs at a profit. If you would like to provide information and sources that contradicts that, then please, go ahead.
I’ll be talking about the tension around Iran and the possibility of engineered false flag attacks in the strait of Hormus to trigger an all out war with Iran on the Vinny Eastwood show at 1 PM for those open to some much needed education on what is really going on in he middle East!
Whoopsadoodle:
http://newstalkzb.co.nz/auckland/news/1151955745-Maori-Party-could-quit-its-support-of-Govt
Might pull support, might not. Will kick up shit however; which is all good.
Just heard that on the news too.
maori Party growing a spine. Oh dear.
Wonder what John Banks has to say about it.
Who really cares what the current Maori Party publically think. They are extinguishing themselves.
They are ceasing to be relevant as a real Party, and by next election, when the two leaders retire, Hone will pick up their votes.
Probably NAct as the Maori Party leaving the coalition opens the way to a snap election due to loss of confidence.
SCOTUS declared companies were people with political rights.
Well guess Campbell Live will be interviewing the civic grass for a comment on its victory for grass free expression.
Public Grass Lawns has political rights too damn it.
The Sky Is Rising!
So, can we now tell the fuckwits who want to make it even harder to produce content to fuckoff?
Edit not working:
Clare Curran has a post over on RA covering this as well.
Well, well, flogging our future to Johnny Foreigner isn’t popular over the Tasman either. Dick Smith is rather pissed off at having an iconic Aussie brand sold to overseas owners.
Does anyone happen to know any of the background that leads Clare Curran to email Red Alert commenters asking them to verify their identity if they want to comment on Red Alert in future?
I do that on the odd occasion when people are claiming to be specific people or have specific knowledge. Most recently when the lead communications person from the Ports of Auckland left comments. There are usually one or two a month where I check likelihoods using track backs and other technical means, and email checks maybe once every few months. That is mainly to allay flamewars about people’s identities.
But that sounds like Red Alert should look at shifting to the login model with verified email addresses – like kiwiblog. That is automatic and tells you at least two things – that you have a valid email address, which means that you can track people back if you have to, and a login that you can disable requiring effort to get another. Alternatively to use one of the 3rd party verifications like Google or WordPress.
I look at those periodically for here, but decide that it isn’t worth the effort. A robust immoderation policy tends to deter the really irritating people who can’t argue with their peers without a phrase book of keywords that they think are shared values. I find that giving them my personal attention amuses me and deters similar abuses of the concept of argument. And when I don’t have time (like now) there are other moderators, and helpful highlights by experienced commentators.
But MP’s can’t do that. They really need to get a volunteer to moderate their blog or put in a gatekeeper of logins. The halfway house they are doing at present just provides munitions for idiots like Cameron.
Ugly out of touch outdated unionists
http://www.nzherald.co.nz/lifestyle/news/image.cfm?c_id=6&gal_cid=6&gallery_id=123614#8552768
F.A.G is real!? Time to re-watch Team America methinks 🙂