Shifting the centre

Written By: - Date published: 8:05 am, November 30th, 2009 - 51 comments
Categories: national/act government, superannuation - Tags: , , ,

Well the productivity task force is reporting back today and some of their ideas have been forward released.

As we expected they are a grab-bag of unpalatable, short-sighted and frankly mad measures from the loony right including putting interest back on student loans, flat tax and means testing free childcare. As the official announcement comes I expect we’ll also see the stripping of work rights on the list as well.

What was completely unexpected for me was the plan to cash up the super scheme. Between that and destroying the tax base I can’t see how we could afford to pay any superannuation at all. But then again maybe the plan is to increase productivity by forcing the elderly to work or starve. Ironically that would probably increase productivity by lowering wage inputs. Which just goes to show what a slippery notion productivity is.

Of course Key won’t run on much of this at all and any measure his government does implement will be watered down considerably.

But that’s the point. This carefully picked task force was never about increasing productivity but about pushing previously discredited and politically poisonous fringe ideas back into the discourse and allowing the government to pitch slightly less poisonous right wing ideas as moderate and centrist by comparison. They’ll also want to test to see which of the crazy measures garners the least outrage.

So while the media are screaming about flat-tax and scrapping the Cullen fund it might pay to look to the fine-print. There will be plenty of nasty stuff that creeps under the radar that may well end up as legislation.

51 comments on “Shifting the centre”

  1. Draco T Bastard 1

    Which just goes to show what a slippery notion productivity is.

    The Arch Druid Report

    Economists rely implicitly on the claim that those numbers have some meaningful relationship with what’s actually going on when potato farmers get their hair cut and hairdressers order potato salad for lunch. As with any abstraction, a lot gets lost in the process, and sometimes what gets left out proves to be important enough to render the abstraction hopelessly misleading. That risk is hardwired into any process of mathematical modeling, of course, but there are at least two factors that can make it much worse.

    Consider the fuss made in economic circles about productivity. When productivity goes up, politicians and executives preen themselves; when it goes down, or even when it doesn’t increase as fast as current theory says it ought, the cry goes up for more government largesse to get it rising again. Everyone wants the economy to be more productive, right? The devil, though, has his usual residence among the details, because the statistic used to measure productivity doesn’t actually measure how productive the economy is.

    Check out A Concise Guide to Macroeconomics by Harvard Business School professor David A. Moss: “The word [productivity] is commonly used as a shorthand for labor productivity, defined as output per worker hour (or, in some cases, as output per worker).” Output, here as always, is measured in dollars usually, though not always, corrected for inflation so what “productivity” means in practice is dollars of income per worker hour. Are there ways for a business to cut down on the employee hours per dollar of income without actually becoming more productive in any more meaningful sense? Of course, and most of them have been aggressively pursued in the hope of parading the magic number of a productivity increase before stockholders and the public.

    Economics and economists lost the plot when they started measuring everything in monetary terms which led to the delusional belief that money is actually a resource. We need our economists and our politicians to start measuring in real terms as continuing to measure in money will only bring about more poverty as the resources that maintain life and prosperity are used up under the no holds bared free-market economy.

    • rainman 1.1

      To those who don’t already know about John Michael Greer, I’d recommend his entire series of recent posts on matters economic. He is a very smart man indeed – although I suspect mainstream economists might develop a headache reading him!

      You’re spot on about the “money as a resource” fallacy. Unfortunately by the time this is commonly understood it will be too late, I fear.

      • Peter Wilson 1.1.1

        I must agree. Reading JMGs weekly posts has both seriously challenged and informed my worldview. I’d go as far to state that it is timely to question some of our most fundamental assumptions, given that the environment that formed them is so rapidly changing as key resources become scarce.

  2. Eddie 2

    A very transparent tactic from Key. The interesting thing is the tactic is already becoming the story, rather than the contents of the report.

    • Tigger 2.1

      Hopefully these repeated trips to the well will wear thin soon – it’s become tedious seeing National use this tactic. Nothing worse than a magician who only has one trick.

  3. ben 3

    increase productivity by forcing the elderly to work

    Actually that would probably lower productivity. Not that you have any clue what you’re talking about. Just another mindless post.

    • IrishBill 3.1

      Nah, a massive influx of desperate workers to the labour market would drive down wages and conditions across the board, thus making labour cheaper and dropping labour inputs. A similar thing happened in the 90’s with increased unemployment and removing of workrights, long term all you get is a failure to invest in productive capital which in turn cripples you in a boom/tight labour market.

      I should also mention that if you keep trolling I’ll ban you for a month.

  4. vto 4

    Imagine if it did actually work. You know, low taxes, less govt, and a wealthier and contented populace. Sounds mighty fine to me..

    Which reminds me – what was Clark’s actual plan to lift us to the top half of the oecd again?

    • IrishBill 4.1

      It didn’t work in the eighties and nineties. In fact all it did was massively grow the wage gap and increase income disparity enormously within NZ.

      • vto 4.1.1

        Mr Bill, it was not tried in the eighties and nineties, it was a partially attempted. Problem, obviously, is the time it takes for the effects to come through. People on this site seem to think everything happens immediately – like claiming Clark should get the credit for the drop in unemployment during her reign.

        Anyway, its all been argued before and we can go back and forwards all day. From my position, low taxes and less govt make it easier for me to operate in business. This has very direct consequences for our lcoal economy, in terms of activity generated and employment created, and is one of the biggest factors in a happily active society. Why is this dismissed so glibly?

        • Pascal's bookie 4.1.1.1

          “Why is this dismissed so glibly?”

          Because it’s glib.

          If the answer really was just ‘Cut taxes! Shrink teh guvmint!!’ it would have been done already. Afterall, it’d be popular as all hell if it worked. Everyone hates tax. But no govt really wants to go there. I suspect they suspect something that you don’t.

          • vto 4.1.1.1.1

            You dismissed it so glibly..

            But no worries – just as long people appreciate that a consequence of higher taxes and fatter govt is less activity and less jobs.

            • Pascal's bookie 4.1.1.1.1.1

              How glib.

            • vto 4.1.1.1.1.2

              Maybe it appears glib because it is such a given. And hence not dismissed so glibly.

            • Pascal's bookie 4.1.1.1.1.3

              No, it’s glib because it has no content to address.

              What parts of govt do you want to eliminate?

              What parts need to be retained?

              Of the parts we get rid of, what will be the effects of that?

              Will the money saved be adding more costs to governent, or society, somewhere else?

              How much money will actually be saved from the cuts?

              Untill the answers to those questions get at least hinted at, then there is nothing there.

            • Draco T Bastard 4.1.1.1.1.4

              Maybe it appears glib because it is such a given.

              It’s not a given though – it’s complete bollix.

              Cut taxes and government spending and all you’ll end with is a failed state with high poverty, massive inequality and people leaving for Australia. Government and taxes are needed to maintain society and as society becomes more complex taxes need to go up.

              One of the lessons that’s observable from the global neo-liberal reforms is everyone’s distinct unwillingness to pay the full cost of doing anything.

            • vto 4.1.1.1.1.5

              Draco “Cut taxes and government spending and all you’ll end with is a failed state with high poverty, massive inequality and people leaving for Australia. Government and taxes are needed to maintain society and as society becomes more complex taxes need to go up.”

              Now that is glib. And full of fundamental error. But to avoid being stuck on a tangent… my proposition above was that lower taxes and less govt mean it easier for me to be active in business and to employ people. This is a fact. Unless somebody can demonstrate that this is not true, which nobody has yet.

              It is just one the points to be taken into account in the debate of course. Others include for example the favourite hobby horse of govt spending and effect that changes there will have. Of course they require some balance, but my point is one of the main factors. And it seems forgotten amongst all the wailing and screaming about the other points.

            • Pascal's bookie 4.1.1.1.1.6

              It’s not one of the main factors vto, it’s one side of one of the main factors.

              Lets get rid of the courts and the criminal and civil legal systems and use the money saved to cut your taxes.

              How’s biz?

              And yes, that’s glib. But only to try, once gain, to show why your complaint is glib.

              I’ll happily concede that all else being equal, giving you a great big tax cut would be good for your business. But so what? All else isn’t equal, and wishing it were so doesn’t help. If you are wishing it were so, you may as well also imagine yourself a free pony, with whatever other features you want to go with it.

            • Draco T Bastard 4.1.1.1.1.7

              my proposition above was that lower taxes and less govt mean it easier for me to be active in business and to employ people. This is a fact

              No it doesn’t and no it’s not.

              Lower taxes removes the infrastructure and other government services like health care that your business depends upon to do business.

            • vto 4.1.1.1.1.8

              So it is only a minor matter P’s B? Strange that, given that the entire report is about lifting incomes to par with Oz. The only way that will happen is with increased jobs and incomes. Which come from business.

              Oh, except in Draco’s world where the govt has created our entire society …

              talk about imagination …

            • Pascal's bookie 4.1.1.1.1.9

              What?

              My problem with your comments isn’t that it is a minor issue. It’s that it’s only one side of an issue. It makes no sense whatsoever to talk about cutting taxes and shrinking govt without identifying what it is that you are cutting.

              It’s like a cost benefit thing. Do just one side of the analysis and it’s useless.

            • vto 4.1.1.1.1.10

              yes I agree it is jut one side of the issue p’s b and if you look back you will see that I acknowledged that other factors need to be taken into account also. I even suggested the effects of changing govt spend as one.

              But my original point still stands – that the fact that lower taxes and less govt make it easier for people in business to generate economic activity and create jobs is one of the main factors in a debate about how to generate economic activity and create jobs. It should be given greater weight in the great balancing act. That is why I bemoaned its frequent glib dismissal. I think that dismissal is short-sighted.

            • Draco T Bastard 4.1.1.1.1.11

              Oh, except in Draco’s world where the govt has created our entire society

              Where did I say that?, Oh, that’s right – I didn’t.

              I did point out that we gave money to the government so that they could then do what was needed to be done to allow our society to prosper ie, build roads and hospitals. I also pointed out that those people who always call for tax cuts, such as yourself, are the type of people who don’t like paying the full costs of the resources and services that they use and need such as roads and hospitals.

            • vto 4.1.1.1.1.12

              Draco, you said it here “Government and taxes are needed to maintain society ”

              and here “Cut taxes and government spending and all you’ll end with is a failed state ”

              Both statements describe a fundamental belief that govt is the overarching benevolent entity and that society is a subset of govt. It is in fact the exact reverse. Govt is a subset of society. That is why I do not understand the pedestal that standardites put the govt on – too much looking after govt at the expense of society. Cullen was a classic for this approach.

              The cry in this debate is “oh no, what about the health, what about the dole, what about this and that?” whereas the cry should be “oh no, where are the jobs and economic activity going to come from to pay for the health, pay for the dole, pay for this and that?”

              its all arse about…

            • Draco T Bastard 4.1.1.1.1.13

              Draco, you said it here “Government and taxes are needed to maintain society ‘

              and here “Cut taxes and government spending and all you’ll end with is a failed state ‘

              Neither of those equate to what you said I said.

              Govt is a subset of society.

              This is closer to what those two sentences of mine say.

              whereas the cry should be “oh no, where are the jobs and economic activity going to come from to pay for the health, pay for the dole, pay for this and that?’

              Why is it, with the massive amounts of productivity increases we’ve had, that we’re still doing 40+ hours per week each?

              In reality, all we need are the resources to do all that and we have them. Our capitalist socio-economic culture is actually getting in the way of achieving them though as the majority of the wealth goes to the few. It’s a massive misallocation of resources – exactly the opposite of what neo-liberal economics said it would do.

        • IrishBill 4.1.1.2

          According to the World Bank New Zealand is the second best country in the world for doing business. I’d suggest that if you’re have a hard time running a business here then you should probably chuck it in and take a job with someone who can run a business properly.

          • vto 4.1.1.2.1

            I referenced it to improving relative to current situation IB. I dont find it overly difficult – what I said is it could be improved. After all there are still plenty unemployed and impoverished. Smartypants.

            • roger nome 4.1.1.2.1.1

              Exposing a small boat like NZ to the stormy seas of the unregulated international market did us a lot of good hey?

              Also – cutting social services and benefits only creates poverty and the many related social problems. Just because they’re hard to quantify, doersn’t mean they don’t exist and impact on productivity (i.e. someone with a p addiction, or sitting in prison doesn’t contribute much to society, nor do they raise productive members of society).

              That’s the problem with the egg-heads like Brash – they only measure what is easily quantifiable, and in doing this, the exclude the most important issues from their thinking.

          • Lanthanide 4.1.1.2.2

            I’ve always kept that fact in mind, but I don’t know why Labour doesn’t make it more widely known. It seems the righties always bang on about how hard it is to do business and the need to “cut red tape”, when apparently it is actually already very easy here?

            That would tend to indicate that “red tape” really isn’t the root cause of any perceived “problems”, I should think.

            • vto 4.1.1.2.2.1

              lanthanide, it is relative to the current situation. If it is not so difficult at the moment so what? If it can be improved and more people employed then why would you not?

    • Lanthanide 4.2

      Yes, pity that we have to imagine that it works.

      Bit of an own-goal there, vto.

    • lprent 4.3

      …what was Clark’s actual plan to lift us to the top half of the oecd again?

      Not a short-term kludge that does nothing. Education and upskilling of the workforce into a higher wage economy. It takes a lot longer (and more work) than crashing down into a low wage economy which is the right appears to want to do by their actions.

      Why do I get the impression that Brash, English, and Hide want to stride strongly into a failed past? This stuff all looks like deja vu to me.

      As you say, you’d have to imagine it working. It hasn’t for more than a decade anywhere.

      • Tim Ellis 4.3.1

        LP, then why did Labour set 2011 as the date for reaching the top half of the OECD? And how well did they perform in that measure?

  5. Tanya 5

    Can we have Don Brash as leader? At least he is a true Conservative, and not a neo-liberal. Honest too.

    • Bright Red 5.1

      Key rolled him

      • The Voice of Reason 5.1.1

        The electorate rolled him first, BR!

        I’d take issue with your deciption of Brash as a true conservative, Tanya, though that’s an admittedly hard concept to pin down. He is a economic dry, in the Chicago school/Thatcherite mould and that is not true conservatism in any way I’m familiar with. In fact, I would have thought neo-Liberal is closer to the mark, surely?

  6. ben forcing the elderly back to work could do a number of things that the right wing might enjoy but it would do nothing to grow the NZ pie. It could be argued that by forcing the elderly back to work it would increase the numbers inthe Labour force. When you have more unemployed,. people get payed less and so that would effect productivity in the longer term.

    The next time you post you might actually want to add something to the discussion rather that be seen to be a arrogant dick head!

  7. outofbed 7

    If the centre is shifted, does that mean that Russel Norman is back to being a left winger ?

  8. randal 8

    this task force is peopled by accountants who call themselves businesmen.
    so where is the new business?
    by definiton new zealand is one of the most productive countries on the earth.
    if it were not then nobody would buy our goods.
    but these accountants are sort of like human leeches.
    they know when to get into new service industries like video shops or garden franchises but they have absolutely no ability whatsoever to create anything except rakeoffs for themselves and ill will and disharmony amongst those who actually do the WORK that produces the income that keeps the system going.

  9. Bill 9

    Don Brash and his team are have obviously taken inspiration from Le Van

    Meanwhile, John and the Nats lurk in the background not going there, but so, so wanting to.

    edit. The same cmment above with the duff link should have been deleted

  10. Zaphod Beeblebrox 10

    Its striking how far left the electorate is moving. In 2005 Brash was within a whisker of being our PM. At the same time Key is signing NZ up for climate change obligations. How Ironic!

    Now he’s being treated as a bit of joke. Whenever RadioNZ want a bit of light relief they call up Roger Douglas.

    Good to see the Nats moving to the centre- though I suspect eventually they will suffer the fate of the Australian Liberal Party which is hopelessly split between the ideologs and pragmatists.

    Now would be a good time for Key to jettison the ideolog old guard for his own good.

    • Bill 10.1

      So the right wing are engaged in desperate, scrabbling nail scraping at the top of a cliff drop to oblivion rather than pushing the center to the right by over calling it?

      hmm.

      • Zaphod Beeblebrox 10.1.1

        Depends on your interpretation. This is certainly the lightest blue National government I can remember.

  11. Just been reading the summary of the initial 2025 Task Force report from M. Hooten’s “Exceltium’ .com and about to delve (lightly) into the 700 plus page main course. It is not a barrel of fun for a unionist90 day probationary period extended out to 12 months, youth rates at the ratio present in 1999 to be reinstated “as a matter of urgency’. Property “rights’ to be included in the Bill of Rights Act, water to be a tradable etc. etc.

    • roger nome 12.1

      haha – sounds like a barrel of laughs to me. i just hope they implement it all in election year so the the left can get on with running the country competently and responsibly.

  12. gingercrush 13

    Pretty shitty report. But the left needs a new focus. Instead of calling it a waste of time and how National will implement some of the things and whatever else they’re saying. All of which is highly predictable. Why doesn’t Goff just pump up his speech on Reserve Bank Act changes and how that would be much more valuable than the nonsense Brash spouted.

    That was a good speech and much better than his “Nationhood speech”. Its also the issue where Goff should keep pressing. Another thing I don’t quite understand is the report talks about cutting government debt something National is also repeating. Though not anywhere the size Brash etc would like. Yet the ETS National implement goes against that. Labour should be highlighting that instead of simply scoffing at everything Brash’s report has to say.

    The way to respond s highlight the speech put to Federated Farmers and how the ETS goes against reducing government debt rather than simply attacking Brash’s report. Much more interesting and does much more to highlight that National isn’t doing anything (as Goff says in his pres release)

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