One of the things I like about being left wing is how often the best moral decision is also the best economic decision.
Take economic stimulus for example. In a recession it’s the most vulnerable such as beneficiaries, low paid workers and youth that are hit worst because they are the ones least likely to have any financial backstop. The good thing is the best way to ameliorate the effects of a recession on society as a whole is to help these people out.
If the recession is likely to be short-term then it’s possible to moderate it by increasing consumer spending and the best way to do that is to make sure that those at the bottom have more money to spend because it is those at the bottom that are more likely to spend in their local economy. It’s also those at the bottom that are more likely to need that money because they won’t have budgetary capacity they can cut.
But you can’t shop your way out of a long term recession. When things are looking like they are going to be bad for a while you need to make sure that the money you are using to stimulate the economy is more tightly targeted. The money still needs to go to the lower income brackets but it needs to do so in a more controlled way. One of the best ways is by bringing infrastructure forward and increase investment in it. Anther way is to tie receipt of this money to education and training. This ensures that the money that you are using to flatten the recession can be fed through the economy in a more controlled way using jobs and training allowances. That also means you’re building productive capacity so full advantage can be taken of the next boom.
Of course the other option is to provide say 80% of your tax package to say the top 30% of earners and hope for some trickle down. But faced with a long recession these earners tend to use the money to pay down their debt or just put it in the bank in case they need it later on. That’s about as stimulating as a Peter Dunne speech and, when it comes at the opportunity cost of jobs and income for the most vulnerable New Zealanders, it’s about as moral as the way he operates.
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