The Government is to blame for record unemployment numbers

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1. tsmithfield 1

   4 February 2010 at 3:12 pm

   Can’t say I entirely agree with this post.

   If you look at the countries that have been pouring in massive stimulus into their economies, many of them are in “donkey deep” now, as Key would put it. Take the PIGS (Portugal, Italy, Greece, Spain) for example. Greece is now having to make massive cuts to its budget due to the high gearing and increasing interest costs to fund its deficit. The European nations mentioned above, plus others will soon be in the same boat. It is likely that eventually some of the countries will default or need bailing out. The US is probably the worst of the lot, but they can fund their deficit in part by printing money, whereas nations in the Euro can’t. So the US can kick the can down the road for a bit longer. The long-term outlook is not at all bright for these countries as there is no easy fix.

   Personally, politics aside, I am very glad that we haven’t gone into borrowing to the same extreme or we would end up facing the same problems. I think we need to get out of deficit as quickly as we can or the long-term implications can be dire.

   Sure, we have had a blip in unemployment now. However, I think we are much better positioned for the longer term than many nations.
   • IrishBill 1.1

     4 February 2010 at 3:15 pm

     Australia is doing pretty well.
     • fizzleplug 1.1.1

       4 February 2010 at 3:16 pm

       Weren’t they one of the few countries not to enter into recession?
     • infused 1.1.2

       4 February 2010 at 3:19 pm

       They won’t be soon. Give it a year.
       • Chess Player 1.1.2.1

         4 February 2010 at 5:45 pm

         I hope the Ozzies are stockpiling their cash from their mineral sales.

         They’ll need it all, and much more, in the coming decades when they run out of food and fresh water.
   • Tigger 1.2

     4 February 2010 at 3:16 pm

     So National has been right to go slow on job creation? I see your point but the question is – why won’t they take responsibility for the unemployment rate?
   • Lew 1.3

     4 February 2010 at 3:24 pm

     TS,

     Well, by definition the government is to blame, since it is they who control the levers. Their job is to run the country to the satisfaction of the electorate, and to the extent that they fail to do so (or fail to convince the electorate that they’ve done so) they’ll suffer. By and large the electorate doesn’t brook excuses like “we inherited a recession” or “the global credit crisis is putting pressure on employers” gladly. This is all against a counterfactual which doesn’t look so bad — as Bill says, the Nats keep telling us to look to Australia, and what do we see when we look there?

     It doesn’t matter whether it’s practical or easy or whatever — either the government puts up something which will generate jobs (and wage growth, etc), or they suffer criticism like this and have to explain themselves in ever-decreasing spirals of economic arcana.

     I see you’ve chosen to defend the latter. Good luck with that.

     L
   • Zorr 1.4

     4 February 2010 at 5:09 pm

     –sigh–

     Way to go TS. You just listed four countries with exactly the same issue, they are in the Euro zone. For just a single example I will use Spain as I know more of the details with their collapse but the same issues apply with the other three listed. Spain, like everyone else, had a massive housing boom fuelled by excessive lending. When the crash came and nobody wanted the houses any more but all this wealth had been artificially created and couldn’t just be “disposed of” or devalued because they are part of the Euro zone and as such cannot devalue their currency to deal with such issues. Cue disaster zone.

     Good example of a crash. A bad example for comparison here.
   • Macro 1.5

     4 February 2010 at 8:09 pm

     I entirely agree with this post!
     This shower of an “administration” are nothing more than a DISGRACE.
2. infused 2

   4 February 2010 at 3:18 pm

   I just employed someone, if that helps.
   • IrishBill 2.1

     4 February 2010 at 3:23 pm

     Let me guess. It’s a buyer’s market?
     • Peter Bilson 2.1.1

       4 February 2010 at 4:23 pm

       Does that concern you IB? It would be stupid to pay over the odds for a position at present as employers budgets are very tight.
       • Bill 2.1.1.1

         4 February 2010 at 9:42 pm

         Slave markets are always buyers markets.

         Just saying.
       • Macro 2.1.1.2

         4 February 2010 at 9:52 pm

         “at present as employers budgets are very tight”
         I don’t recall their budgets ever not being tight, especially when it comes to paying for a fair days pay. Of course there are the few odd exceptions and such a rule doesn’t apply to directors fees or CEOs.
     • infused 2.1.2

       4 February 2010 at 11:46 pm

       It is to a degree. This person though is fresh out of polytech, ms technology focused, a+, some cisco stuff. Very motivated.

       20yrs old, I’ve put them on a modest amount. Also given him a car and a phone.

       Just cause I vote national doesn’t mean I treat employees like shit.
       [no it doesn’t. but it means you defend the right of other employers to do so. The problem with National’s labour policy – low minimum wage, 90 days etc – isn’t that all bosses will abuse their position but that some will. These policies are a kind of bandits’ charter, not much use to good employers, trouble in the hands of bad ones, who often have the most vulnerable employees]
   • Clarke 2.2

     4 February 2010 at 4:36 pm

     I just employed someone, if that helps.

     Of course it helps – good on you!
3. gingercrush 3

   4 February 2010 at 3:26 pm

   Fine National is responsible for record unemployment numbers. Who cares. I don’t. If we can all agree on that then fine. But when unemployment does fall and it will and when economic growth is better which it will be. Don’t say National had nothing to do with it. Because you can’t both blame the government for unemployment then turn around and make excuses when the economy does recover. And you lefties will do exactly that. Its the same shit you lot will use about how unstructured this economy is then ignore that Labour saw the highest growth in house prices for decades.

   Oh and someone on the left should have a talk with Phil Goff he seems to think we’re in an era of boom times.
   • snoozer 3.1

     4 February 2010 at 3:32 pm

     you can blame the government for not doing anything to stop unemployment rising as much as it has.
4. Lew 4

   4 February 2010 at 3:33 pm

   GC,

   Fine National is responsible for record unemployment numbers. Who cares.

   59,000 of your fellow citizens care.

   But your reasoning is sound — if they’re to blame for the slump, they should be to blame for the recvery, too. Not that Nat supporters gave Labour any love for the nine long years of prosperity under their watch.

   L
   • gingercrush 4.1

     4 February 2010 at 3:46 pm

     Because that growth was mostly attributed to record jumps in house prices. The economy initially rose because of our low dollar and good export prices. But soon that economy boom was reliant on record house prices. That pushed our interest rates up, our dollar climbed and exporters hurt. Labour also inherited an economy that had good growth possibilities. Say what you will about the 90s government but when Bill Birch gave that final budget in 1999 he forecast future growth to be over 3%.

     National didn’t get growth prospects. They inherited an economy that already was in recession. There is the difference. National will grow the economy and when Labour gets in six or nine years later they’ll once again inherit a healthy economy.
     • Lew 4.1.1

       4 February 2010 at 3:51 pm

       See, this is what I mean about economic arcana. You might well be correct, but it doesn’t matter — at a political level, a government plays with the hand it’s dealt, and is judged by the electorate according to its winnings. And a government’s job is to succeed in spite of a bad hand, not to fail and make excuses.

       L
     • bobo 4.1.2

       4 February 2010 at 4:14 pm

       Yeah National inherited a recession and made sure it lasted as long as they could make it with Dr Brashes obsession with low inflation, high unemployment, at the time Uk was booming the US was improving, you could argue yeah its all just a property bubble.. Your reasoning sounds like no matter what National do it will be just bad luck or bad timing on the economic curve with Labour inheriting all their hard work whatever.

       I take it you never lost your job or worked in the 90s? Its very easy to look at events in a clinical academic way years later without seeing the turmoil it created in peoples lives at the time.

       oh well i better get back to doing some work..
       • Jcw 4.1.2.1

         4 February 2010 at 5:26 pm

         Are you suggesting that high inflation is desirable? Clearly that is not the case as high inflation errodes our international competitiveness over the long run.
     • Draco T Bastard 4.1.3

       4 February 2010 at 10:02 pm

       Another delusional response from the political right.

       National won’t grow the economy – they will transfer a lot of wealth to the rich though. This has been happening since the 1980s and the 4th Labour government. The problem is that the economic theory that they’re working with isn’t worth the paper it’s written on.
5. Brett Dale 5

   4 February 2010 at 3:38 pm

   Im guessing if unemployment falls, you are going to credit John Key?
   • Chess Player 5.1

     4 February 2010 at 5:48 pm

     Um, no, they won’t.

     You just won’t see it mentioned on this blog…
     • Mr Magoo 5.1.1

       4 February 2010 at 7:08 pm

       It hasn’t and thus your argument is yet another puff of hot air.

       I know I am wasting my breath here but..

       a) Foreseeable rise was all but ignored as national did sweet f all. The rise was not their fault, the failure to responsibly act to prevent it LIKE THEY SAID THEY WERE GOING TO is their fault.

       b) If it falls now and they have not done anything that could have caused that then, no, they cannot be given credit for it.

       While these things are not always precisely attributable to their cause, in this case there is no possible cause.

       Nothing is as nothing does.

       Kind of annoyed by it as I know that 10’s of thousands of kiwis and their families are suffering.

       Kind of makes one wonder where you could stick one of those hard edges of the recession? Brownlee has ample room…
   • Macro 5.2

     4 February 2010 at 8:16 pm

     That’s a very big “IF” Brett!
     What could possibly make you think that it might? when even the PM isn’t holding his breath. Fact is he has done nothing and is bereft of ideas that could possibly alleviate the situation. He is in fact useless. And the quicker he is history the better.
6. Herodotus 6

   4 February 2010 at 3:43 pm

   Whist there has been limited action on the current government that has not helped so was the lack of building NZ economy for the last 20 years or so
   This maybe a slightly non right leaning blog. If there was left a better legacy from the past regimes, particularly what Labour 99-08 left behind then this recession maynot have been as severe as it currently is or for me may still be to come, there is still potential for a “W”. This government for me is letting NZ down by doing the same as what was put in place before, a few deck chairs being rearranged at best. There is no underlining structural changes occurring. The banks are operating just as they were (Perhaps slightly less aggressive after paying extra tax).
   Simiply put we grow grass and have as a country abundant water supplies. Where is the marketing wizz kid promoting our free range image. Or are all our best brains being used to spin for the left & right. That will do wonders for NZ !!!!
7. tsmithfield 7

   4 February 2010 at 3:46 pm

   IrishBill “Australia is doing pretty well.”

   That is largely because China has been having a feeding frenzy on Australia’s commodities. However, China is now tightening their economy due to the run-away nature of their growth. Commodity prices have been getting hammered lately as a result.

   Don’t be at all surprised to see Australia go into recession. Their reserve bank governer just put off an expected interest rates increase because he is a bit skeptical about the situation as well.
   • Zaphod Beeblebrox 7.1

     4 February 2010 at 8:41 pm

     If Australia does, Key and English will be well and truly stuffed by next year.
8. Jared 8

   4 February 2010 at 4:05 pm

   Its a salient point to advocate policies like the Greens New Deal, but by and large the job creations would be temporary and unsustainable (other than the housing related areas) but I sincerely doubt those who are now out of jobs would lend their hand to most of the “jobs” created under the New Deal. It might look nice on paper, but I doubt it would have much impact if implemented.

   Also, we have learnt our lesson in the past in trying (and failing) to control the dollar. The Reserve Bank cannot control our dollar, it is at the whim of the market.
   • Lanthanide 8.1

     4 February 2010 at 4:17 pm

     Yeah, I guess those 3,500 people who turned up for 100-150 supermarket jobs couldn’t be bothered doing any of those ‘green jobs’. They’d rather work in dead-end go-nowhere jobs than take on something challenging with greater career prospects.

     /sarcasm.

     If you build it, they will come.
     • Pat 8.1.1

       4 February 2010 at 4:26 pm

       That’s right. Why would anyone want a supermarket job close to their home in South Auckland when they could tramp around the back blocks of the South Island removing wilding pines?

       /sarcasm
       • Clarke 8.1.1.1

         4 February 2010 at 4:44 pm

         And if you’re the Minister of Social Development, why would you bother doing anything about creating the green jobs to help sop up South Island unemployment when you could sit on your fat arse and blame population growth instead?

         /sarcasm

         Oh, hang on a sec, that wasn’t sarcastic, that was Bennett’s actual approach ….
         • pollywog 8.1.1.1.1

           5 February 2010 at 9:36 am

           fast track the national cycle way, increase petrol prices to get more people on bikes, then run em over in record numbers, as has been happening, and thus reduce the population 🙂

           captcha :driven
       • Lanthanide 8.1.1.2

         4 February 2010 at 5:10 pm

         Clearly ‘green jobs’ = ‘forestry jobs’ in your mind.
9. tc 9

   4 February 2010 at 4:33 pm

   mmmmm yes Australia is doing well as it’s chock full of minerals/oil/gas now being more in demand and the Rudd gov’t stimulated the economy and not with a bikepath but by putting money in pockets and extra infrastructure projects.

   This lot did nothing aside from the well off getting another taxcut and giving the nod to projects already underway by labor whilst cutting several noses off spiteful faces….nightclasses/green initiatives etc and lets not get into the broken election promises.

   They lack the guts to reform tax properly…….labor dodged that bullet also but if Nat’s want to be taken seriously they have to consider a CGT and other measures that level the playing field.

   Want to catch Oz Johnny and get better productivity/services/employment…….CGT in since 87, Stamp duty on property sales (since the 80’s), land tax (been around for years in some states)….a broad tax base that their backers will never allow as they’d have to stump up more dosh.

   It’s a do nothing Gov’t beacuse the real measures that have long term equitable distribution impacts are not wanted by their backers……greed is good apparently.
10. outofbed 10

    4 February 2010 at 6:36 pm

    First pack of Green New Deal initiatives:
    In May 2009 we released a green stimulus package to save or create almost 18,000 jobs (FTE for 1 year) directly and almost 43,000 in all, by investing $1B per year over the next 3 years in:
    Energy efficiency (insulating homes, upgrading schools and businesses)
    Transport efficiency (more choice, more affordable, better for health)
    Protecting waterways (improve water quality and biodiversity, protect 100% Pure brand, reduce flooding)
    Building more homes (build 6,000 new state houses, lower energy costs, improved asset value and healthier people)
    Community sector initiatives (waste minimisation, community housing and more)
    http://www.greens.org.nz/greennewdeal
11. TightyRighty 11

    4 February 2010 at 7:38 pm

    didn’t economists forecast 11% unemployment at the start of the recession? I would have thought limiting it to just over 7% AND keeping the books reasonably balanced is reasonably good going.
    • Clarke 11.1

      4 February 2010 at 8:23 pm

      Give it time – unemployment is a lagging indicator, and if there’s a double dip recession it’s going to get a fair bit worse before it gets better.
      • TightyRighty 11.1.1

        4 February 2010 at 8:31 pm

        gee thanks, i didn’t realise that.

        i’m picking a further increase, though not of this magnitude. i think unemployment will climb as high as 8%, which is pretty rough, but reasonably expectable considering we are leaving a recession. double digit would have been sub par, but these figures could be considered understandable. my hope is for the reserve bank to lower the ocr again. time to face up that we are a credit reliant and exporting economy, two things helped by a lower OCR. while inflation is damaging, there are no signs of it being out of control at the moment.
        • Clarke 11.1.1.1

          5 February 2010 at 9:21 am

          I largely agree with your analysis, but I still think Andrew’s criticism is valid – in the face of (probably) 8%-ish unemployment, the inaction from the government is unhelpful. “Sit and hope” doesn’t seem like much of a strategy.

          Can’t see much move downward movement on the OCR front, though … and it’s not clear what impact it would have anyway, as commercial borrowing rates seem to have a pretty low correlation with the OCR at the moment.
12. Macro 12

    4 February 2010 at 9:16 pm

    There is almost nothing happening in the civil construction sector at the present time. Last year at this time developers were merely finishing off subdivisions with nothing new planned. This season has been an absolute disaster with almost no new work and only preliminary earthworks keeping civil contractors ticking over. Previously there has been a demand for 18,000 new dwellings in the Auckland region per year. That is just not happening. The civil construction industry is the “canary” for unemployment. – if people are laid off there you can expect tough times for the future. Any recovery is a long way off because it hasn’t happened yet, and won’t now until next Oct at the earliest.
    Road works wont do it. The employment structure for roading is minimal. Buildings require people to put them up, services to supply, materials that need to be processed by people etc. 180 homes to be build on Maori land is insignificant. Just 1% of the demand for Auckland region alone!
    Your 8% tr and more I’m afraid because your hero is a complete incompetent.
    • Herodotus 12.1

      5 February 2010 at 8:54 am

      Perhaps earthworks &civil works are down for 2 reasons: the time to get any zoning in place then consenting (esp with the super city no one wants to make a decission) and the lack of ability to obtain funding from banks. It is difficult to develope where zoning takes 9-10 years, and there is no politicial motivation to solve this problem both Lab and Nats. Sure the bank will too readily loan to owner-occupants but not to those wishing to develope. Only the very big developers and a mum/dad sub dividing the 1/4 ac could very easily be the future in NZ.
      • Macro 12.1.1

        5 February 2010 at 1:36 pm

        Yes I know it takes years to gain consents! I know of one place where people are residing in untitled dwellings “bought” two years ago! That’s my point entirely! This slowdown is not going to go away overnight. NAct’s meddling in the supercity and the failure of the financial institutions don’t help either.
13. Bill 13

    4 February 2010 at 10:00 pm

    “Any recovery is a long way off…”

    Recovery? What recovery?

    They have talked of U’s and V’s and even W’s. But nobody much is talking about the i..you know, full stop and plummet?

    That’s where my intuitive money is. We’re at that Warner Bros lag time moment where Wily Coyote is peddling air unaware of the impending.
    .
    .
    .
    .
    .
    pfff!
    • Galeandra 13.1

      4 February 2010 at 11:21 pm

      No, the Nacts have been peddling (hot) air for a while now. W E C is still pedalling.

      captcha quotes 🙂
14. clay barham 14

    5 February 2010 at 5:15 am

    Entrepreneurs create new jobs. They think out of the bubble and live out of the box, as cited in Bubbles, Boxes and Individual Freedom on Amazon and claysamerica.com. Ayn Rand’s book Fountainhead centered on Roark’s jury summation, which represents her ideals of an entrepreneur, where individual freedom, elbowroom and individual interests are superior to the interests of community, as sought by the leftists like Rousseau, Marx and Obama. See also Save Pebble Droppers & Prosperity on Amazon and claysamerica.com.
    • lprent 14.1

      5 February 2010 at 5:44 am

      Ummm, you really haven’t looked at the studies that look at entrepreneurs. I’ll summarize them for you.

      Entrepreneurs do create jobs. So does making babies, breeding sheep, making rubbish, and probably arse scratching (wears out the pants – thereby creating demand for pants).

      What you’re struggling to say (in an inarticulate and highly coded way) is that entrepreneurs create new types of jobs by generating new types of demand.

      They do this by finding and founding new industries. On the way through the vast majority of them either fail financially or manage to merely survive but nothing more. They are “think out of the bubble and live out of the box” because most of them are kind of nuts. Frequently they are borderline maniac-depressives. Much of the time failed ventures will drag the savings of other people down with them.

      The people you’re lauding are typically the winnowed survivors of that process. The majority of them survived and prospered by sheer luck, typically by finding someone that actually made their nutty ideas workable. A small minority did actually did do it largely themselves.

      Entrepreneurs are worthwhile supporting, but not for the inane reasons that you’re suggesting. They are just nuts enough to try something truly desperate in the market that no sane person would consider. Some of those wild gambles pay off. This is how new industries form.

      But typically the majority of successful entrepreneurs will fail on subsequent speculative ventures. They didn’t understand why they succeeded in the first venture and tend to over-commit on subsequent ones. That is why the new industries that they create usually wind up in the hands of others.

      This picture is a little different to the mythic picture that you and the nutty Rand paint. But then you’re not really into reality are you?

      Society needs to support them, but also needs to restrict the damage they also cause. You only need to look at causes of the current recession to see both sides of the issue.

      Pity the poor entrepreneur, for they know not what they do or why they do it.
    • Clarke 14.2

      5 February 2010 at 8:15 am

      Ayn Rand’s book Fountainhead centered on Roark’s jury summation, which represents her ideals of an entrepreneur …

      Not to point out the obvious here, but Rand had no academic or practical qualifications in the subject of entrepreneurship, and The Fountainhead is a novel.

      If you’re suggesting that the fictional rantings of a dead author with interesting sexual predilections should be used as the basis of sound economic decision making, then perhaps we should also research our foreign policy by reading back-issues of Spiderman comics.
      • Lew 14.2.1

        5 February 2010 at 8:59 am

        Don’t forget the dexedrine addiction. No character assassination of Rand is complete without the words “speed-fuelled rant”.

        For what it’s worth I think her writing is much-maligned. It’s wonderfully polemic. But, indeed, it’s no more the basis for running a society than the Celestine Prophecy.

        L
        • Clarke 14.2.1.1

          5 February 2010 at 9:28 am

          For what it’s worth I think her writing is much-maligned. It’s wonderfully polemic.

          Yes, she could certainly write … although she badly needed a decent editor. To call her “long-winded” or “using a rhetorical steam-hammer to crack a walnut and then grind it to an exceptionally fine powder” is to understate the problem by a couple of orders of magnitude.

          And it’s always interesting to talk about Rand with younger ACT supporters – largely they haven’t actually read the books due to the length and the excess verbiage. Mostly they’ve read about the books rather than worked their way through the full length of the sacred texts.
15. sean14 15

    5 February 2010 at 9:49 am

    “What a disgrace that the minimum wage rose only 25 cents when a fiscal stimulus amongst the lowest paid could have created jobs.”

    How does making it more expensive to employ low-skilled people create jobs?
    • Clarke 15.1

      5 February 2010 at 9:50 am

      What makes you think that everyone on the minimum wage is low-skilled?
      • Macro 15.1.1

        5 February 2010 at 1:47 pm

        Exactly! I know of a MA (Hons) BSc Dip Sc earning $13 an hour.

        And Sean the low waged SPEND all their income! There are a large number of them and each extra small amount amounts up to a large sum which feeds back into the economy.
        Giving lots to wealthy individuals as in tax cuts to the top tax bracket, on the other hand nearly always goes to savings or payments off the mortgage – which is the same thing really. None of this money ends up feeding directly back into the productive economy as in the former case. Blingish’s “stimulus” package is no such thing!
16. sean14 16

    6 February 2010 at 9:52 am

    Clarke – fair point, it’s probably more accurate to say that those on the minimum wage are doing low skilled work instead of being necessarily low skilled.

    Macro – What job is the MA (Hons) BSc Dip Sc doing? Given that it only pays $13 an hour, is it a case of a highly skilled person doing a low-skilled job?

    I’m sure the low-waged do spend all their income, but making it more expensive for businesses to employ people isn’t going to create jobs. By that logic we should just increase the minimum wage to $50 and let the good times roll.

Links to post

1. LifeinBalanceinfo: posted on 4 February 2010 at 11:01 am
2. yournewwealthmaker: posted on 4 February 2010 at 4:21 pm

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