I wish Finlay MacDonald wrote more about politics and less about cats and kids and stuff because he’s well worth reading when he’s on a serious topic.. and a weekly column in the Sunday Star-Times is a hell of a thing to waste.
His piece yesterday eviscerates Key’s vacuous economic speech from last week. He approvingly quotes my description of it as like a high school essay you haven’t studied for ‘just chuck in every key-word you can think of and bulk it out by restating the question in longer form.’ (would have been nice if he’d named The Standard though 🙁 )
MacDonald goes on to give a penetrating run-down of the problems with our economy’s fundamentals and the lack of a plan (or even an ambition) from Key to do anything about them:
“Conservative and liberal commentators alike acknowledge that New Zealand cannot hope to return to its pre-recessionary ways, buying and selling houses to fill up with consumer junk bought with the borrowed savings of more successful national economies.
The trouble is, without meaningful reform of the fundamental economic conditions that have created and sustained this fantasy, New Zealanders can only ever be expected to behave in predictable ways.
Our capital markets are feeble, our finance companies black holes, so we invest in personal property. Our tradeable sector suffers due to manufacturers and exporters being routinely hobbled by an over-traded and over-valued currency. Our foreign-owned banks have used the hot money gushing through their coffers due to that volatile exchange rate to flood the economy with credit, fuelling the preoccupation with property and flat screen TVs. We train lawyers and accountants instead of scientists and engineers. We can’t save because we’re already borrowing just to maintain a static standard of living.
That’s the counter-productive economic tailspin we’ve been in for too long now. John Key isn’t a financial illiterate, so he knows all that…why doesn’t he take the next logical step and start talking about the real impediments to growth, namely the exchange rate volatility and the fixation with fighting inflation that drives it? He doesn’t need to advocate a return to the command economy, or repudiate everything that has happened since 1984. But he can’t keep waffling about the effects of fundamental economic failure without at least opening up for discussion their fundamental causes.
…we seem to be looking in all the usual old places for signs of ‘recovery’ house prices and sales volumes, a pulse in the sharemarket, an uptick in consumer spending. And despite the rhetoric about these factors being the problem rather than the answer, what are the chances of Key and co. not trying to take credit for any evidence of life returning to our moribund economy, superficial or not?
Key could have used the crisis of this recession and his own considerable political capital to break the circuit and reset the macro-economic controls that determine how we might work, save, invest and produce our way into the top half of the OECD. Instead, we get this: ‘In the end, New Zealand’s economic prosperity relies on the hard work and inventiveness of our businesses and their employees.’
It’s great to see commentators pushing for a real debate on the economy, just as Chief Justice Elias has done on law and order. Unfortunately, it doesn’t look like Key is interested.