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To intervene or not to intervene, that is the question…

Written By: - Date published: 9:26 am, February 9th, 2013 - 27 comments
Categories: capitalism, class war, national - Tags: ,

Frank Macskasy at Frankly Speaking writes

To intervene, or not to intervene, that is the question:
Whether ’tis nobler in this government’s mind to suffer The slings and arrows of outrageous recessionary fortune,
Or to take arms against a global sea of economic troubles,
And by opposing end them? To be hands on, and interventionist…
(With apologies to The Bard…)


Farmers get it…


'Well-deserved' $80m for irrigation

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Rich families get it…


Richlisters up for Govt bailout

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Kids from rich families  get it…


$43 million should be saved from private school subsidy

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Insurance companies get it…


Government announces $500m bailout for insurer AMI

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Even cute, furry-footed Hobbits get it…


OECD knocks 'Rings' films' multimillion tax subsidies

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And more for the Precious


Hobbit tax rebate swells to $67.1m in second year of production

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Hell, practically everyone can get it…


business.govt.nz Grants & incentives



Subsidies for everything and everyone…

But not, it seems, to assist struggling construction companies until the Christchurch re-build kicks in, in earnest, and they can trade their way out of difficulties,


Mainzeal collapse 'tip of iceberg'

Full story


In a brutally frank analysis of the industry,  NZ Herald journalist Anne Gibson wrote this piece about other failed construction companies and the effect it was having throughout the country – see: Recession hammered building firms, say chiefs

Greg O’Sullivan, of  Takapuna-based building consultants Prendos, said,

The recession has hammered the industry to the ground.  It becomes a very acrimonious environment. Builders are having to watch every penny to survive.”

Source: IBID

And it was all so unnecessary.

No government could  not have prevented the recessionary effects of the Global Finance Crisis. But a more proactive government could have mitigated the harshest effects of the international recession with careful stimulation of the economy.

And by “stimulation” I do not refer to the wasteful, blunt-instrument-style tax cuts of 2009 and 2010. Those tax cuts added nothing to economic growth and only served to cut government revenue (see: Outlook slashes tax-take by $8b).

Thousands of jobs could have been saved. Thousands more jobs created.

A proactive government, with Ministers able to look ahead, would have immediatly implemented strategies to counter damaging recessionary effects;

  • a dynamic building programme post-2009′s “Job Summit” (and I don’t mean Key’s wretched cycleway idea – see:  Cycleway jobs fall short)
  • increased investment, incentives, and  subsidies for apprenticeships and other training/education for young people and other unemployed New Zealanders
  • reform of tax laws which see inefficient investment in speculative house-buying/selling less attractive, and re-direct investment into productive industry

National should never have allowed our economy to get where it is now.

This is a government that is derelict in it’s duty, and for Steven Joyce and his cronies to carp on about  “overseas investment” is a moronic cargo-cult mentality that simply defies understanding.

If New Zealand businesses leaders and Captains of  Commerce still believe that National is a “prudent manager of the economy” – then going by the last four years and events in the 1990s –I promise you that you will get what you richly deserve if they are re-elected in 2014 (or earlier).

This isn’t governance. This is economic decline by a thousand cuts.

Expect things to get worse.


27 comments on “To intervene or not to intervene, that is the question…”

  1. If New Zealand businesses leaders and Captains of Commerce still believe that National is a “prudent manager of the economy” – then going by the last four years and events in the 1990s –I promise you that you will get what you richly deserve if they are re-elected in 2014 (or earlier).

    Should probably read,

    If New Zealand businesses leaders and Captains of Commerce still believe that National is a “prudent manager of the economy” – then going by the last four years and events in the 1990s –I promise THEM that THEY will get what THEY richly deserve if they are re-elected in 2014 (or earlier).

    Makes better sense.

    My bad.

  2. Tiresias 2

    Joyce on ‘Morning Report’ yesterday only had “foreign investment” as a solution to all New Zealand’s woes – and in order to get “foreign investment” we are supposed to change our minds about the undesireability of mining and oil extraction etc, and embrace ‘flexibility’ which is shorthand for ‘put up with being exploited for a handful of beans’.

    Unfortunately for Joyce though, however seductively New Zealand lies on her back with her legs apart wiggling her bum, foreign investors are going to take one look her grossly over-valued currency and decide, quite sensibly, to put their money where it’s not going to lose 10 – 15% of its value in short order when the GFC eases and the inevitable currency re-aligments occur.

  3. AmaKiwi 3

    Too often we treat politics as if it is a rugby test: us against them, be a team player, etc.

    In 1949, post-war Japan was nearly in the stone age. It created MITI, a powerful government ministry to plan what the country needed to do to recover. In one generation Japan was the envy of the world. Its GDP was second only to the USA, despite having one third the population of the USA.

    Our government bailouts have no long term rhyme or reason. As a result they steadily impoverish the country. Here’s how some small countries have done long range planning to economically triumph:

    Scandinavian Economic Development Speech: Fast Forward – Growing Good Jobs by David Cunliffe | Sunday, September 30, 2012 – 15:00, Speech to Laingholm District Citizens Association, Laingholm, 30 September 2012

    Footnote: This is the speech that brought down the wrath of Shearer and the ABC gang. Tall poppy syndrome. Rugby politics. Brut force instead of brains.

    How bad does our economy have to get before we ALL take a broader perspective and decide we HAVE TO work together or we will all sink together?

  4. @ Frank Macskasy,

    Great article. You have managed to focus on the crux of the debate re Government proactivity and the pathetic approach of this current government.

    An additional thought: If we have a government who give tax-cuts to wealthy and gains revenue through taxes such as GST & petrol, and selling off assets there appears to be no real motivation for the said government to be wanting people to be in better circumstances. There is a moral hazard evident with this approach.

    If the system is set up so that a government benefits when its people are prosperous, then there is a motivation for that system, the government, to ensure this is the case. This is clearly missing from this current government. Who are they working for? Who is benefiting? Not a hell of a lot of people in my view.

    Who the heck are voting for these people? Where are their heads “at”?

    • An additional thought: If we have a government who give tax-cuts to wealthy and gains revenue through taxes such as GST & petrol, and selling off assets there appears to be no real motivation for the said government to be wanting people to be in better circumstances.

      Spot on, Blue Leopard.

      An economics commentator (name escapes me at the moment) recently pointed out that National is desperate for any signs of economic recovery. It doesn’t matter if it’s short term; environmentally damaging; economically/fiscally damaging, or a false recovery – any sign will do.

      Just enough to get them re-elected in 2014 (or earlier).

    • Indeed, Amakiwi. I re-posted Cunliffe’s speech on my blog soon after it was released (as I did with Shearer’s recently).

      Cunliffe’s points can be beautifully summed up with this statement he made.

      Denmark doesn’t tell its businesspeople what to do. Instead, Denmark sees its businesspeople as partners. The Danish government sits down with its key business groups. The two sides plan a workable strategy. After listening to its voters, workers and business partners, the Danish government doesn’t muck around. Incentives, sector plans, skills training, research and development, industry investment, targets and timetables are all actively used to get the economy moving and to keep it moving.

      There is real symbiosis; it’s a win-win partnership, and the whole country benefits.

      Hell yes!

      By contrast, Key’s “Job Summit” in February 2009 was supposedly (we were told) of a similar nature. But instead it turned out to be window dressing and little more. (Kinda like the old Soviet shops pre-1991, where window-displays were full of consumer goods – but the shops inside were mostly empty. That was the nature of John Key’s “Jobs Summit”.)

      The “trick” now is to get the rest of the country to understand this.

      • blue leopard 5.1.1

        “The “trick” now is to get the rest of the country to understand this. ~F Macskasy

        You can say that again….and again…and again….in fact keep saying it until the rest of the country do understand.

      • Afewknowthetruth 5.1.2

        Frank, like most other people, you just don’t get it.

        Global oil extraction peaked over 2005 al to 2008 (much as predicted years beforehand) and all oil-dependent economies are screwed long term, with those most dependent on oil imports falling first, i.e. Spain.

        Nothing is going to change that geological reality, though desperation attempts to prop things up by fracking and deep-sea drilling will work in the very short term, at horrendous environmental cost.

        Death by a thousand cuts is the order of the day, the month, the year, the decade for the ‘proles’, with covert fascism morphing into overt fascism and an ever greater wealth gap until revolution breaks out.

  5. Coronial Typer 6

    I like Cunliffe. But New Zealanders are notoriously non-patriotic when it comes to being organised into sustained cooperation between business and the state. (Exception: the managed war economy from 1940 to 1947).

    Labour will have to be subtler than that, and the New Zealand state is now far far weaker than Denmark’s. So any organising will need to be targeted, organised, and led by the industries themselves. Sutch is dead.

    As Mackasey’s above examples show, Key’s government has taken the mantle of interventionism off Labour. they are ‘hands on’ with industry to a far greater degree than Clark’s. Sure, it’s light. Sure, it’s not always in the most value-added sectors. But Labour and Greens will need to show that their version of ‘hands on’ is superior to National’s. and their sectoral choices superior.

    So Mackasey’s post is a false binary. Why not argue for specific sectors, for example those that:
    – are export focused
    – are rich in high income jobs
    – are committed to research and development in their products and services
    – are located here, using our land and resources, and committed to staying
    – want the help

    None of the above applies to construction.

    • bad12 6.1

      That all works ‘oh so fine’ if the rest of the world wants to buy what you produce, if the rest of that world don’t want to then it’s all a bit 10,000 spoons when all’s you need is a knife,

      Housing construction tho has the beauty of being an industry that can be ongoing using NZ labour and NZ materials while along with that the pace and size of the build would not be reliant upon what occurs in the global realm,

      According to Bill’s figures,(English that is), it takes 8 years after an immigrant has settled in NZ for the market to produce a home for that particular person/family,

      That’s the wrong way round in my opinion, we should be producing the houses befor the immigrants come here…

  6. Fortran 7

    What about the Swedes buying nine farms in the Waikato ?
    Ok, I suppose they are not Chinese.

    • Saarbo 7.1

      Im dead set against Foreigners buying our farms. But maybe one of the reasons people are not complaining about the Swedes is that they have purchased 9 farms developed by Graeme Hart. Hart converted pine forestry into dairy farms, they are on pumice soil and are actually quite marginal farms. I still dont agree that they should have been sold to the swedes but these farms are not in the same league as the Crafer farms. They have been on the market since 2009.

  7. Murray Olsen 8

    The government intervenes in the economy on a daily basis. The problem is that it intervenes on behalf of speculators, foreign banks, and the already rich. That the taxpayer should be bailing out the Spencers is obscene. If they’ve made a mess, they should have enough toilet paper lying around to clean it up.
    I am also incredibly suspicious about Mainzeal. I doubt if they wanted help. From what I’ve seen, the parent company let a subsidiary go down the drain to escape the leaky buildings mess. The Serious Fraud Office should probably be called in, but I won’t be holding my breath.

  8. ChrisH 9

    But if the government had invested in housing construction, that would have prevented house prices and rents rising as fast as they have done, and everyone knows that National governs by, for, and of the private-sector property ‘investor’. Which, in this country, is not to be confused with housing construction.

  9. Zaphod Beeblebrox 10

    Forgot to mention the bankers, lawyers, brokers and accountants who will be receiving the proceeds of the sale of the taxpayers SOEs.

  10. karol 11

    Excellent post, Frank. And really exposes Labour’s “hands on government” slogan as playing with myths. Real Labour would have a slogan about inclusiveness and working for those on low incomes, whether they are beneficiaries, paid or unpaid workers: a slogan that challenges the NAct government for the powerful, wealthy & elite few.

    • Excuse me if this is also a myth, I suspect it might be, yet hasn’t it been proven that people simply don’t vote for the benefit of those on low incomes? I thought if there ever was a time that people would come out in numbers for such a purpose it would have been in the middle of a Global Financial Crisis, but no, they stayed at home and enough voted for wealthy interests that they got into power.

      Perhaps Labour screwed up by the Superannuation stunt? I don’t know, yet I am of the impression that people, not even low income people, appear to care about working issues in this country. Mana; how many voted for them?

      It appears that there is an attitude that if we keep being generous to our “superiors” interests, then one day they are going to benevolently turn around to us and address the pressing problems that require addressing NOW! It ain’t happening folks.

      • Colonial Viper 11.1.1

        It appears that there is an attitude that if we keep being generous to our “superiors” interests, then one day they are going to benevolently turn around to us and address the pressing problems that require addressing NOW!

        This is a very common traditional belief amongst working class National voters. You vote for National because they look after your bosses, and then your bosses will look after you.

  11. vto 12

    Yep, again, more bludging freeloading business and subsidies by the taxpayer.


    Bloody pay your way you bludging freeloading businesses and employers. I am sick to death of subdising you with my taxes. Pay for yourself you bludgers.

    Piss off.

    Not to mention the nasty hypocrisy that distorts your faces.

  12. Mike 13

    Yep, $2 billion bailing out failed finance companies. Yet thanks to the political collusion of the MSM, most of the general public are seething and moaning about the comparatively relatively paltry $30 odd million in welfare fraud. Wake up people!

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