Two paths diverged

Written By: - Date published: 6:44 am, October 10th, 2012 - 16 comments
Categories: Economy - Tags:

So, we know what Key’s utopia is: golf, holidays, no jobs, and, um, no toilets. But what about the Nats’ economic policies? Where are they heading? Let’s examine each and their results.

  • Asset sales/privatisation – so more of NZ will be foreign-owned, sending profits offshore, and more pubic services will be run for a profit, excluding those who can’t afford them.
  • More expensive education – so our workforce will be less educated.
  • Lower minimum wages and reduced work rights – so our incomes will be lower.
  • A high dollar strategy -killing manufacturing and meaning there will continue to be a large current account deficit funded by borrowing and asset sales.
  • A focus on mining, oil and gas, and agricultural intensification for economic growth – so the only route to prosperity is greater environmental degradation.
  • Low-value roads rather than public transport – so we are more dependent on petrol and exposed to oil shocks.
  • Urban sprawl rather than compact urban form – locking in high transport costs for generations.
  • Crony capitalist deals with (often foreign-owned) favoured businesses – so success  depends more and more on lobbying and personal links with ministers, rather than economic, environmental, and social viability.

This, then, is National’s plan for New Zealand. Let’s fast forward to see what we would have if they were to be in government for the next, say, two decades….

The low-skill workforce works in low-pay, ununionised jobs for foreign companies who ship the profits offshore. The massive current account deficit thereby created can’t be funded through high-value exports because the high dollar strategy has destroyed manufacturing. Instead, more assets are sold and our environment is exploited ever more heavily for minerals, oil and gas, and agriculture.

Businesses see success as getting government subsidies. Workers can’t afford user-pays services, or housing, or transport. And they’re stuffed if they lose their jobs – unemployment  and poverty are rife. Emigration is hollowing out our skill base – in 2012, the number of people leaving every year for Australia could fill Eden Park. In 20 years, they could fill it every 6 months.

The high dollar can’t protect the country from rising oil prices and the lack of public transport and the prevalence of urban sprawl makes people dependent on consuming high amounts of oil to live their lives. The rising national debt is a disaster waiting to happen, and then an oil shock hits … and no-one’s coming to bail-out some poor farmers and miners on islands in the middle of nowhere.

Of course, there’s an alternative to National. An investment approach, rather an an asset-stripping one.

Rather than lowering youth wages with the justification that it may create a few more low-value jobs (and reduce the pay of all young people on the existing minimum wage at the same time), you direct your energies toward creating high value industries that create high paying jobs. The high-pay jobs with supportive savings policies create a large capital base so that we no longer need to import foreign capital (is borrow/sell assets) to develop.

You don’t put all your effort into more farming, more mining, and more drilling, you look at increasing manufacturing of what we already produce so that New Zealand is exporting valuable goods, not raw materials.

You don’t let your manufacturing sector die because you have to play by the ‘rules’ and not interfere when all your trading partners are undertaking competitive devaluations of their currencies to steal wealth from you, instead, you fight fire with fire.

You reduce your economy’s dependence on oil – the most rapidly rising cost in the world economic system – by investing in smart, energy-efficient transport (you don’t cross your fingers and pray the electric car will save you).

You protect New Zealand ownership because, at the end of the day, only people in this country really give a damn about it – to everyone else, we’re a short-term profit centre.

And you invest in public services because they’re simply the most cost-effective means of delivering services and, if there’s anything the last 20 years have proven, it’s that competition in public goods is an illusion in small economies – the private investors will always over-price and asset-strip and the government will be forced to get back into the market with money or ownership (telecoms, air, banking, rail,…). And you invest in housing, health, and poverty reduction because a) they lead to a more productive workforce and b) what is the point of all this if not more fulfilling and enjoyable human lives?

16 comments on “Two paths diverged ”

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  1. IrishBill 1
    10 October 2012 at 7:45 am

    We know what’s going to happen because we’ve seen it before. The savaging of social capital and public wealth in the eighties and nineties set us up for a generation of inequity, crime, and ill-health while reducing the government’s power to change anything substantially. Only it’ll be worse this time round.

    Back in 2008 Nicky Hager described National’s agenda as picking up where they left off in ’99. I’ve seen nothing so far that would refute that. I’d also note that having a managerial fifth labour government rather than a transformative one* meant it’s been easy for National to do so. That’s something we can’t afford to have happen again.

    *Unlike some on the left I don’t hold a grudge against Labour for this – many forget just how tired, mistrustful, and intolerant of “big-idea” restructuring and transformation the electorate were after fifteen years of right-wing revolution.

    • karol 1.1
      10 October 2012 at 7:51 am

      IB: *Unlike some on the left I don’t hold a grudge against Labour for this – many forget just how tired, mistrustful, and intolerant of “big-idea” restructuring and transformation the electorate were after fifteen years of right-wing revolution.
       
      I have some sympathies for both sides on this.  I do remember that once ‘neoliberalism’ became the dominant discourse in politics, the media and elsewhere, it was very difficult for any party with a strong left wing agenda to get elected – the MSM would have led the way in demolishing them.

  2. Tom Gould 2
    10 October 2012 at 8:21 am

    The right worked out some time back that there would not be enough to keep everyone comfortable so they invented trick down, which was actually trickle up. And they have been very successful at it.

    • karol 2.1
      10 October 2012 at 4:18 pm

      TG, I suppose it depends what you mean by comfortable.  I’m not an economist, but I understood there  was enough resources for everyone to live at a reasonable standard – so long as we keep the global population under control.
       
      But the trickle-up brigade are just greedy, and want more than is necessary for a reasonably comfortable life.  They want EXCESS!

    • Draco T Bastard 2.2
      10 October 2012 at 5:35 pm

      There’s plenty to keep everyone comfortable – if the wealth wasn’t given to the few, if population was under control and that we lived within the hard physical limits set by the real world.

      EDIT: Oh, and we stop trying to have people working for 40+ hour weeks. When everyone has to work all the time is when those hard physical limits get ignored.

  3. Roy 3
    10 October 2012 at 10:19 am

    On a side issue, why the aversion to toilets anyway? Those of us who have ever had to use a long-drop have a quiet appreciation of how nice it is to have a clean flush toilet when we need one. Is Jonkey afraid that someone will shove his head in a toilet and flush?

    • brybry 3.1
      10 October 2012 at 3:00 pm

      Nah. If your first name is also a name for the crapper then they must be abolished from your planet. That’s the rule.

  4. Wairua 4
    10 October 2012 at 2:02 pm

    Has James reverted to his toilet obsession ?

  5. JonL 5
    10 October 2012 at 2:52 pm

    Perhaps we will see job growth – like the USA – where all the “growth” in jobs has been low paid menial jobs like waitressing, fast food chains and low paid age care.workers.
    No production – that’s all gone to China.
    Also, we’re taking after the USA in the Student Loan debacle, which is impoverishing a generation or two of Americans, just like in NZ…….here, it’s in the billions, there it’s in the Trillions! Another generation of debt slaves amongst the young, which, without the jobs to repay, will dog them to the grave!
    Well done!!!!

  6. karol 6
    10 October 2012 at 4:22 pm

    Just to throw this into the mix of possible policies for the future.  There was a press release from Mana today, in response to the Greens proposed policies on quantitative easing.  They say that they will see your QE, and raise it by a financial transaction tax.
     

    MANA welcomes the Green Party announcement of three specific proposals to begin tackling the high New Zealand dollar.

    Along with changes to the Reserve Bank Act and measures to curb another housing bubble, the Green Party are suggesting “quantatitive easing” as a way to reduce our over-valued dollar.

    “We are prepared to look at these proposals and given they have been attacked so vociferously by Economic Development Minister Stephen Joyce, then they must have real merit” says MANA Vice President John Minto.

    “The glaring omission from the Green Party proposals however is a Financial Transaction Tax which would address the high dollar directly without the problems of other proposals. MANA’s Hone Heke Financial Transaction Tax would target speculative buying and selling of the New Zealand dollar which is the main reason for its high value”.

     
     
     

  7. Fisiani 7
    10 October 2012 at 9:41 pm

    •Asset sales/privatisation – so more of NZ will be foreign-owned, sending profits offshore

    care to show some proof of this ridiculous claim. Apparently you have to do so on this blog.

    Such a ludicrous claim will surely join the hysterical ‘wall of shame’ of employers exploiting the 90 day rule.
    The non existent wall and the non existent foreign buyers.

    • tracey 7.1
      11 October 2012 at 5:59 am

      treasury stated in ten years the shares could be in foreign hans which is profit going overseas.

  8. RedLogix 8
    10 October 2012 at 10:49 pm

    the non existent foreign buyers.

    “A yearly survey by Goldman Sachs & Partners shows foreign ownership of the stock market in the June quarter was 35.9%, compared to 36.1% in the same period last year.”

    http://www.nbr.co.nz/article/new-zealand-sharemarket-36-foreign-owned-nk-100102

    And just who do you think is getting the roughly $12b a year in ‘negative investment income’ that flows out of our economy every year?

    And who owns our our biggest four bank fisi?

  9. Fisiani 9
    11 October 2012 at 9:54 am

    When the first mixed ownership flotation is snapped up by New Zealanders you will look rather silly