Two paths diverged

• James Henderson
• 12 years ago
• Categories: Economy

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?