Bill English is living in a dream, and he may create a nightmare for the rest of us.
Last week, he said the recession would be over in 6-12 months. He hasn’t bothered to announce any significant new spending in response to the recession – all the supposedly new spending he has announced so far has come out of the normal budget for new programmes set aside last in last May’s Budget before the credit crisis that would have been spent anyway, and is mostly repackaging of spending that was going to happen anyway. Yesterday, he seemed to doubt the recession was something to worry about at all – “people feel they have more cash in their pockets and they are wondering when the recession is going to hit them”. Well, the recession may not have hit Bill English’s New Zealand yet, the New Zealand of wealthy land-owning people with secure incomes, but it sure has hit the 10,000 Kiwis who found themselves out of work and in the dole queue in December alone, and the thousands who have joined them since.
No, the recession isn’t all that bad yet. Unemployment is still well lower than National ever achieved in the 1990s because of Labour’s success in achieving full employment. On average, we are still richer than we were in 2006. If you’ve got a safe job, good pay, and a mortgage, you’ve got more cash in hand now than a year ago. But we are only in the first round of the recession and the self-reinforcing effect of very low unemployment has, so far, protected jobs.
That is set to change if things are allowed to go on the way they are. If the 7% unemployment Treasury and others are predicting by year end comes to pass we will have moved to structural unemployment that will start reinforcing the recession – lower demand from both the newly unemployed and those who still have jobs but can’t get decent wage rises and, wary of losing their jobs, save rather than spend, will keep the economy from recovering, as it did through the early 1990s recession. When the labour market switches from being counter-recessionary to pro-recessionary, it won’t just be what the Herald calls ‘the other New Zealand’ that will be hurting, it will be everyone.
That’s why it’s so important to be acting decisively now. Screw this ignorant, nonsensical bollocks that the journos are parroting about the need to keep some powder dry for when things get really bad. A given economic stimulus is not going to be somehow more powerful later. It’s better to use it now to keep us from getting into a deeper hole than start using it when we are deeper in the vicious recessionary spiral. If you’re getting sucked into a whirlpool, you don’t hold back some engine power for later, you go full bore before it’s too late.
Avoiding the point when unemployment starts to spiral up and up should be a priority of the Government, if it isn’t already too late. Problem is, Bill English, the man with his hands on the nation’s purse strings, thinks there is nothing to worry about. He believes the recession will fix itself in no time, despite what his officials and everyone else are saying.
Like a climate change denier, English seems to think (needs to think, to keep his ideology intact) that all the experts are wrong and there’s nothing to worry about. That doesn’t bode well for the rest of us.