Waking up to the realities of neoliberalism and austerity

Written By: - Date published: 7:04 am, June 1st, 2016 - 159 comments
Categories: capitalism, class war, International - Tags: , , , ,

Even the IMF now acknowledges the downsides of neoliberal economics and government austerity policies. In a significant new report IMF economists write:

Neoliberalism: Oversold?

Instead of delivering growth, some neoliberal policies have increased inequality, in turn jeopardizing durable expansion

There has been a strong and widespread global trend toward neoliberalism since the 1980s

There is much to cheer in the neoliberal agenda. The expansion of global trade has rescued millions from abject poverty. Foreign direct investment has often been a way to transfer technology and know-how to developing economies. Privatization of state-owned enterprises has in many instances led to more efficient provision of services and lowered the fiscal burden on governments.­

However, there are aspects of the neoliberal agenda that have not delivered as expected. Our assessment of the agenda is confined to the effects of two policies: removing restrictions on the movement of capital across a country’s borders (so-called capital account liberalization); and fiscal consolidation, sometimes called “austerity,” which is shorthand for policies to reduce fiscal deficits and debt levels. An assessment of these specific policies (rather than the broad neoliberal agenda) reaches three disquieting conclusions:

•The benefits in terms of increased growth seem fairly difficult to establish when looking at a broad group of countries.­

•The costs in terms of increased inequality are prominent. Such costs epitomize the trade-off between the growth and equity effects of some aspects of the neoliberal agenda.­

•Increased inequality in turn hurts the level and sustainability of growth. Even if growth is the sole or main purpose of the neoliberal agenda, advocates of that agenda still need to pay attention to the distributional effects.­ …

When the benefits of increased growth are “difficult to establish” and the costs are “prominent” the policy has failed. Not to mention the fact that eternal growth is the wrong (and an impossible) goal anyway. Coverage in The Guardian:

Austerity policies do more harm than good, IMF study concludes

A strong warning that austerity policies can do more harm than good has been delivered by economists from the International Monetary Fund, in a critique of the neoliberal doctrine that has dominated economics for the past three decades. In an article seized on by the shadow chancellor, John McDonnell, the IMF economists said rising inequality was bad for growth and that governments should use controls to cope with destabilising capital flows.

McDonnell said: “The International Monetary Fund has summarised what a growing consensus among economists across the globe now think, that Osborne-style austerity economics increases inequality and instability, and undermines growth. …

And:

You’re witnessing the death of neoliberalism – from within
….
You hear it [the death of the ideology] when the Bank of England’s Mark Carney sounds the alarm about “a low-growth, low-inflation, low-interest-rate equilibrium”. Or when the Bank of International Settlements, the central bank’s central bank, warns that “the global economy seems unable to return to sustainable and balanced growth”. And you saw it most clearly last Thursday from the IMF.

What makes the fund’s intervention so remarkable is not what is being said – but who is saying it and just how bluntly. In the IMF’s flagship publication, three of its top economists have written an essay titled “Neoliberalism: Oversold?”.

The very headline delivers a jolt. For so long mainstream economists and policymakers have denied the very existence of such a thing as neoliberalism, dismissing it as an insult invented by gap-toothed malcontents who understand neither economics nor capitalism. Now here comes the IMF, describing how a “neoliberal agenda” has spread across the globe in the past 30 years.

The results, the IMF researchers concede, have been terrible. Neoliberalism hasn’t delivered economic growth – it has only made a few people a lot better off. It causes epic crashes that leave behind human wreckage and cost billions to clean up, a finding with which most residents of food bank Britain would agree. And while George Osborne might justify austerity as “fixing the roof while the sun is shining”, the fund team defines it as “curbing the size of the state … another aspect of the neoliberal agenda”. And, they say, its costs “could be large – much larger than the benefit”.

From the 1980s the policymaking elite has waved away the notion that they were acting ideologically – merely doing “what works”. But you can only get away with that claim if what you’re doing is actually working. Since the crash, central bankers, politicians and TV correspondents have tried to reassure the public that this wheeze or those billions would do the trick and put the economy right again. They have riffled through every page in the textbook and beyond – bank bailouts, spending cuts, wage freezes, pumping billions into financial markets – and still growth remains anaemic.

And the longer the slump goes on, the more the public tumbles to the fact that not only has growth been feebler, but ordinary workers have enjoyed much less of its benefits. Last year the rich countries’ thinktank, the OECD, made a remarkable concession. It acknowledged that the share of UK economic growth enjoyed by workers is now at its lowest since the second world war. Even more remarkably, it said the same or worse applied to workers across the capitalist west.

Economists don’t talk like novelists, more’s the pity, but what you’re witnessing amid all the graphs and technical language is the start of the long death of an ideology.

Here in NZ we are experiencing the slowest recovery from a recession in over 50 years, and (as Labour reminded us recently) the share of wealth going to workers is decreasing under National. Another data point confirming the failure of this ideology.

We need radical new ideas, and it is up to a Labour Green government to deliver them.

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159 comments on “Waking up to the realities of neoliberalism and austerity”

  1. Stunned mullet 1

    Yes NZ is so terrible, we have free healthcare, education, a high spend on social welfare, record immigration…..hang on if it’s so terrible why are people coming to live here and why do we regularly come towards the top on surveys of preferred countries to live in ?

    Sure we have problems and government must be stamped on and held to account but the daily oversold negativity on this blog is getting passé.

    • One Anonymous Bloke 1.1

      Meanwhile, on Earth, the IMF has some credibility and you um, don’t. Go on, tell everyone how much you agree with the Prime Minister again.

    • b waghorn 1.2

      Free health care you say, I know to retires that after years of paying taxes have funded their own surgeries in the last year. Your full of shit

      • maninthemiddle 1.2.1

        That’s their choice. But if they wait, their treatment will be free. That’s the way it always has been.

        • b waghorn 1.2.1.1

          One of them was told that they would only do their blind eye once she was blind in the other, so yeah na your full of shit to

          • maninthemiddle 1.2.1.1.1

            And the surgery for that one eye was…’free’? Yes. You live in a la la land where there is no limit to public spending and no accountability either. Grow up.

            • Halfcrown 1.2.1.1.1.1

              That is a heap of shit, try and get a FREE eye surgery in Hamilton. There they have a Catch 22 situation. If you got one good eye you have to pay. When you have had that eye fixed, if you need surgery on the other then they will say “as you have one good eye we have fixed” you will have to pay. As Waghorn said , that person would have to go blind before they do anything Free.

              • maninthemiddle

                It’s free. I know because I happen to have a close friend who has just had one eye operated on, and the other will be done in about 2 months. It’s free. Having to wait doesn’t make it not.

                • Halfcrown

                  FUCKING BULLSHIT PAL I could not give a fucking shit if you know the whole of the population of the North Island who have had eye surgery, apart from your so called close friend IT IS NOT FREE.
                  Try that in Hamilton the closest place to me, it does not matter how long you wait, if you are not blind you wont get it done for free. I repeat IT IS NOT FREE.
                  Once again you do not know what the fuck you are on about. I KNOW from personal experience.
                  I will spell it out for you I HAVE HAD THAT DONE AND I HAD TO PAY.
                  No way with or without waiting lists, if you can see out of one eye you would get it free. Get It, like you have to pay. DO you understand that bit, like put your hand in your pocket, Good luck to your mate who did not have to pay. Was it because he was a higher earner who according to your other bit of bullshit pays more tax?

                  • maninthemiddle

                    Tell me the name of someone you know who has PAID for eye surgery on the public system. If you can’t, then apologise.

                    • Halfcrown

                      Who suggested that someone pays in the public system? I didn’t. What I stated was, as I could not get on any list I had to go private and pay.
                      Nowhere did I imply paying in the public system.

                      As for apologising that will be the day when I apologise to the likes of you

                    • maninthemiddle

                      “I didn’t. ”

                      Yes, you did. Quote:

                      “IT IS NOT FREE.”

                      Unquote.

                • smokes kreen

                  I can also confirm from the experience of a family member, that eye surgery in Hamilton is free in the public system for a very limited number of people. This family member failed twice to even make the waiting list and all the while their condition became worse. Because they had one “good” eye, there was no chance of them making the waiting list here. In the end they were forced to either go private or live with the loss of sight in one eye. This is real third world stuff. Unlike Eritrea (which is in the third world) where eye surgery is delivered by the Hollows Foundation for $25.

                  Each District Health Board seems to have it’s own policies and I have heard of others living elsewhere who have been fortunate enough to have their eye surgeries performed in the public system. If your friend got their surgery free, isn’t it about time there was a uniform system applied nation wide which is fair to everybody wherever they live.

                  • maninthemiddle

                    That’s as it has always been. But when you qualify, the surgery is free.

                    • smokes kreen

                      As I stated earlier, you WON’T qualify for free eye surgery in the public system in Hamilton if you have one “good” eye, so you are forced to go private and pay for it, or put up with going blind in that eye. End of subject end of story.

                    • maninthemiddle

                      We aren’t discussing whether or not you qualify. Every system has it’s ‘qualifications’ because there is not unlimited funding. The issue is whether, having qualified, the surgery is free. It is.

                    • b waghorn

                      Oh for fucks sake . this conversation started with assertion that nz had free medical. Not free medical if you meet certain criteria. Full of shit you are

                    • maninthemiddle

                      The original comment was “we have free healthcare…”. We do have free healthcare. If you meet criteria. Are you seriously suggesting there should be no restrictions? What do you want your tax rate to be?

                    • b waghorn

                      Free health care suggests if you have an ailment it gets fixed no matter how minor, at best we have limited health care depending on how ill or how much $.
                      So your wrong.
                      How much tax it would take is not part of the argument,

                      And another thing too even get to see a surgeon you will of most likely paid a visit charge at your gps’ .

                    • maninthemiddle

                      “Free health care suggests if you have an ailment it gets fixed no matter how minor, at best we have limited health care depending on how ill or how much $.”

                      Rubbish. Free healthcare means when you access it, it is free. In NZ today we are performing more operations (elective, semi-elective, urgent and emergency) on the public purse than ever before. Considering the increasing demands of a rapidly growing population and ever increasing medical advances, we have very good health delivery, world class in fact.

        • Colonial Viper 1.2.1.2

          And if they die in the mean time, that saves the system a whole lot of money, making the procedure truly “free.”

    • mauī 1.3

      We’re a 1st world country living with increasing 3rd world conditions. If you can’t see that maybe you’re living under a bridge or in a car.. but you’re definitely not because you’re saying stuff that resembles comfortable middle class quackery living in lala land.

      • maninthemiddle 1.3.1

        Have you ever visited the ‘third world’? I doubt it. In NZ we have obese people who are allegedly living in poverty. We have a new ‘poor’ who can afford to smoke, drink and watch tv on the latest flat screen. We have people living in garages with 8 kids and no-one asks if they have ever heard of contraception.

    • save nz 1.4

      why are people coming to live here – yep they come to live here, many with gains made from the corruption and privatisation of their own countries- buy real estate – and then go off again once they have the passport.

      Immigration used to be a way to diversify NZ and get talent in, their was a strict criteria, now it is used as a short term prop to sell off assets to incoming money while pretending NZ is a rock star economy (yep premature baby living in a tent on today’s news!). The problem is that once someone has the NZ passport they can come and go, more family members can arrive and take from our countries social welfare while giving nothing back. And the health and super and education crisis is growing not helped by our population increasing approx 1.5% last year – now that is not sustainable!

    • Colonial Viper 1.5

      Stunned mullet – do you know about the concept of the least bad option? That’s what NZ has become, thanks to people like you.

      And yes, NZ is still a nice place to live if you have a net worth of a couple of million dollars. Like so many of our new immigrants do.

    • s anstey 1.6

      What is more important is that our forefathers fought for the …right.. to have free health care, free education, and support during times of economic need………..

      Under this national government any fool can see the writing on the wall…….just this week the midcentral dhb has stopped the wound nurse in the community…….slowly they are stopping services , the elderly are now being sent home to die alone……….without trained suppor,t they have put in untrained labour.

      Nurses jobs are going ……..

      Managers and untrained staff are doing their jobs………..

      • maninthemiddle 1.6.1

        “What is more important is that our forefathers fought for the …right.. to have free health care, free education, and support during times of economic need………..”

        What rubbish. They fought for freedom from tyranny, not free stuff. Those who fought would have had no idea what a 21st century health or education system would need to deliver, let alone it’s cost.

    • Enough is Enough 1.7

      New Zealand is terrible

      No more needed to be said.

      The neoliberal revolution has been a disaster with the rich becoming richer and children now living on the streets.

      We can and must do better than this.

    • Adrian 1.8

      Underfunded police
      Underfunded Public Hospitals
      Underfunded Social welfare
      Underfunded retirement fund
      Underfunded schools….the list goes on, with no actual plan anywhere in sight.
      Sorry it all seems so passe to you.
      I would have thought these issues rather important?

    • Foreign waka 1.9

      NZ is not terrible but neither education nor healthcare is free. The taxpayer, and lets not forget that these are the people who cannot escape via loopholes and trust funds, pay via direct deduction called PAYE, GST, ACC and EQC levy etc already for the “service”. And after the check has been cashed and banked, parents pay “donations” to schools, fees to the doctor and if its not a “have a couple of panadol and rest” is up to the waiting list for specialist assessment or worse, elective surgery where the wait is so long that a the patient will die before even having a chance to be cured.
      The high spend on welfare is what we all pay for in the first place – the moneys belong to the wider public, always has. It is only through very crafty words manship that people belief that this is like a penalty (pun intended) that needs to be paid to walk these shores.
      If the majority of that public wants the money spend on social stability and NZ promotes itself as a democracy, it should be responsibly spend to have a healthy, happy and working population. Everything else is just hoodwinking and deceit.

  2. Erik Bloodaxe 2

    Health isn’t free SM – try even getting on a waiting list for elective surgery. Education is far from free (are you a parent with children at school?) and definitely not so at the tertiarty level (admittedly there is substantive subsidisation). Social Welfare spend is NOT high and has been dropping significantly in real terms since the 1980’s. I suspect people are coming here due to the tax concessions they can get here compared to overseas where such tax avoidance and evasion opportunities are less (e.g. no capital gains tax – which makes very little sense). This column isn’t negative it is the truth – obviously sometimes the truth hurts eh!

    • Sam C 2.1

      How can you avoid or evade a tax that doesn’t exist (eg CGT)?

      • One Anonymous Bloke 2.1.1

        Bribe the National Party to oppose its introduction.

      • dv 2.1.2

        Sam if you buy property, shares, with the intention to sell and make a capital gain, then the profit is taxed.
        So there is a CGT.

        • maninthemiddle 2.1.2.1

          If you buy and sell a property within 2 years, the gain is taxable. Yes, there is a CGT.

          • dv 2.1.2.1.1

            Be interesting to find out how many have paid that CGT on the recently flipped properties

            • maninthemiddle 2.1.2.1.1.1

              Based on my IRD sources, they’ll pay. And every time the media print a story about someone making a quick buck, they go to the top of the list!

              • dv

                Good to know.
                Actually the IRD should have a link to the property data base and the database should throw up those properties sold under the 2 year clause..

  3. mauī 3

    The best line is the last one.

    We need radical new ideas

  4. Nic the NZer 4

    Its hard to get excited about the IMF repudiation based on their extensive history with this sort of thing. Previously they repudiated their own forecast and model for Greece (The greek economy was forecast to grow rapidly of the back of the Austerity policies, instead it shrank substantially). This has not really altered their role in imposing more Austerity on Greece however.

    Its also worth pointing out that for most countries there is no default risk. Government spending debates are all about inflation and growth effects alone. Inflation is low presently so there goes one benefit of austerity out the window. The other benefit supposed is crowding out, where too much govt spending impedes even more private spending growth. That would mean Austerity causes the economy to grow rapidly, note see IMF forecast failures above, so there goes the other benefit as well.

    • Pat 4.1

      that take on it is understandable, and your examples valid however the situation in Greece has been one clear example of the IMF admitting failure and it is noted that the research arm and leadership of IMF act contrarily…..think the reasons for that fairly obvious…..as to default risks and inflation, couple of examples spring to mind , Venezuela and Zimbabwe…..inflation isn’t dead , merely resting.

      • Colonial Viper 4.1.1

        Another way of looking at this is that the IMF is another example where some low and mid level grunts may be slightly more Left Wing, but only the elite approved and filtered right wingers get promotions into the leadership office suite/chief editors chair.

        • Pat 4.1.1.1

          or that the leadership are less concerned with facts and more focused on immediate outcome

          • Colonial Viper 4.1.1.1.1

            in their written reports they have to keep up a facade of concern for the ordinary person affected by their decisions. In truth the elite make the big decisions for themselves.

            • Pat 4.1.1.1.1.1

              thats the 100% cynical view of it….Im more inclined to see it as the benefit to them and theirs is a fortuitous side effect of not crashing the system.

            • Pat 4.1.1.1.1.2

              they are like Dr Frankenstein…..they have created a monster that they can’t control, but that monster (which they love) is all that protects them from the angry townsfolk and their pitchforks

        • Olwyn 4.1.1.2

          A few days ago, Pat put up a comment on supply-side fans and starve-the-beast adherents being committed to the view that taxes should be cut, but having different rationalisations for it. http://thestandard.org.nz/labour-should-front-foot-tax/#comment-1180180 There will also be more than one position among the neoliberal elites, but what none of them will want to relinquish is their dominance. And I suspect that some of them must now be looking for ways of getting out of the current paradigm without wholly sacrificing their dominance. A wrecked society, after all, does not make for a biddable or predictable version of the rational-economic-man, who is so important to their theory.

      • Nic the NZer 4.1.2

        Eurozone borderline deflation. Oh yes and inflation is only resting… Australia borderline deflation, and oh yes inflation is only resting…. inflation has only been resting since the mid eighties.

        • Pat 4.1.2.1

          its a very small world you live in Nic…..think there are a few peoples in the world that don’t live in western Europe and Australia…..and the Fed is talking interest rate increases….glad you’ve got inflation licked.

          https://en.wikipedia.org/wiki/List_of_countries_by_inflation_rate

          oh, and i note oil is steadily climbing…..but thats not inflationary of course

          • Nic the NZer 4.1.2.1.1

            And i thought you would retort, the daily supression of inflation will continue until morale improves.

            • Pat 4.1.2.1.1.1

              lol..and I thought you might address inflation….guess we were both wrong

              • Colonial Viper

                Deflation is a far more dangerous phenomenon than inflation.

                The countries on that list which have severe inflation problems (say over 20% inflation per year) are typically either under economic attack by the financial powers, or have had their internal productive and manufacturing capacity destroyed, or both.

                • Pat

                  both inflationary and deflationary spirals destroy economies and by extension societies……as with all things it is a question of degree

                  • Colonial Viper

                    So what now? Are we going to run our economy on the basis of inflation control? Inflation getting a bit high, so let’s destroy another 20,000 jobs and suppress wages a little but harder?

                    That’s been the Reserve Bank strategy.

                    How’s that working out for the people so far?

                    • Pat

                      the point is they thought they had inflation under control…the formula ….but the GFC response has proven that to be fools gold, the risk now as they try and delay the GFC running its course is deflation despite QE and negative interest rates (and whatever else they come up with) and subsequent massive overcorrections…..either of which will collapse the economy….its one hell of a balancing act that can’t end successfully as without inflation the debt remains unserviceable.

                      the medicine will kill the patient….and then theres CC.

                    • Pat

                      heres a hypothetical for you…..how would you wind up a ponzi scheme?…

                    • Colonial Viper

                      Investment asset price inflation has not been under control. That’s the kind of inflation that the 1% and especially the 0.01% like.

                      They issued trillions in new money into the financial system and surprise surprise the resulting inflation in investment asset prices was more than welcome.

                      That of course has not led to much inflation in real world goods and services because that money was poured into Wall St, not Main St.

                      heres a hypothetical for you…..how would you wind up a ponzi scheme?…

                      The US method around the housing bubble and also the subprime mortgage scam was to bail out the people at the very top of the Ponzi scheme with massive amounts of publicly created money and to let the vast numbers of people at the bottom of the Ponzi scheme go bust (brankruptcies, mortgagee sales and evictions).

                      There are probably better and more equitable ways of than that.

                    • Nic the NZer

                      @Pat, “its one hell of a balancing act that can’t end successfully as without inflation the debt remains unserviceable.”

                      That’s the paranoid perspective.

                      In fact most of the levers you perceive to be there and functional are not even attached to the economy in a functional way.

                      For example, Central Bank Interest Rates, they don’t prevent housing bubbles from forming (obviously) and are not sufficient to create full employment. This follows from the fact that there is no Natural Rate of Interest (the rate the central bank is targeting in theory), except for single entity economies. Yes the ‘sophisticated’ models used by central banks and treasuries are based on modeling an economy made up of exactly 1 entity. In practice central banks target the NAIRU rate of unemployment, announce that this is full employment and that any more will create inflation (and in their single entity models it will), and are satisfied that what ever asset bubbles appear to be forming that’s a natural consequence of the market setting prices (and wages, and unemployment rates).

                      Deficits (Surplus), this is a more effective tool than monetary policy. In fact the rate of unemployment could immediately be brought below the NAIRU rate simply by buying up the labour of the unemployed. For this reason its not used (because that would create inflation in the treasuries and central banks single entity models). On the other hand the same single entity models frequently say that cutting the deficit (or running a surplus) will create additional employment or that running a deficit will actually reduce employment (this is called Ricardian equivalence). Such strange results definitely should lead to questions about the validity of this forecasting. The main point of the Deficit / Surplus policy appears to be fooling the rubes into believing the government is financially constrained by what markets will lend to them. Surprisingly its massively convincing which takes all the heat away from the serious discussions about the regressive policy of using mass unemployment to target already trivial inflation.

                      Quantitative Easing, this is an extension of interest rate targeting. However, Central Banks gave up targeting the quantity of money (which was linked fairly directly to inflation rates by Monetarism) when it was discovered that in practice banks could create as much money as they pleased, regardless of what ever quantity the central bank was targeting (or supplying)! In fact there is little to no correlation between the quantity of money anyway and the rate of inflation, and little reason to believe that producers have or will raise prices when a quantity of money is produced. Yes, you read that correctly QE (or no QE) does not cause or allow banks to lend any faster one way or the other. That’s why QE has created no main-street inflation, because it has no effect on the availability of bank lending to main-street (though it did support some aspects of the Casino economy).

                      So there is no balancing act there, and there is no balancing act when a government is able to instruct a Central Bank to act on its behalf (no default risk).

                      All we have seen is a drawn out period where a large pool of unemployed is maintained and this has had downward pressure on wages (at the bottom), driven up inequality, and required that spending growth be funded almost entirely on rising private debt (aided and abetted by de-regulation of lending in many cases). Un-surprisingly firms have faced few cost pressures and so inflation has been low, but its not clever, there is almost nothing which is able to trip up the institutions involved, and the consequences for the majority have been poor.

                    • Pat

                      @Nic

                      lol…bollocks..
                      it is very simple….the debt has to be inflated away…how do you pay for inflation(interest)?…growth…there is no growth…why?..because consumers cannot take on more debt (the basis of neoliberalism)……what happens to that debt if interest rates increase?..what happens when an absence of demand creates deflation? …negative growth…..what happens with negative growth?…depreciating asset values and default …it is a ponzi scheme and there is no solution that doesn’t involve collapse.

                      why the f**k do you think the worlds central bankers have spent the last 8 years dancing on the head of a pin…they are in a holding pattern because all the options are bad.

                    • Pat

                      @CV
                      the question was how do you wind up a ponzi scheme….it is not a metaphor…how would you wind up an everyday ponzi scheme if you were the regulating authority?

                    • Nic the NZer

                      @Pat, I am afraid its once again rather simpler than that (and central banks have been ineffectively fiddling with monetary policy / interest rates for considerably longer than 8 years. I don’t see how you can say they have been sitting on their hands).

                      What is faced now however is a massive political problem. After years running the economy in the interests of wealthy elites, in order to actually repair it some policies not in the interest of elites will be needed. In fact a real proper fix will see many of those elites incarcerated for their prior financial crimes.

                      But these central banks can always do the same trick again, and bail out their banks again after the next financial crisis. No doubt that’s easier than trying to challenge the neo-liberal consensus if your a central banker.

                      The other problem with your comment is the private sector and government appear on opposite sides of the balance sheet. First decide about which sides debt your trying to de-lever as the other side will need to be gaining debt at the same time.

                    • Pat

                      tell me Nic..why hasnt the Venezuelan central bank bailed out the Venezuelan economy and simply provided the funds to stock their hospitals with medicines, or their supermarkets with food …or why they have triple figure inflation?…..you can continue to promote your theory that the world needs only to believe your version of monetary policy and all will be roses but until they join in with your delusion reality is what we have.

                    • Pat

                      “investment asset price inflation has not been under control. That’s the kind of inflation that the 1% and especially the 0.01% like.

                      They issued trillions in new money into the financial system and surprise surprise the resulting inflation in investment asset prices was more than welcome.”

                      that is post GFC…..the neolibs thought they had inflation mastered pre crash…

                      “So I want to explain to you today the policy we – and the Bank of England – will continue to pursue to ensure the British economy entrenches our new won and hard won stability and continues to grow – ensuring we take no risks with inflation or stability generally, or with the fiscal position.”
                      Gordon Brown 2003

                      http://www.theguardian.com/politics/2008/sep/11/gordonbrown.economy

                    • Colonial Viper

                      tell me Nic..why hasnt the Venezuelan central bank bailed out the Venezuelan economy and simply provided the funds to stock their hospitals with medicines, or their supermarkets with food …or why they have triple figure inflation?

                      Every country needs hard foreign currency to trade. This is a system designed to advantage those few countries in the tight knit western club who are permitted to issue infinite amounts of that currency at will (basically this is the US, Japan and UK).

                      Venezuela primarily needs USD to access the critical goods that its economy needs to function.

                      But the Venezuelan central bank does not have the authority to print USD or any other currency considered a reserve currency.

                      And because the primary export they rely upon for hard foreign currency, oil, has been at rock bottom prices, Venezuela has been experiencing a massive foreign hard currency squeeze.

                    • Colonial Viper

                      the question was how do you wind up a ponzi scheme….it is not a metaphor…how would you wind up an everyday ponzi scheme if you were the regulating authority?

                      Sigh.

                      You wind it up like you wind up fucking Bridgecorp and send all the directors behind it to prison.

                      To the people who honestly invested money in such a scheme, if they are not covered by any government or Reserve Bank protections they will lose the balance of any monies not recovered from the Ponzi scheme and the directors of that scheme.

                      This is all proper financial regulation and fraud prosecution 101.

                      Was it that fucking hard you had to ask me.

                    • Nic the NZer

                      Venezuela has tripple figure inflation due to the political instability going on in the country. In fact their central bank already funds all the things it can buy domestically (much of the Venezuelan economy can only import in US $, the medication etc is not up for purchase to their CB). That remains an ongoing operation until the political issues can be resolved however (which the CB can’t do much about).

            • Pat 4.1.2.1.1.2

              “Venezuela has tripple figure inflation due to the political instability going on in the country. In fact their central bank already funds all the things it can buy domestically (much of the Venezuelan economy can only import in US $, the medication etc is not up for purchase to their CB). That remains an ongoing operation until the political issues can be resolved however (which the CB can’t do much about).”

              The inflation and empty shelves caused the political instability….as you point out the Venezuelan CB can do nothing about their inability to purchase in USD and that is the point…they can do do nothing because the bolivar is depreciated beyond use.

              as to your previous post re monetary policy, I didn’t say the CBs have been sitting on their hands…..indeed they have been pedaling like mad, but they are caught between a rock and a hard place and have only the narrowest of bands to operate in ..as said both inflation and deflation will cause collapse, that is the reason for the holding pattern and why the Fed cannot increase interest rates as they have tried to do previously and backed off.

              the ever flexible NAIRU theory is disproved by stagflation which if you were around in the 70s you may recall.

              QE and deficit funding results depend on the state of the economy to which they are applied and whether or not the funding is expansionary (growth) or if not then is inflationary…we are at peak crap, hence the QE being channeled not into the productive economy but the speculative and asset bubbles.

              The default of which we should be concerned (and the CBs are) is not the default of gov deficits (though they don’t like the moral hazard) it is the default of private individuals and institutions with their record level and unserviceable debt loadings currently being sustained by zero interest rates….and they only way to make those debts serviceable in a normal interest rate environment is to inflate the debt to a serviceable proportion….but inflation requires growth and will increase interest rates….too much or too fast and the defaults occur before the ratios can sufficiently improve.

              ‘So there is no balancing act there, and there is no balancing act when a government is able to instruct a Central Bank to act on its behalf (no default risk).”

              You say no balancing act….I say a balancing act unprecedented.

              • Nic the NZer

                “The inflation and empty shelves caused the political instability….as you point out the Venezuelan CB can do nothing about their inability to purchase in USD and that is the point…they can do do nothing because the bolivar is depreciated beyond use”

                As I pointed out in previous with you, fixed exchange rate regimes, face significant additional issues, in what they can do with their govt spending. But Venezuela has conducted its foreign trade largely in US$ for a long time. There are simply no magic bullets there to the political or economic problems, no matter how much you or they demand that they be forth coming. Venezuela would be better off it it can absolve itself of its fixed exchange rate but that will require the development of a much more stable and capable domestic economy, and overcoming some of their political issues will probably cause more economic disquiet in the interim.

                “as to your previous post re monetary policy, I didn’t say the CBs have been sitting on their hands” – Pat

                “why the f**k do you think the worlds central bankers have spent the last 8 years dancing on the head of a pin…they are in a holding pattern because all the options are bad.” – Also Pat

                The simpler theory is that the pedaling like mad’ doesn’t achieve very much, which it doesn’t. But you continue to be fooled Pat.

                “QE and deficit funding results depend on the state of the economy to which they are applied”

                What makes you think that? Its never been applied to any economy which was not some state of depressed, what makes you think it does anything *in general* to the economy.

                “the ever flexible NAIRU theory is disproved by stagflation which if you were around in the 70s you may recall”

                The NAIRU theory was the new and hot theory answering Keynesism at the time actually, it wasn’t ‘refuted’ by anything (in the mainstream of economics, its still a thing), which is why we still have NAIRU rates calculated and used by the OECD, EU and most countries (including NZ).

                “The default of which we should be concerned (and the CBs are) is not the default of gov deficits (though they don’t like the moral hazard) it is the default of private individuals and institutions with their record level and unserviceable debt loadings currently being sustained by zero interest rates….and they only way to make those debts serviceable in a normal interest rate environment is to inflate the debt to a serviceable proportion….but inflation requires growth and will increase interest rates….too much or too fast and the defaults occur before the ratios can sufficiently improve.”

                Unfortunately you would have to convince me that this debate has reached the level of anything more ‘personal responsibility’. Govt’s could easily resolve this problem if it was a thing, but its not, its personal responsibility for this problem and ‘everyone if responsible’ for govt debt (the non-issue which is causing no problems in most countries, except in the Eurozone).

                • Colonial Viper

                  Both left wingers and right wingers running around pretending that these mathematical economic theories are real things. One lesson here is that the Labour caucus is if anything actually more orthodox in economic outlook than even Pat is.

                  = we’re seriously screwed

                • Pat

                  “as to your previous post re monetary policy, I didn’t say the CBs have been sitting on their hands” – Pat

                  “why the f**k do you think the worlds central bankers have spent the last 8 years dancing on the head of a pin…they are in a holding pattern because all the options are bad.” – Also Pat

                  so in your lexicon dancing on the head of a pin is the same as sitting on your hands?….strange world you inhabit

                  “The NAIRU theory was the new and hot theory answering Keynesism at the time actually, it wasn’t ‘refuted’ by anything (in the mainstream of economics, its still a thing), which is why we still have NAIRU rates calculated and used by the OECD, EU and most countries (including NZ).”
                  However, in the 1990s in the U.S., it became increasingly clear that the NAIRU did not have a unique equilibrium and could change in unpredictable ways. In the late 1990s, the actual unemployment rate fell below 4% of the labor force, much lower than almost all estimates of the NAIRU. But inflation stayed very moderate rather than accelerating. So, just as the Phillips curve had become a subject of debate, so did the NAIRU.

                  ‘Furthermore, the concept of rational expectations had become subject to much doubt when it became clear that the main assumption of models based on it was that there exists a single (unique) equilibrium in the economy that is set ahead of time, determined independently of demand conditions. The experience of the 1990s suggests that this assumption cannot be sustained.”

                  wiki philips curve

                  “Unfortunately you would have to convince me that this debate has reached the level of anything more ‘personal responsibility’. Govt’s could easily resolve this problem if it was a thing, but its not, its personal responsibility for this problem and ‘everyone if responsible’ for govt debt (the non-issue which is causing no problems in most countries, except in the Eurozone).”

                  so you think its a eurozone problem…

                  “More importantly—again, when I say the situation is worse today than it was in 2007—in 2007 this debt problem was essentially confined to the advanced market economies. Since then, the debt ratios—the private debt ratios in particular—have exploded in the emerging market countries and so we now have in a sense a global problem whereas in 2007 you might say we had a regional problem with the advanced market economies. But now it’s basically everywhere so, yes, I do think that the situation is worse than it was then…”
                  http://www.financialsense.com/contributors/william-white-oecd/debt-worse-2007

                  • Nic the NZer

                    “So you think its a eurozone problem…”

                    Maybe that was unclear. The eurozone has actual problems with govt debt many countries like NZ cant (as they control their central banks). But both are prioratising cutting govt debt (thats apparantly everybodies problem) over cutting private debt (which is left to each their own).

                    You can make all the claims you like about the NAIRU being abandoned its not. Recently there was a disagreement between one David Friedman and some CBO economists Romer and Romer about the growth outcomes of Bernie Sanders proposed economic policy. While Friedman forecast strong growth based on a significant output gap the Romers rejected that based of a small output gap (an extension of the NAIRU basically). Basically rejecting the NAIRU would require the model is not an equilibrium model and so its in the analysis regardless of how bull of a concept it is.

                    • Pat

                      “Maybe that was unclear. The eurozone has actual problems with govt debt many countries like NZ cant (as they control their central banks). But both are prioratising cutting govt debt (thats apparantly everybodies problem) over cutting private debt (which is left to each their own).”

                      not just government debt and as stated even countries that control their own CBs are constrained in financing….as you have noted world trade is conducted predominantly in USD.
                      You also continue to ignore the impact of private debt default even if your theory about QE were correct. There is serious consideration of debt jubilee however that is loaded with unintended consequences and as far as I can see nobody even knows who the ultimate creditors are so that would be a blind throw of the dice though possibly marginally better than uncontrolled collapse.

                      “You can make all the claims you like about the NAIRU being abandoned its not. Recently there was a disagreement between one David Friedman and some CBO economists Romer and Romer about the growth outcomes of Bernie Sanders proposed economic policy. While Friedman forecast strong growth based on a significant output gap the Romers rejected that based of a small output gap (an extension of the NAIRU basically). Basically rejecting the NAIRU would require the model is not an equilibrium model and so its in the analysis regardless of how bull of a concept it is.’

                      I haven’t claimed NAIRU is abandoned, though given its poor record it should be, I have have said its usefulness is disputed….and judging by your last sentence you don’t appear convinced of its effectiveness yourself.

                      An analysis of the current economic situation is neither approval of said system nor a demand for change (though obviously one needed) it is simply an observation given the situation that has been created and the tools available it appears unsolvable….and the actions and opinions appear to support this view.

              • Nic the NZer

                Starting with rejecting the NAIRU. It would be a good thing if more people understood this supposed relation between unemployment and inflation. A little sunlight on the debate would probably reject vast swathes of actual economic management. But if that foundation stone of equilibrium analysis is rejected then you also must reject the long run (when the economy supposedly reaches equilibrium) in general. That means rejecting the supposed causal effects of spending causing inflation and so on. So if you reject the NAIRU you should draw the same conclusions i have should you not?

                The reason thats first is because all the supposed unsustainability conclusions of govt spending are once again in the long run.

                So in fact its possible for the public sector to bail out the private sector (a report recently concluded this is where the bailouts in Greece went to private sector banks mostly, obviously the problem here is the institutions which are benefiting and harm to the public) which is the available solution. Its also possible (though not as straight forward to organise at will) for the private sector to be paying for the public sector and this is what Cullens surpluses were about, the private sector levered up the public sector ran surpluses and repaid govt debt. Heres the rub however, you cant have both de-lever at once without shrinking GDP in general so recession or depression.

                Presently public debate is concerned enough to talk about private debt levels and act on public debt levels. This adds up to harmful policy.

                • Pat

                  ‘So if you reject the NAIRU you should draw the same conclusions i have should you not?”

                  sadly i cannot…you appear determined to endow money with an intrinsic value that it simply does not and can not possess, consequently you ignore the very real risks associated with its debasement….how you can ignore such a fundamental aspect is beyond me…especially given all the real world examples.

                  • Nic the NZer

                    Which intrinsic value is that? All i am essentially suggesting is that spending in many cases causes additional economic activity and when it does there is no inflation risk from it. Clearly that could be used to fulfill public purpose (is my conclusion) and i suggest it should be so. The spending is not the important part and neither is the money created. The desirable part is the public purpose activity persued in this case.

                    Note there is no inflation as long as additional activity is created, its about output gaps again. If the resources would otherwise sit idle then no inflation risk exists and the public purpose is gained for essentially free.

                    • Pat

                      Thats one hell of a lot of conditionals…any one of which can be misjudged even if you ignore the sad reality that it is a method that has been misused for political purposes frequently in the past.

                      i have previously said said I believe there is a role for issuing for specific purposes that are beneficial i.e. major infrastructure, the likes of a social housing initiative…..but even then it contains inflationary risks

                      Take the situation we have currently, we have around 6% unemployment and a desperate housing shortage in our major population area …I believe the government needs to become involved in a major housing programme as if left to the market it will not be resolved , particularly in the affordable and social areas where the need is greatest….however we lack capacity so do we import capacity? (as we did for ChCh, thereby producing a smaller NGDP growth than funded)….do we outbid the private sector for their capacity?(inflationary ) do we train existing unemployed (takes time and with a lack already in the private sector may end up supplying existing market….subsidy)……and then there is the reduced property values such a stock increase should produce to be considered and the international investment,balance of payments and exchange rate implications.

                      And if we successfully manage all this there is the soaking up of available labour for any other areas of demand which in itself is inflationary which leads to interest rate increases …….unless you want to imitate one Rob Muldoon and install a wage/ price freeze and capital controls……you may recall how well that worked out.

                      There are uses for what you propose but they must be strictly limited and monitored to ensure they are achieving what was intended and adjusted if not.

  5. YNWA 5

    And the mainstream media are where on this?

  6. johnm 6

    Excerpts from Monbiot’s The Zombie Doctrine
    15th April 2016

    Neoliberalism was not conceived as a self-serving racket, but it rapidly became one. Economic growth has been markedly slower in the neoliberal era (since 1980 in Britain and the US) than it was in the preceding decades; but not for the very rich. Inequality in the distribution of both income and wealth, after 60 years of decline, rose rapidly in this era, due to the smashing of trade unions, tax reductions, rising rents, privatisation and deregulation.

    The privatisation or marketisation of public services – such as energy, water, trains, health, education, roads and prisons – has enabled corporations to set up tollbooths in front of essential assets and charge rent, either to citizens or to government, for their use. Rent is another term for unearned income. When you pay an inflated price for a train ticket, only part of the fare compensates the operators for the money they spend on fuel, wages, rolling stock and other outlays. The rest reflects the fact that they have you over a barrel.

    Financialisation, as Andrew Sayer points out in Why We Can’t Afford the Rich, has had similar impacts. “Like rent,” he argues, “interest is … unearned income that accrues without any effort.” As the poor become poorer and the rich become richer, the rich acquire increasing control over another crucial asset: money. Interest payments, overwhelmingly, are a transfer of money from the poor to the rich. As property prices and the withdrawal of state funding load people with debt (think of the switch from student grants to student loans), the banks and their executives clean up.

    Sayer argues that the past four decades have been characterised by a transfer of wealth not only from the poor to the rich, but within the ranks of the wealthy: from those who make their money by producing new goods or services to those who make their money by controlling existing assets and harvesting rent, interest or capital gains. Earned income has been supplanted by unearned income.

    The greater the failure, the more extreme the ideology becomes. Governments use neoliberal crises as both excuse and opportunity to cut taxes, privatise remaining public services, rip holes in the social safety net, deregulate corporations and re-regulate citizens. The self-hating state now sinks its teeth into every organ of the public sector.

    Perhaps the most dangerous impact of neoliberalism is not the economic crises it has caused, but the political crisis. As the domain of the state is reduced, our ability to change the course of our lives through voting also contracts. Instead, neoliberal theory asserts, people can exercise choice through spending. But some have more to spend than others: in the great consumer or shareholder democracy, votes are not equally distributed. The result is a disempowerment of the poor and middle. As parties of the right and former left adopt similar neoliberal policies, disempowerment turns to disenfranchisement. Large numbers of people have been shed from politics.

    Chris Hedges remarks that “fascist movements build their base not from the politically active but the politically inactive, the “losers” who feel, often correctly, they have no voice or role to play in the political establishment.” When political debate no longer speaks to us, people become responsive instead to slogans, symbols and sensation. To the admirers of Donald Trump, for example, facts and arguments appear irrelevant.

    http://www.monbiot.com/2016/04/15/the-zombie-doctrine/

  7. Draco T Bastard 7

    Foreign direct investment has often been a way to transfer technology and know-how to developing economies. Privatization of state-owned enterprises has in many instances led to more efficient provision of services and lowered the fiscal burden on governments.­

    No it hasn’t and no it hasn’t.

    FDI keeps control of the technology so it isn’t transferred at all and privatisation of state-owned enterprises shows a decrease in efficiency, increase in prices and an increase in costs as infrastructure and bureaucracy gets duplicated.

    removing restrictions on the movement of capital across a country’s borders (so-called capital account liberalization);

    About the only thing that liberalisation of money across borders seems to have achieved is a massive increase in money dodging taxes and being used in other crimes.

    Here in NZ we are experiencing the slowest recovery from a recession in over 50 years,

    And we wouldn’t even be seeing that much if we didn’t have a massive housing bubble happening and massive insurance payouts for the Christchurch earthquakes.

  8. maninthemiddle 8

    1. Your 3 year old article by Rod Oram has already been superceded by solid growth and job creation.
    2. Labour’s claims on household incomes has been thoroughly debunked, which is why they have all but stopped making those claims.
    3. Free market economics has reduced poverty (http://www.economist.com/news/leaders/21578665-nearly-1-billion-people-have-been-taken-out-extreme-poverty-20-years-world-should-aim) dramatically over the past 20 years.
    4. Inequality is a function of reducing poverty, because entrepreneurs, risk takers etc who actually create jobs receive higher rewards. There success should be celebrated, not looked on with envy.

      • One Anonymous Bloke 8.1.1

        Not an original “thought” among them. Hackneyed long-debunked zombie arguments. False assumptions and false conclusions.

        They found the Well of Eternal Stupid and drank deeply.

      • maninthemiddle 8.1.2

        If the shoe fits…

        • One Anonymous Bloke 8.1.2.1

          It doesn’t. Either you genuinely have less than no clue what you’re talking about, which is the charitable explanation, or you’re lying deliberately as a perfect expression of everything you believe in.

          Is there some other reason for your string of irrelevant strawmen?

          Your hatred of New Zealanders blinds you to the fact that Cullen raised taxes and the minimum wage, and enjoyed low unemployment and a stronger economy. Lab5 didn’t do enough to address the ongoing wealth transfer, and they still managed to acknowledge it. Meanwhile, the shit you believe has been proven wrong over and over and over again.

          Your Daddy refuses to believe there’s even a problem, and you parrot his every dribble.

          • maninthemiddle 8.1.2.1.1

            Oh I love NZ. Which is why I celebrate every morning that successive governments have at least paid attention to implementing something approaching free market economic policies, and deliver the prosperity we enjoy.

            • One Anonymous Bloke 8.1.2.1.1.1

              “Love” – that’s a funny name for preventable infectious diseases, poor housing, incompetence and greed. Those are the fruits of your hate. Own them.

              • maninthemiddle

                Incompetence and greed are human characteristics that regrettably inhabit all governments. Infectious diseases and poor housing are well managed in NZ.

                • One Anonymous Bloke

                  “Well managed” in this context, translates as “getting worse”. Source: The Lancet.

                  • maninthemiddle

                    No. Well managed as in managing those that arise, eliminating those that already present.

                    • One Anonymous Bloke

                      Neither of which are happening faster than new cases arise, hence “worse”. They are arising faster these days because of the incompetent economic dogma you espouse, and again, the evidence for this is well documented, cf: IMF et al..

                      Own it.

                    • maninthemiddle

                      No, infectious diseases arise because of record levels of migration. Oh, and left wing nut jobs who won’t vaccinate their kids.

                    • One Anonymous Bloke

                      Ignorant much? On Earth, The Lancet cites poor housing and social and income inequality, not migration, for the increased incidence of infectious disease admissions to NZ hospitals.

                      You will deny this and clutch at your witless drivel as though it is a security blankie.

                    • maninthemiddle

                      So if I earn $100,000 per year, but my cousin earns 200,000, then I am more likely to get an infectious disease? Think about it. It’s bs.

                    • One Anonymous Bloke

                      🙄

                      Yet another right wing embodiment of the Dunning-Kruger effect.

    • adam 8.2

      I would have thought with all the people coming out of poverty as all you cupidity merchants keep harping on about, then protest against the system would drop to virtually zero. All these people having better lives and all that…

      And yet, everyday all across the globe – more protest, more riots, and more action by people against a system which lies about it’s own success and enriches the rich.

      Must be nice sitting in a bubble maninthemiddle, and having the whole envy argument to fall back on to feel smug.

      • maninthemiddle 8.2.1

        Really? Protests around the world? And that’s your replacement for arguing real data?

        • One Anonymous Bloke 8.2.1.1

          Meanwhile, on Earth, the World Bank and OECD, and now the IMF, have come clean about the harm your beliefs do. Harm that was predicted right from the start. Harm to children, harm to families, harm to individuals, harm to communities, and harm to your precious economy.

          So please explain why people shouldn’t simply spit on you in the street.

          • maninthemiddle 8.2.1.1.1

            The WB, OECD and IMF all back free market policies. None back what’s happening in Venezuela, or what happened in the Soviet Union.

            • One Anonymous Bloke 8.2.1.1.1.1

              So what, dickhead. You’re arguing with a social democrat. The IMF et al back (and have the evidence) mixed economies.

              • maninthemiddle

                Mixed market economies use free market economics. They back limited government intervention as required. So do I.

                • One Anonymous Bloke

                  Let’s not forget that in this context, “required” is for Saudi bribes, Sky City and Rio Tinto, and not for homeless children.

                  Your priorities are twisted by hate and stupidity.

                  • maninthemiddle

                    No. I oppose any bribe or corporate welfare. But I also expect parents to act responsibly, including accessing help available for their children.

                    • adam

                      ah there it is…

                    • One Anonymous Bloke

                      Then you’re a fool, since just up the page we can see you claiming that incompetence and greed and ubiquitous. Worse still, you seem blissfully unaware of the effects of poverty and inequality on human behaviour.

                      In short, you’re blaming poor people for their own misfortune, which by an amazing coincidence, is exactly the same evidence free hate-speech that right wingers have been trotting out to oppose all social progress for centuries.

                      Everything good happens in spite of you.

                    • One Anonymous Bloke

                      Typo: *are* ubiquitous…

                      Plus what Adam said.

                    • maninthemiddle

                      “you’re blaming poor people for their own misfortune, ”

                      Not at all. I believe in helping the poor. By teaching them to help themselves. NZ enjoys a generous and wide reaching welfare system that should ensure no-one lives in the conditions we sometimes see in the media. We also have a healthy employment market, and healthy economic growth.

                      “you seem blissfully unaware of the effects of poverty and inequality on human behaviour.”

                      Cut the bs. NZ has negligible real poverty, and inequality exists in every political and economic system. If your behaviour is affected by inequality it is your character flaw. I am not the slightest bit concerned if my cousin earns ten times as much as me, as long as my basic needs are met. In NZ, that can be case for everyone.

                    • One Anonymous Bloke

                      Meanwhile, on Earth, inequality is quantified by, for example, the GINI coefficient: higher GINI, higher inequality. The effects of which are well understood, and denied by you.

                      In this context, “teaching” means “cutting education funding” and denying the well documented effects of low household income on education.

                      I’m sure you believe the dogshit you gobbled up. To me, you just have dogshit on your breath.

                    • maninthemiddle

                      1. Education funding has not been cut.
                      2. Free market policies have reduced poverty.

                      Feel free to move to Venezuela.

                    • One Anonymous Bloke

                      More dogshit. Poverty has doubled in New Zealand since 1984. You are incapable of comprehending why that is.

                    • maninthemiddle

                      “Poverty has doubled in New Zealand since 1984. ”

                      No, it hasn’t. There is very little poverty in NZ. When I find the contents of food parcels in the recipients rubbish bins, when I visit those in need and see flat screen TV’s and satellite dishes, when I can buy a loaf of bread at Countdown for $1and parents send their kids to school without lunch, this is not poverty, it is incompetence.

        • adam 8.2.1.2

          bubble man much maninthemiddle – don’t you read or see any news? Obviously not

    • dv 8.3

      On the other hand middleman

      http://www.stuff.co.nz/business/money/80358491/new-zealand-house-price-rises-outpace-all-but-one-country

      Only Qatar (15.5 per cent) outstripped New Zealand in the data for growth.

      On the price-to-income ratio measure, New Zealand headed off 30 other countries in an index which compared the situation in 2015 with 2010.

      New Zealand’s 123.9 index score topped Australia (109.1), Japan (103.7) and the US (103). The index charts the relationship between middle (median) incomes and median house prices.

    • millsy 8.4

      blah blah blah..

    • Draco T Bastard 8.5

      Your 3 year old article by Rod Oram has already been superceded by solid growth and job creation.

      What solid growth and job creation?

      Labour’s claims on household incomes has been thoroughly debunked,

      [citation needed] (and don’t link to either Slater or Farrar as both will be lying about it)

      Free market economics has reduced poverty

      NZ poverty rate in 1984 was 14%. Thirty years after the imposition of the ‘free-market’ it’s now 25%.

      Inequality is a function of reducing poverty, because entrepreneurs, risk takers etc who actually create jobs receive higher rewards.

      According to one of the richest entrepreneurs in the world they don’t create jobs at all.

      • maninthemiddle 8.5.1

        “What solid growth and job creation?”
        http://www.scoop.co.nz/stories/BU1504/S00608/strong-economic-growth-to-spur-further-jobs-creation.htm
        http://www.stuff.co.nz/business/opinion-analysis/78374460/Pattrick-Smellie-The-NZ-jobs-machine-chugs-on

        “Labour’s claims on household incomes has been thoroughly debunked,”
        Just think about this. Where in Labours figures are the self employed?

        “NZ poverty rate in 1984 was 14%. Thirty years after the imposition of the ‘free-market’ it’s now 25%.”
        a> Are you seriously suggesting 1 in 4 people in NZ live in poverty? You live in lala land. And I supported my comment with a reference. Go read.

        “According to one of the richest entrepreneurs in the world they don’t create jobs at all.”
        He’s an idiot. Entrepreneurs start businesses. Businesses employ people. https://oneboldmove.com/entrepreneurs-create-jobs/

        • Draco T Bastard 8.5.1.1

          Where in Labours figures are the self employed?

          In dire poverty as they get seriously less than they were. You’re speaking to someone who knows lots of people who are self-employed and have seen their hourly rate drop from $40/hour in 2008 to $20/hour now. And $20/hour isn’t actually enough to fund their business never mind to pay them a wage.

          Are you seriously suggesting 1 in 4 people in NZ live in poverty?

          Yes because it actually happens to be true unlike the lies from this government.

          He’s an idiot. Entrepreneurs start businesses. Businesses employ people.

          No, he’s someone who understands that an entrepreneur can’t start a business if the community isn’t buying. And that the low wages that Bill English was so enthusiastic about ensures that people aren’t buying thus no selling and no increase in jobs.

          • maninthemiddle 8.5.1.1.1

            “In dire poverty as they get seriously less than they were. ”
            Rubbish, but you miss the point. Were they or were they not included the numbers?

            “Yes because it actually happens to be true unlike the lies from this government.”
            No, it’s bs.

            “No, he’s someone who understands that an entrepreneur can’t start a business if the community isn’t buying. ”
            You know nothing about business entrepreneurship. Entrepreneurs often DO start businesses selling things the community aren’t buying. New products, new services, new technologies. He’s a muppet, and so are you.

            • Draco T Bastard 8.5.1.1.1.1

              Rubbish, but you miss the point. Were they or were they not included the numbers?

              I assume that they were included as they would have been included in the statisticians surveys.

              No, it’s bs.

              Simple so that even you can understand it

              Entrepreneurs often DO start businesses selling things the community aren’t buying. New products, new services, new technologies.

              Yeah, they do – and then they go under. No new jobs, no new product, no new technologies. The community needs to be buying for all of that to happen. If the community’s not buying then there’s none of that.

              The only muppets are the RWNJs, such as yourself, who prove that they haven’t got a clue as to what they’re talking about while believing that they do. You just proved yourself another perfect example of the Dunning-Kruger effect.

              • maninthemiddle

                “I assume that they were included as they would have been included in the statisticians surveys.”

                They weren’t.

                “Simple so that even you can understand it”

                So simple it fooled you!

                “and then they go under.”

                Like Sam Morgan. Like all these peoplehttp://www.topbusinessentrepreneurs.com/

                • Draco T Bastard

                  They weren’t.

                  [citation needed]

                  So simple it fooled you!

                  Nope, I’ve lived it.

                  Like Sam Morgan. Like all these

                  Sam Morgan created TradeMe which worked because people used it. All the other entrepreneurial types that also tried to create similar auction sites in NZ have mostly failed because people don’t use them.

                  If the community isn’t buying then there’s no jobs created no matter how damn entrepreneurial someone is. I myself have had several businesses fail because no one was buying.

                  • maninthemiddle

                    “If the community isn’t buying then there’s no jobs created no matter how damn entrepreneurial someone is. ”

                    Rubbish. No-one was buying microsoft software until Bill Gates came along. Some entrepreneurs create new products and services that the community will purchase even though they never have before.

                    “I myself have had several businesses fail because no one was buying.”

                    Yep, it happens. Product life cycles etc. So you no longer employed people. Just as well entrepreneurs come along and employ people in your place.

                    • One Anonymous Bloke

                      Some entrepreneurs, and you forgot to mention the massive amount of public money poured into R&D, because you have no clue what you’re talking about.

                    • maninthemiddle

                      “Some entrepreneurs, and you forgot to mention the massive amount of public money poured into R&D,”

                      Because it pays for itself. And ‘some’ contradicts your claims.

        • KJT 8.5.1.2

          Except that entrepreneurs are less than 3% of the wealthy.

          Most either inherited wealth, stole it, were subsidised by the State, or were given a monopoly or the products of State expenditure by deluded Neo-liberal Governments. (Asset sales)..
          Apple being a good case in point. Every one of the patents, and technologies required for their products, were first developed in publicly funded universities and research institutes.

          • maninthemiddle 8.5.1.2.1

            “Except that entrepreneurs are less than 3% of the wealthy.”

            Cite??

            • Draco T Bastard 8.5.1.2.1.1

              Perhaps you need to read this:

              One of the unfortunate side effects of all the publicity and hype surrounding startups is the idea that entrepreneurship is a guaranteed path to fame and riches. It isn’t. Building a startup is incredibly hard, stressful, chaotic and –- more often than not –- results in failure. That doesn’t mean it’s not a worthwhile thing to do, just that it’s not a good way to make money.

              A more rational career path for money-making is one that rewards effort, in the form of promotions, increased security, salary and status. Startups, unfortunately, punish effort that doesn’t yield results. In fact, the biggest source of waste in a startup is building something nobody wants. While in an academic R&D lab, creation for creation’s sake will often get you praise, in a startup, it will often put you out of business.

              • maninthemiddle

                I aksed for cite to support the claims:

                “Except that entrepreneurs are less than 3% of the wealthy.”
                and
                “Most either inherited wealth, stole it, were subsidised by the State, or were given a monopoly or the products of State expenditure by deluded Neo-liberal Governments. ”

                I’m still waiting.

                • Draco T Bastard

                  Yep. And you’re probably not going to get a direct cite. What you’ll get though is evidence:

                  The late Steve Jobs and Bill Gates are good examples of iconic entrepreneurs. They combined high-tech acumen with brilliant business plans and succeeded by exploiting opportunities that resulted from technological breakthroughs.

                  “This might have been a realistic image of a successful entrepreneur here in Norway too,” says Nordli Hansen.

                  But when she analysed the statistics she encountered a different picture.

                  She found few signs of technological know-how leading to highly profitable innovations. This is not the main road to Norwegian entrepreneurship. Old money is what counts most.

                  “If you want to become to become a successful leader in business and industry, you should preferably have super-rich parents. The chances of making it to the top increase proportionately with parents’ wealth and incomes,” says Nordli Hansen.

                  Essentially: The rich are rich because they start rich.

                  Nothing to do with entrepreneurship but the support structure that they have available to them as children and then young adults.

          • Draco T Bastard 8.5.1.2.2

            Except that entrepreneurs are less than 3% of the wealthy.

            Yep, that too.

            Back when I was doing a business course one of the things we learnt was that you never put in an entrepreneur as CEO as they’ll actually take risks and try to produce new products most of which will fail and thus bankrupt the company.

  9. Rocco Siffredi 9

    I don’t think you read the report;

    “There is much to cheer in the neoliberal agenda. The expansion of global trade has rescued millions from abject poverty. Foreign direct investment has often been a way to transfer technology and know-how to developing economies. Privatization of state-owned enterprises has in many instances led to more efficient provision of services and lowered the fiscal burden on governments.­”

    • Pat 9.1

      you forgot the but…..

      “However, there are aspects of the neoliberal agenda that have not delivered as expected. Our assessment of the agenda is confined to the effects of two policies: removing restric- tions on the movement of capital across a country’s borders (so-called capital account liberalization); and fiscal consolidation, some- times called “austerity,” which is shorthand
      for policies to reduce fiscal deficits and debt levels. An assess- ment of these specific policies (rather than the broad neoliberal agenda) reaches three disquieting conclusions”

      • Rocco Siffredi 9.1.1

        Yes, two issues, so deal with the couple of issues no? Why the need for ‘radical new ideas’?

        • Pat 9.1.1.1

          the two issues examined in this paper found neoliberalism wanting…..it is likely to be the same in any other area they examine….it is a flawed model

  10. Bernard 10

    In Parliament yesterday, Key shot back at Labour over falling owner-occupied housing saying that rates had been falling since the mid 80s. I think it is a fair point but of course no one says it’s a direct result of neoliberalism.

    • Pat 10.1

      would be an amazing admission for someone like Little stand in parliament and offer that as a reply…..suspect neoliberalism will become an oft named source of woe sometime in future parliaments.

      • Bernard 10.1.1

        Agree Pat, that is the real re-balancing that needs to happen. Everyone except those that are still benefiting would and do argue otherwise. Interesting chart somewhere today that I saw showed only the top 10% percentile showed home ownership rates rising, all others were falling. The point is that Labour needs to wake up to the fact that they’ll never win this fight unless they acknowledge that it is they that started this, they sold their sorry souls out in the 80s. It’s happened all over the West so they can console themselves with that. The real question is why and how did it happen and who, if anyone, made it happen. At least then we know who or what we are really fighting here.

          • Bernard 10.1.1.1.1

            I’m so pleased that you brought up George. I also like his ideas about rewilding the countryside, something that NZ needs. I see it like ‘Thing One and Thing Two’ in Seuss’s Cat in the Hat (if you’re familiar with it), As a kid, reading it, there was always the fear that all the chaos they created was going to leave the boy to face the wrath of his mother, that it was all so undo-able. Lo and behold, they returned and fixed up all their mess, just in time. Neoliberalism has created chaos, Now we need more than just hope that things can be fixed. We need to see it happen before ‘The End’. We need to accept that a form of anarchy is necessary first.

    • maninthemiddle 10.2

      Because it isn’t. It is the result of a range of factors, including increasing immigration from countries where home ownership is not a cultural norm. The idea that home ownership rates is an indicator of economic well being is a nonsense. Greece has higher home ownership rates that NZ, as do Spain, Portugal and Italy. The PIGS.

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