Who grows better? Labour or National?

Written By: Guest post - Date published: 12:05 pm, July 22nd, 2011 - 89 comments
Categories: Economy, labour, national - Tags: statistics

Under the last Labour-led government the GDP per capita rose 15.6%. Under John Key’s National, it has fallen 1.9%. ‘Ah but Labour was just lucky and Key has just been unlucky’, say the righties. Which suggests righties think economic policy doesn’t matter and makes you wonder why we’re arguing. The data, however, shows conclusively which party has the best record on growth.

Here is the average annual (June year) growth for each government since 1935, ordered from largest to smallest. The bars in bold outline are the averages for Labour and National governments.

So, it’s pretty conclusive that Key sucks as an economic manager. Worst record in 80 years, and by a long, long way.

It’s also clear that National is consistently worse than Labour: 2.9% vs 4.1.

Even taking out that incredible First Labour government, Labour still beats National.

It’s also interesting to see that growth rates are tending to slow. The Fifth Labour government excepted, the governments since 1975 are the worst performers on growth. I wonder if this was inevitable (that there is an exception to the rule suggests not) or a result of, first, National’s disastrous Think Big, then, the neoliberal revolution and, now, Key’s bastardised amalgamation of the two wherein we sell assets to pay for motorways we don’t need.

I haven’t included the Liberal/Reform coalition government that referred to itself as the ‘National government’ from 1931 to 1935 but, interestingly, even that government from the height of the Depression had a better growth record at 2.6% than all the neoliberal era governments (except, again, the Fifth Labour government).

If CGT vs asset sales hasn’t convinced you already, the records should: if you care about the economy, put a Labour-led government in charge of it.

– Bright Red

89 comments on “Who grows better? Labour or National? ”

Comments are now closed

higherstandard 1

22 July 2011 at 12:38 pm

This is the most fatuous analysis ever to appear on this site.
- mickysavage 1.1
  
  22 July 2011 at 12:48 pm
  
  Why? Don’t you like the conclusion?
- Blighty 1.2
  
  22 July 2011 at 12:54 pm
  
  Saying it doesn’t make it so. Tell us what is wrong with the analysis?
  
  BR’s supplied 75 years of data spanning 10 governments and, 23 elections. The difference is pretty clear between the two parties. What is your rebuttal?
  
  Or don’t you have one?
  - Blue 1.2.1
    
    22 July 2011 at 2:16 pm
    
    I think the rebuttal is about the world economic climate at each individual time, comparing each Governments growth to those of the OECD as a comparison in the same cimate, whether or not there was a war perhaps (FFS) which involved huge amounts of Government spending. There are many reasons why economies grow, an export led economy like ours that relies on other countries buying our exports, as open to vagaries and whims of international trade and the conditions within which they exist. As HS has said it is fatuous indeed. Why not show an unemployment graph over the same period, from a reliable source?
    - Blighty 1.2.1.1
      
      22 July 2011 at 2:23 pm
      
      why don’t you supply that graph?
      
      We’re not talking one-off coincidences here. 75 years, ten governments. Are you really claiming it’s just that Labour has successively been lucky for three generations? (and, if so, isn’t that a reason in itself to elect them 🙂 ?)
      - Blue 1.2.1.1.1
        
        22 July 2011 at 2:38 pm
        
        Firstly because I don’t have to grasp at straws like the left tend to do. In any research, it is important to look at all sides of the data. From this graph you can certainly get a correlation between governments and growth. However, this is bivariate data, multivariate data gives a true picture of these types of relationships. So if you want to correlate anything – you can. There is a direct correlation between, in a statistical sense, the introduction of NCEA and increased obesity in children, it doesn’t mean that NCEA causes obesity (or maybe it does). However anyone with common sense would realise that the two are completely unrelated. The fact that they occurred at the same time does not mean they are related.
        
        Just like Labours poor poll results for their ‘leader’ correlate to their party vote, this surely can’t be related (can it?). This is poor science at best and Fox News type of interpretation for the misinformed and stupid, at worst.
        
        Blighty 1.2.1.1.1.1
        
        22 July 2011 at 2:40 pm
        
        So, you’re arguing that government policy doesn’t influence the economy and it’s all just a coincidence?
        
        In that case, why do you oppose Labour’s economic policy?
        
        Blue …
        
        22 July 2011 at 3:58 pm
        
        Thats not what I said or intended. Your ability to interpret graphs matches your ability to read. Government policy of course has impacts on the economy, but as anyone with a 3rd form level of economics education would tell you, countries do not operate in vacuums, and their economies are not mutually exclusive to the economic conditions of our major trading partners. One is correlated to the other. If this were not the case we would be forever insulated against movements in our currency and the flow on effects on the trading conditions we rely on. Clearly we are not. I oppose Labours policies on the same basis that you oppose Nationals, I don’t believe in them, because eventually you run out of middle income earners (woops sorry) “rich pricks” to tax (teachers, nurses, doctors, lecturers, police) and I have little trust for those in Labour that want to impose them on my family. Labour masquerade as “workers rights advocates” but those same workers are by definition penalised by them. They are epitome of a falsehood.
        
        r0b …
        
        22 July 2011 at 4:10 pm
        
        Why do you call them rich pricks Blue? That’s a bit mean.
        
        Blue …
        
        22 July 2011 at 4:32 pm
        
        Yes it was wasn’t it, and I unreservedly apologise to the nurses, teachers, and other ones for repeating the oft quoted lines I hear from the apparently and clearly self-perceived downtrodden masses that are about to rise up and do what they do well……nothing.
        
        Colonial Viper …
        
        22 July 2011 at 4:36 pm
        
        self-perceived downtrodden masses that are about to rise up and do what they do well……nothing.
        
        lol
        
        unemployed highly trained mentally distressed ex Iraq War vets, having come home to broken homes and a broken economy
        
        How long do you think this ‘doing nothing’ you speak of is going to last? Seriously?
        
        Of course I am talking about the US there, but have you not paid attention to Egypt, Bahrain, Libya and Greece?
        
        r0b …
        
        22 July 2011 at 5:02 pm
        
        That probably sounded more coherent in your head than it did when it escaped.
        
        felix …
        
        22 July 2011 at 5:56 pm
        
        Thing is, Blue, I only ever see you right-wingers talking about “rich pricks”.
        
        It’s like Dr Cullen called John Key one once, and since then you’ve all developed tourettes.
        
        As r0b says, it’s a bit mean. Tarring all those people with the same brush, just because of John Key.
        
        burt …
        
        23 July 2011 at 12:24 am
        
        Blue’s right though. In the last 3 terms of Labour govt fiscal drag was overtaxing the middle earners more than it was hammering the real top earners. Core Labour voters were treated as cash cows while the real high earners restructured their affairs. Absolute shame on Labour crapping on it’s core voter base.
        
        felix, Cullen’s Roth on people earning more than an 80’s University Lecturer must be very deeply rooted.
        
        felix …
        
        23 July 2011 at 5:20 am
        
        Nice bit of mind reading. I’ll just go by what he said, thanks.
        
        mik e …
        
        23 July 2011 at 12:04 pm
        
        He used that fiscal drag to rebuild our economy Burt fix the run down armed forces $5-6billion their, Save $16billion in the Cullen fund pay down $10billion in debt. close the gap between Australia for the first time in twenty years with working for families rebuild capacity in education our OECD rankings went up for the first time in twenty years the worst decline was under the previous slash and burn govt. early childhood education $1.4 billion dollars even Peter Gluckman Keys chief science advisor thinks we should spend more their. so Burt.It wasn,t their Economic policy that pissed people of it was their liberal rights that pissed them so get your facts right
        
        burt …
        
        24 July 2011 at 1:19 pm
        
        So you are defending the over taxing of middle earners ? Wow, and you call yourself a Labour supporter. What next – lets justify eating the poor because they were sold with a GST exemption ?
        
        burt …
        
        22 July 2011 at 6:47 pm
        
        Blighty
        
        So, you’re arguing that government policy doesn’t influence the economy and it’s all just a coincidence?
        
        NZ was in recession either Q4 2007 or Q1 2008 depending on how you like to spin it – but somehow that wasn’t Labour’s fault…. Just like day 1 of the 1990 National govt discovering the BNZ was insolvent and needed to be bailed out apparently wasn’t Labour’s fault either – it happened on National’s watch….
        
        This graph is indeed clutching at straws, sad desperate sloppy spin.
        
        Colonial Viper …
        
        22 July 2011 at 6:53 pm
        
        sad desperate sloppy spin.
        
        Almost as sad and as sloppy as the 170,000 new jobs Bill English promised last year.
        
        Where he forgot to say that they would be in Australia.
        
        burt …
        
        23 July 2011 at 12:02 am
        
        Almost as sad and as sloppy (don’t forget desperate) or slightly more sad and sloppy (don’t forget desperate) – that depends on your point of view.
        
        But I’m glad you agree with me that it’s sad desperate sloppy spin.
        
        mik e …
        
        23 July 2011 at 11:51 am
        
        IT was Roger Douglas who deregulated the bnz an allowed it to lend to his ponzi schemers mates like Bruce Judge and co thats why it went belly up and then it was sold of at fire sale prices now its making about a billion a year and that profit is heading overseas.
- felix 1.3
  
  22 July 2011 at 1:08 pm
  
  “This” being the operative word in higherstandard’s comment, of course…
  - Ianupnorth 1.3.1
    
    22 July 2011 at 5:27 pm
    
    I think he is from Matamata which might explain it.
Pete George 2

22 July 2011 at 1:03 pm

It’s certainly selective – if you dropped the oldest government off (a time when we were recovering out of the Great Depression) it would make a big difference.

And comparing the first 2 1/2 years of a first term for the current government is also misleading, the first term for Clarks governement the GDP dropped (after a lesser world financial hiccup) and then recovered.

If you look at this graph: http://www.rbnz.govt.nz/keygraphs/Fig2.html
you can see that the plummet began under Labour and continued down, closely tracking the US, no surprises there.

It’s as unfair to say that Labour precipitated the recession as it is to blame National for it’s depth and longetivity.

The graph also shows the best recoveries in the past few decades were under National….
- lprent 2.1
  
  22 July 2011 at 1:28 pm
  
  It’s certainly selective – if you dropped the oldest government off …. it would make a big difference.
  
  Do you read the posts at all? You know – like where it says….
  
  Even taking out that incredible First Labour government, Labour still beats National.
  
  Whenever National are in power and something bad happens to the world economy like 97 or when they simply screw up like 91, the depths are pretty deep because they do the required corrective measures half-heartly and late – just as they do for everything else. If Labour is in power, the depths are similar to our trading partners – much shallower.
  
  So of course after National screw up as they routinely do, and the problem goes away (world economy rebounds, National corrects their benefit cut screwups, or simply National gets dumped), we bounce up sharply.
  
  But you view their bounce performance as an advantage without looking at their amazing ability to cripple the economy. The latter is the reason that their overall performance of the last century has been pathetic.
  
  And you wonder why many here think that you’re politically naive?
  - felix 2.1.1
    
    22 July 2011 at 1:38 pm
    
    If Pete Squirrel were to actually read the posts instead of just looking at the pictures he’d have nothing much to comment on.
    
    Most of the discussions he gets into these days seem to consist of him raising points that have already been dealt with and others patiently explaining the bleeding obvious to him.
  - Secret George 2.1.2
    
    22 July 2011 at 1:39 pm
    
    Did you read what I said? Like where it said :The graph also shows the best recoveries in the past few decades were under National….
    
    felix, you don’t have a great record of reading your own links properly.
    - felix 2.1.2.1
      
      22 July 2011 at 2:17 pm
      
      [citation needed]
    - Blighty 2.1.2.2
      
      22 July 2011 at 2:26 pm
      
      the graph shows the best growth period in the past 30 years was the 3rd Labour government, followed by the Fifth Labour government.
      - Pete George 2.1.2.2.1
        
        22 July 2011 at 2:34 pm
        
        The graph I linked to shows the best growth in 92-94 during a National government.
        
        The 88 crash, the dot-com burst and the 2008 recession all occurred or began during Labour governments. They were all international events so coincidental. It’s all a lot more complex than a few selective bars on a single graph.
        
        Blighty 2.1.2.2.1.1
        
        22 July 2011 at 2:43 pm
        
        so you think the fact that average growth under Labour governments has outstripped average growth under National governments by 42% OVER THEIR ENTIRE HISTORY AS GOVERNING PARTIES is just a coincidence?
        
        If that’s the case, I suppose you think that economic policy is a nullity. If so, why do you oppose Labour’s?
        
        Colonial Viper 2.1.2.2.1.2
        
        22 July 2011 at 5:05 pm
        
        In the Aliens movie, Pete George is the corporate guy who needs to be abandoned for the beasties lunch early in the first act, for the good of the other surviving humans.
        
        bbfloyd 2.1.2.2.1.3
        
        22 July 2011 at 6:59 pm
        
        now your really talking vile shit george… your so called “recovery” was no more than national playing their favorite “boom/bust” game.. i well remember how completely the economy stalled between 91 and 92.. as a direct result of the attack on the population launched by the psychopath richardson and nz’s answer to rasputin, bill birch.
        
        the “recovery” wherein money was suddenly pumped into the deliberately stagnated building sector, for example was timed to flood money into the economy in the lead up to the 93 election..
        
        don’t waste my time with silly personality bullshit in response(assuming you can) as i won’t waste any more time on you. just understand, you make a total arse of yourself every time you come on her and spout your halfwit dribble…
        
        mik e 2.1.2.2.1.4
        
        22 July 2011 at 7:16 pm
        
        once again Pete it was only a percentage change in growth not a volume in growth . The actual cash figures were very low. The increase was of a very weak economy so the volumes of growth were very low only a few hundred million over 9years 8.5% in real terms for National, as opposed 28.5 % in volume over nine years for Labour over nine years.I will put up th year yo year figures before next week and you will see how badly the economy performs under National. a small percentage of a much bigger pie is better than big percentage of a very small pie!
        
        mik e 2.1.2.2.1.5
        
        22 July 2011 at 7:30 pm
        
        These are treasury figures your looking at. need I say more . get the real figures from the NZ year book.
- mik e 2.2
  
  22 July 2011 at 1:36 pm
  
  Pete George go to the NZ year book have a look at the real dollar figures and not percentages, you will find National did have good recoveries but they were very short lived. usually followed by longer recessions only 6 months after the massive tax cuts mainly for the rich.They were unsustained what we had was a yo yo economy with very little growth.
- Draco T Bastard 2.3
  
  22 July 2011 at 4:43 pm
  
  It’s certainly selective – if you dropped the oldest government off (a time when we were recovering out of the Great Depression) it would make a big difference.
  
  Aren’t we supposed to be recovering from a major global recession?
  
  Yep, that’s what John Key said. Considering this shouldn’t we be seeing the same sort of growth jump for this government that the 1st Labour government saw?
  
  The graph also shows the best recoveries in the past few decades were under National….
  
  Which graph are you talking about? Because it sure as hell isn’t the one you linked to.
prism 3

22 July 2011 at 1:07 pm

The figures stand on their own merit. Whether Labour was lucky or smart, vote for Labour – the lucky party. Australia can have their lucky country, let’s get behind Labour and then we’ll all get lucky.

And this isn’t tongue in cheek, if the present grotesque, burlesque revue carry on with their performance of being politicians (and a university capping dramatic group would put on a better show) we will all be pitchforked into the extravaganza, most of us at the back end of the stuffed pantomime horses or don-keys (along with the fabulous song and dance duo Don and John Key).
mik e 4

22 July 2011 at 1:26 pm

When you look at the volume of growth that is year to year actual growth in dollars including inflation being taken in to account the figures are even more stark just taking percentages by them selves doesn,t provide the whole picture. you may have several years with no or negative growth then suddenly have 9% growth in one year which makes the average look a lot better than it really is.Like in the 90s. when you add all the cash sums together for each year and divide them by the number of years you get the actual amount of growth over that period and not a percentage of a percentage .so when you look at the Shipley Bolger [Birch English finance ministers] govt in the 1990,s they only managed just under 1% per annum 8.5%total volume of growth over 9years[ my figures are the difference in the size of they the economy from when they started their tenure and what size it was when they finished not just a pure percentage which dosn,t take into acount when the economy goes backwards] in real growth,stats from New Zealand year book. Where the Clark[cullen finance minister]managed just over 3% per annum 28%total volume average real growth over their 9 years. then you look at Bil Englishs tenure 98-99-09-10-11,you get less than 1% growth in 5 years.Through that time their is another couple of stats that show that he has borrowed heavily and given tax cuts to the rich . So obviously his recipe for the economy is a complete FAILURE.then he complains about the previous govts growth was on the back of borrowing . Another lie go and have a look at your local library and you find the truth in the NZ year book borrowing grew no faster under the Clark than the Shipley Bolger govt or for that matter this Key govt the difference was that Cullen saved something like $30Billion in the cullen fund and kiwisaver .Key has reduced savings Changed private borrowing to govt borrowing and the total amount has stayed the same.the economy is faltering because of tax cuts for the rich and reduced savings[ allowing inflation to go up ] reducing the large percentage of Kiwis wealth while the top 2% get the bulk of Keys windfall. While the rest of us do it hard.
- Chris 4.1
  
  22 July 2011 at 2:13 pm
  
  I know this isn’t adding anything to the discussion but please but some paragraphs in there. At the moment I just can’t read it.
Colonial Viper 5

22 July 2011 at 1:27 pm

LAB will do better than NAT without a doubt, but net growth per capita is going to be extraordinarily hard to achieve in the next 5 years.
- Peter 5.1
  
  22 July 2011 at 1:38 pm
  
  At least Labour will be concerned with distributing the benefits of any growth, this Blue team innately don’t give a toss!
Lanthanide 6

22 July 2011 at 1:29 pm

If Labour wins the election and we have a massive peak-oil fuelled depression in the next term, I’m sure you’ll post a follow up graph showing that the Labour government was even worse than Key?

This graph is pointless. There are too many confounding variables. If it was always a level playing ground in terms of international relations and technologies, we could compare which government was better. But as it is, there really is surprisingly little difference between the different governments.
- lprent 6.1
  
  22 July 2011 at 1:34 pm
  
  …there really is surprisingly little difference between the different governments.
  
  That is why we have civil servants who advise politicians. They tend to advise against the really really stupid things across governments. But there is a consistently better performance from Labour governments IMHO because they tend to think on a longer term framework.
  
  They also tend to be a lot better at keeping the debt levels down or reducing them than National (contrary to National’s myths) is because debt acts as a brake on the economy.
  - bbfloyd 6.1.1
    
    22 July 2011 at 7:09 pm
    
    which highlights another point. national governments have traditionally been elected after periods of structural/economic reforms by labour governments. this has allowed them to foster (with print media assist) the myth of nationals superior economic skills, simply by doing nothing.
    
    the current government have snapped that cycle by undoing much of the groundwork done for them. seemingly for no more than party political posturing purposes.. we now have the true picture of nationals “skill” exposed for all to see.
Peter 7

22 July 2011 at 1:33 pm

The employment record of the last Labour government was far better than this and the previous National government. I wonder what the historical records indicate?
randal 8

22 July 2011 at 1:56 pm

yep the world is in for sea change at the moment. everybody assumes it is just going to carry on as per usual but growth everywhere will slow down as environmental constraints really start to bite and all the old dinosaurs land shibboleths like roopit and his ilk get swept away by events that are more powerful than the pitifully short sighted could ever imagine.
Afewknowthetruth 9

22 July 2011 at 2:45 pm

Firstly, growth is the problem, not the answer. The more economic growth there is, the worse all the factors become that make life worth living and make life possible.

Secondly, economic growth is predicated on risiing energy consumption and rising resource consumption. Neither is possible in a post peak world.

Discussion about events that occured when increasing energy was available and before the world had been largely stripped of resources has no relevance to present day conditions.
- mik e 9.1
  
  22 July 2011 at 7:26 pm
  
  A few thats not true either if transfer energy from to being reusable. recycling and sustainable we can create a whole new economy but we do have to reduce consumption and waste in lots of areas. the world doesn,t need all these resources we can do without. but giving up on the idea of change is against natures urges to survive for that is natures basic tennent SURVIVAL!
  - Viv 9.1.1
    
    22 July 2011 at 9:10 pm
    
    mik e . Realising that we can’t continue to have GDP growth as we know it is not ‘giving up on the idea of change’.
    Afewknowthetruth is right, growth is the problem. The planet is a closed system & continued expansion isn’t possible- how come so few people acknowledge this? Is labour going to start measuring more than just GDP? This is the 21st century, anyone heard of peak oil, water & arable land shortages, climate change? A bit more recyling & some greenwash aint gonna do it. NZ needs to ‘grow’ in food security and other areas of self reliance, not GDP.
    - Colonial Viper 9.1.1.1
      
      22 July 2011 at 10:15 pm
      
      A bit more recyling & some greenwash aint gonna do it.
      
      Yep.
      
      I also suggest that the next Government needs to do more than measure things other than GDP.
      
      They need to:
      – take 100,000 vehicles net off the roads a year.
      – double GST on all vehicles over 2L displacement
      – increase the cost of petrol to $3/L over 24 months.
      – hold 180 days reserve supply of liquid fuels in reserves onshore.
      – add 200MW in renewable electricity generation a year.
      – extend and electrify the NZ train network, electric trams and add NZ rolling stock to suit.
      – reduce the end user cost of public transport by 25%.
      – require substantially upgraded requirements in terms of building insulation, solar water heating, commercial process efficiencies.
      – price electricity in a way which greatly rewards lowered usage.
      – reserve (or if necessary nationalise) all currently untapped and undiscovered fossil fuel reserves as not for export for a period of 25 years
      – implement significant financial and asset reforms to crush financial and asset speculation once and for all.
      
      Steps to localise both food production and energy generation, as well as vastly improve the use of farmland and waterways is also essential.
      - Draco T Bastard 9.1.1.1.1
        
        22 July 2011 at 11:55 pm
        
        reduce the end user cost of public transport by 25% per year
        
        FIFY
        Public transport needs to be free.
        
        price electricity in a way which greatly rewards lowered usage.
        
        Been thinking about that and decided that it should be a block usage system. Buy a fixed amount of power for the month and any use over that is massively expensive. Have multiple size “blocks” that you can buy so as to suit different households but the larger blocks actually cost more so that people are incentivised to use less.
        
        require substantially upgraded requirements in terms of building insulation, solar water heating,
        
        This is an absolute must. We could save so much if we didn’t have such crap housing stock. Also need to have some means to force older houses up to the new standard.
        
        reserve (or if necessary nationalise) all currently untapped and undiscovered fossil fuel and other mineral reserves as not for export
        
        FIFY
        
        Colonial Viper 9.1.1.1.1.1
        
        23 July 2011 at 12:02 am
        
        +1
        
        You sure you don’t want to start a political party with me sometime? 🙂
    - mik e 9.1.1.2
      
      23 July 2011 at 12:18 pm
      
      Viv Traditional industries are giong to stagnate, sooner or later their is going to need to be a huge growth in the short term to change the infrastructure . The only way I see your scenario working out is if we have a World govt one vote for every body.The powers that be won,t let that happen in our life time as the need for greed is a survival instinct that served us well before we became civilized we could only eat so much food in a day but now that instinct has been transfered to the modern world your going to have to convince a lot people to change their ways. Its probably a lot more sensible to work with the system as we can harness it to change rather than opting out or fighting it.
stevedore 10

22 July 2011 at 3:48 pm

“…first, National’s disastrous Think Big, then, the neoliberal revolution and, now, Key’s bastardised amalgamation of the two wherein we sell assets to pay for motorways we don’t need.”

= the best description of the current government I have read anywhere. Thanks!
- Afewknowthetruth 10.1
  
  22 July 2011 at 4:20 pm
  
  Think Big wasn’t a disaster for the corporations that benefited, just a disaster for NZ and the global environment.
  
  The neoliberal revolution wasn’t a disaster for the corporations that beneited, just a disaster for NZ and the global environmnet. .
  
  John Key’s policies are not a disaster for the corporations that benefit, just a disaster for NZ and the global environment.
  - Colonial Viper 10.1.1
    
    22 July 2011 at 4:53 pm
    
    NZ has been living off several of the Think Big projects.
    
    We need several more. A billion in year invested in renewable energy sources and energy use reduction, for instance.
    - felix 10.1.1.1
      
      22 July 2011 at 5:43 pm
      
      Owned by us.
      - Colonial Viper 10.1.1.1.1
        
        22 July 2011 at 5:55 pm
        
        Ah yes, that small detail is important.
side show bob 11

22 July 2011 at 3:51 pm

Oh sorry, my mistake I thought it was Labour’s polling graph.
- Mac1 11.1
  
  22 July 2011 at 5:56 pm
  
  In a way it is,ssb. After the Nats klutzing up the economy, Labour came in to sort it- which it did- in ’35, ’57, ’72, ’84 and 1999.
  
  Guess what happens in 2011 after another Natastrophe?
Nick C 12

22 July 2011 at 5:28 pm

Just comparing that graph to this one, I suspect the strong correlation is not between National and low growth vs labour and high growth, but in fact a correlation between low govt expenditure as a % of GDP and high growth: http://www.2025taskforce.govt.nz/firstreport/28.htm
- Colonial Viper 12.1
  
  22 July 2011 at 5:57 pm
  
  but in fact a correlation between low govt expenditure as a % of GDP and high growth:
  
  **facepalm**
  
  Good on you for not spotting the dependent variables there
  - Nick C 12.1.1
    
    22 July 2011 at 6:13 pm
    
    Well clearly if they are both correlated then the dependent variable is govt spending as a % of GDP and the independent variable is who is in government. My real point is that I don’t care whether the ‘red team’ or the ‘blue team’ is in government, I care what policies they are implimenting to achieve higher growth.
    - Lanthanide 12.1.1.1
      
      22 July 2011 at 6:21 pm
      
      So surely you should vote for the team that does that best…
    - Colonial Viper 12.1.1.2
      
      22 July 2011 at 6:26 pm
      
      jeeezzuz dude
      
      The reason that it looks like govt expenditure as a % of GDP is low during booms is because GDP expands, reducing the size of the metric.
      
      Same with why govt expenditure as a % of GDP is high during crashes, i.e. because GDP nosedives, increasing the size of the metric.
      
      Sheesh.
      
      If anything, Government expenditure is something that the economy can rely upon for stability through the ups and downs of the neoclassical business cycle.
      - Nick C 12.1.1.2.1
        
        22 July 2011 at 6:51 pm
        
        That is true, but it doesnt mean that govt spending as a % of GDP is the exclusivly dependent variable. GDP growth can also be dependent on high or low government spending. If govt spending as a % of GDP were the exclusily dependent variable you would expect to see govt spending as a % of GDP going up and down once every 5-10 years in a constant cycle, but with no long term trends. That clearly isnt the case. GDP growth is quite high up until the early 70’s which can be expained by consistently low Govt Spending % of GDP ratio until then. Muldoon came in and implimented Think Big and other terrible investments. GDP growth slowed. Ruth Richardson came in and cut government spending, but not to pre 1970’s levels. GDP growth increased, but not to pre 1970s levels.
        
        So it goes both ways, you would have to be a fool to think otherwise.
        
        Colonial Viper 12.1.1.2.1.1
        
        22 July 2011 at 6:58 pm
        
        So it goes both ways, you would have to be a fool to think otherwise.
        
        Well I don’t know about that, I was just criticising what you said:
        
        I suspect the strong correlation is not between National and low growth vs labour and high growth, but in fact a correlation between low govt expenditure as a % of GDP and high growth
        
        Of course its “correlated”, after all GDP is the denominator of the metric you use.
        
        Draco T Bastard 12.1.1.2.1.2
        
        22 July 2011 at 8:53 pm
        
        GDP growth is quite high up until the early 70′s which can be expained by consistently low Govt Spending %…
        
        No it can’t. Believing that is just more of the believing that correlation is causation delusion.
        
        What’s more likely is that up until the 1960s productivity growth was easy due to increasing amounts of cheap oil, associated easy mechanisation and access to British markets. From the early 1970s NZ’s terms of trade began to decline due to Britain entering the EEC, a couple of oil shocks, mechanisation becoming more complex and thus more expensive and the world economy slowing due to the developed world entering into a Crisis of Capitalism – can produce lots but can’t sell it (IMO, this is actually the main driver to become a financial hub as profits from industrialism are declining).
        
        Colonial Viper …
        
        22 July 2011 at 9:01 pm
        
        IMO, this is actually the main driver to become a financial hub as profits from industrialism are declining).
        
        The smart money recognised this in the early to mid 1980’s. The primary game changed from making money from railways toys cars and tech to making money from money.
        
        Draco T Bastard …
        
        23 July 2011 at 12:04 am
        
        Making money from money massively ups the dead weight loss of profit on the economy slowing growth* even more.
        
        * I really do hate that word in respect to economics. It fits in some ways like when talking about making process improvements to use less resources (Human and material) but it’s usual meaning when used is to make bigger, use more resources which is just plain stupid. Labours promise to grow the economy and have more jobs (paraphrased) fits the latter meaning.
        
        Colonial Viper …
        
        23 July 2011 at 12:09 am
        
        Labours promise to grow the economy and have more jobs (paraphrased) fits the latter meaning.
        
        Yes I know, I know.
        
        Adequate pay to work a 4 day working week, spread jobs around wider, and have a tonne of currently unleft work in terms of emotional labour and rebuilding national infrastructure sorted out.
        
        Unemployment <2% within 18 months.
        
        mik e 12.1.1.2.1.3
        
        23 July 2011 at 10:47 am
        
        NC Mother England was subsidizing us then . We were taken away from her apron strings, although we were told in 1956 this would be happening around 1972 NZ made no plans to change and diversify our economy so thats why our economy tanked in the 70s onward The right still haven,t figured it out yet. Roger Douglas destroyed a lot of our industrial capacity then virtually destroyed[While smart economies redirected and developed those capacities], our on going research and development was decimated by Roger Douglas and further decimated by successive National govts.They think they can fix the economy by cutting costs including this Key/English who have cut R&D innovation spending very crudely , when research needs to be consistent and ongoing to be affective . The research has shown that economies that spend heavily in this area are growing and will continue to grow much faster. ie. Singapore ,South Korea, Germany ,China .
    - mik e 12.1.1.3
      
      22 July 2011 at 6:43 pm
      
      Well Nick C Keys Govt is doing a lot of the WRONG things reducing savings when we should be increasing saving it keeps inflation down as well as making interest rates cheaper and investment money more readily available which combines to keep our dollar down.Reducing investment in R&D and innovation. As you can see in the above graph GOVERNMENTS who spread wealth around get more growth. National are basically doing all the wrong things
      - Nick C 12.1.1.3.1
        
        22 July 2011 at 6:57 pm
        
        “As you can see in the above graph GOVERNMENTS who spread wealth around get more growth.”
        
        Nonsense, if anything it shows the other way round. Do you really think that welfare spending under Holland and Holyoake was higher than it is today?
        
        Colonial Viper 12.1.1.3.1.1
        
        22 July 2011 at 6:59 pm
        
        YES i.e. benefits were far higher as a % of the median wage
        
        mik e 12.1.1.3.1.2
        
        23 July 2011 at 10:02 am
        
        Those govts spent more on housing state housing plus state advances loans at 3% for private housing and farms for under 36year olds as well as subsidizing milk butter [ for local consumption] wool and meat car assembly and other import substitution.public works. They also kept the pound in those days pegged!people who don,t know their hisTORY !
        
        Colonial Viper …
        
        23 July 2011 at 10:08 am
        
        Yeah wait until they read about the massive land confiscations which occurred in NZ in the 1890’s. That’ll get them going . End of the world it was eh. (In fact every farmer today owes their livelihood to that Government action).
- Puddleglum 12.2
  
  22 July 2011 at 6:25 pm
  
  Starter for 10: Why might government expenditure as a proportion of GDP go up in a recession? (Hint: GDP is going down. Another hint: Unemployment goes up).
  
  Thanks for showing me part of the 2025 Taskforce first report. Now I realise why Key disbanded it. The reasoning is appalling and shows all the hallmarks of what Blue (above) accuses the poster of – to quote Blue:
  
  “In any research, it is important to look at all sides of the data. From this graph you can certainly get a correlation between governments and growth. However, this is bivariate data, multivariate data gives a true picture of these types of relationships. So if you want to correlate anything – you can”
  
  Brash needed to chat with Blue before he wrote his first report.
  
  And here’s the ‘official’ GDP growth for the past couple of decades.
  - Colonial Viper 12.2.1
    
    22 July 2011 at 6:32 pm
    
    haha you pipped me to it
  - mik e 12.2.2
    
    22 July 2011 at 6:55 pm
    
    This Graph is only percentage change not the volume of growth . but it clearly shows the short term growth around the tax cuts followed by the long recession .The actual growth in dollar terms is far more accurate than percentage change, percentage change of what! thats what ACT & National have been hiding behind including Roger Douglas.
lefty 13

23 July 2011 at 9:35 am

There is no doubt that Labour is better at managing capitalism than National.

I am not sure that is something to boast about.
- mik e 13.1
  
  23 July 2011 at 10:19 am
  
  Lefty that because they know what works better in taming the wild beast called capitalism which very cyclical the right want to take all the controls of laissez fair [sheel be right mate the market knows best] but we have modern research now with very powerful computers and much better educated statisticians their research shows that in fact their are no laissez fair economies succeeding[every time I here ACT put up a country thats following their policies I just laugh because their either telling lies or the country usually tanks it within a few months of these claims ie Argentina 1998 election and Roger Kerr claiming Singapore was the ultimate free market just recently an out an out lie] just like there are no communist states succeeding so the balance is some where in between.
felix 14

23 July 2011 at 9:47 am

How about we just agree that the ALCP grows better and leave it at that.
Afewknowthetruth 15

23 July 2011 at 11:39 am

I suppose people will recognise that GDP is a fraud and does not measure progress some time after the system has collpsed.
Bored 16

23 July 2011 at 12:53 pm

So for the historic record, it iis conclusive, Labour governments did better at growth than National. Not surprised actually, doing the right thing by everybody instead of by your mates only is always going to get a better result.

Next question: who will do better in a shrinking economy (for the next 50 years or so till it bottoms out), and why?
Ianupnorth 17

23 July 2011 at 1:55 pm

I’ve posted this on Open Mike, but it is worth adding here as it should contribute to the debate –

Something really nice about seeing the most right wing paper in the UK suddenly realise everything they have believed in has created the current global meltdown!

http://www.telegraph.co.uk/news/politics/8655106/Im-starting-to-think-that-the-Left-might-actually-be-right.html

It has taken me more than 30 years as a journalist to ask myself this question, but this week I find that I must: is the Left right after all? You see, one of the great arguments of the Left is that what the Right calls “the free market” is actually a set-up.

The rich run a global system that allows them to accumulate capital and pay the lowest possible price for labour. The freedom that results applies only to them. The many simply have to work harder, in conditions that grow ever more insecure, to enrich the few. Democratic politics, which purports to enrich the many, is actually in the pocket of those bankers, media barons and other moguls who run and own everything.

John Key, are you listening?
Richard 18

3 August 2011 at 2:10 pm

By the same argument I’m sure it would be found that George Bush is an economic maestro.