web analytics

Working our way forward

Written By: - Date published: 11:50 am, October 13th, 2008 - 16 comments
Categories: economy, election 2008, labour, national, wages, welfare, workers' rights - Tags:

It was inevitable that the focus of media coverage of Labour’s announements yesterday would be the deposit insurance, it’s a good self-centred middle-class story. But the important stuff, as Irish pointed out last night, is the re-training money, the speed-up of infrastructure construction, the money for sewerage, housing, and anti-erosion projects.

The deposit insurance simply acts to prevent runs on the banks and to give people the security to put their money into deposits, giving financial institutions credit to lend to businesses. As you know, financial institutions hold only a fraction of the cash they need to pay out their depositors (fractional banking). If people stop depositing or people panic and try to withdrawal their money in large numbers, the institution runs of cash and the house of cards comes tumbling down. Deposit insurance gives iron-cast confidence; paradoxically, insuring people’s deposits if institutions collapse actually all but eliminates the already small chance that they will collapse.

So, that secures the private finance system but it doesn’t get the economy humming. To do that in a time of global depression, history shows we need the State to utilise the slack in the economy from the contracting private sector.

Allow people and plant to sit idle and the economy grinds to a halt. People languish out of work and, as their standard of living stagnates or declines, so does their demand for goods and services, forcing more people out of work. Wages fall as workers compete for scarce employment. Crime and suicide rise amongst purposeless, alienated young men. That was National’s response to a relatively minor recession in 1991. They let unemployment climb and climb (which was to their advantage, it weakened the unions and blew out the welfare budget allowing National to undermine work rights and cut benefits). National’s only solution, then and now, is to lower tax on the rich, as if we can spend our way out of recession.

Labour, in contrast, is looking at the experience of the 1930s. It knows we have to work our way back into growth and, if the private sector can’t lead, the Government must. Just as in the 1930s, government infrastructure and housing developments will soak up otherwise idle labour and capital. Additionally, retraining allowances will give workers the opportunity to upskill, rather than sit unemployed. Both the infrastructure work and the retraining will keep workers’ incomes up and the cost of benefits down. We’re not talking make-work schemes either. We’re talking about using this crisis as an opportunity to do the work that can’t be done when the economy is stretched to full capacity to create more assets and a more productive New Zealand in the long-run.

You can compare National and Labour’s differing approaches to work in different factories. In some factories, when machinery breaks down (as it always does) everything grinds to a halt. Other machinery in the chain has to stop and workers have to sit around waiting for the problem to be fixed (the difference is in factory work that’s a chance for a cup of tea or a smoke, it’s less fun being unemployed). In other factories, when a machine breaks, the management works out something else you can be doing in the meantime – maybe working around the broken part of the production chain or going off and learning another process somewhere else in the factory so that you become a more useful worker. No prizes for guessing which factories do best in the long-run, are better to work at, and end up paying more.

Labour has wisely rejected the opportunistic suggestions of Mark Weldon and David Skilling, which are just veiled get richer quick schemes for the very people who have pushed us to the precipice in the first place. Instead, they have gone for an updated version of the policies that the First Labour government put in place to boost us out of the Great Depression. The great thing is that, this time, we needn’t wait through six years of dithering from the Right before we get the action we need. In just under four weeks, we can choose whether to go with the Left’s plan or the Right’s inaction.

16 comments on “Working our way forward ”

  1. Greg 1

    National actually cam up with a similar policy a few years back. It was called ‘Think Big’.

    When a government interfers in the free market incentives are distorted, unintended consequences result. I can see a few of these coming from this policy.

  2. Matthew Pilott 2

    Which free market are you talking about, greg? I haven’t spotted one, and I’ve been looking for a long time.

    In all seriousness, there isn’t any such thing as a free market, but there are distortions every which way. Some distortions are for the better, others for the worse. They’re all interrelated and can’t be viewed in isolation, but claiming a new distortion is going to mess up a free market is claiming that a tangible is going to destroy a myth – can’t happen.

    Any negative impacts of these ‘dostortions’ will surely be less than the impact of the market continuing to act as it is now.

  3. Ari 3

    Greg- and when the Government DOESN’T interfere, priorities are distorted, and workers lose big. We need a government that can touch lightly, but still do what it needs to for society. The problem with National is that they think “touch lightly” means “let go completely”. Labour spends on a few things that don’t necessarily need to be spent on, but it does a LOT to avoid waste.

    And as Matthew P points out, we’re going to be even worse off without some positive interference right now. This is actually the sort of time where a government that can really swing the hammer could get away with some good economic initiatives, and I’ve been impressed by Labour’s plan so far. (minus the whole “taxing productivity” rather than “taxing waste” thing)

  4. Felix 4

    You must forgive Greg, he’s just finished his second econ paper and his first Ayn Rand book.

    Now he’s considering a career in trolling.

  5. Ari 5

    Curse Ayn Rand for trying to imply that her ideology was somehow objective rather than subjective.

  6. coge 6

    So Steve. I take it you’re handy with a shovel?

  7. Not bad, i’ve spent some time shovelling a variety of stuff.but most of my factory experience was in a tanning factory, which is smelly work, you cut your hair short when you’re working in that all day, get the stink out easier. there was one process packing wool that was was removed from the skins before washing with a caustic paint. The paint leaves a nasty scar, got some on my overalls on the eg, when i took them off all the leghair came away too smooth as, left a bit of a burn though (which is why it worked on the sheep skins). Anyway, the wool was put through an oven after being washed off to dry it before it came through to the packing machine. Thing was the joker running the oven always tried to get too much wool in at once, it would catch fire and then we’ld have a hell of a time getting the burnt stuff out before getting up and running again. Plus, I was never given any training on the woolbailing machine so I kept fucking that up.

    some asbestos work too, scares the lving hell out of me but i’m a worrier and various general labourer, landscaping (ie digging) work. Something satisfying about seeing a trench or a embankment or whatever and saying – ‘yup, i dug that out, i made that with my two hands’, pay’s crap though, your body breaks down, and people who sit on their arse all day assume they’re better than you.

    [lprent: Urggh I’ve smelt tanning factories when looking at their furnaces. I hope that the nose shut down (eventually). It is enough to make one a vegetarian.]

  8. randal 8

    everybody knows the nats policy of unbridled nepotism…its not what you know its who you know. the sooner winz are instructed to find jobs for people instead of the current bullshit then we might get some where. those buildings are filled with bun eaters and people who knew someone when the nats were last in power and have stubbornly held on to their sinecures ever since.

  9. Joanna 9

    Yay – plan for universal student allowances just anounced! Another iniative to help NZers upskill. And about time too – though sadly too late for me:(

  10. randal 10

    yes well I owe $100,000 and still cant get a job…why is that?

  11. coge 11

    Well I started my working life cutting scrub for a property developer, and it was a good learning experience.

    So back O/T, is Helen Clark attempting to score points by selling us a depression? I thought it would be preferable for every Kiwi if such a situation was
    avoided. As T E Lawrence said “Nothing is written”

    Hands up if you’re in favour of a depression!

  12. Draco T Bastard 12

    Matthew Pilott:

    Which free market are you talking about, greg? I haven’t spotted one, and I’ve been looking for a long time.

    Well put MP, well put 😀

    In all seriousness, there isn’t any such thing as a free market, but there are distortions every which way.

    And the biggest distortion of all is ownership which is why I’ve gone from calling our present system a capitalist free-market to a capitalist’s free-market.

    coge:

    Hands up if you’re in favour of a depression!

    Whatever made you think we have a choice?

  13. Felix 13

    People skills, randal.

  14. Coge, read the post (that’s some really good analysis) – you may learn something. I really don’t understand you far-righties, you either ignore the truth or you’re just so narrow minded and cut off from the rest of the world that I feel sympathy for you (much like the Palin crowd). Govt intervention is what’s needed in times like this – couldn’t be more obvious.

  15. T-Rex 15

    “Curse Ayn Rand for trying to imply that her ideology was somehow objective rather than subjective.”

    Amen to that. “No one should give anything to anyone else without expecting something in return. Unless they, you know, like them… or are part of the same family… or make that the same social group… or in fact better just make it share the same (confusing) values structure or something… umm… BLUDGERS!”

Links to post

Recent Comments

Recent Posts

  • COVID-19 vaccine slated for possible approval next week
    The green light for New Zealand’s first COVID-19 vaccine could be granted in just over a week, Prime Minister Jacinda Ardern said today. “We’re making swift progress towards vaccinating New Zealanders against the virus, but we’re also absolutely committed to ensuring the vaccines are safe and effective,” Jacinda Ardern said. ...
    BeehiveBy beehive.govt.nz
    9 hours ago
  • New ACC Board members announced.
    The Minister for ACC is pleased to announce the appointment of three new members to join the Board of ACC on 1 February 2021. “All three bring diverse skills and experience to provide strong governance oversight to lead the direction of ACC” said Hon Carmel Sepuloni. Bella Takiari-Brame from Hamilton ...
    BeehiveBy beehive.govt.nz
    12 hours ago
  • Economic boost for Southland marae
    The Government is investing $9 million to upgrade a significant community facility in Invercargill, creating economic stimulus and jobs, Infrastructure Minister Grant Robertson and Te Tai Tonga MP Rino Tirikatene have announced.  The grant for Waihōpai Rūnaka Inc to make improvements to Murihiku Marae comes from the $3 billion set ...
    BeehiveBy beehive.govt.nz
    20 hours ago
  • Celebrating the Entry Into Force of the Treaty on the Prohibition of Nuclear Weapons
    [Opening comments, welcome and thank you to Auckland University etc] It is a great pleasure to be here this afternoon to celebrate such an historic occasion - the entry into force of the Treaty on the Prohibition of Nuclear Weapons. This is a moment many feared would never come, but ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Supporting disabled people to stay connected
    The Government is providing $3 million in one-off seed funding to help disabled people around New Zealand stay connected and access support in their communities, Minister for Disability Issues, Carmel Sepuloni announced today. The funding will allow disability service providers to develop digital and community-based solutions over the next two ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Voluntary saliva testing offered to quarantine workers from Monday
    Border workers in quarantine facilities will be offered voluntary daily COVID-19 saliva tests in addition to their regular weekly testing, COVID-19 Response Minister Chris Hipkins said today. This additional option will be rolled out at the Jet Park Quarantine facility in Auckland starting on Monday 25 January, and then to ...
    BeehiveBy beehive.govt.nz
    5 days ago
  • Next steps in firearms buy-back
    The next steps in the Government’s ambitious firearms reform programme to include a three-month buy-back have been announced by Police Minister Poto Williams today.  “The last buy-back and amnesty was unprecedented for New Zealand and was successful in collecting 60,297 firearms, modifying a further 5,630 firearms, and collecting 299,837 prohibited ...
    BeehiveBy beehive.govt.nz
    5 days ago
  • Jobs for Nature projects target iconic ecosystems
    Upscaling work already underway to restore two iconic ecosystems will deliver jobs and a lasting legacy, Conservation Minister Kiri Allan says.  “The Jobs for Nature programme provides $1.25 billion over four years to offer employment opportunities for people whose livelihoods have been impacted by the COVID-19 recession. “Two new projects ...
    BeehiveBy beehive.govt.nz
    5 days ago
  • New Public Housing Plan announced
    The Government has released its Public Housing Plan 2021-2024 which outlines the intention of where 8,000 additional public and transitional housing places announced in Budget 2020, will go. “The Government is committed to continuing its public house build programme at pace and scale. The extra 8,000 homes – 6000 public ...
    BeehiveBy beehive.govt.nz
    6 days ago
  • Prime Minister congratulates President Joe Biden on his inauguration
    Prime Minister Jacinda Ardern has congratulated President Joe Biden on his inauguration as the 46th President of the United States of America. “I look forward to building a close relationship with President Biden and working with him on issues that matter to both our countries,” Jacinda Ardern said. “New Zealand ...
    BeehiveBy beehive.govt.nz
    6 days ago
  • Jobs for Nature funding will create training and employment opportunities
    A major investment to tackle wilding pines in Mt Richmond will create jobs and help protect the area’s unique ecosystems, Biosecurity Minister Damien O’Connor says. The Mt Richmond Forest Park has unique ecosystems developed on mineral-rich geology, including taonga plant species found nowhere else in the country. “These special plant ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Pre-departure testing extended to all passengers to New Zealand
    To further protect New Zealand from COVID-19, the Government is extending pre-departure testing to all passengers to New Zealand except from Australia, Antarctica and most Pacific Islands, COVID-19 Response Minister Chris Hipkins said today. “The change will come into force for all flights arriving in New Zealand after 11:59pm (NZT) on Monday ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Bay Cadets learn skills to protect environment
    Bay Conservation Cadets launched with first intake Supported with $3.5 million grant Part of $1.245b Jobs for Nature programme to accelerate recover from Covid Cadets will learn skills to protect and enhance environment Environment Minister David Parker today welcomed the first intake of cadets at the launch of the Bay ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Cook Islanders to resume travel to New Zealand
    The Prime Minister of New Zealand Jacinda Ardern and the Prime Minister of the Cook Islands Mark Brown have announced passengers from the Cook Islands can resume quarantine-free travel into New Zealand from 21 January, enabling access to essential services such as health. “Following confirmation of the Cook Islands’ COVID ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Supporting communities and landowners to grow employment opportunities
    Jobs for Nature funding is being made available to conservation groups and landowners to employ staff and contractors in a move aimed at boosting local biodiversity-focused projects, Conservation Minister Kiritapu Allan has announced. It is estimated some 400-plus jobs will be created with employment opportunities in ecology, restoration, trapping, ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Border exception for some returning international tertiary students
    The Government has approved an exception class for 1000 international tertiary students, degree level and above, who began their study in New Zealand but were caught offshore when border restrictions began. The exception will allow students to return to New Zealand in stages from April 2021. “Our top priority continues ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Tiwai deal gives time for managed transition
    Today’s deal between Meridian and Rio Tinto for the Tiwai smelter to remain open another four years provides time for a managed transition for Southland. “The deal provides welcome certainty to the Southland community by protecting jobs and incomes as the region plans for the future. The Government is committed ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • New member for APEC Business Advisory Council
    Prime Minister Jacinda Ardern has appointed Anna Curzon to the APEC Business Advisory Council (ABAC). The leader of each APEC economy appoints three private sector representatives to ABAC. ABAC provides advice to leaders annually on business priorities. “ABAC helps ensure that APEC’s work programme is informed by business community perspectives ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Govt’s careful economic management recognised
    The Government’s prudent fiscal management and strong policy programme in the face of the COVID-19 global pandemic have been acknowledged by the credit rating agency Fitch. Fitch has today affirmed New Zealand’s local currency rating at AA+ with a stable outlook and foreign currency rating at AA with a positive ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Additional actions to keep COVID-19 out of NZ
    The Government is putting in place a suite of additional actions to protect New Zealand from COVID-19, including new emerging variants, COVID-19 Response Minister Chris Hipkins said today. “Given the high rates of infection in many countries and evidence of the global spread of more transmissible variants, it’s clear that ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • 19 projects will clean up and protect waterways
    $36 million of Government funding alongside councils and others for 19 projects Investment will clean up and protect waterways and create local jobs Boots on the ground expected in Q2 of 2021 Funding part of the Jobs for Nature policy package A package of 19 projects will help clean up ...
    BeehiveBy beehive.govt.nz
    3 weeks ago
  • New Zealand Government acknowledges 175th anniversary of Battle of Ruapekapeka
    The commemoration of the 175th anniversary of the Battle of Ruapekapeka represents an opportunity for all New Zealanders to reflect on the role these conflicts have had in creating our modern nation, says Associate Minister for Arts, Culture and Heritage Kiri Allan. “The Battle at Te Ruapekapeka Pā, which took ...
    BeehiveBy beehive.govt.nz
    3 weeks ago