Archive

Posts Tagged ‘economy’

2017 – Ongoing jobless tally

21 March 2017 2 comments

.

Unemployment logo

.

Continued from: 2016 – Ongoing jobless tally

By the numbers, for this year;

.

Events

.

January

February

March

April

Otago University: unknown

May

.

Unemployment Statistics* at a Glance

.

.

(*  See caveat below)

.

Caution: Official Unemployment Statistics

.

On 29 June 2016, Statistic NZ announced that it would be changing the manner in which it defined a jobseeker. This   so-called “revision”  would materially affect how unemployment stats were counted and reported;

.

statistics-nz-logo

.

Change: Looking at job advertisements on the internet is correctly classified as not actively seeking work. This change brings the classification in line with international standards and will make international comparability possible.

Improvement: Fewer people will be classified as actively seeking work, therefore the counts of people unemployed will be more accurate.

The statement went on to explain;

Change in key labour market estimates:

  • Decreases in the number of people unemployed and the unemployment rate
  • Changes to the seasonally adjusted unemployment rate range from 0.1 to 0.6 percentage points. In the most recent published quarter (March 2016), the unemployment rate is revised down from 5.7 percent to 5.2 percent
  • Increases in the number of people not in the labour force
  • Decreases in the size of the labour force and the labour force participation rate

When Statistics NZ ‘re-jigged’ its criteria for measuring unemployment in June, unemployment dropped from 5.7% to 5.2% (subsequently revised again down to 5.1%).

All  unemployment data from Statistics NZ should therefore be treated with caution. Unemployment is  likely to be  much higher than Statistics NZ figures indicate.

 

.

.

.

References

Statistics NZ: Household Labour Force Survey – Revisions to labour market estimates

Statistics NZ: Labour Market Statistics – June 2016 quarter

Trading Economics: New Zealand Unemployment Rate  to January 2017

Previous related blogpost

Lies, Damned lies and Statistical Lies

National exploits fudged Statistics NZ unemployment figures

Lies, Damned lies and Statistical Lies – ** UPDATE **

2016 – Ongoing jobless tally and why unemployment statistics will no longer be used

.

.

.

 

2016 – Ongoing jobless tally and why unemployment statistics will no longer be used

14 November 2016 9 comments

.

Unemployment logo

.

Continued from: 2015 – Ongoing jobless tally

So by the numbers, for this year;

.

Events

.

January

February

March

April

May

June

July

August

October

November

.

Statistics

.

This blogger previously reported how Statistics NZ recently implemented a so-called “revision” which would materially affect how unemployment stats were counted and reported;

.

statistics-nz-logo

.

On 29 June 2016, Statistic NZ announced that it would be changing the manner in which it defined a jobseeker;

Change: Looking at job advertisements on the internet is correctly classified as not actively seeking work. This change brings the classification in line with international standards and will make international comparability possible.

Improvement: Fewer people will be classified as actively seeking work, therefore the counts of people unemployed will be more accurate.

The statement went on to explain;

Change in key labour market estimates:

  • Decreases in the number of people unemployed and the unemployment rate
  • Changes to the seasonally adjusted unemployment rate range from 0.1 to 0.6 percentage points. In the most recent published quarter (March 2016), the unemployment rate is revised down from 5.7 percent to 5.2 percent
  • Increases in the number of people not in the labour force
  • Decreases in the size of the labour force and the labour force participation rate

The result of this change? At the stroke of a pen, unemployment fell from 5.7% to 5.2%;

.

nz-unemployment-rate-october-2015-to-october-2016

.

And on-cue, National was quick to capitalise on Statistics NZ’s figure-fudging;

On 2/3 July, TV3’s The Nation, Dear Leader Key told Corin Dann;

“The unemployment rate in New Zealand is now falling pretty dramatically.”

On 8 August, Key was quoted on Interest.co.nz;

“On the other side, we need these people in an environment where unemployment is 5.2% and where growth is still very, very strong. You’ve just got to be careful when you play around with these things that you don’t hamstring certain industries that need these workers.”

On 12 August, in Parliament, English also gleefully congratulated himself on the “fall” in unemployment;

“The Reserve Bank is forecasting an increase of about 1 percent more growth in the economy over the next 3 years, compared with what it thought 3 months ago. It is forecasting that unemployment is going to continue falling from 5.2 percent this year to 4.5 percent by 2019 and that job numbers will increase by more than 2 percent on average over the next 2 years. A significant component of that, of course, will be the construction boom, where thousands of houses will be built over the next 2 or 3 years. These forecasts are in line with Treasury’s forecast for the labour market and show an economy that is delivering more jobs, lower unemployment, and real increases in incomes when in many developed countries that is not happening.”

The latest Statistics NZ (soon to be re-branded Ministry of Truth) unemployment figures showed another “fall”. The unemployment rate for the September 2016 Quarter is now purportedly 4.9%;

.

unemployment-sept-2016-household-labourforce-survey-statistics-nz

.

Can that figure – 4.9% – be trusted?

When Statistics NZ “re-jigged” its criteria for measuring unemployment in June, unemployment dropped from 5.7% to 5.2% (subsequently revised again to 5.1%);

.

unemployment-june-2016-household-labourforce-survey-statistics-nz

.

Predictably, National were quick to once again exploit the September statistics, as their Twitter-feed showed on 2 November;

.

national-party-twitter-2-nov-2016-unemployment

.

And three days later;

.

national-party-twitter-5-nov-2016-unemployment

.

It’s all nonsense, of course – made worse by Statistics NZ’s other dodgy criteria used when considering their definition what constitutes being “employed”;

Employed: people in the working-age population who, during the reference week, did one of the following:

  • worked for one hour or more for pay or profit in the context of an employee/employer relationship or self-employment
  • worked without pay for one hour or more in work which contributed directly to the operation of a farm, business, or professional practice owned or operated by a relative

Statistics NZ’s mis-representation of our “low unemployment” environment has gone largely unnoticed and unchallenged. No one in the mainstream media has picked up on the questionable data;

This meant the size of the labour force rose 33,000 and unemployment fell by just 3,000 to 128,000. The unemployment rate fell to 4.9% from a revised 5.0% in the June quarter. This was the lowest unemployment rate since the December quarter of 2008. Unemployment has fallen by 7,000 over the last year and is up 1,000 from two years ago.Interest.co.nz

Unemployment has fallen below 5 percent for the first time in nearly eight years thanks to the growing economy, but it is still not translating into booming wages. Official figures show the unemployment rate declined to 4.9 percent in the three months to September, or 128,000 people, the lowest rate since December 2008.Radio NZ

According to Statistics New Zealand, the unemployment rate fell to 4.9% in the September 2016 quarter. This is the lowest unemployment rate since the December 2008 quarter. There were 3,000 fewer people unemployed than in the June 2016 quarter and 10,000 fewer over the year.Maori TV

The unemployment rate has fallen to 4.9 percent for the September 2016 quarter, according to new figures from Statistics NZ. That’s the lowest it’s been since December 2008. – TV3 News

New Zealand’s unemployment rate fell below 5 percent for the first time since December 2008 as employers took on more staff than expected, although that didn’t spur wages to rise at a faster pace. The kiwi dollar rose on the figures. The unemployment rate fell to 4.9 percent in the three months ended Sept. 30 from a revised 5 percent rate in June, Statistics New Zealand said.Sharechat

New Zealand has recorded its best unemployment rate in almost eight years with third quarter figures falling to a better than expected 4.9 per cent. The jobless rate declined from a revised 5.0 per cent in the June quarter, according to Stats NZ, taking it to its lowest point since December 2008. – NZCity/NZ News

New Zealand’s unemployment rate fell below 5 per cent for the first time since December 2008 as employers took on more staff than expected, although that didn’t spur wages to rise at a faster pace. The kiwi dollar rose on the figures.

The unemployment rate fell to 4.9 per cent in the three months ended September 30 from a revised 5 per cent rate in June, Statistics New Zealand said.NZ Herald

New Zealand’s unemployment rate fell more than expected in the third quarter to drop to 4.9 per cent – the lowest rate since last 2008. The jobless rate declined from a revised 5.0 per cent in the June quarter, according to Stats NZ taking it to its lowest point since the December quarter nearly eight years ago. There were 3,000 fewer people unemployed than in the previous quarter and 10,000 fewer over the year. – TVNZ News

Of course there were “3,000 fewer people unemployed than in the previous quarter and 10,000 fewer over the year“! Ten thousand unemployed people vanished from the data, at the click of a mouse, as Statistics NZ worked their “magic”.

Statistics NZ could potentially make unemployment vanish entirely, overnight, by changing the unemployment criteria to people with only two hearts and scaly blue skin.

Only Hamish Rutherford, at Fairfax media, pointed out the questionable value of Statistics NZ’s data;

Unemployment has fallen to the lowest level in almost eight years, as the economy creates more than 10,000 new jobs a month. Official figures show the unemployment rate dropped to 4.9 per cent in the the September quarter, the first time it has fallen below 5 per cent since December 2008.

Earlier this year Statistics New Zealand revised the way it conducts the quarterly household labour force survey (HLFS), in a bid to bring the survey more in line with international standards. However the changes mean Statistics New Zealand cannot make confident comparisons with all of the figures from previous surveys.

But even in Rutherford’s article, the all-important point of dodgy stats was lost amongst the ‘rah-rah‘ of the mythical drop in unemployment.

The Otago Daily Times made an even less impressive, passing, reference to Statistics NZ’s fudged figures;

Unemployment in New Zealand is at its lowest level since 2008 but there will be lingering concerns about the lack of wage growth and the impact this will have on the inflation outlook.

Statistics New Zealand has changed some of its survey data to measure unemployment and employment and those changes are still bedding in.Otago Daily Times

Government Statistician, Liz MacPherson, has rejected any suggestion of political partisanship in the way unemployment data is now being presented.

.

grant-robertson-liz-macpherson

.

She was defensive in the face of criticism from Labour’s Grant Robertson and on  16 August, Ms MacPherson stated;

Like my predecessors I am fiercely protective of the statutory independence of the role of the Government Statistician and strongly refute any assertions made by Grant Robertson that there has been political interference in the production of official statistics.

This independence means that I maintain the right to make changes necessary to ensure the relevance and quality of our official statistics. Changes to the Household Labour Force Survey have been made to ensure that we produce the best possible measure of the current state of the labour market and to maintain consistency with international best practice.

Far from ignoring technological change during the past 30 years, such as the advent of the internet, we are incorporating these changes so as to be technology neutral.

Within the survey questions, to be regarded as actively looking for a job you must do more than simply look at job advertisements, whether it is online or in a newspaper.

It is not uncommon for revisions to be made to official statistics as a result of more accurate information becoming available or changes to international standards and frameworks.

In addition we are introducing new measures – for example underutilisation – enabling a deeper, richer understanding of New Zealand’s labour market.

When this does occur it is standard practice for Statistics NZ to communicate reasons for revisions and anticipated changes well in advance of their official release, as we did on 29 June 2016. […]

Statistics NZ has a legislative obligation to release objective official statistics. We will continue to do this at all times.

One of many ironies not lost on this blogger is that other government departments extoll the virtues of jobseeking on-line. As CareersNZ and WINZ state the blindingly-obvious, “most job vacancies are listed online”;

Careersnz;

.

careersnz-use-the-internet

.

WINZ;

.

work-and-income-where-to-look

.

Ms MacPherson’s assertion that Statistics NZ has changed it’s definitions of unemployment and jobseeking  “to maintain consistency with international best practice” is not an acceptable explanation.

If “international best practice” does not recognise on-line jobseeking as constituting a definition of unemployment – then that in itself is worrying and suggests that global unemployment may be much, much higher than current international statistics portray.

As a consequence of Ms MacPherson’s decision to exclude on-line jobseekers from official stats, this blogger concludes that official unemployment data is  severely flawed and unrepresentative of our real unemployment numbers.

In simple terms; the numbers are a sham.

Unemployment statistics will no longer be presented in on-going up-dates of the Jobless Tally.

.

.

This Statement has not been endorsed by MiniTruth (formerly StatsNZ)

.

ministry-of-truth-logo

.

.

.

Addendum1: Definition of Employment

Employed: people in the working-age population who, during the reference week, did one of the following:

  • worked for one hour or more for pay or profit in the context of an employee/employer relationship or self-employment

  • worked without pay for one hour or more in work which contributed directly to the operation of a farm, business, or professional practice owned or operated by a relative

  • had a job but were not at work due to: own illness or injury, personal or family responsibilities, bad weather or mechanical breakdown, direct involvement in an industrial dispute, or leave or holiday.

Source

.

References

Statistics NZ: Household Labour Force Survey – Revisions to labour market estimates

Scoop media: On The Nation – Patrick Gower interviews John Key

Interest.co.nz: Key deflects calls for migration review; says migration needed with 5.2% unemployment

Scoop media: Parliament – Questions & Answers – 11 August 2016

Statistics NZ: Labour Market Statistics – September 2016 quarter

Statistics NZ: Labour Market Statistics – June 2016 quarter

Twitter: National (2 Nov)

Twitter: National (5 Nov)

Interest.co.nz: Jobs grew 35,000 or 1.4% in Sept quarter, but unemployment fell just 3,000 and jobless rate falls to 4.9%

Radio NZ: Unemployment drops to lowest level since 2008

Maori TV: Work force grows despite youth unemployment

TV3 News: Unemployment drops to lowest rate since 2008

Sharechat: NZ jobless rate falls below 5% for first time since 2008, wage inflation muted

NZCity/NZ News: Jobless rate falls to near eight-year low

NZ Herald: NZ jobless rate falls below 5 per cent for first time since 2008, wage inflation muted

TVNZ News: Unemployment rate falls to near eight-year low

Fairfax media: Unemployment drops to lowest level since 2008 on booming job creation

Otago Daily Times: Unemployment lowest in eight years

Radio NZ: Statistician denies political interference over job seeker figures

Statistics NZ: Government Statistician responds to Grant Robertson

Careersnz: Job hunting tips

Work and Income: Where to look

Additional

TVNZ: Q+A – Interview with John Key

Previous related blogpost

Lies, Damned lies and Statistical Lies

National exploits fudged Statistics NZ unemployment figures

Lies, Damned lies and Statistical Lies – ** UPDATE **

.

.

65lzh35c

.

.

This blogpost was first published on The Daily Blog on 9 November 2016.

.

= fs =

2015 – Ongoing jobless tally

7 November 2015 5 comments

.

Unemployment logo

.

Continued from: 2014 – Ongoing jobless tally

So by the numbers, for this year;

.

Events

.

January

February

March

April

May

June

July

August

September

October

November

 .

Statistics

.

unemployment quarter ending September 2015 - new zealand

.

Source

*NB: actual rate for Dec 2014/Jan 2015 Quarter should be 5.7%, not 5.8% as depicted in above column. See Stats NZ data here.
.

June 2015 quarter – Employment & Unemployment

.

statistic nz - june 2015 quarter - unemployment

.

Commentary from Statistics New Zealand:

The unemployment rate increased to 5.9 percent in the June 2015 quarter (up from 5.8 percent), Statistics New Zealand said today. At the same time, there were 7,000 more people employed over the quarter (up 0.3 percent).

“Even though employment grew over the quarter, population growth was greater, which resulted in a lower overall employment rate for New Zealand,” labour market and household statistics manager Diane Ramsay said.

“Despite lower quarterly growth, this is still the 11th consecutive quarter of employment growth, making it the second-longest period of growth since the period between 1992 and 1996,” Ms Ramsay said.

Over the year to June 2015, employment growth was still fairly strong (at 3 percent) with 69,000 more people employed. The manufacturing industry showed the strongest annual employment growth.

“This is the first time since the December 2013 quarter that the construction industry has not been the largest contributor to annual growth in employment,” Ms Ramsay said.

The vast majority of growth was in Auckland (29,600 people), where the annual employment growth was driven by retail trade and accommodation, followed by construction. Bay of Plenty had the second-highest employment growth, with 11,000 more people being employed over the year.

Annual wage inflation, as measured by the labour cost index, was 1.6 percent, compared with annual consumer price inflation of 0.3 percent.

Source

September 2015 quarter – Employment & Unemployment

.

statistic nz - september 2015 quarter - unemployment

.

Labour market at a glance

  • Number employed fell for the first time in three years.
  • Unemployment rate increased to 6.0 percent.
  • Labour force participation rate falls further from record high in March 2015 quarter.
  • Annual wage inflation remained at 1.6 percent.

Source

Additional analysis;

  1. The Employment Rate fell 0.5%
  2. According to the HLFS, Total actual weekly hours worked increased over the last Quarter by  +0.4, and  Annually, by +1.5

Which means few people are working longer hours to sustain economic growth.

.

Other Economic Info

.

ANZ Economic Outlook

The New Zealand economy has clearly entered a more challenging period. Growth averaged just a 0.3% quarterly pace over the first six months of the year vis-à-vis a 0.9% quarterly pace over the second half of 2014.

Annual growth slowed to 2.4% in Q2 (the slowest since December 2013) and timelier indicators suggest a pace tracking perhaps a tad below 2% at present; not dire – nor a downturn – but certainly sluggish and consistent with deceleration.

In per-capita terms, activity is treading water and slowing labour demand (but still-strong labour supply growth) has seen the unemployment rate tick up to close to 6% Consumer and business confidence have fallen, and where the expansion was previously relatively broad-based, a more divergent regional performance is now evident.

Full Report here.

CTU Economic Bulletin 173 – Oct 2015

Despite economic growth in production per hour worked which peaked at 4.7 percent in dollar terms in the year to June 2014, wage rises have been subdued. Even the Reserve Bank is commenting on it. What are some of the reasons for wage rises being low?

We have a poorly performing economy. Most of the recent growth has been because more people have been brought into the labour force or people are working longer hours, rather than because people are producing more in each hour they work. Over the supposed “rock star” period of June 2013 to June 2015, the economy’s production per hour worked increased only 0.1 percent. Yet companies’ profit rates are rising quickly – so wages could.

Even the Minister of Finance concedes that current strong net immigration is holding down wages. It could be much better controlled so that, while taking humanitarian concerns into account, it focuses on skills that New Zealand residents genuinely do not have or couldn’t be trained to do, and in numbers that the country can absorb.

The Government has been open about suppressing pay increases for people employed in the state sector. Its tight funding of contractors such as in aged care also holds down wages. By doing this, the Government is reducing pressure on private sector employers for pay increases.

Full Report here.

Building Consents – Statistics NZ

Fonterra

  • 24 September: Fonterra Co-operative Group lifted its forecast total available for payout for the 2015/16 season to $5.00 − $5.10 kgMS due to an increase in the forecast Farmgate Milk Price of 75 cents
  • 14 October: Standard and Poor’s  downgraded Fonterra’s  credit rating from A to A-

Westpac Economic Overview – November 2015

Brewing El Niño conditions are likely to cause dry weather and knock the economy. And there will be further challenges from a global economic slowdown, the levelling off of the Canterbury rebuild, and the possibility of a housing market slowdown in Auckland.

Full Report here.

.

.

.

Addendum1: Under-employment

The  under-employment stats;

People who are underemployed are those who work part-time, would prefer to work more hours, and are available to do so. In unadjusted terms, the number of underemployed grew by 12 percent over the year. While the number of part-time workers increased over the year, the ratio of people underemployed to employed part-time also rose – from 17.1 percent in June 2013 to 18.7 percent this quarter.

Official under-employment: up

Definitions

Jobless: people who are either officially unemployed, available but not seeking work, or actively seeking but not available for work. The ‘available but not seeking work’ category is made up of the ‘seeking through newspaper only’, ‘discouraged’, and ‘other’ categories.

Under-employment: employed people who work part time (ie usually work less than 30 hours in all jobs) and are willing and available to work more hours than they usually do.

Employed: people in the working-age population who, during the reference week, did one of the following:

  • worked for one hour or more for pay or profit in the context of an employee/employer relationship or self-employment 

  • worked without pay for one hour or more in work which contributed directly to the operation of a farm, business, or professional practice owned or operated by a relative 

  • had a job but were not at work due to: own illness or injury, personal or family responsibilities, bad weather or mechanical breakdown, direct involvement in an industrial dispute, or leave or holiday.

Source

Addendum2: Other Sources

Statistics NZ:  Household Labour Force Survey

.

.

[To  be periodically up-dated]

.

.

= fs =

“The Nation” reveals gobsmacking incompetence by Ministers English and Lotu-Iiga

.

 

the nation_logo

.

If there is a crystal-clear example why a functioning democracy must have  vibrant, critical current affairs programmes on free-to-air televesion, then  TV3’s ‘The Nation‘ on the morning of 2 May was top-of-the-pile. Without doubt, this land-mark episode was a powerful insight into the general competence (or lack, thereof) of two of the government’s senior ministers; Finance Minister Bill English and Corrections Minister, Peseta Sam Lotu-Iiga.

.

 

Corrections Minister, Peseta Sam Lotu-Iiga -- TV3's 'The Nation' host & interviewer, Lisa Owen -- Finance Minister Bill English

(L-R) Corrections Minister, Peseta Sam Lotu-Iiga — TV3’s ‘The Nation’ host & interviewer, Lisa Owen — Finance Minister Bill English

.

The highly talented host-interviewer, Lisa Owen, interviewed both, drilling deep down, and extracting information; admissions; and more critically – waving aside pathetic attempts to fudge legitimate answers. The resulting exchanges did not make for a ‘happy day’ for either government minister, revealing one totally out of his depth, and the other unwilling to admit that his stewardship of the country’s economy has been an abject failure.

1. Finance Minister Bill English

In  the opening months of World War 2, there was a period from September 1939 to May 1940, known as “the Phoney War“. Both the Allied Nations (led by Great Britain) and the expanding Third Reich were technically at war, but major military operations did not commence until Nazi Germany invaded Belgium, the Netherlands and Luxembourg on 10 May 1940.

In New Zealand, we might have referred to those first eight months as a “Clayton’s War” – the war you’re having when you’re not really having a war. (For those old enough to remember, “Clayton’s” refers to a non-alcoholic beverage marketed in New Zealand in the 1970s and 1980s. It was heavily promoted with the catch-phrase, “the drink you have when you’re not having a drink”. The marketing campaign was an advertisers dream-come-true, catching the public’s attention. The product, unfortunately for the manufacturers, was less successful. )

The same could be said of New Zealand’s so-called “rock star economy” and “recovery”.

By nearly all accounts, our recent growth has been predicated on three factors;

  1. The Auckland housing boom/bubble
  2. The Christchurch Earthquakes re-build
  3. Exports – particularly dairy – to China

The first is reliant purely on borrowing from off-shore to fund speculative activity. When that bubble finally bursts, we will be left with a multi-billion debt; thousands of bankruptcies; and an economy in tatters as capital flight takes place.

The second is a short-term growth-spurt which owes it’s origins to two natural disasters – literally disaster capitalism.

The third is built upon China’s unsustainable growth, and has recently fallen away, returning Australia as our number one trading partner, as the value of dairy commodities plummet.

The first two are unsustainable. The last is reliant on a major trading partner’s economic well-being. As with New Zealand’s lamb and butter exports to the UK prior to it joining the EEC in January 1973, we have placed our export “eggs” in one, very big, very fragile, basket.

Against this backdrop of The Phoney Economic Recovery,  the following financial facts should give us cause for concern;

  1. The on-going cost of the 2009 and 2010 tax-cuts, estimated to be around $3.8 billion per year, and up to $4.26 billion last year
  2. Plummeting dairy prices resulting in lower payout to farmers and taking $7 billion out of the economy
  3. Reduced tax-take by the government is around $4.5 billion

In view of unsustainable tax-cuts in 2009 and 2010; the economy taking a $7 billion “hit”; and lower than anticipated tax revenue by this government, it was hardly unexpected that Bill English’s promises of a surplus this year have collapsed.

Lisa Owen challenged the hapless Finance Minister in a sixteen minute long interview. In this excerpt, English is evasive when asked questions about the governments surplus;

.

.

Full interview here

Throughout the interview, English was upbeat and insisted that a surplus was just around the corner;

“Well, okay, it would be nice if the number got there this year; it’ll just take a bit longer. What’s important here is the trajectory. So Government is closing its deficits; it’s getting to surplus. We’ll soon be in a position to start paying off debt. Our expenditure’s under control; the revenue’s a  bit harder. You’ve just seen in the last day or two, dairy prices are going down again; that has an impact. So we’re sufficiently confident in the direction that we’re not going to cut services or cut entitlements to try and chase a larger surplus number.”

Lisa Owen asked the Minister: “Okay. Well, before on The Nation, you said that the Government would not make any cuts to reach surplus. Is that still your plan?

English replied;  “That’s right. We’re not going to make any specific extra decisions now just because our tax revenue’s a percentage point – 1% down.”

Then, incredibly, English maintained that tax-cuts were still on National’s agenda;

Owen: “I just want to look at some of the big promises, like tax cuts. They were meant to come from that $500 million that you now don’t have. But is it fair to say that they’re not really likely now?

English: “As we indicated last year, we wouldn’t be able to contemplate that until 2017 for some of the reasons that you’ve outlined. So at the moment, the ability to deliver some kind of moderate tax cut hasn’t changed and we would have the next couple of budgets to work out how that would happen.”

Owen: “Hang on, Minister. It has changed, hasn’t it, Minister, because you’ve just identified the fact you’ve got less money, so it must have changed.

English: “Well, we’ve shifted the money from next year to the year after; that’s technically what’s actually happened. We’ll deal with that as time goes on, but the point I’m making is our finances are-“

Owen: “Is it likely that your tax cuts then will be delayed as well? Maybe 2018, not 2017?

English: “No, we’re not suggesting that. We said at the end of last year that they would be possible in 2017. We’ve made allowance for that.”

It beggars belief that we have a Finance Minister willing to entertain the notion of tax cuts at a time when dairy prices are dropping; tax revenue is falling; and public debt has ballooned to $59.9 billion  and rising by $27 million per day, every day.

.

public debt - NZ Treasury

.

Never mind tax cuts – when do we, as a nation, start to repay this debt mountain?!

The reality is that if National proceeds with promises of tax cuts in 2017 (which is an election year – bribe anyone?) New Zealand will have to  borrow from offshore to make up the shortfall in revenue. Our debt mountain will continue to grow.

English himself admitted that the deficit this year will be in the order of around half a billion dollars;

“…It is what it is, and that is for the 14/15 year, we budgeted $370 million surplus. It looks like it will be a $500 or $600 million deficit, and the surplus will be the next year. So we’re on track.”

Somewhere in National’s gross mis-management of the economy, they have gone from a $370 million surplus to a potential $600 million deficit – just shy of $1 billion lost.

How does a government make such a colossal mistake? “It is what it is” is hardly an explanation.

Throughout the interview, English kept repeating the mantra of a future surplus;

“The direction is pretty clear. Our surpluses will come and they will grow, and we’ll be able to pay off debt.”

“The target remains getting to surplus, and in the Budget, you’ll see the details of where the Government is up to with it. But I’m indicating that despite falling a bit short in 14/15, we’re on track for surplus.”

Though English insisted that there would be no cuts to spending, he did use coded language for possible reductions to welfare spending;

Owen: “Is it likely that your tax cuts then will be delayed as well? Maybe 2018, not 2017?”

English: “No, we’re not suggesting that. We said at the end of last year that they would be possible in 2017. We’ve made allowance for that.”

Owen: “Okay. So what about measures to curb poverty, then? Will they have to be delayed? Because the Prime Minister identified them as something of a priority. Is that going to be delayed?”

English: “Well, we’ve been working on these issues for a while, particularly focused on communities and families with persistent deprivation and caught in a cycle of dependence. And so you could expect to see us continue with that sort of programme through this Budget…

… Or sickness and invalids beneficiaries with more support for their health issues and more support for employment, could actually get out of dependency, off welfare and remain in work.

Because as we all know, invalids don’t actually have real disabilities or debilitating injuries or diseases – they are simply on a “cycle of dependence”.

When in trouble, blame someone else. In this case, invalids.

Owen then moved on to the issue of Auckland’s growing housing crisis and nailed English on this government’s spectacular inability to manage and address that city’s housing shortage. English simply blamed the Auckland Council;

“Well, the migration numbers have stayed high, bearing in mind about half of migrants appear to go to Auckland; the other half go to the rest of the country. But there’s pretty clear signals that Auckland City Council need to get on with the job. They are the ultimate decision-maker around the infrastructure and around the consenting for new houses. We’re giving them the toolkit to enable them to do it faster, but there’s clearly a lot more to be done, and we’ll keep looking for more tools to help the Auckland City Council to do the job they need to do.”

When still in trouble, keep blaming someone else. In this case, the Auckland Council.

Thus far, National’s grand strategy to cope with Auckland’s housing crisis is to shift ownership of 2,800 properties from Housing NZ to the Tamaki Redevelopment Company – as if shifting properties around on a giant ‘Monopoly’ board will somehow solve the problem?

Owen pointed out to English that in transferring 2,800 houses to the Tamaki Redevelopment Company, that he was breaking a previous committment;

Owen: “Now, hang on a minute. There you offloaded 2800 houses, and I thought you had a cap on getting rid of state houses of about 2000. So is that cap gone now?

English: “Well, no. What we’ve said is Housing New Zealand will own at least 60,000 houses, and that certainly hasn’t changed. Government remains the owner—”

Owen: “No, you said a cap, Minister. So has the cap gone now with this 2800 houses? The cap’s blown?

English: “No. Government will remain the owner of the Tamaki houses. We’ve simply put them in a different government company, which has been set up specifically to regenerate that community, because it’s a very particular skillset.”

English had all but surrendered to Owen’s persistent questioning by outright admitting his government’s failure to address Auckland’s mounting housing crisis;

“That’s right. We’re not meeting demand. I certainly agree with that. Whether it gets worse before it gets better, forecasters can argue over that. We’ve got plenty to do to meet the demand that’s been there for a while. And as I said, the Government’s supporting Auckland City, trying to get them a better toolkit and making our own contribution through redeveloping our own land in Auckland.”

For English, this interview was possibly the worst in his political career. He had to explain why his commitment to returning to surplus this year was now in tatters, and why his government’s housing plan for Auckland consisted of moving state housing from owner to owner, without adding significantly to the overall stock.

The only reason why National’s reputation for being a “sound prudent fiscal manager” survives intact is because New Zealanders are not paying attention.

But worse was to come when Corrections Minister, Peseta Sam Lotu-Iiga took the chair and was also interviewed by Lisa Owen. What followed was a debacle of Hekia Parata proportions.

2. Corrections Minister, Peseta Sam Lotu-Iiga

With on-going  privatisation of State services dressed up as so-called “Public-Private Partnerships” (PPPs), Lisa Owen put several questions to the Corrections Minister on the role of UK company, Serco, which has been contracted to run the new prison at Wiri.

His responses were jaw-droppingly incompetant. The man was totally out of his depth, as these excerpts show;

Owen: “So are they getting paid and how much?”

Lotu-Iiga: “Well, the contract is between Serco and PlaceMakers, and I’m not privy to those sums, but—”

 

Owen: “So you don’t know how much the business is going to make—”

Lotu-Iiga: “I don’t have the figures on me, but we could ask Serco what the contract’s for.”

 

Owen: “Out of the inmates building framing and having these contracts. So who makes the profit out of the contract?”

Lotu-Iiga: “ Well, we don’t know whether there’s profits being made, but what PlaceMakers—”

 

Owen: “Why don’t you know that, Minister? Because this is under your watch.”

Lotu-Iiga: “Well, I spoke to the managing director of PlaceMakers yesterday, and they said that they will pay a standard contract for fees to Serco. I don’t know what that amount is…”

 

Owen: “Right, so in terms of rehabilitation, but you don’t know who’s making a profit or if one’s being made?

Lotu-Iiga: ” Hang on. They’ve got a commercial transaction between Serco and PlaceMakers. I don’t know what that figure is, but we can work it out.”

 

Owen: “Even with that $30 million? Even with that $30 million profit that they’re making per annum?”

Lotu-Iiga: “I don’t think they’re making a $30 million profit.”

 

Owen: “You don’t think it’ll make $30 million, and what you’re saying is it’s still saving money even though this company is making a profit out of it? It’s still saving us money even though they’re taking that profit.”

Lotu-Iiga: “It’s… Well, it’s saving the taxpayer money. It is saving the taxpayer money.”

 

And then this astounding admission from the Minister that must have had every viewer that Saturday morning choking on his/her milo/tea/coffee, and the Prime Minister speed-dialling his Chief-of-Staff;

Owen: “Who employs those monitors? Who employs the monitor in the prison? “

Lotu-Iiga: “There will be— If I can just finish, there will be an ombudsman. They will be subject to complaints—”

Owen: “So the monitor in the prison, Minister, just to be clear, the monitor in the prison; who employs the monitor?
Lotu-Iiga: “My understand is that the monitors are based in the prisons, but they report to the Department of Corrections.”

Owen: “Who employs the monitor and pays their wages, Minister?

Lotu-Iiga: “Well, I don’t have those facts on me, but they do report—”

Owen: “Well, I do. The person who employs the monitor— the person who employs the monitor is the company, Serco. They employ the monitor, and pay their wages.”

Lotu-Iiga’s spectacular ignorance of his own portfolio has almost certainly destroyed his political career. He will also have disappointed his political strategist and mentor, controversial far right-winger,  Simon Lusk.

Lusk was employed by Lotu-Iiga during the 2008 election campaign for the Maungakiekie Electorate Campaign. In return, as well as being paid by Lotu-Iiga, in his Maiden Speech in Parliament the newly-elected MP openly acknowledged Lusk’s involvement in his election to Parliament. In this Youtube video, Lotu-Iiga mentions Lusk at 3:56. Note who is sitting behind Lotu-Iiga – Aaron Gilmore, another Lusk protégé.

Bad luck, Simon.

It is not often that I feel sympathy for a Minister of a National Government. When I do, it is the pity I feel for a doomed man whose career has come to a grinding, crushing halt.

At the next Cabinet re-shuffle, Lotu-Iiga will be joining Kate Wilkinson, Phil Heatley, and Aaron Gilmore in political oblivion.

Dead Minister Walking.

3. Political Panel

Mike Williams, Bernard Hickey & Jamie Whyte comment on interviews with Bill English and Peseta Sam Lotu-Iiga. Note ex-ACT leader, Jamie Whyte’s cringe-worthy apologistic comments on behalf of English, and why he thinks government debt does not matter.

4. The Programme

All in all, this was one of the most outstanding episodes of “The Nation” with excellent interviews; topical subject matter; and insightful analysis by (most) of the panellists. Lisa Owen joins Kim Hill as two of this country’s most formidable interviewers.

This is the sort of programming Mediaworks should be broadcasting at Prime Time. My “money” would be on people desperate for informative television – who are sick to their stomachs on a sickly diet of “reality tv” – to flock to such a viewer-friendly scheduling.

Good, quality, current affairs should never be tucked away as some sort of “guilty pleasure”.

.


 

References

Wikipedia: The Phoney War

Wikipedia: Claytons

Rabobank: Country Report New Zealand

Farming Show: Australia becomes top trading partner once again

Radio NZ: Price drop another blow for dairy farmers

NZ Herald: Brian GaynorPlans for jump-start reveal differing styles

Scoop media:  Govt’s 2010 tax cuts costing $2 billion and counting

Fairfax media: Dairy prices fall at Fonterra GlobalDairyTrade auction

Beehive: Fact sheet – Personal tax cuts

Radio NZ: English concedes surplus target unlikely

Youtube: The Nation – Can National promise a surplus by 2016?

TV3: The Nation – Interview –  Finance Minister Bill English

Treasury: Debt

Fairfax media: Public debt climbs by $27m a day

Fairfax media: Government offloads 2800 state houses to Auckland development company

TV3: The Nation – Interview – Corrections Minister Sam Lotu-Iiga

Wikipedia: Serco

Simon Lusk: Clients

Fairfax media: The rapid rise of a well-educated man

Youtube: Peseta Sam Lotu-Iiga MP – Maiden Speech

Previous related blogposts

Tax cuts and jobs – how are they working out so far, my fellow New Zealanders?

Did National knowingly commit economic sabotage post-2008?

Budget 2014 – Why we will soon owe $70 billion under this government

The Mendacities of Mr Key #3: tax cuts

When the Rich Whinge about paying tax

Two Tax Strikes against Dunne?

“It’s one of those things we’d love to do if we had the cash”

National’s Ohariu candidate admits contact by Simon Lusk

Power Struggle in the National Party?!

Other blogs

Unframed: John Key has no credibility on debt and no Plan B

Acknowledgement

Tim Watkin, Producer of “The Nation“, for interview transcripts; link to Youtube excerpt featuring Bill English; and valuable insights.


 

.

debt-mountain-cartoon.

This blogpost was first published on The Daily Blog on 3 May 2015.

.

.

= fs =

Radio NZ Debate: Bill English vs David Parker

.

20-september

.

Check out this excellent debate between National’s Bill English and Labour’s David Parker. Well worth listening to;

.

Election Issues debate - Economy - bill english - david parker - radio nz - housing - 2014 election - debate

.

Alternative link: Listen to Bill English and David Parker debate the economy on Nine to Noon

.

 


 

.

john key is scared of your vote

Above image acknowledgment: Francis Owen/Lurch Left Memes

.

.

= fs =

National, The Economy, and coming Speed Wobbles – March Update

23 March 2014 2 comments

.

The Nationalmobile

.

On 1 March, in a previous blogpost, I raised the following issues;

1. The Reserve Bank has indicated that  it will begin to increase the OCR (Official Cash Rate) this year. Most economists  are expecting the OCR to rise a quarter of a percentage point on March 13.

Confirmed. True to it’s word and as clearly signalled, on 13 March the Reserve Bank  raised the Official Cash Rate (OCR) from 2.5% to 2.75%.

2. An increase in the OCR will inevitably flow through to mortgage rates, increasing repayments.  As mortgaged home owners pay more in repayments, this will impact on discretionary spending; reducing consumer activity, and flow through to lower business turn-over.

Confirmed. The ANZ Bank  has already  announced it will increase its floating and flexible home loan rates .25 percentage points to 5.99% on 17 March. Expect other banks to follow suit. Other bank rate rises will be signalled here.

This will inevitably dampen consumer spending and reduce economic activity.

3. An increase in the OCR will inevitably also mean a higher dollar, as currency speculators rush to buy the Kiwi. Whilst this may be good for importers – it is not so good for exporters.

Confirmed, as the NZ Herald reported;

The New Zealand dollar jumped to a five-month high after the Reserve Bank raised the benchmark interest rate as expected and signalled further hikes are on the way.

The kiwi rose as high as 85.26 US cents, from 84.73 cents immediately before the Reserve Bank’s 9am statement. The local currency recently traded at 85.20 cents.”

And in another Herald story,

By raising rates, the Reserve Bank aims to tame both inflationary pressures and house price increases but also runs the risk of elevating an exchange rate it already considers too high, making exports less competitive.”

For a nation that bases it’s economy on exporting, a rising Kiwi Dollar will bring inevitable problems of higher debt and greater trade imbalance. It means we are not paying our way in the world and inevitably there will be a “Crunch Day” of tragi-Greek proportions.

On that day, the public will blame politicians.

Politicians will blame each other.

And the Left will shake it’s head in exasperation – it’s admonitions that this was all predictable as a natural consequence of unconstrained consumerism coupled with rampant capitalism –  lost in the shrill clamour of pointless blame-gaming.

As BERL economist, Ganesh Nana, said on The Nation on 15 March, we’ve been down this road before and not learned a single lesson  from these experiences.

4. As economic activity and consumer demand falls, expect businesses not to hire more staff and for fresh  redundancies to add to the unemployment rate. Unemployment will either stay steady later this year, or even increase.

On-going…

5. As interest rates rise, in tandem with the Reserve Bank’s policy on restricting low-home deposits, expect home ownership to fall even further. This will increase demand for rentals, which, in turn will push up rents. Higher rents will also dampen consumer spending.

Confirmed. The Reserve Bank  has reported that there has “been some moderation in the housing market. Restrictions on high loan-to-value ratio mortgage lending are starting to ease pressure, and rising interest rates will have a further moderating influence...”

Expect home ownership levels to fall even further as interest rates rise further; rents increase (thereby making it harder for low income families to save); and mortgagee sales to rise as well.

Interestingly, when in Opposition, National Party leader, John Key lambasted the Labour Government for a high OCR leading to high interest rates. In a desk-thumping speech, on 29 January 2008, he railed,

Why, after eight years of Labour, are we paying the second-highest interest rates in the developed world?

[…]

Why can’t our hardworking kids afford to buy their own house?…

[…]

Mortgage rates are rocketing upwards…

[…]

We know Kiwis are suffocating under the burden of rising mortgage payments and interest rates…”

It seems that Mr Key should now begin to be answering his own questions.

6. As the global economy picks up and demand for oil increases, expect petrol prices to increase. This will have a flow-through effect within our local economy; higher fuel prices will lead to higher prices for consumer goods and services. This, in turn, will force the Reserve Bank to ratchet up interest rates (the OCR) even further.

Whilst fuel prices remained steady during the worst of the GFC, they have begun edging upward again as the global economy improves and demand for energy grows.

Our high Kiwi Dollar will mitigate the worst of rising crude-oil prices – but only temporarily. Once other Central Banks begin to rise their OCRs, expect the value of the Kiwi Dollar to fall as speculators sell the Kiwi in preference to harder currencies.

This will be good for exporters.

But will be a negative impact on imports – such as oil. Prices will rise as the Kiwi Dollar falls. Count on it.

7. As businesses face ongoing pressures (described above), there will be continuing  pressure to dampen down wage increases (except for a minority of job skills, in the Christchurch area). For many businesses, the choice they offer their staff will be stark; pay rise or redundancies?

Data suggests that wages are not keeping pace with GDP Growth;

.

Wages

.

NZ average hourly wages 2012 - 2014

.

GDP

.

NZ GDP Growth Rate 2012 - 2014

.

8. Expect one or more credit rating agencies (Fitch, Moodies, Standard and Poors) to put New Zealand on a negative credit watch.

On-going…

9. According to a recent (21 February) Roy Morgan poll, 42%  of respondents still considered the economy their main priority of concern. 21% considered social issues as their main concern.This should serve as a stark warning to National that people will “vote with their hip wallets or purses” and if a significant number of voters believe that they are not benefitting from any supposed economic recovery, they will be grumpy voters that walk into the ballot booth.

There is no reason to think otherwise on this issue. Voters who are spending more on mortgage or rent are less inclined to be happy consumers.Especially as mortgage rates are expected to rise even further, according to Bernard Hickey’s assessment of Governor Graeme Wheeler’s statement,

Wheeler said in early December he expected to raise the OCR by 2.25% by early 2016, which would lift variable mortgage rates to around 8% by then. The bank forecast interest rate rises of around 1% this year and a similar amount next year.”

Home owners paying 7% to 8% on their mortgage will not be happy-chappies and chapettes. They will be grumpy. The 2009 and 2010 tax cuts will be a dim memory and any attempt by Key to remind voters of those cuts will not be warmly received. Especially as any minute gain for workers was more than swallowed up by the rise in GST, ACC, government user-pays charges, and now their mortgages and rents.

If only a small percentage of grumpy voters change their voting away from National (or stay home) – that will mean a critical drop in support for a right-wing bloc. One or two percentage points is all that is required to change the government.

10. National has predicated its reputation as a “prudent fiscal manager”  on returning the government’s books to surplus by 2014/15. As Bill English stated  just late last year,

We remain on track to surplus in 2014/15, although it will still be a challenge to actually reach surplus in that financial year.”

[…]

On top of which is the $61 billion dollar Elephant in the room; the government debt racked up by National since taking office in 2008. As Brian Fallow wrote in the Herald in 2011,

The concern about government debt is not so much about its level, but the pace at which it is increasing. In June 2008 net government debt was $10 billion, or 5.6 per cent of GDP, and gross debt $31 billon, or 17.2 per cent of GDP.”

A lower tax-take, reported by Treasury on 11 March puts serious doubt on National’s ability to return to “remain on track to surplus in 2014/15″;

  • Total unconsolidated tax receipts for the seven months ended January 2014,  $143 million (0.4%) below the 2013 Half Year Economic and Fiscal Update (2013 HYEFU) forecast…
  • Total unconsolidated tax revenue for the seven months ended January 2014,  $459 million (1.1%) below the 2013 Half Year Economic and Fiscal Update (2013 HYEFU) forecast…
  • GST $250 million below forecast,
  • Net individuals’ taxes $191 million below forecast,
  • Customs and excise duties $156 million below forecast

The March Treasury report follows from a February report showing a similar “smaller than forecast tax take across the board“,

The Crown’s operating balance before gains and losses (obegal) was a deficit of $1.79 billion in the six months ended December 31, $380 million wider than forecast in its Dec. 17 half-year economic and fiscal update, and down from a shortfall of $3.19 billion a year earlier. Core tax revenue was $602 million below forecast at $29.18 billion.

[…]

The smaller tax take was across the board, with GST 2.3 per cent below forecast at $7.5 billion, source deductions for personal income tax 1.2 per cent below forecast at $11.71 billion, and total corporate tax 4.9 per cent below expectations at $3.56 billion.

As I wrote on 1 March, should National fail in that single-minded obsession, the public will not take kindly to any excuses from Key, English, et al. Not when tax payer’s money has been sprayed around with largesse by way of corporate welfarism. Throwing millions at Rio Tinto, Warner Bros, China Southern Airlines, Canterbury Finance, etc, will be hard to justify when National has to borrow further to balance the books.

Any economic “recovery” is fragile; dependent on overseas factors; and will bring new problems. Little wonder that Key brought the election date forward by two months. Mortgage rates by the end of the year will be nudging 7%.

Not much of a Christmas present for New Zealanders.

As such, Labour must begin to attack Key’s government in this area. This will be a grand opportunity for the Left to finally drive a stake through the “heart” of National’s undeserved reputation as  being a “responsible economic manager”.

National remains utterly vulnerable during this year’s election.

.

*

.

References

Interest.co.nz:  Bernard Hickey looks at what the Reserve Bank’s OCR decision means for mortgage rates and house prices

Radio NZ: Reserve Bank warns of more interest rate rises

Interest.co.nz: Mortgages

NZ Herald: Dollar jumps on OCR hike + video

NZ Herald: New Zealand raises interest rate to 2.75 percent

Reserve Bank: Reserve Bank raises OCR to 2.75 percent

John Key: SPEECH: 2008: A Fresh Start for New Zealand

Interest.co.nz: Oil and Petrol

tradingeconomics.com: Wages

tradingeconomics.com: GDP

Roy Morgan: Economic Issues down but still easily the most important problems facing New Zealand (42%) and facing the World (36%) according to New Zealanders

NBR: Govt sees wider deficit in 2014 on ACC levy cut, lower SOE profits

Fairfax media: Public debt climbs by $27m a day

NZ Herald: Govt debt – it’s the trend that’s the worry

NZ Treasury: Tax Outturn Data

NZ Herald: Govt deficit bigger than expected as tax trickles in

Previous related blogposts

TV3 Polling and some crystal-ball gazing

National, The Economy, and coming Speed Wobbles

.

*

.

https://fmacskasy.files.wordpress.com/2014/02/the-cost-of-living1.jpg

Above image acknowledgment: Francis Owen

This blogpost was first published on The Daily Blog on 16 March 2014.

.

.

= fs =

A Tale of Two Track Records: Labour vs National #1: New Zealand GDP

12 March 2014 4 comments

.

party-logos - which

.

As the election campaign for 2014 heats up, citizens can expect a deluge of dis-information, distortions, and  lies from the enemies of the progressive Left. Their constant repetition will be that Labour left the economy is a shocking state in 2008, with the most pernicious  outright lie that the Clark-Cullen government left New Zealand with a “decade of deficits”.

None of it is true. It is part of a meme-construction by the Right, with zealous followers who are willing and able to spread their mis-information on the internet.

Spreading lies is easy.

Discovering the truth is that much harder – you need to know where to look.

This series of reports will hopefully make things easier for those who want a clearer picture of events over the last two or three decades.

Those who cannot remember the past are condemned to repeat it.” – George Santayana

  • Introduction

Most graphed information is taken from Trading Economics, a US-based, on-line, economics-information website.

Trading Economics provides its users with accurate information for 196 countries including historical data for more than 300.000 economic indicators, exchange rates, stock market indexes, government bond yields and commodity prices. Our data is based on official sources, not third party data providers, and our facts are regularly checked for inconsistencies. TradingEconomics.com has received more than 100 million page views from more than 200 countries.

In turn, the site uses information from Statistics New Zealand, the World Bank, NZ Treasury, etc.

The reader can set dates for specific time-parameters  (indicated with red arrows) to search the site’s data-banks by years. It is extremely user-friendly and informative.

.

field parameter searches

.

Other sources for data will be clearly referenced.

National governance is marked with a blue line.

Labour governance is marked with a red line.

  • New Zealand GDP

“The gross domestic product (GDP) measures of national income and output for a given country’s economy. The gross domestic product (GDP) is equal to the total expenditures for all final goods and services produced within the country in a stipulated period of time.”

.

New Zealand GDP

.

In the 1990s, under National and Ruth Richardson’s (1990-1993) economic stewardship, GDP dropped from $43.9 to $40.3 billion and unemployment skyrocketed to 11.2%. For much of the 1990s, GDP see-sawed up and down, peaking at $67.9 billion in 1997 before falling away again.

Note: National implemented two tax cuts, in 1 July 1996 and 1 July 1998. Neither seemed to help grow GDP, and many public services were cut back in the late 1990s.

For Labour, except for a dip in 2001, GDP rose every year from 2002 to 2008. The rise in percentage terms is outlined below.

From 2009 to 2013, despite the GFC, GDP increased from $117.8 to $169.6 billion, though the rise in percentage terms, outlined below, was not so encouraging. GDP growth, per capita, was also lack-lustre, as demonstrated below.

  • New Zealand GDP per capita

“The GDP per capita is obtained by dividing the country’s gross domestic product, adjusted by inflation, by the total population.”

.

New Zealand GDP per capita

.

Except for two recessionary periods (early 1990s and 2007/08 Global Financial Crisis and recession), New Zealand’s GDP, per head of capita, has grown every year, until the GFC/recession, when it dropped from$28,168.1 per capita in 2008 to $27,383.8 in 2009.

Curiously,  the 2009 and 2010 tax cuts did not seem to contribute greatly to per capita GDP.

  • New Zealand Real GDP

Real Gross Domestic Product (real GDP) is a macroeconomic measure of the value of economic output adjusted for price changes (i.e., inflation or deflation). This adjustment transforms the money-value measure, nominal GDP, into an index for quantity of total output. GDP is the sum of consumer Spending, Investment made by industry, Excess of Exports over Imports and Government Spending. Due to inflation GDP increases and does not actually reflects the true growth in economy. That is why inflation rate must be subtracted from the GDP to get the real growth percentage called the real GDP.

The raw data for the Reserve Bank  graph (see below) is available in an XLS spreadsheet containing all key figures.

.

reserve bank of nz real gross domestic product 1990_2013

.

  • Main Stats
  1. Average GDP, 1990 to 1999:     2.4%
  2. Average GDP, 2000 to 2008:   3.5%
  3. Average GDP, 2009 to 2013*:  1.2%

* 2013 figure averaged over three Quarters only.

(Calculations based on RBNZ raw data spread sheet)

  • Impactors on GDP growth
  1. Recession, 1987/91
  2. Ruth Richardson’s “Mother of all Budgets” in 1991, which deepened the recession,
  3. Recession, 1997/98
  4. GFC/recession, from 2007/08 onward.
  • Conclusion
  1. Whilst GDP figures “bounce” around, Labour’s stewardship of the economy between 2000 and late 2008 has been more consistant in GDP growth and with less extremes shown in the 1990s and post-2008.
  2. GDP dipped into negative growth in the early 1990s and post-2008
  3. GDP remained in positive growth between 2000 to 2008
  4. Allegations that the economy did not perform well under Labour are clearly wrong, and the evidence does not sustain those claims.
This blogpost was first published on The Daily Blog on 5 March 2014.

.

*

.

References

Trading Economics:  About Us

Trading Economics: New Zealand GDP

Trading Economics: New Zealand GDP per capita

Wikipedia: Real Gross Domestic Product (definition)

Reserve Bank of NZ: Real GDP

Reserve Bank of NZ: Real GDP Raw Data spreadsheet

NZ Treasury: New Zealand Economic Growth: An analysis of performance and policy

NZ Treasury: Recent Economic Performance and Outlook

Te Ara: The ‘mother of all budgets’

Ministry of Business, Innovation, & Employment/Dept of Labour:  How bad is the Current Recession? Labour Market Downturns since the 1960s

Colin James: Ruth amid the alien corn

Previous related blogposts

Labour: the Economic Record 2000 – 2008

.

*

.

The trouble with capitalism is that you run out of money

There, fixed it.

.

.

= fs =

Letter to the Editor: A Rock Star Economy?!

28 January 2014 2 comments
.

old-paper-with-quill-pen-vector_34-14879

.

FROM: 	"f.macskasy" 
SUBJECT: Letters to the Editor
DATE: 	 Tue, 28 Jan 2014 22:32:06 +1300
TO: 	"NZ Herald" letters@herald.co.nz 

.

The Editor
NEW ZEALAND HERALD

.

HSBC chief economist, Paul Bloxham, describes New Zealand as
the "rock star" economy among OECD nations. 

I hope not. Rock stars have a nasty habit of burning out
early (the Rolling Stones being an exception) through drugs,
booze, and other nasty vices.

I recall that Ireland was described as the "Celtic Tiger"
between 1995 and 2000 - until it's economy crashed and
burned later. It's massive foreign investment led to an
unsustainable property boom which collapsed like a house of
cards in 2008 with the GFC.

The "Celtic Tiger" has lessons for our own nation, as we
also face an unsustainable property boom and associated
private debt that, by  31 June 2012, reached a staggering
$256.4 billion, or 125.3% of GDP  (ref; RBNZ).

I've no doubt that the HSBC - a UK-based bank - is loving
our "rock star" economy. They are no doubt amongst big
lenders, funding our property speculation habit.

Trouble is, like most suppliers of a "habit", they will
eventually seek payment-in-full.

That's when we'll see how rock stars crash.

-Frank Macskasy
(address & phone number supplied)

.

*

.

election 2014

Above image acknowledgment: Francis Owen

.

.

= fs =

Excuses, Excuses….Key is full of them!

19 June 2012 3 comments

.

.

John Key has finally admitted what the rest of us already suspected;  National will not be returning to surplus in 2014-15.

See:  Key not sure of surplus goals

The economy is simply not generating enough taxable activity; incomes are low; and not enough jobs are being created.

It’s as simple as that.

In part, this is due to ongoing overseas economic problems in Europe, and the USA’s mind-numbing US$14 trillion dollar debt.

But most of our poor performance can be sheeted home to National’s own policies; cutting expenditure; not implementing job creation programmes; and unaffordable tax cuts in 2009 and 2010. Taken together, these are a toxic mix of free market “medicine” that is making the “patient” very sick, before we see any signs of improvement.

Last night (18 June), with one simple statement, Key admitted the blindingly obvious,

I’m now a little less confident of reaching a surplus.”

Well, der!!

It’s not like National’s past performance has given us reason for confidence in their economic planning and predictions!

See: Jobs, jobs, everywhere – but not a one for me? (Part Rua)

But perhaps the most derisable aspect of Key’s admission was when he added this comment,

In terms of what that means for New Zealand it doesn’t really change anything. The European debt crisis remains the biggest threat to the New Zealand economy by some margin. I’m a little less confident because of Europe in general but let’s see how things play out over the next three to six months

See:  PM: Euro crisis may delay surplus target date

Is John Key claiming that the crisis in Europe and the collapse of the Greek economy wasn’t evident only three and a half weeks ago, when Bill English released the 2012 Budget? And when all manner of predictions were made?

See:  Budget 2012: The main points

The Greek melt-down has been happening since 2008, when the global financial crisis began the collapse of that house of cards. It did not start yesterday.

So why is Key only now referring to Greece? And why is he using Greece as an excuse for National’s 2014/15 objective, to return to surplus, falling apart?

Because that objective was never tenable in the first place.

Like John Key’s constant  big job promises (170,000 new jobs; Sky City’s convention centre 1,800 new jobs, etc),  Budget 2012 was predicated on high economic growth (3%) which simply was never credible. It was a propaganda exercise.

National is simply using the Greek Crisis as an excuse for National’s own poor fiscal management.

Just as National has used the global financial crisis to excuse  New Zealand’s ongoing high unemployment; then welfare beneficiaries for their predicament;  and before that, blamed the previous Labour government for our stagnant economy.

See:  John Key, Statement to Parliament 2011,  8 February, 2011

See: Bill English, Parliamentary Questions And Answers – 30 July 2009

Now it’s the Greek’s turn to be National’s latest excuse for their economic mis-management.

Conservatives and right wingers made a big deal out of those at the bottom of the socio-economic ladder taking responsibility for their actions and choices.

See:  Food parcel families made poor choices, says Key

Unfortunately, those same conservatives and right wingers rarely seem to take responsibility for their own actions and choices.

How many more years will need to pass before Key and National run out of excuses; others to blame; and begin to take responsibility?

This blogger doubts that voters will wait that long.

For National, the clock is ticking.

.

.

= fs =

A John, a Tony, and a Winston

.

.

This morning’s  ‘Q+A’ (TV1), and ‘The Nation’  (TV3),  featured interviews with John Key, Tony Ryall, and Winston Peters. Peters  also appeared on John Tamihere’s panel on ‘Think Tank‘ – but more on that in a moment.

The three interviews and panel yielded some interesting points…

.

Tony Ryall, Minister for State Own Enterprises

.

One of National’s constant cop-outs on why the economy is stagnating and unemployment is so high, is a constant finger-pointing at the previous Labour government. According to Key, English, et al in National, the previous Labour government left the economy in a “parlous state”,

In 2008 the Government inherited an economy that had been in recession for nearly a year and that was up against a world economy in crisis….

… Under the last Labour Government the economy got way out of balance.

… We inherited from Labour a set of government books showing never-ending budget deficits and government debt spiralling out of control. This would have ruined the economy and created an onerous debt burden destructive to jobs and income growth.

See:  John Key, Statement to Parliament 2011,  8 February, 2011

I do agree with the view that for New Zealand to have a sustained recovery based on a stronger export sector will be a challenge with the dollar at the current levels. But I imagine that that member will not try to make a political point about that, because it is precisely record-high interest rates and a record-high dollar, driven by the previous Government’s reckless economic management, that have put the export sector into such a difficult position. “

See: Bill English, Parliamentary Questions And Answers – 30 July 2009

None of it is true, of course, and National’s attempt to re-write history is simply a dishonest strategy to excuse their own shocking performance at growing the economy.  In fact, this blogger pointed this out in a carefully researched analysis of Labour’s track record from 2000 to 2008.

See:  Labour: the Economic Record 2000 – 2008

Today (17 June), SOE Minister Tony Ryall let slip on ‘Q+A’  an admission that Labour’s record on fiscal management was not what National Party strategists had been alleging,

TONY RYALL  Uh, its certainly about debt. You know, New Zealands debt is currently $52 billion, $53 billion. Expected to go to $72 billion in the next three years. Thats getting to a level that were uncomfortable with. Thats the reason why we want to sell a minority stake in these assets, free up some cash that can then be invested in the other priority assets that New Zealanders want in the future

[abridged]

TONY  RYALL Thats right. Because at the moment, were going from $8 billion when we started in 2008. The debts now around $52 billion. Were expecting to be at $72 billion in another three years time…

See: TVNZ  Q+A  Transcript interview with Tony Ryall

So much for National; their party apparatchiks; and supporters who constantly warn us that Labour was, and is, a “borrow and spend” Party. National seems to be quite adept at racking up massive overseas debt – whilst cutting taxes locally.

Eventually though, that debt has to be re-paid. Hence why National is selling state assets and cutting back on state/social services.

Thank you, Tony Ryall, for the admission that the previous government, in fact, was not as fiscally inept as you and your colleagues have made out. Nor as inept as your handling of the country’s economy.

Feel free to call an early election any time soon?

.

John Key, Prime Minister (Temporary)

.

John Key’s appearance on today’s ‘The Nation‘ as the front man for an ideologically-driven National Party was on-par with past performances as the ever-smiling, smooth-talking politician, whose role it is to put a “human face” on the neo-liberal agenda.

There were several issues touched upon in the interview – though none as deeply as perhaps the viewer might have desired. On the issue of National’s deal-making with Sky City, Key was let off the hook lightly – with Fairfax interviewer, John Hartevelt looking slightly bemused when a particularly promising line of questioning was cut short.

Perhaps the interview tried cramming in too many issues, for the alloted time?

On the issue of the Auditor General’s investigation on National’s involvement in deal-making with Sky City on the possible awarding of a contract to build a new Convention centre, one comment from Key, in particular, should have raised a few eyebrows and generated further questioning.

At 6.37 into the interview;

KEY: The involvement I had, as Minister of Tourism was to go and talk to a number of critical players, and as part of a general conversation say to them, “Hey, look, New Zealand’s interested in building a convention centre. Did that with Sky City. I did that with people out at ASB Centre The Edge. I did that with Ngati Whatua. That’s not unusual.  I mean, and to argue that that would be unusual would be to say, well, look I have discussions with people in Whangarei about building a museum there. And I have discussions  with people in Auckland about building  a cycleway.

So now what we’re  talking about about is, ok, was there undue influence or was the process correctly handled, that’s what the auditor general  will say.

So let me tell you this, for a start of, ok, in terms of the expression of interest process, my office had absolutely no involvement, no correspondence, [ interuption by Rachel Smalley] no phone calls, absolutely nothing. So when the auditor general  comes in there will be no correspondence, no phone calls, no discussions, zero.

In a very casual, matter-of-fact manner, Key has stated that whilst he had “talks to a number of critical players, and as part of a general conversation say to them, “Hey, look, New Zealand’s interested in building a convention centre” – that there is no record whatsoever of any such talks or interaction with any of the parties involved.

What we do know is this,

Prime Minister John Key has confirmed he offered a deal to Sky City allowing the casino to have more pokie machines in return for building a multimillion-dollar convention centre. Mr Key, speaking from Indonesia, confirmed he made the offer to Sky City in his capacity as Minister of Tourism, Newstalk ZB reported…

… Mr Key was asked last July in a question for written answer from Green MP Sue Kedgley whether he or any of his ministers had met representatives from the casino to discuss changes to the Gambling Act.

He replied: “I attended a dinner with the Sky City board 4 November 2009 where we discussed a possible national convention centre and they raised issues relating to the Gambling Act 2003″.  “

See: NZ Herald SkyCity deal was PM’s own offer

See: Blogpost Doing ‘the business’ with John Key – Here’s How

The problem here, is that with Key’s “office having absolutely no involvement, no correspondence, no phone calls” we, the public have no way of knowing what has transpired. There is simply no telling what has gone on between Key and “critical players”.

I don’t know about you, the reader, but I am not in the slightest reassured by Key’s explanation.  It is an extremely worrying development in our system when important matters between government of commercial intrerests can be discussed in secret; off the record; and with no paper trail or other indication as to how arrangements were agreed upon.

The potential for corruption is plain for all to see.

If Key does not comprehend this, then his political advisors are not doing their jobs properly. This is not the transparent government that we have come to expect in a modern society – nor what John Key promised us.

See:  Open and Transparent Government – Declaration

John Key then went on to mount an extraordinary and peculiar attack on Winston Peters.

At 27.35 into the interview;

KEY: I dare him to go out there and say he will not under any conditions form a government with Labour, even if Labour’s policy is to raise the super age from 2020, not in the three-year period from 2014 to 2017.

“I dare him to say he will not, because he’s tricky and he’ll find a way all around all of that stuff. “

See: TV1 News -National in trouble – Peters

See:  TV1 VIDEO: Prime Minister John Key on ACC, super and the future

Curiously, when pushed by John Hartevelt, Key did not categorically rule out  a coalition deal with Peters as he did in 2008.

This blogger believes that  Key and National understand   Rule #1 in politics: learn to count.

If National’s support drops in 2014 (or earlier election) they will require a coalition partner with more numbers than the one-man parties of ACT and United Future. Only NZ First comes anywhere near offering the Nats a  potential coalition partner.

At the very least, National’s strategists want to drive Peters away from any potential coalition-partnership or Supply & Confidence support deal for a Labour-led government.

As for Peters – this blogger doubts that he will repeat his fatal mistake of entering into coalition with National, as he did in  on 11 December 1996. Peters understands that his constituency vote for him because it is a protest vote against the incumbent government – in this case, National.

Just as in 1996, people voted for him as part of a wide-spectrum political bloc of anti-National sentiment that was sweeping the country. By coalescing with the Nats in 1996, Peters ignored that sentiment and suffered the wrath of the electorate – first at the superannuation referendum in 1998, which was soundly defeated 92% to 8%. A year later, at the general election, Peters barely scrapped back into Parliament by winning his seat with a 63 vote majority. His Party polled under the 5% threshold.

No doubt National will continue to play their silly-bugger games to de-stabilise the  Labour-led governmen-in-waiting. They have no option, as their own internal polling must be reflecting what mainstream polling is showing; the public have had enough of National; it’s “Bright Future” never-never promises;  and want change. Come 2014 (if not earlier), the Nats will be dog-tucker and will be gone by dinner-time on election night.

Again, feel free to call an early election any time soon, Dear Leader?

.

.

Winston Peters appeared on TVNZ’s ‘Q+A‘, and afterward on TV3’s ‘Think Tank‘, hosted by John Tamihere. Neither appearances could have been more starkly contrasting.

On ‘Q+A‘, interviewed by the personable Greg Boyd, Peters resorted ‘to form’, and displayed  his typical media-combativeness and mis-mash  of slogans and faux-outrage, that is his public persona.

It was painful to watch.

See: TVNZ Q+A Winston Peters on Coalition and Superannuation

‘Nuff said.

Contrast Peter’s cringeworthy performance on ‘Q+A‘, with his appearance on  ‘Think Tank‘, today, as one of three guests; Labour Leader David Shearer and Auckland University professor, Jane Kelsey.  This was a Winston Peters from a Parallel Universe where he appeared thoughful; measured; insightful; and practically led the panel. This is a Winston Peters who commands respect and attention – not the Jeykill & Hyde version on ‘Q+A’ who alienates the viewer with his  antics.

See: TV3 Think Tank 17 June

As a critic of Winston Peters, my suggestion to him is this; lose the attitude. Or at least tone it down. The media can be a pain in the arse, for sure, but why wind them up needlessly?

Save the aggro for the debating chamber in the House. That is where Peters can best utilise that righteous anger he is so famous for. And where he can best show the public that he is on our side as the champion of the Ordinary Kiwi Battler.

The Winston Peters that this blogger saw on ‘Think Tank‘ is the one that will help re-build NZ first.

Not the grumpy old bugger who got into a shouting-match with Greg Boyd.

If Peters reads this, take my criticisms as constructive. Or not. As a Labour-Green supporter, I’m not terribly fussed if he makes it back to Parliament at the next election, or fades away into the Twilight Zone.

But perhaps his supporters and Party activists deserve that opportunity?

Just my 5 cents + 15% gst worth.

.

*

.

Acknowledgement

Cartoons by Murray Webb

.

.

= fs =

Guest Author: David Cunliffe, A Bold New Direction?

– David Cunliffe, MP for New Lynn, Labour Economic Development Spokesperson

.

.

Speech to annual Kensington Swan insolvency function, Auckland, 11 June 2012

Tēnā Koutou

Thank you for inviting me into the lion’s den.

As this is a group of insolvency and receivership lawyers and accountants, it’s a fair guess that your businesses will be booming right now.

If I was speaking to a group of exporters and manufacturers, it’s a fair bet the opposite would be true.

And if this was a group of blue collar workers from my electorate in west Auckland, you can bet your boots the mood would be grim.

So many Kiwis are really struggling to make ends meet. After the 2008 crash they were just getting along. A year later this had turned to anger, a year later to despair. This year, many of them are heading for the departure gate: 50,000 a year in the last year alone. A quarter of New Zealanders no longer live here.

So for their sake, and everyone’s sake, let’s begin this conversation by being frank and up-front.

We all know that much of the business community generally favours National.

Unfortunately, New Zealand is still a democracy, so Labour gets voted back in from time to time. That’s “tiresome”! I know, but that’s the way it is.

So, what “evil plans” does Labour have in store for the business community this time? The answer might be welcome news for all but the insolvency team

Anyone who seriously believes that the economy can somehow heal itself by being left alone, hasn’t read a newspaper for the last 12 months.

Looking at world markets over the last few months, I would have to agree that we are “back at the precipice – with a frayed rope” (Brian Fallow, NZ Herald).

Greece may still reject its bailout package; Spanish banks are still in deep trouble; and Italy is too big to bail, or to let fail.

The Beehive spin doctors are all too ready to blame anyone but themselves for New Zealand’s repeated undershooting of growth forecasts. None of it washes.

The Canterbury earthquake rebuild should by now be a source of positive growth – but it is well behind schedule and the government is squarely to blame.

Commodity prices can’t be the problem. They have only just come off record highs, reminding us that putting all our cows in one basket is way too risky.

The results under the Key Government make depressing reading.

No one these days seriously believes that a totally unregulated economy will work. Just as important, no one seriously believes that a totally regulated economy will work. It’s a question of getting the balance right.

Do I want to return to the days when you needed a letter from your doctor before you could buy margarine? Absolutely not. Do I want to return to the days when people had a sense of security and trusted their leaders? Absolutely.

LESSONS FROM THE LAST GREAT DEPRESSION

It is said that “Those who cannot learn from history are doomed to repeat it.” (George Santayana); or in plain language… “History repeats itself because no one was listening the first time.”

One of the things that gets me up in the morning is the sentiment expressed in the media and in the current government that “nothing can be done so we may as well take it.”

That we may as well accept appalling emigration levels, high unemployment and record high youth unemployment, an accelerating increase in poverty, and debt that leads to regular international credit downgrades.

We should expect more from each other than that.

There is absolutely no inevitability about economic decline.

We do face utterly fundamental choices about our economic future. Effective change will occur when tens of thousands of us behave differently in our firms and unions, boardrooms and Ministries, classrooms and farm sheds.

Of course it is easier to say what we should not do, than what we should do. So in these remarks I want to draw some lessons for what we should do differently:

1. Regulate Financial Markets

The Great Depression, for those who haven’t studied history, was caused by a lack of government regulation. Then, just like now, the vast majority of businessmen strongly resisted any attempt at government regulation.

Then, after the banks sent themselves bankrupt through unregulated speculation with their clients’ funds, the bankers tried to pretend that it wasn’t their fault.

The 1929 stock market crash triggered an economic tsunami that all but flattened America. Just like now, it was the ordinary people that bore the brunt of the crash and the depression that followed it.

And, as if the crash itself wasn’t bad enough, the government still refused to intervene, so the situation got worse. Bank after bank collapsed, along with the millions of families who had entrusted those bankers with their life savings.

By 1933, 11,000 of the United States’ 25,000 banks had failed. That’s nearly half.

People had no money, so they couldn’t buy manufactured goods. Because people stopped buying manufactured goods, factories closed down. Because factories closed down, workers got fired. Because workers got fired, they couldn’t buy manufactured goods.

And so it went on, and on, and on, until, by 1933, nearly 13 million Americans were unemployed. That was a quarter of the total workforce.

And what was the government’s response: nothing. Why? Because the government was intensely opposed to any kind of regulation of big business – the same view as many of the people in this room.

The then US Secretary of the Treasury was Andrew W. Mellon, who was, by curious coincidence, one of the wealthiest men in America.

Mellon strongly opposed government regulation of the banking sector. However, he strongly pushed for austerity measures to balance the budget. Does this sound familiar?

Mellon advised President Herbert Hoover to:

“liquidate labour, liquidate stocks, liquidate farmers, liquidate real estate… it will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up from less competent people.”

Alas, no. What happened in America was exactly the same as is currently happening in Europe. The austerity measures, which were supposed to turn the economy around, instead sent it into a nosedive.

You know, one of the wonderful things about democracy, is that voters sometimes show a good deal more sanity than the politicians or the vested interests.

In America’s case, the voters threw out Herbert Hoover and voted in Franklin D. Roosevelt. Roosevelt heavily intervened in the economy, regulated the banks and the stockbrokers, and set America on the path of its longest period of economic growth in history.

I mention all this, because we are currently looking over the economic precipice once more. The world’s three largest economic zones: America, the European Union and Japan/China are already in decline.

And, amazingly, the economic purists in the West are still advocating exactly the same policies as the ones that caused the Great Depression. Really? Have we learned nothing from history?

Who carried the can when the whole house of cards came tumbling down? Certainly not the bankers that set up the house of cards in the first place. As usual, it’s the ordinary people, who pay taxes and naively expect politicians to look after their interests, who are paying the price.

Despite all the promises that the European economic austerity measures would turn this tragic situation around, the opposite is occurring.

When you start firing all your workers and closing down your government departments, those people have no money to spend. Because the workers have no money to spend, the local businesses suffer. So they start firing staff. So the economy goes into deep recession, with no easy way out.

The Labour team believes this is lunacy. If New Zealand goes into a recessionary spiral, what we are close to, we will have to be expansive too.

An increasing number of journalists and politicians are saying what ordinary people already know: that many of the economic policies of the last 30 years have ended in disaster.

You hear the National government taking about the need to sell assets because we have so little money in this country. Do you know why we have so little money in this country? It’s because a large percentage of our economic assets are overseas-owned.

For example, when the Australian-owned banks make billions in profits here, that money isn’t returned to New Zealanders. The money goes straight back overseas.

That financial drain is one of the main reasons we are not paying our way in the world – our external deficit is getting bigger and bigger.

2. Keep and build our assets

And, as if that were not bad enough, the government now wants to sell our major state assets, which is simply going to mean higher power prices for ordinary New Zealanders and still more profits disappearing overseas.

And I’m not the only one who thinks this is nuts. The economic consultants BERL, concluded that the asset sales programme would leave the public accounts looking worse, not better.

BERL’s chief economist, Dr Ganesh Nana, concluded the effect of asset sales on the wider economy would be even worse because the dividends lost to the state would quite likely go to foreign shareholders, adding to the country’s external deficit and national debt.

So why is National proceeding? Is it partly because of its promises to big business? It is partly because many National Party politicians may have links to the very people who will profit from these asset sales? Or partly because the National Party is simply blind?

No matter how many independent analysts report that the asset sales will be an economic disaster that will further increase our national debt, John Key simply looks the other way.

For how much longer, I’m not so sure. I think it’s increasingly obvious that the National government will be dog tucker at the next election. National is hoping that by then, the assets will have been sold and there’ll be nothing we can do about it.

Be that as it may, don’t get me started on the risks of selling off a major stake in our energy system at a time when the world is entering unparalleled energy scarcity and skyrocketing fossil fuel prices – that is the subject of another speech!

3. Get people back to work

If the last Great Depression provides some chilling lessons of what went wrong, it also provides hope for what can be done better.

Much of New Zealand’s response to the Depression in the 1930s and early 40’s is still working for us:

• Around 50% of the state houses still around now were built in the 1930s and 1940s
• Around 40% of all schools still in use were built in this era
• Almost all the North Island dams, and the same of the pylons and substations
• Thousands of rural bridges
• Most of Auckland’s water supply dams and systems
• The core of the Crown Research Agencies, in the form of the DSIR
• Around half of New Zealand’s still-existing hospitals,
• The great North Island pine forests, and
• Most of our government departments now existing were formed, all in that era

Eighty years ago we saw an economic development plan rolled out that turned us all from Depression to development. Like the United States New Deal, the Savage government’s plan altered the course of the country.

For at least 30 years after the end of World War II until the oil shocks of the 1970s, the Government response to the Great Depression still dominated political and commercial life.

In the 1960s, business and the public sector continued this partnership with the great Kinleith Mill near Taupo, and New Zealand Steel at Glenbrook.

Private capital was making money at the same time as the public sector achieved its policy goals.

By the 1980s, the whole system was in need of reform. However, in place of reform, we got a system that closed down productive industries, encouraged energy wastage, created massive unemployment and, above all handed most of the wealth and power to a small elite who the so-called ‘free’ market.

It was this unregulated market that lead to the twin meltdowns; first the 1987 stock market crash, then the 2008 meltdown. Since 2008, the scale of our decline has been substantial.

Throughout the world, pro-business governments have imposed austerity measures and throughout the world, these austerity measures have been an unmitigated disaster.

We need to think with that degree of boldness and clarity, while carefully managing our financial resources, to truly turn back the degree of risk and decline that we now face.

4. Rewrite the invisible plan

By contrast, National is nothing if not predictable in its policies and in its results. From 1990 to 1999, and from 2008 to 2012, the same economic leadership and same result:

• Almost no economic growth
• Public sector cost-cutting that drove recession ever-deeper
• A state that is weaker year after year, and
• A country where wealth transferred from the many to the few, to the point where law firms find it harder and harder to get clients, except in the Receivership Team.

Business is bad. And it was bad the last time National was in, and it’s no coincidence.

Let’s project the same policies after another three years. Here’s how it runs. Treasury again over-predicts GDP growth and hence tax-base income. Private debt remains high and focused on rental housing. The population stagnates and starts to decline even in Auckland.

Respectfully, a buoyant insolvency and mortgagee sector is not the economic sign we want. On the track we are on, it’s what we will get.

When the credit ratings agencies downgraded New Zealand last year, they told us that our biggest problem was not public debt, which is relatively small by world standards, but total private debt and our inability to pay our way in the world.

A new direction is needed.

Let’s not fool ourselves that just doing a little more or a little less of what we have been doing before will save us

LESSONS FROM SMALL SMART COUNTRIES

Small smart countries around the world are grappling with the same issues – how to sustainably grow jobs and incomes in an open, export-oriented economy amid a turbulent world market.

As part of my Economic Development portfolio work, I have commissioned a study of six such countries: Denmark, Finland, Singapore, Taiwan, Ireland and Israel.

The most obvious conclusion of this study so far is that none of them leave their future to chance. The weakest, Ireland, was the one that lowered taxes, opened up to unrestrained foreign investment, and trusted the invisible hand of the market to bring future prosperity.

But whether they have governments of the centre-left or centre-right, all these countries have set a clear vision for where they want to get to, what they want to be, and how they will get there. All set policy targets and timetables and measure their progress.

Take Denmark. It wants to be among the top 10 richest, most innovative countries in the world. It wants to be top 10 for quality labour supply and top three for renewable energy.

They have a 10 year plan to achieve that.

They manage their interest rates, control their housing market, and peg their exchange rate to the Euro.

They manage productivity growth by setting hard targets for education, research and innovation performance, for example:

They invest 3% of their national income in research and development: 2% from the private sector and 1% from the public. That is still dwarfed by neighbour Finland with nearly 4%. New Zealand’s total is less than 1%.

Their innovation strategy is led by the Danish Economic Council, a broad-based top level group including key government agencies, business and labour representatives, and labour experts.

They are careful with their money, and they understand the value of investment.

They invest in research and development, they invest in their infrastructure, they invest in their forests and their environment, but most of all they invest in their people.

To the Danes, investing in education, innovation and infrastructure, is not a liability but an asset. Because without all three, their economy cannot survive.

Is it working? You be the judge – they have fewer natural resources than us, higher population density, and a rubbish climate.

But their income per person is US$40,169 compared to our US$29,882.

Even more importantly, their exports per person are around NZ$ 26,000, compared to our NZ$9,000.

They gain about the same amount from agriculture as us, but many times more from niche manufacturing, environmental services and high technology.

Let’s acknowledge that Denmark is a member of the largest economic union on the planet and has the captive market that comes with that.

Labour under the leadership of both Phil Goff and Helen Clark had a proud record of responsibly improving our trade access. Labour also pushed for environment and labour standards in trade agreements, something we will need to continue to advocate in future.

INVESTMENT, INNOVATION, AND EDUCATION

We need to learn from small smart economies like Denmark. We cannot just leave it to chance, or to the market forces that have got us into this mess.

So Labour went into the last election campaigning for new and better ways to grow our economy.

At the core of our economy-wide measures were big changes to boost capital for business investment, technology and skills. These are the fundamental drivers of productivity.

Our Leader, David Shearer, and Finance Spokesperson, David Parker, have both recently reaffirmed the importance of these changes.

While John Key was hard at work lining his own pockets, David Shearer was getting his hands dirty, feeding and sheltering the people in some of the most depressing and dangerous places on earth. He managed billions of dollars of tax-payers funds with consummate skill, fought corruption and faced down warlords.

Which party leader do you think is better suited to lead us through this time of crisis?

So what will Labour do that shows we have learned the lessons of history?

Number one, we will have to stop the sort of speculation that got us into this mess in the first place.

We have to get investment flowing where it can do the most good – into productive businesses and exports, rather than unproductive financial or property speculation. Like both Treasury and the Reserve Bank, Labour supports a capital gains tax.

Now, nobody in this room, myself included, likes paying tax. And nobody in this room, myself included, likes seeing their hard-earned tax revenue wasted.

I think we all agree that the tax system has to be simple, transparent and achievable.

For example France and Germany are now looking at simplified forms of indirect taxation, such as a financial transactions levy.

It would be so small that most bank users would never even notice it, would be simple to collect, and would raise enough revenue to fund lowering other taxes while fully funding infrastructure development without incurring further public debt. I am delighted that our revenue Spokesperson, David Clark, is keeping a weather eye on these developments.

Another tragic result of the so-called free market is that, the country is now saddled with the multibillion dollar liability of supporting the casualties of this economic religion – the long term unemployed, the single parent families, the pensioners who can no longer afford to warm their houses.

Any economic policy that does not put the unemployed back to work, rebuild the productive sector and help us to pay our way in the world is doomed to failure, and very expensive failure at that.

The current government said they wanted New Zealand to catch up to Australia.

Well it’s working: every week, thousands of Kiwis leave the country in search of a better life across the Tasman.

Why? Because they get paid so much more in Australia. Why are wages higher in Australia? Because the Australian government sees it’s working people as an asset, not a liability.

What’s the National Government’s solution to this – to lower wages still further while doing nothing to improve productivity. Genius.

Clearly no-one told Steven Joyce that Germany, one of the wealthiest countries on the planet, has both high wages and high productivity.

National has again walked away from common sense. One of the key ingredients to Australia’s success has been its compulsory, employment based savings scheme.

Because New Zealand’s workers don’t earn enough to save, the country’s vital savings pool is alarmingly small.

So our second major policy is to lift sustainable local savings and investment is a universal Kiwisaver scheme. This would hike our savings rate four times faster than National’s pallid plan and give every working Kiwi a huge nest egg for their retirement.

To make matters worse, National’s approach to superannuation resembles a man on an iceberg in the sun. He thinks he is on solid ground, but he has built his future on some tragically false assumptions.

The third big policy change from Labour is getting our innovation engine revving. At the moment it is hardly even idling. Total research and development investment in NZ is less than 1% . In Denmark it is 3%. In Finland they are targeting 4% .

Our innovators deserve a break – there are huge public benefits from a vibrant innovation system, and our proposed R and D tax credits reflect that.

By supporting research and development in our business community, we invest in the pillars of economic growth, innovation, education and innovation.

As Economic Development spokesperson, I will be pushing for much higher levels of investment in research and development in both the public and private sector and for a serious overhaul of our innovation ecosystem.

Remember that infrastructure is not just bricks and mortar. Our future depends on having a world class information backbone.

It is a crying shame that it took the current government nearly three years to even begin rolling out its so-called ultra-fast broadband plan. If three years delay is ultra-fast, I’d hate to see ultra-slow.

Fourth, we never forget that our best resource is our people. Education and skills must be a top priority and it must be for all – not just those who can afford them. These three pillars of skills are education skills, physical skills and life skills.

It disgusts me that the National cabinet was prepared to maintain subsidies for their own private schools while firing teachers in everyone else’s schools.

How would Labour fund further investment in education? The answer is simple: stop investing in failure. It is social and economic insanity to be paying people the dole while there are forests to be planted and infrastructure to be built.

Labour will get school leavers off the dole by ensuring a seamless transition into work. We will fund thousands of new apprenticeships by redirecting dole money to job creation with real skills. We will ensure that every young New Zealander under 20 is either earning or learning.

In the twenty first century no-one should expect to be in one job for their whole working life. That’s why learning must be life-long. Denmark invests billions each year into adult and community education, in New Zealand we invest pocket money.

LESSONS FROM THE GRASS ROOTS

Our economy, under National, is like an oil tanker with the captain asleep at the wheel.

Robert Wade, a New Zealand professor at The London School of Economics, summed up how governments should work with their economies. I’ve paraphrased his views:

When the economy is working well, leave it alone.

When the economy has problems or failures that can be fixed, fix them.

And when an economic policy fails altogether, do something else.

Sounds like common sense to me.

A key lesson of the Great Depression is that unregulated financial markets invariably suffer catastrophic failure. The recent Global Financial Crisis is a classic example.

From New Zealand’s economic development perspective, we can turn around the failed policies of the past.

So that means working with individual industries, regions, businesses and communities to help make good things happen.

You have a build a wall one brick at a time.

You have to build a business one customer at a time.

We have to build our economy one region and one industry at a time.

And we must rebuild our community one family at a time.

So we could have all the fine ideas in the world about economic growth, but if it does not put one unemployed worker into a job, or put one more high value product into an export market, then it will not turn our economic boat around.

Renewing our commitment to industry sectors, regions and communities, will be a key part of Labour’s economic development agenda…

I know it’s trendy to talk about recycling. But we’ve overlooked something here. What about “recycling” human beings? There isn’t a person in this room that isn’t deeply concerned at the numbers of young people, especially young Māori and Pasifika who are not only unemployed, but in some cases, currently considered by some to be “unemployable”.

We also have vast tracts of public and private land that is currently badly under-utilised.

Can we please, please, learn some lessons from history. Where did New Zealand’s great commercial forests come from? Where did America’s great commercial forests come from? They were both planted in the Great Depression by the unemployed.

The American Civilian Conservation Corps is a textbook case of turning the economy around by turning people’s lives around.

Throughout America, these groups planted trees, built roads and improved both their lives and the lives of their descendants.

Labour embraced the Conservation Corp idea in our last manifesto. For Labour, the Conservation Corp has always been about skills and training, with the community benefitting. I’ll bet someone will claim that National’s already proposed this. Nonsense. What National wants is to punish the poor and prepare them for a life of dead-end jobs as lowly servants of the rich and powerful.

Instead of merely paying the dole to fit young people, Labour’s Conservation Corps plan includes education and training that will take them on to sustainable employment. I’d like to see them earning a living wage in return for a fair day’s work.

They could learn structure, discipline and life skills. They could then be sent out to do the work that’s currently not being done, from planting trees to disaster relief. Imagine, for example, the difference it would have made if we had had 5000 fit young people available for disaster relief after the Christchurch quake.

New Zealanders loved the Student Volunteer Army and the Farmy Army that helped clean up Christchurch. However, the famers and the students soon had to go back to work. Imagine the difference a full time group would have made?

It’s not just the country that would have benefited, either. Hard work is a great healer for unemployed lives. With training, this same army could now be rebuilding the houses that the Christchurch people so desperately need.

But for now, New Zealand needs more forests. If we could replant some of our unproductive land into forests, we could create one of the world’s greatest carbon sinks. We could create thousands of jobs planting trees, and thousands more processing the timber in a few years.

These new forests could be placed in trust for the benefit of future generations, and New Zealand could be on its way towards becoming carbon neutral.

However, there’s a deeper problem with our current forestry sector: most of the timber simply gets shipped overseas for processing. This robs New Zealanders of jobs and export revenue.

Because many of our best forests are overseas owned, by companies that have absolutely no interest in New Zealand jobs.

Labour is keen to see higher levels of value added in our primary sector, and as Economic Development Spokesperson I am going to be pushing to get New Zealand logs processed in New Zealand mills.

CONCLUSION

While politicians squabble about balancing the government’s books, our ship is in dangerous waters.

The Labour Party is not your enemy.

Your enemy is inefficiency, corruption, and the wastage of both public and private wealth.

Your enemy is a cosy corruption that helps a few friends of the government get very rich at the expense of the community, including most of the business community.

The three pillars of our survival are investment, innovation and education.

An educated population that earns decent wages will work in your factories and offices, will buy your products, and invest in your shares.

Even as we speak, the global crisis deepens. We cannot solve the crisis of the present by repeating the failures of the past.

New Zealand rose to the challenge of the Great Depression and emerged as a prosperous and functional democracy that was the envy of the world.

There are no winning sides on a sinking ship. While we squabble on the deck, our situation grows graver every day.

Our ship cannot sail itself. We can’t wait for the crisis to overwhelm us before we respond.

A global economic tsunami could sink us. We have to work as a team; rather, we have to work as a crew, remembering that we’re all in this together. We all prosper together or we all sink together.

Thank you.

.

*

.

Blogger’s Analysis

Cunliffe’s   sums it up nicely,

“No one these days seriously believes that a totally unregulated economy will work. Just as important, no one seriously believes that a totally regulated economy will work. It’s a question of getting the balance right.”

Balance.

One word to sum up the need to do away with the  cock-eyed extremism of neo-liberalism.

One day, in the far distant future, voters will understand, and laugh, at Parties like National. Until then, we will see-saw between National stuffing things up, and a centre-left government  having to fix it…

Can’t we just eliminate the Stuff-up Phase and just keep a balanced economy?!

As things stand at present, every six years or so, a sizeable chunk of voters experience a rush of blood to their head and vote for National. Even despite knowing that National’s policies will destructive and will impact on our social services – voters still tick that ‘National’ box.

*facepalm*

Electing National for a second term will prove to be an expensive exercise for us all. Once National privatises our energy companies, expect power prices to rise as investors expect to maximise returns on their investment,

.

Frank Macskasy Blog Frankly Speaking

Hikes defended – Otago Daily Times – 30 July 1999

.

Trans Alta was formerly Capital Power, 100% owned by Wellington City Council up until 1994. In that year, by a narrow majority, WCC voted to privatise 49% of the power company.

As usual, Wellingtonians were promised the usual; lower energy prices; greater efficiencies; blah, blah, ad infinitum-blah.

Wellingtonians swallowed the BS, and re-elected those City Councillors (led by then-mayor, Fran Wilde) who had supported the privatisation of the first half of Capital Power.

In 1995, soon after local body elections, the remainder 51% was sold to Canadian energy company, Trans Alta.

Then the power price rises started.

This blogger has said it before, and will keep saying it again; no one does this to us; we do it to ourselves.

Thankfully, National’s use-by date has passed, and voters’ fascination with John Key  is rapidly waning.

.

Acknowledgement

Tumeke

.

.

= fs =

The Dark Art of ‘Spin’ – How It’s Done (Part #Rua)

.

.

Continued from:  The Dark Art of ‘Spin’ – How It’s Done

And relevant also: The wheels are coming off, and there’s a funny ‘plink-plink’ sound

And: How Paula Bennett and National are wasting our taxdollars

*

Make no mistake – National’s scheme to “offer” subsidised contraception is a cunning plan to deflect attention from a raft of bad news that has been in the headlines lately,

Three years of neo-liberal “reforms”;  slashing state services; tax cuts; introducing labour market “flexibilities” – have produced very little gain for this country.

On top of that are the run of scandals afflicting National; Nick Smith and Bronwyn Pullar;  John Banks, Sky City,  and Kim Dotcom; Murray McCully and MFAT; John Key’s secret deals with Sky City…  It is an eye-opening  litany of failure, stuff-ups,  and dodgy dealings.

Cue – the Spin Doctors.

Method;

  1. Pick a dog-whistle issue, preferably one loaded with misconceptions, prejudice, and moralising
  2. Choose a vulnerable group in our society who are powerless and easily demonised
  3. Offer a naive, simplistic “solution” to a problem that doesn’t exist – but still pushes people’s emotional buttons
  4. Encourage moral hysteria, before calling for “calm”.

.

Full Story

.

There is good reason why National has released this crazy plan at this point in time.

It has nothing to do with assisting beneficiaries in any way, shape, or form.

It has everything to do with deflecting attention from National’s own failures.

If National was truly interested in assisting people with subsidised contreaception – it would offer this choice to everyone.

And along with free contraception, National should be offering free dental care for children; meals in schools; and other programmes to help New Zealanders.

Otherwise, Paula Bennett’s “offer” of subsidised contraception for beneficiaries should be seen for what it really is: Spin Doctors deflecting public attention away from National’s shocking economic performance. It’s pointing a finger and yelling, “Look over there“!

Once upon a time they burned women as witches.

.

.

= fs =

A little trick borrowed from the former Soviet bloc…

.

Full Story

.

In the late 1970s, I had the opportunity to visit my parent’s homeland, behind the Iron Curtain. It was possibly the most educative experience of my life, and I had an opportunity to witness, first hand,  an economic and social system that was quite alien to me.

Some of the lessons I learnt…

  1. Extreme economic policies – whether marxist-leninist or neo-liberal – don’t work, and will ultimately fail. Neither cater for human needs, individually or socially.
  2. It’s true what they say about centralised planning and the public transport system; it was incredibly cheap, efficient, and very user-friendly.
  3. Alway take extra jeans with you to sell on the black market.
  4. Do not mess with the local police. Ever.
  5. Unemployment doesn’t exist in a socialist country – though they have three or four people doing the job of one. That’s the trade-off; unemployment or over-staffing. Which do you prefer? (At least with over-staffing, there were few idle hands for mischief-making and you didn’t have to waste money on unemployment benefits.)
  6. New Zealand was actually more egalitarian (or socialist or whatever you want to call it) in the 1970s, under Norman Kirk and Robert Muldoon – than an actual Soviet Bloc country. Weird – but that’s how it felt.
  7. There was no such thing as inflation. Oh no – they just changed the labels. So Brand X of coffee at 100 forints would disappear off the shelf, to be replaced with Brand Y, at 110 forints. Or a lower weight. That was marxist/leninism’s version of capitalism’s “creative accountancy”.

And it appears that, judging by recent media reports, New Zealand businesses have caught on to Item #7. Instead of raising prices, simply reduce the content.

The only thing is… it didn’t work very well for the Soviet Bloc, and their economies  eventually all but collapsed by the late 1980s, or early 1990s.

Just a thought for us smug Westerners. Reducing content and/or brand-name replacement is only a temporary sticky-plaster and hides fundamental problems with the economy.

As if the lessons of the global banking crisis and resultant recession wasn’t enough of a clue for the West…?

Ok, who’s up for a 150 135 gr bar of Cadbury?

.

.

= fs =

Goodbye to All That:

Reflections of a GOP Operative Who Left the Cult

Mike Lofgren

.

Barbara Stanwyck: “We’re both rotten!”

.

.

Fred MacMurray: “Yeah – only you’re a little more rotten.” -“Double Indemnity” (1944)

.

.

Those lines of dialogue from a classic film noir sum up the state of the two political parties in contemporary America. Both parties are rotten – how could they not be, given the complete infestation of the political system by corporate money on a scale that now requires a presidential candidate to raise upwards of a billion dollars to be competitive in the general election? Both parties are captives to corporate loot. The main reason the Democrats’ health care bill will be a budget buster once it fully phases in is the Democrats’ rank capitulation to corporate interests – no single-payer system, in order to mollify the insurers; and no negotiation of drug prices, a craven surrender to Big Pharma.

But both parties are not rotten in quite the same way. The Democrats have their share of machine politicians, careerists, corporate bagmen, egomaniacs and kooks. Nothing, however, quite matches the modern GOP.

To those millions of Americans who have finally begun paying attention to politics and watched with exasperation the tragicomedy of the debt ceiling extension, it may have come as a shock that the Republican Party is so full of lunatics. To be sure, the party, like any political party on earth, has always had its share of crackpots, like Robert K. Dornan or William E. Dannemeyer. But the crackpot outliers of two decades ago have become the vital center today: Steve King, Michele Bachman (now a leading presidential candidate as well), Paul Broun, Patrick McHenry, Virginia Foxx, Louie Gohmert, Allen West. The Congressional directory now reads like a casebook of lunacy.

It was this cast of characters and the pernicious ideas they represent that impelled me to end a nearly 30-year career as a professional staff member on Capitol Hill. A couple of months ago, I retired; but I could see as early as last November that the Republican Party would use the debt limit vote, an otherwise routine legislative procedure that has been used 87 times since the end of World War II, in order to concoct an entirely artificial fiscal crisis. Then, they would use that fiscal crisis to get what they wanted, by literally holding the US and global economies as hostages.

The debt ceiling extension is not the only example of this sort of political terrorism. Republicans were willing to lay off 4,000 Federal Aviation Administration (FAA) employees, 70,000 private construction workers and let FAA safety inspectors work without pay, in fact, forcing them to pay for their own work-related travel – how prudent is that? – in order to strong arm some union-busting provisions into the FAA reauthorization.

Everyone knows that in a hostage situation, the reckless and amoral actor has the negotiating upper hand over the cautious and responsible actor because the latter is actually concerned about the life of the hostage, while the former does not care. This fact, which ought to be obvious, has nevertheless caused confusion among the professional pundit class, which is mostly still stuck in the Bob Dole era in terms of its orientation. For instance, Ezra Klein wrote of his puzzlement over the fact that while House Republicans essentially won the debt ceiling fight, enough of them were sufficiently dissatisfied that they might still scuttle the deal. Of course they might – the attitude of many freshman Republicans to national default was “bring it on!”

It should have been evident to clear-eyed observers that the Republican Party is becoming less and less like a traditional political party in a representative democracy and becoming more like an apocalyptic cult, or one of the intensely ideological authoritarian parties of 20th century Europe. This trend has several implications, none of them pleasant.

In his “Manual of Parliamentary Practice,” Thomas Jefferson wrote that it is less important that every rule and custom of a legislature be absolutely justifiable in a theoretical sense, than that they should be generally acknowledged and honored by all parties. These include unwritten rules, customs and courtesies that lubricate the legislative machinery and keep governance a relatively civilized procedure. The US Senate has more complex procedural rules than any other legislative body in the world; many of these rules are contradictory, and on any given day, the Senate parliamentarian may issue a ruling that contradicts earlier rulings on analogous cases.

The only thing that can keep the Senate functioning is collegiality and good faith. During periods of political consensus, for instance, the World War II and early post-war eras, the Senate was a “high functioning” institution: filibusters were rare and the body was legislatively productive. Now, one can no more picture the current Senate producing the original Medicare Act than the old Supreme Soviet having legislated the Bill of Rights.

Far from being a rarity, virtually every bill, every nominee for Senate confirmation and every routine procedural motion is now subject to a Republican filibuster. Under the circumstances, it is no wonder that Washington is gridlocked: legislating has now become war minus the shooting, something one could have observed 80 years ago in the Reichstag of the Weimar Republic. As Hannah Arendt observed, a disciplined minority of totalitarians can use the instruments of democratic government to undermine democracy itself.

John P. Judis sums up the modern GOP this way:

.

“Over the last four decades, the Republican Party has transformed from a loyal opposition into an insurrectionary party that flouts the law when it is in the majority and threatens disorder when it is the minority. It is the party of Watergate and Iran-Contra, but also of the government shutdown in 1995 and the impeachment trial of 1999. If there is an earlier American precedent for today’s Republican Party, it is the antebellum Southern Democrats of John Calhoun who threatened to nullify, or disregard, federal legislation they objected to and who later led the fight to secede from the union over slavery.”

.

A couple of years ago, a Republican committee staff director told me candidly (and proudly) what the method was to all this obstruction and disruption. Should Republicans succeed in obstructing the Senate from doing its job, it would further lower Congress’s generic favorability rating among the American people. By sabotaging the reputation of an institution of government, the party that is programmatically against government would come out the relative winner.

.

.

A deeply cynical tactic, to be sure, but a psychologically insightful one that plays on the weaknesses both of the voting public and the news media. There are tens of millions of low-information voters who hardly know which party controls which branch of government, let alone which party is pursuing a particular legislative tactic. These voters’ confusion over who did what allows them to form the conclusion that “they are all crooks,” and that “government is no good,” further leading them to think, “a plague on both your houses” and “the parties are like two kids in a school yard.” This ill-informed public cynicism, in its turn, further intensifies the long-term decline in public trust in government that has been taking place since the early 1960s – a distrust that has been stoked by Republican rhetoric at every turn (“Government is the problem,” declared Ronald Reagan in 1980).

The media are also complicit in this phenomenon. Ever since the bifurcation of electronic media into a more or less respectable “hard news” segment and a rabidly ideological talk radio and cable TV political propaganda arm, the “respectable” media have been terrified of any criticism for perceived bias. Hence, they hew to the practice of false evenhandedness. Paul Krugman has skewered this tactic as being the “centrist cop-out.” “I joked long ago,” he says, “that if one party declared that the earth was flat, the headlines would read ‘Views Differ on Shape of Planet.'”

Inside-the-Beltway wise guy Chris Cillizza merely proves Krugman right in his Washington Post analysis of “winners and losers” in the debt ceiling impasse. He wrote that the institution of Congress was a big loser in the fracas, which is, of course, correct, but then he opined: “Lawmakers – bless their hearts – seem entirely unaware of just how bad they looked during this fight and will almost certainly spend the next few weeks (or months) congratulating themselves on their tremendous magnanimity.” Note how the pundit’s ironic deprecation falls like the rain on the just and unjust alike, on those who precipitated the needless crisis and those who despaired of it. He seems oblivious that one side – or a sizable faction of one side – has deliberately attempted to damage the reputation of Congress to achieve its political objectives.

This constant drizzle of “there the two parties go again!” stories out of the news bureaus, combined with the hazy confusion of low-information voters, means that the long-term Republican strategy of undermining confidence in our democratic institutions has reaped electoral dividends. The United States has nearly the lowest voter participation among Western democracies; this, again, is a consequence of the decline of trust in government institutions – if government is a racket and both parties are the same, why vote? And if the uninvolved middle declines to vote, it increases the electoral clout of a minority that is constantly being whipped into a lather by three hours daily of Rush Limbaugh or Fox News. There were only 44 million Republican voters in the 2010 mid-term elections, but they effectively canceled the political results of the election of President Obama by 69 million voters.

This tactic of inducing public distrust of government is not only cynical, it is schizophrenic. For people who profess to revere the Constitution, it is strange that they so caustically denigrate the very federal government that is the material expression of the principles embodied in that document. This is not to say that there is not some theoretical limit to the size or intrusiveness of government; I would be the first to say there are such limits, both fiscal and Constitutional. But most Republican officeholders seem strangely uninterested in the effective repeal of Fourth Amendment protections by the Patriot Act, the weakening of habeas corpus and self-incrimination protections in the public hysteria following 9/11 or the unpalatable fact that the United States has the largest incarcerated population of any country on earth. If anything, they would probably opt for more incarcerated persons, as imprisonment is a profit center for the prison privatization industry, which is itself a growth center for political contributions to these same politicians.[1] Instead, they prefer to rail against those government programs that actually help people. And when a program is too popular to attack directly, like Medicare or Social Security, they prefer to undermine it by feigning an agonized concern about the deficit. That concern, as we shall see, is largely fictitious.

Undermining Americans’ belief in their own institutions of self-government remains a prime GOP electoral strategy. But if this technique falls short of producing Karl Rove’s dream of 30 years of unchallengeable one-party rule (as all such techniques always fall short of achieving the angry and embittered true believer’s New Jerusalem), there are other even less savory techniques upon which to fall back. Ever since Republicans captured the majority in a number of state legislatures last November, they have systematically attempted to make it more difficult to vote: by onerous voter ID requirements (in Wisconsin, Republicans have legislated photo IDs while simultaneously shutting Department of Motor Vehicles (DMV) offices in Democratic constituencies while at the same time lengthening the hours of operation of DMV offices in GOP constituencies); by narrowing registration periods; and by residency requirements that may disenfranchise university students.

This legislative assault is moving in a diametrically opposed direction to 200 years of American history, when the arrow of progress pointed toward more political participation by more citizens. Republicans are among the most shrill in self-righteously lecturing other countries about the wonders of democracy; exporting democracy (albeit at the barrel of a gun) to the Middle East was a signature policy of the Bush administration. But domestically, they don’t want those people voting.

You can probably guess who those people are. Above all, anyone not likely to vote Republican. As Sarah Palin would imply, the people who are not Real Americans. Racial minorities. Immigrants. Muslims. Gays. Intellectuals. Basically, anyone who doesn’t look, think, or talk like the GOP base. This must account, at least to some degree, for their extraordinarily vitriolic hatred of President Obama. I have joked in the past that the main administration policy that Republicans object to is Obama’s policy of being black.[2] Among the GOP base, there is constant harping about somebody else, some “other,” who is deliberately, assiduously and with malice aforethought subverting the Good, the True and the Beautiful: Subversives. Commies. Socialists. Ragheads. Secular humanists. Blacks. Fags. Feminazis. The list may change with the political needs of the moment, but they always seem to need a scapegoat to hate and fear.

It is not clear to me how many GOP officeholders believe this reactionary and paranoid claptrap. I would bet that most do not. But they cynically feed the worst instincts of their fearful and angry low-information political base with a nod and a wink. During the disgraceful circus of the “birther” issue, Republican politicians subtly stoked the fires of paranoia by being suggestively equivocal – “I take the president at his word” – while never unambiguously slapping down the myth. John Huntsman was the first major GOP figure forthrightly to refute the birther calumny – albeit after release of the birth certificate.

I do not mean to place too much emphasis on racial animus in the GOP. While it surely exists, it is also a fact that Republicans think that no Democratic president could conceivably be legitimate. Republicans also regarded Bill Clinton as somehow, in some manner, twice fraudulently elected (well do I remember the elaborate conspiracy theories that Republicans traded among themselves). Had it been Hillary Clinton, rather than Barack Obama, who had been elected in 2008, I am certain we would now be hearing, in lieu of the birther myths, conspiracy theories about Vince Foster’s alleged murder.

The reader may think that I am attributing Svengali-like powers to GOP operatives able to manipulate a zombie base to do their bidding. It is more complicated than that. Historical circumstances produced the raw material: the deindustrialization and financialization of America since about 1970 has spawned an increasingly downscale white middle class – without job security (or even without jobs), with pensions and health benefits evaporating and with their principal asset deflating in the collapse of the housing bubble. Their fears are not imaginary; their standard of living is shrinking.

What do the Democrats offer these people? Essentially nothing. Democratic Leadership Council-style “centrist” Democrats were among the biggest promoters of disastrous trade deals in the 1990s that outsourced jobs abroad: NAFTA, World Trade Organization, permanent most-favored-nation status for China. At the same time, the identity politics/lifestyle wing of the Democratic Party was seen as a too illegal immigrant-friendly by downscaled and outsourced whites.[3]

While Democrats temporized, or even dismissed the fears of the white working class as racist or nativist, Republicans went to work. To be sure, the business wing of the Republican Party consists of the most energetic outsourcers, wage cutters and hirers of sub-minimum wage immigrant labor to be found anywhere on the globe. But the faux-populist wing of the party, knowing the mental compartmentalization that occurs in most low-information voters, played on the fears of that same white working class to focus their anger on scapegoats that do no damage to corporations’ bottom lines: instead of raising the minimum wage, let’s build a wall on the Southern border (then hire a defense contractor to incompetently manage it). Instead of predatory bankers, it’s evil Muslims. Or evil gays. Or evil abortionists.

How do they manage to do this? Because Democrats ceded the field. Above all, they do not understand language. Their initiatives are posed in impenetrable policy-speak: the Patient Protection and Affordable Care Act. The what? – can anyone even remember it? No wonder the pejorative “Obamacare” won out. Contrast that with the Republicans’ Patriot Act. You’re a patriot, aren’t you? Does anyone at the GED level have a clue what a Stimulus Bill is supposed to be? Why didn’t the White House call it the Jobs Bill and keep pounding on that theme?

You know that Social Security and Medicare are in jeopardy when even Democrats refer to them as entitlements. “Entitlement” has a negative sound in colloquial English: somebody who is “entitled” selfishly claims something he doesn’t really deserve. Why not call them “earned benefits,” which is what they are because we all contribute payroll taxes to fund them? That would never occur to the Democrats. Republicans don’t make that mistake; they are relentlessly on message: it is never the “estate tax,” it is the “death tax.” Heaven forbid that the Walton family should give up one penny of its $86-billion fortune. All of that lucre is necessary to ensure that unions be kept out of Wal-Mart, that women employees not be promoted and that politicians be kept on a short leash.

It was not always thus. It would have been hard to find an uneducated farmer during the depression of the 1890s who did not have a very accurate idea about exactly which economic interests were shafting him. An unemployed worker in a breadline in 1932 would have felt little gratitude to the Rockefellers or the Mellons. But that is not the case in the present economic crisis. After a riot of unbridled greed such as the world has not seen since the conquistadors’ looting expeditions and after an unprecedented broad and rapid transfer of wealth upward by Wall Street and its corporate satellites, where is the popular anger directed, at least as depicted in the media? At “Washington spending” – which has increased primarily to provide unemployment compensation, food stamps and Medicaid to those economically damaged by the previous decade’s corporate saturnalia. Or the popular rage is harmlessly diverted against pseudo-issues: death panels, birtherism, gay marriage, abortion, and so on, none of which stands to dent the corporate bottom line in the slightest.

Thus far, I have concentrated on Republican tactics, rather than Republican beliefs, but the tactics themselves are important indicators of an absolutist, authoritarian mindset that is increasingly hostile to the democratic values of reason, compromise and conciliation. Rather, this mindset seeks polarizing division (Karl Rove has been very explicit that this is his principal campaign strategy), conflict and the crushing of opposition.

As for what they really believe, the Republican Party of 2011 believes in three principal tenets I have laid out below. The rest of their platform one may safely dismiss as window dressing:

1. The GOP cares solely and exclusively about its rich contributors. The party has built a whole catechism on the protection and further enrichment of America’s plutocracy. Their caterwauling about deficit and debt is so much eyewash to con the public. Whatever else President Obama has accomplished (and many of his purported accomplishments are highly suspect), his $4-trillion deficit reduction package did perform the useful service of smoking out Republican hypocrisy. The GOP refused, because it could not abide so much as a one-tenth of one percent increase on the tax rates of the Walton family or the Koch brothers, much less a repeal of the carried interest rule that permits billionaire hedge fund managers to pay income tax at a lower effective rate than cops or nurses. Republicans finally settled on a deal that had far less deficit reduction – and even less spending reduction! – than Obama’s offer, because of their iron resolution to protect at all costs our society’s overclass.

Republicans have attempted to camouflage their amorous solicitude for billionaires with a fog of misleading rhetoric. John Boehner is fond of saying, “we won’t raise anyone’s taxes,” as if the take-home pay of an Olive Garden waitress were inextricably bound up with whether Warren Buffett pays his capital gains as ordinary income or at a lower rate. Another chestnut is that millionaires and billionaires are “job creators.” US corporations have just had their most profitable quarters in history; Apple, for one, is sitting on $76 billion in cash, more than the GDP of most countries. So, where are the jobs?

Another smokescreen is the “small business” meme, since standing up for Mom’s and Pop’s corner store is politically more attractive than to be seen shilling for a megacorporation. Raising taxes on the wealthy will kill small business’ ability to hire; that is the GOP dirge every time Bernie Sanders or some Democrat offers an amendment to increase taxes on incomes above $1 million. But the number of small businesses that have a net annual income over a million dollars is de minimis, if not by definition impossible (as they would no longer be small businesses). And as data from the Center for Economic and Policy Research have shown, small businesses account for only 7.2 percent of total US employment, a significantly smaller share of total employment than in most Organisation for Economic Co-operation and Development (OECD) countries.

Likewise, Republicans have assiduously spread the myth that Americans are conspicuously overtaxed. But compared to other OECD countries, the effective rates of US taxation are among the lowest. In particular, they point to the top corporate income rate of 35 percent as being confiscatory Bolshevism. But again, the effective rate is much lower. Did GE pay 35 percent on 2010 profits of $14 billion? No, it paid zero.

When pressed, Republicans make up misleading statistics to “prove” that the America’s fiscal burden is being borne by the rich and the rest of us are just freeloaders who don’t appreciate that fact. “Half of Americans don’t pay taxes” is a perennial meme. But what they leave out is that that statement refers to federal income taxes. There are millions of people who don’t pay income taxes, but do contribute payroll taxes – among the most regressive forms of taxation. But according to GOP fiscal theology, payroll taxes don’t count. Somehow, they have convinced themselves that since payroll taxes go into trust funds, they’re not real taxes. Likewise, state and local sales taxes apparently don’t count, although their effect on a poor person buying necessities like foodstuffs is far more regressive than on a millionaire.

All of these half truths and outright lies have seeped into popular culture via the corporate-owned business press. Just listen to CNBC for a few hours and you will hear most of them in one form or another. More important politically, Republicans’ myths about taxation have been internalized by millions of economically downscale “values voters,” who may have been attracted to the GOP for other reasons (which I will explain later), but who now accept this misinformation as dogma.

And when misinformation isn’t enough to sustain popular support for the GOP’s agenda, concealment is needed. One fairly innocuous provision in the Dodd-Frank financial reform bill requires public companies to make a more transparent disclosure of CEO compensation, including bonuses. Note that it would not limit the compensation, only require full disclosure. Republicans are hell-bent on repealing this provision. Of course; it would not serve Wall Street interests if the public took an unhealthy interest in the disparity of their own incomes as against that of a bank CEO. As Spencer Bachus, the Republican chairman of the House Financial Services Committee, says, “In Washington, the view is that the banks are to be regulated and my view is that Washington and the regulators are there to serve the banks.”

2. They worship at the altar of Mars.  While the me-too Democrats have set a horrible example of keeping up with the Joneses with respect to waging wars, they can never match GOP stalwarts such as John McCain or Lindsey Graham in their sheer, libidinous enthusiasm for invading other countries. McCain wanted to mix it up with Russia – a nuclear-armed state – during the latter’s conflict with Georgia in 2008 (remember? – “we are all Georgians now,” a slogan that did not, fortunately, catch on), while Graham has been persistently agitating for attacks on Iran and intervention in Syria. And these are not fringe elements of the party; they are the leading “defense experts,” who always get tapped for the Sunday talk shows. About a month before Republicans began holding a gun to the head of the credit markets to get trillions of dollars of cuts, these same Republicans passed a defense appropriations bill that increased spending by $17 billion over the prior year’s defense appropriation. To borrow Chris Hedges’ formulation, war is the force that gives meaning to their lives.

A cynic might conclude that this militaristic enthusiasm is no more complicated than the fact that Pentagon contractors spread a lot of bribery money around Capitol Hill. That is true, but there is more to it than that. It is not necessarily even the fact that members of Congress feel they are protecting constituents’ jobs. The wildly uneven concentration of defense contracts and military bases nationally means that some areas, like Washington, DC, and San Diego, are heavily dependent on Department of Defense (DOD) spending. But there are many more areas of the country whose net balance is negative: the citizenry pays more in taxes to support the Pentagon than it receives back in local contracts.

And the economic justification for Pentagon spending is even more fallacious when one considers that the $700 billion annual DOD budget creates comparatively few jobs. The days of Rosie the Riveter are long gone; most weapons projects now require very little touch labor. Instead, a disproportionate share is siphoned off into high-cost research and development (from which the civilian economy benefits little); exorbitant management expenditures, overhead and out-and-out padding; and, of course, the money that flows back into the coffers of political campaigns. A million dollars appropriated for highway construction would create two to three times as many jobs as a million dollars appropriated for Pentagon weapons procurement, so the jobs argument is ultimately specious.

Take away the cash nexus and there still remains a psychological predisposition toward war and militarism on the part of the GOP. This undoubtedly arises from a neurotic need to demonstrate toughness and dovetails perfectly with the belligerent tough-guy pose one constantly hears on right-wing talk radio. Militarism springs from the same psychological deficit that requires an endless series of enemies, both foreign and domestic.

The results of the last decade of unbridled militarism and the Democrats’ cowardly refusal to reverse it[4], have been disastrous both strategically and fiscally. It has made the United States less prosperous, less secure and less free. Unfortunately, the militarism and the promiscuous intervention it gives rise to are only likely to abate when the Treasury is exhausted, just as it happened to the Dutch Republic and the British Empire.

3. Give me that old time religion. Pandering to fundamentalism is a full-time vocation in the GOP. Beginning in the 1970s, religious cranks ceased simply to be a minor public nuisance in this country and grew into the major element of the Republican rank and file. Pat Robertson’s strong showing in the 1988 Iowa Caucus signaled the gradual merger of politics and religion in the party. The results are all around us: if the American people poll more like Iranians or Nigerians than Europeans or Canadians on questions of evolution versus creationism, scriptural inerrancy, the existence of angels and demons, and so forth, that result is due to the rise of the religious right, its insertion into the public sphere by the Republican Party and the consequent normalizing of formerly reactionary or quaint beliefs. Also around us is a prevailing anti-intellectualism and hostility to science; it is this group that defines “low-information voter” – or, perhaps, “misinformation voter.”

The Constitution to the contrary notwithstanding, there is now a de facto religious test for the presidency: major candidates are encouraged (or coerced) to “share their feelings” about their “faith” in a revelatory speech; or, some televangelist like Rick Warren dragoons the candidates (as he did with Obama and McCain in 2008) to debate the finer points of Christology, with Warren himself, of course, as the arbiter. Politicized religion is also the sheet anchor of the culture wars. But how did the whole toxic stew of GOP beliefs – economic royalism, militarism and culture wars cum fundamentalism – come completely to displace an erstwhile civilized Eisenhower Republicanism?

It is my view that the rise of politicized religious fundamentalism (which is a subset of the decline of rational problem solving in America) may have been the key ingredient of the takeover of the Republican Party. For politicized religion provides a substrate of beliefs that rationalizes – at least in the minds of followers – all three of the GOP’s main tenets.

Televangelists have long espoused the health-and-wealth/name-it-and-claim it gospel. If you are wealthy, it is a sign of God’s favor. If not, too bad! But don’t forget to tithe in any case. This rationale may explain why some economically downscale whites defend the prerogatives of billionaires.

The GOP’s fascination with war is also connected with the fundamentalist mindset. The Old Testament abounds in tales of slaughter – God ordering the killing of the Midianite male infants and enslavement of the balance of the population, the divinely-inspired genocide of the Canaanites, the slaying of various miscreants with the jawbone of an ass – and since American religious fundamentalist seem to prefer the Old Testament to the New (particularly that portion of the New Testament known as the Sermon on the Mount), it is but a short step to approving war as a divinely inspired mission. This sort of thinking has led, inexorably, to such phenomena as Jerry Falwell once writing that God is Pro-War.

It is the apocalyptic frame of reference of fundamentalists, their belief in an imminent Armageddon, that psychologically conditions them to steer this country into conflict, not only on foreign fields (some evangelicals thought Saddam was the Antichrist and therefore a suitable target for cruise missiles), but also in the realm of domestic political controversy. It is hardly surprising that the most adamant proponent of the view that there was no debt ceiling problem was Michele Bachmann, the darling of the fundamentalist right. What does it matter, anyway, if the country defaults? – we shall presently abide in the bosom of the Lord.

Some liberal writers have opined that the different socio-economic perspectives separating the “business” wing of the GOP and the religious right make it an unstable coalition that could crack. I am not so sure. There is no fundamental disagreement on which direction the two factions want to take the country, merely how far in that direction they want to take it. The plutocrats would drag us back to the Gilded Age, the theocrats to the Salem witch trials. In any case, those consummate plutocrats, the Koch brothers, are pumping large sums of money into Michele Bachman’s presidential campaign, so one ought not make too much of a potential plutocrat-theocrat split.

Thus, the modern GOP; it hardly seems conceivable that a Republican could have written the following:

.

“Should any political party attempt to abolish social security, unemployment insurance and eliminate labor laws and farm programs, you would not hear of that party again in our political history. There is a tiny splinter group, of course, that believes you can do these things. Among them are H. L. Hunt (you possibly know his background), a few other Texas oil millionaires and an occasional politician or business man from other areas. Their number is negligible and they are stupid.” (That was President Eisenhower, writing to his brother Edgar in 1954.)

.

It is this broad and ever-widening gulf between the traditional Republicanism of an Eisenhower and the quasi-totalitarian cult of a Michele Bachmann that impelled my departure from Capitol Hill. It is not in my pragmatic nature to make a heroic gesture of self-immolation, or to make lurid revelations of personal martyrdom in the manner of David Brock. And I will leave a more detailed dissection of failed Republican economic policies to my fellow apostate Bruce Bartlett.

I left because I was appalled at the headlong rush of Republicans, like Gadarene swine, to embrace policies that are deeply damaging to this country’s future; and contemptuous of the feckless, craven incompetence of Democrats in their half-hearted attempts to stop them. And, in truth, I left as an act of rational self-interest. Having gutted private-sector pensions and health benefits as a result of their embrace of outsourcing, union busting and “shareholder value,” the GOP now thinks it is only fair that public-sector workers give up their pensions and benefits, too. Hence the intensification of the GOP’s decades-long campaign of scorn against government workers. Under the circumstances, it is simply safer to be a current retiree rather than a prospective one.

If you think Paul Ryan and his Ayn Rand-worshipping colleagues aren’t after your Social Security and Medicare, I am here to disabuse you of your naiveté.[5] They will move heaven and earth to force through tax cuts that will so starve the government of revenue that they will be “forced” to make “hard choices” – and that doesn’t mean repealing those very same tax cuts, it means cutting the benefits for which you worked.

During the week that this piece was written, the debt ceiling fiasco reached its conclusion. The economy was already weak, but the GOP’s disgraceful game of chicken roiled the markets even further. Foreigners could hardly believe it: Americans’ own crazy political actions were destabilizing the safe-haven status of the dollar. Accordingly, during that same week, over one trillion dollars worth of assets evaporated on financial markets. Russia and China have stepped up their advocating that the dollar be replaced as the global reserve currency – a move as consequential and disastrous for US interests as any that can be imagined.

If Republicans have perfected a new form of politics that is successful electorally at the same time that it unleashes major policy disasters, it means twilight both for the democratic process and America’s status as the world’s leading power.

Footnotes:

[1] I am not exaggerating for effect. A law passed in 2010 by the Arizona legislature mandating arrest and incarceration of suspected illegal aliens was actually drafted by the American Legislative Exchange Council, a conservative business front group that drafts “model” legislation on behalf of its corporate sponsors. The draft legislation in question was written for the private prison lobby, which sensed a growth opportunity in imprisoning more people.

[2] I am not a supporter of Obama and object to a number of his foreign and domestic policies. But when he took office amid the greatest financial collapse in 80 years, I wanted him to succeed, so that the country I served did not fail. But already in 2009, Mitch McConnell, the Senate Republican leader, declared that his greatest legislative priority was – jobs for Americans? Rescuing the financial system? Solving the housing collapse? – no, none of those things. His top priority was to ensure that Obama should be a one-term president. Evidently Senator McConnell hates Obama more than he loves his country. Note that the mainstream media have lately been hailing McConnell as “the adult in the room,” presumably because he is less visibly unstable than the Tea Party freshmen

[3] This is not a venue for immigrant bashing. It remains a fact that outsourcing jobs overseas, while insourcing sub-minimum wage immigrant labor, will exert downward pressure on US wages. The consequence will be popular anger, and failure to address that anger will result in a downward wage spiral and a breech of the social compact, not to mention a rise in nativism and other reactionary impulses. It does no good to claim that these economic consequences are an inevitable result of globalization; Germany has somehow managed to maintain a high-wage economy and a vigorous industrial base.

[4] The cowardice is not merely political. During the past ten years, I have observed that Democrats are actually growing afraid of Republicans. In a quirky and flawed, but insightful, little book, “Democracy and Populism: Fear and Hatred,” John Lukacs concludes that the left fears, the right hates.

[5] The GOP cult of Ayn Rand is both revealing and mystifying. On the one hand, Rand’s tough guy, every-man-for-himself posturing is a natural fit because it puts a philosophical gloss on the latent sociopathy so prevalent among the hard right. On the other, Rand exclaimed at every opportunity that she was a militant atheist who felt nothing but contempt for Christianity. Apparently, the ignorance of most fundamentalist “values voters” means that GOP candidates who enthuse over Rand at the same time they thump their Bibles never have to explain this stark contradiction. And I imagine a Democratic officeholder would have a harder time explaining why he named his offspring “Marx” than a GOP incumbent would in rationalizing naming his kid “Rand.”

.

***

Related Stories

The Quiet Staffer Who Went Nuclear on the GOP

GOP to Fed: Let Economy Fail

.

***

.

This article was re-printed, verbatim, from Truthout. Whilst it deals primarily with U.S. politics, which is vastly more feral than anything we presently have here, in New Zealand, it is still worthwhile exploring how right wing politics can undermine democratic institutions and processes, to pursue and promote a partisan agenda.

Licensed under a Creative Commons Attribution-Noncommercial 3.0 United States License.

Acknowledgement to Tumeke blog.

.

.

Capitalism, top heavy and toppling – Bernard Hickey

This is must-read stuff…

Full article here.

It is worth noting that, here in New Zealand, recent tax cuts gave $2.5 billion a year to the top 10 per cent of earners and “practically nothing to the bottom 20 per cent of earners, who got 3 per cent of those cuts”.

It is also worth noting that, as a country, we are having to borrow $380 million  per week to – in part – fund those tax cuts.  That’s $17.6 billion this year alone.

Far from being a “prudent fiscal manager”, National is being highly irresponsible as it continues to woo the  Middle Class for their votes.

Only thing is: eventually it all has to be paid back. Even selling all out SOEs won’t cover that debt mountain, as we simply don’t have enough state assets left after the 1980s and 1990s.