By Jenée Tibshraeny
University of Auckland Law professor Jane Kelsey warns New Zealand is headed down the same path as Greece and Ireland, as the conditions for a major economic crisis are ripe.
Kelsey has launched a brazen attack on the “neoliberal” system we’ve been living in since the 1980s, in her newly released book, ‘The FIRE Economy’.
She says our free-market capitalist society has created a “FIRE” economy – an abbreviation for an economy that’s had its wealth created by the financial, insurance and real estate sectors.
Kelsey, who’s perhaps best known for speaking out against the Trans-Pacific Partnership Agreement, warns we’re in for a major economic crisis, if we don’t change tack soon.
The book details how ‘financialisation’ has progressively hollowed out the New Zealand economy, and burdened households and the country with unsustainable debt.
Kelsey argues the housing bubble, finance company collapses and the insurance hangover from the Canterbury earthquakes are symptoms of a market fundamentalism that celebrates easy profits and risk, and treats the people and communities who lose as collateral damage.
She’s concerned New Zealand is in a “cocoon” or “state of denial”, where we’re labelled as having a rock star economy, yet the likes of the International Monetary Fund is saying we have dangerous levels of public and private (including foreign) debt and exposure to the FIRE economy.
“Even though what’s in there [the book] might seem radical in terms of the debate in New Zealand today, it’s not radical in terms of the international debate at all”, Kelsey says.
New Zealand ticks boxes of crisis trigger checklist
She points out the IMF has made a checklist of triggers that have resulted in crisis. The first four have been common causes since the 1970s, while the second four were new to the Global Financial Crisis. She says New Zealand ticks almost every box:
- A credit boom and rapid financial expansion
- Rapidly rising asset prices, especially housing
- Financial ‘innovations’ that rely on favourable economic conditions
- Financial liberalisation and innovation
- A sharp rise in household debt and defaults
- High leverage backed by illiquid assets
- The growth of complex derivatives in the shadow banking system
- The depth of international financial integration
Kelsey is concerned too much finance sees money put into “making money out of money”, rather than into the productive economy.
“There’s a point at which the money-go-round actually can’t continue.”
Re-regulating our economy
Kelsey says it’s not just the economy that needs to be changed, but the way it’s regulated – the entire financial infrastructure.
She writes, “Cabinet directives and Treasury guidelines that mandate a light-handed and risk-tolerant approach to all regulation can be revoked.
“Treasury’s oversight team can be dismantled and officials, especially in core agencies, can be required to learn new regulatory practices as a condition of employment.
“In practice, we will require a revolution in the state sector equivalent to the restructuring of the 1980s and 1990s, with the reverse objectives.”
Revamping the Reserve Bank Act
Kelsey suggests the Reserve Bank’s Policy Targets Agreement should be broadened, so it isn’t solely focused on price stability.
“If the objective is price stability, but price stability doesn’t include the real estate market, then you have some contradictions you need to deal with, and I think the Reserve Bank is struggling with that.”
She says the Reserve Bank’s structure is designed to insulate its inflation targeting objective from political intervention.
She’s calling for the Act to be revamped, as “many other countries are saying political interventions are increasingly needed”.
“We kind of have this fixation here that no one can touch the Reserve Bank Act, and we need to break through that.”
Bigger govt. with less reliance on the private sector
Kelsey is calling for the Government to stop entering into contractual agreements with the private sector, as this makes it harder to track where funds are going and sees the public purse made vulnerable to commercial interests.
She writes, “What was once an integrated public service is now a diffused web of public agencies constantly being reorganised and private actors performing public functions”.
She says the government should renegotiate existing contracts, restrict the scope of new contracts, and not enter into any new public private partnerships (PPPs).
Kelsey says PPPs are a “guaranteed income stream to what’s basically a consortium of financiers, the construction sector and the management industry”.
When there’s a problem, they end up in big contractual disputes that cost taxpayers.
“This particular government has gone hell for leather down the path of PPPs and PFIs (private finance initiatives), without there being much debate. And these are long-term arrangements… so they tie the hands of future governments and their income streams.”
Remaining flexible when entering international agreements
Kelsey wants to bring both the state and a social conscious back into the market.
She wants us to “avoid digging ourselves deeper into the international connectedness through regimes that make it difficult for us to change tack”.
She claims she isn’t advocating New Zealand be cut off from the world, but says we need to remain flexible when entering into international relationships, as economies and world dynamics are ever-changing.
Concluding her book, Kelsey writes, “This book has exposed the paradox that financialisation and neoliberalism are fragile, unsustainable and yet resilient, as they reinforce each other within a regime that was designed to withstand the pressures for change.”
Despite it being difficult, Kelsey says we need to make some changes to our “unbalanced” economy, dependent on dairy exports and driven by speculation.
“It’s not enough to say we can’t do anything because we’re part of a globalised world. We actually can do things in this country to change our direction.”
107 Comments
She's spot on.
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When the chickens come home to roost, will we blame the millenials addiction to blingey phones? Will we blame non-residents buying our real estate?
Or will we blame the flogging off of state assets and the outflow of profits, due to deregulation and slack controls?
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Hm.
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I'm sure once it's our turn to be called "lazy" and "tax evaders" we'll protest just as hard as the Greeks do, now.
Only it will be too late.
From the title/heading I didnt think find a huge amount to agree with, instead I read it all twice just to make sure what she was saying.
Totally agree, she is sport on.
"too late/our turn" just one thing just consider that many countries are in far more perilous state than us IMHO. Sure we can go down the gurgler but there wont be many after us as they will be long gone and we will be too small to notice (I hope).
Greece is a failed state. Totally corrupt, dysfunctional government institutions (even India manages to collect taxes properly, btw, Greece does not and is not trying to either), Europe's largest public sector and highest per capital expenditure on welfare payments. As critical as I am about NZ, it is far away from being a basket case like Greece.
That people in NZ believe in bs industries such as selling real estate, insurances and "financial products" to each other is another matter. Now everyone pretends to be shocked that bs industries do not earn us a living, but still boring milk powder. NZ has not been investing in its future for decades but simply lived off substance and that is a catastrophic mistake. Chasing people out of universities by charging high fees that mostly feed an administrative/managerial overhead is probably one of the worst sins.
Is anything going to change? I doubt it. Kiwis are apathetic when it comes to politics. The pain will have to get a lot stronger before anything happens and even then, they are more likely to run off to other countries than improve their own. Sad fact is that we have lost the pride in our country, culture, future and chosen the easy way on everything.
Never mind. Good luck to us all.
Kelsey says it’s not just the economy that needs to be changed, but the way it’s regulated – the entire financial infrastructure.
I hope your book talks about money and how it is the Money supply growth itself that has fed the growth of the FIRE economy.... In my view, it is largely that growth in Money supply (credit)... the effects radiating outwards from the Banking sector (which creates it )... that has fueled the rise of the FIRE economy.. to the point where there is a disconnection from economic fundamentals...
There are structural flaws in the Global Monetary system, our Monetary system... inflation targeting... etc..
I look forward to reading your book.
almost there Roelof.....
When the Money gets free of physical goods and services constraints, it can go much much faster.
What you described is the feedback loop (remember the butterfly's wing) and the compounding process.
human and "social" capital have natural limits. Turning it into money gives us a way to tracking the sacrifice and deferment of the results of our natural capital - a medium farmer makes 10,000 liters a day, deferment via money, allows that to be a tradable specialty rather than very smelly yogurt for their family and staff.
But when the accumulated amount, i.e. that through sacrifice, keeps attracting value there is little natural physical restriction. Just risk, and speed of update - and in our modern world we can visually view the market in near real time; not having to predict and interpreted ticker tape, and have minutes or hours in transfaction turnaround, or risk of literal trading floor losses.
The small margins don't go back into the physical capital world, they accumulate in the Money capital world - this is the feedback loop.
That is then reused in the same many - that is the compounding loop.
The compounding loop will quickly approach "e" the maximum rate of expansion, as the natural time factor involved in a period gets shorter.
Natural capitals do stand on the shoulders of previous giants, todays' trucking logistics would have been impossible on the roads of the 1950's let alone earlier. But it can never reach the compounding speed of the pure mathematical Money capital world. The real world also has natural attrition which the inflation of the Money world doesn't match. Through in greed self-serving bankers and government to steer the whole system
The banks create money when they hand out a mortgage, that money inflates the houses which do not show up in the inflation figures. Nasty positive feedback.
I think the reserve bank targeting inflation works well, its just using the wrong inflation rate. The inflation rate should be dominated by the house inflation rate at the moment.
We changed the monetary system so we could continue to improve our living standards beyond what we deserved (could pay for). While I agree with some of what Kelsey says (especially with the private money creation), who in the 70s would have accepted that we could not continue to pay for these living standard improvements and who today is prepared to give up these living standards we enjoy today. It would be political suicide to do this.
What we are going through is part of the lifecycle of a country / empire - HISTORY repeats
I wonder what our standard of living would revert to if we were to truly live at our means?
Either way, we'll have to pay the piper sometime and I'd rather we becoming materially poorer now vs later if it means we can still retain control of our assets, land and sovereignty.
The cost I worry about most, is the cost to the environment. The overgrazing to keep us in meat, the felling of forests to build our houses and grow more grass...
The inhumane treatment of animals, whether it be for meat, for dairy, cosmetics, medicine, religion or fetishism/fashion...
We re destroying our own habitat because we fear being left behind. Because we want to keep up with the Jones's. Because we've been fed a culture of entitlement by TV and glossy magazines.
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Hard work? Since when was hard work guaranteed to get you rich? Millions of pioneers and women in Africa would heartily disagree with you.
have to have trade-ables (money) (and careful of population size).
that's what I found when running the farm, just no money for me to personal succeed at those things and customers weren't willing to pay the commodity price to put it in as part of the item production cost - they'll buy smartphones, and expensive entertainment, but not quality production. And the "money money" that the article is talking about makes all the trade income and effort worthless - MBIE spends more on rubbish like signage than most farms can afford - so they're trying to corporatise the farms, by off-shore owners if NZers cant
Yes. Not very many know the true price of all they consume, these days.
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The sad truth is that if everything was charged at true cost - which would include the costs incurred to mitigate the pollution incurred to produce most things - we would not (well, I wouldn't) be able afford most of what we consume.
This goes from the true cost of manufacturing a plain white cotton t-shirt, to the price of your chop or steak on your plate.
It would be interesting to know the state of the economy if we hadn't have changed to the policies from 1984.
I think NZ was entering the area of banana republic back then, and the economic policies that Kelsey has criticised is the only reason we have delayed that.
Although with the rest of the world now in the same boat, it may go on for a long time yet.
Plutocracy - If you want to retain an asset, land and sovereignty then one would make sure that any Government and bureaucrat practices essential prudent spending only!! And NO public system is capable of this!!
In NZ's public system there is the attitude of super-size us!! They find a problem and address it in a manner that creates more for them, both as an organisation and individually.
The employees within these organisations do very well but the people on the SME side and their employees get shafted......
I couldn't help but wonder...how much in funding does Auckland Uni receive from the Government?
I recall when Roger Douglas brought in .."user pays"
At the time, even I thought it was a great idea....
NOW.... It is easy to see the higher order effects of it.
it gave the public/local body sector autonomy and gave them the power to create fiefdoms and little empires..
Douglas opened the floodgates.... and created something he never intended..??
Out of these kinds of things I learnt about "unintended consequences"....
AND... policy advisors / the public sector and politicians are very good at making decisions that have unintended consequences.... big ones
Regarding Auck. Uni. ... student loans has been a boon for them and others.
( read "the economic state of the Nation by Roger Bowden )
If the cost of housing is anything to go by, then by stripping out all the waste of non value added costs that the rentiers add, then we would have the same housing for a lot less cost. Our disposable income would increase and we would also afford to build better housing and still cost less than at present.
All that is needed to achieve this is some simple paper reforms.
The other day we were given an excellent link Naomi Klein and her book "The Shock Doctrine" (now a movie) and some time back another link to Princes of the Yen: Central Bank Truth Documentary.
These coupled with other articles convices me we are close to recieving "The Shock Doctrine"
I would say
Global Central banks, just like the Japan Central bank did, are lining us up for The Shock - a massive global meltdown. All the banks will close. It will be worse than Greece.
The crisis will be resolved by every country selling ALL their assets or shutting down businesses the Corporates dont want. Many banks will close for good.
Each countries Central bank will take over each governments finances. Like what is happening in Greece.
This, i believe will happen no later than 2017 and after the TPP, TTIP are all in place
We will now, allong with the rest of the West, we be part of the Global Corporate Empire.
It is highly possible, during the shock treatment that America will launch a first strike on Russia.
Once Russia falls China will be forced to surrender to America.
Then American Global Domination will be achieved and the Corporates will be in control of everything
Calm down - the currency pairs have yet to round trip 10 big figure handles each day, as they did in the late eighties.The US will not strike Russia, as it didn't during the Cold War - MAD still applies today, otherwise NATO would have invaded just as it has in the Middle East etc. Words are still cheap.
Stephen H - America has a plan (war game) where they launch a three pronged attack on China in 2017.
Basically the idea is.
America will hit military satelites, and missile sites in one supper fast massive overwhelming attack.
The idea is to knockout the missiles before they can be launched.
Any missiles that manage to be launched will be taken out by the massive global missile defence system.
Should a few missiles get through then the West will still survive and that is the cost of victory.
Don't be so stupid. Russia still has Cold War era fast response missiles and dead-man systems. Not to mention all the subs. There is no global missile defence system, the Americans still can't manage to reliably intercept a slow moving target of their own control with no decoys. First strike has not been a viable strategy for a very long time even if one power was insane enough to consider it.
Learn some things outside your conspiracy theory circles.
Mike B has got a point, the US would like to be the "Grand Master" of the planet.
Read this article from 1992 in the NY Times
U.S. Strategy Plan Calls for Insuring No Rivals Develop A One-Superpower World
This comment and the ones that follow sort of prove it is not just America who have outlying strange conspiracy types. Kiwis forget that for every one here (many in this thread) there are about 100 in the US. Palin, Trump, Klien, Brand, and similar can never get elected but provide fodder for their opponents who think they are about to take over the world. Grow up. It will never happen. People can see through weirdness no matter where it comes from (exception: non democratic countries).
Your theories aren't quite as absurd or wild as David Chaston would have us believe.
"Robert Mundell, “the father of the euro,” and one of the world’s most respected economists, also views crisis as the starting point for change. In a May, 2007 lecture, Mundell related, “International monetary reform usual becomes possible only in response to a felt need and the threat of a global crisis.”
This Nobel Prize winner also pointed his finger to the possible trigger event, saying that the “global crisis would have to involve the dollar,” and that a world currency should be viewed as “a contingency” to a global dollar disaster.[18]
With a similar crisis in mind, Benn Steil offers what appears to be an altruistic solution. In order to avert the crisis, all that nations need to do is relinquish sovereignty before the problem become insurmountable.
“Governments must let go of the fatal notion that nationhood requires them to make and control the money used in their territory. National currencies and global markets simply do not mix; together they make a deadly brew of currency crisis and geopolitical tension and create ready pretexts for damaging protectionism.”[19]"
http://www.forcingchange.org/one_world_one_money_with_endnotes
Pretty much on target. although many of the "bad warning signs" apply to the 3 cities, rather than provincies, and that _growing_ discrepancy (as Napier, New Plymouth, Invercargil etc continue to struggle to keep up with the Joneses) is yet another Greek style warning.
Greek rural collapse was about 15 years ago, and highlights the globalisation danger of "whats the point of producing anything if everything can be made elsewhere cheaper" especilly for those not young and fungible
thats why it does not make sense to have at least one of the new graduate schools in somewhere other that the three main centres
why not Tauranga or napier or nelson or blehiem plenty of places in NZ to develop it and help regional NZ
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11482053
By the way, i should have added that America, in addition to surounding China and Russia with Trade deals is also surrounding China and Russia with a massive missile defence system. Covering Land Sea and Air.
Part of that missile defence system is located in Australia.
Because of the high cost the trading countries are being asked to contribute.
Very good and valid on the dangerous economic path NZ has headed down and highlights the faults of our out dated financial system geared to towards consumerism and speculation that could lead to Greece fate of Austerity measures.
Whats annoying is small group, mainly baby boomers who had education and health paid for and see what they paid for their house soar in value, feel that lovely smug and gooey warm sensation.
While generations X & Y etc. well be left to carry the can when the market returns to what we actually export rather than loan.
This has been the American way after the GFC. Europe followed suit, but did not have the size/market clout to pull it off. Australia did not have to do so, because of mining boom. NZ's dairy is struggling now.
But things will change with more integration into the American economy and way of doing things.
Despite some accuracy about the challenge we face, the standard academic approach still comes through. Some things she advocates are just back to front.
"Kelsey is calling for the Government to stop entering into contractual agreements with the private sector, as this makes it harder to track where funds are going". What rot.
Once the civil servants, including academics get a stranglehold on the cash anything can happen to it. Obscure meaningless activities become entrenched, the low income people (who are certainly not government employees) pay the tax and get nothing in turn.
Kelsey's statement is just another in the ceaseless campaign to cement their priviledged position.
Once the civil servants, including academics get a stranglehold on the cash anything can happen to it.
Yep, it the so called Ph. D. standard.
"My generation gave former tenured economics professors discretionary authority to fabricate money and to fix interest rates.
We put the cart of asset prices before the horse of enterprise.
We entertained the fantasy that high asset prices made for prosperity, rather than the other way around.
We actually worked to foster inflation, which we called 'price stability' (this was on the eve of the hyperinflation of 2017).
We seem to have miscalculated." Read more
Shes a left wing crank. Having said that the capitalist system has been bastardised by mad men with money printing, the manipulation of interest rates allowing insane credit growth they have gone for the soft option. They believed they could defy the market but just created unsustainable bubbles.
Second that. The enthusiasts for a 'new economic order' tend towards the utopians. And Utopia tends towards Distopia once yez figure in that old pest, Human Nature.
So, in order to preserve a New Order, once the cracks inevitably appear, there are progroms, a cull of the Unenlightened, an entitled Elite (because they just Know Better) and a New Feudalism.....
It's an old and sorry story.
You're describing exactly what's already being done to preserve capitalism....
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the pogroms are the wars of choice the west has waged, for both access to resources and 'preservation of our way of life'
The cull of the unenlightened: the unenlightened are made up of those people considered to be 'collateral damage' : civilians raped and displayed and starved and killed by those wars of choice. Millions whose standard of living has dropped considerably due to mega corporations getting a hold of their land or water supply, or even just suffering the pollution these same corporations are inflicting by simply being in business
And - an entitled elite....are you seriously going to pretend those who've made billions since markets and industries have been deregulated are not acting like an entitled elite?
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But you're right, the dumbing down of our education and the declawing of our investigative media is ensuring a feudalism of the deliberately kept ignorant.
that is why government must Back Off,
and the wealthy Must come forward.
Sadly much of the system has evolved so we don't actually have many wealthy (outside of government) because it takes so much effort to just stay ahead of the compliance costs and wanna's
What little is wealth tends to be dead capital in houses because it is lousy to invest into NZ, with it's super high compliance and overheads...
We setup a business and hire staff, if you know you'll be working for government 30% of the time you put in, and that the people you employ will also lose 30% of what you pay immediately as they spend 30% of their working for the government not you and not themselves. A government which is inefficient at returning value (see Chch CBD)
I agree there are fundimental problems with our economy and way too much debt, but her solution? Bigger government and more socialism. Sigh.
As soon as any academic uses the word "neoliberal" I switch right off. Many of the changes made in the 80s had to be made or we really would have ended up like Greece. It's too simplistic and easy to blame Roger Douglass, a LOT has happened since then to affect the economy, both right and left wing policies.
Well less Govn intervention and removing of the laws and regulations put in place after (because of) the Great Depression have it seems brought us to the eve of an even Greater Depression.
Keynes also said (I think) at the time (something along the lines of) they'd get out of it because they had the materials to do so, today we do not.
To be fair it the neoliberal reforms in the 70s and 80s did solve the obstacle to the flow of capitalism at the time. Just like how in the 30s, unions were strengthened and wages were increased, solving the acute problem of the time and leading to the next crisis. And this is how it always is, the seeds of the next crisis are sown in the solution to the previous one. But you're right, there's no reason to think 'hey, this worked last time!' is a good argument for doing the same thing again. Conditions change, therefore so do the valid solutions.
The problem I think Mark is that many liberals like Jane Kelsey look back upon the distant past with rose tinted nostalgia. To them it looked like a Gold Age of prosperity, equality, stability, and cross-class solidarity, before the Dark Ages of the neoliberal era descended upon the land. What they fail to acknowledge was the powerfully disruptive pressures, which strained the delicate fabric of the economic and social order appeared as early as the 1950s and 1960s, well before the Neoliberal reforms.
" By now the economic crisis was at boiling point and, a top-secret memo from the prime minister's economic advisor Thomas Balogh to Harold Wilson on 16 March reveals details of the emergency package being considered.
Brian Walden, then a backbench MP, says the "mad plan" would have involved forbidding foreign travel, banning any cash from being sent abroad, effectively seizing pensions held abroad - "a virtual financial coup d'etat".
Andrew Graham, an economic advisor to 10 Downing Street at the time, revealed to BBC Two's Leviathan documentary UK Confidential the full extent of the threatened crisis action.
Large international companies trading in sterling would have been unable to use their balances without a certificate from the government and UK citizens working abroad would have had their sterling bank accounts frozen indefinitely, he said.
'Mad plan'."
http://news.bbc.co.uk/1/hi/special_report/1999/01/99/1968_secret_histor…
http://vi.uh.edu/pages/buzzmat/articles/collinswaning1968.pdf
Basically it was a matter of policy elites and politicians not being willing to be responsible for allocating resources between different social groups with competing demands. They instead preferred to shift responsibility into the care of "the markets" which could be framed as impersonal, impartial forces, which would be allowed to decide the relative fortunes of the public. Of course those markets were anything but impersonal and impersonal, they were just as much a political arena as any soapbox or campaign race.
"Aside from these trenchant observations about the Reagan economy, Krippner also analyzes decision-making at the post-1970s Federal Reserve. She notes that Paul Volcker disingenuously adopted ‘monetarism’ as a method of shielding the Fed from political blowback from its induced harsh recession of the early 1980s. This kind of avoidance of explicit responsibility continued during the Greenspan era, as Greenspan sought to position the Fed as ‘following’ the markets rather than leading them. One gem in a footnote is a Krippner interview with Janet Yellen, in which Yellen says she heard Robert Rubin in the 1990s arguing the Fed was irrelevant.
The era of financialization was not letting the market decide, it was, as Krippner argues, a specific form of ‘neoliberal statecraft’. It was governing without consent of the governed, by depolitizing decisions to a state-constructed market. And for a time, it did defray the social, fiscal, and legitimacy crises that politicians in the 1960s and 1970s couldn’t solve. But that time, as our episode of bubbles and crashes and frauds suggest, is over. We will have to create an architecture of decision-making once again, to solve the problems earlier politicians wouldn’t and couldn’t. The fight over resources, as Occupy Wall Street reminded us for a time, is perennial."
http://www.nakedcapitalism.com/2014/02/matt-stoller-greta-krippners-cap…
Basically it was a matter of policy elites and politicians not being willing to be responsible for allocating resources between different social groups with competing demands.
Really..??? Would you really trust elite policy elites and politicians in making wise and intelligent decisions in regards to allocating resources...???
Of course not. I am an anarchist for a reason, but this is precisely why I am an anarchist. Governments allocate resources, this is their primary responsibility, which they currently perform even today in spite of their disingenuous platitudes about free markets and free trade. Its governments who determine access to natural resources such as minerals (minerals permits), construction of infrastructure to transport the resources from the mines (roads, rails, ports), they have a heavy influence in communications infrastructure (radio frequency spectrum permits, launching of satellites for communications, telegraph and telephone communications), they create and enforce a system of "property rights", including the land registration, insurance, zoning, eminent domain, and planning, they administer and regulate the financial system, and all this doesn't even include the massive "civil service" bureaucracy which is currently driven purely by commercial imperatives. Read directing the allocation of resources towards the wealthy, and they need not even be wealthy from New Zealand.
""We have to do more to encourage investment as a country, and one of the things I'm taking through the cabinet at the moment is a joined-up national investment attraction strategy which will have four or five big agencies that are involved in this phase working together under Peter Chrisp from NZTE, and their job will be to show a pipeline of private sector investment opportunities to international investors so that they can come in, invest, particularly in our regions, and encourage opportunities to grow new industries and put more capital into existing industries across the regions,"
http://www.nbr.co.nz/article/joyce-new-push-attract-foreign-investors-1…
The basic social problem is the poor have no resource of value to use to improve their position for any reason (eg intelligent self improvement). Often this is a case of no interest or priority to do so, or an inability to see an advantage in doing so.
But we do have to work out just what kind of work do we expect from a population.
If all are expected to work for their crust at labour, then we have a slavery. via force, debt, social (tribal) it matters not. I have lived in the later, trust me, it is indeed slavery when your roof and crust depend on following the masters' orders.
But if we expect to have many wealthy living of investments, who does the labour? who decides what is fair? what of the young or old or infirm?
what level is reasonable, what is healthy? what of those who disagree?
I think this discussion is rather moot. It's not up to us to decide the general politic framework by which society operates. This is done in the hallowed halls of power, closed to the likes of us. Decision are being made on a global level now. The role of politicians on the national stage is to sell those decisions to the credulous public. Politicians here are only too mindful of their responsibility.
" Addressing the US Chamber of Commerce during his bid to become director-general of the WTO, Mr Groser said the change required for, and resulting from, free trade deals necessitated discretion.
Evidence backed the benefits of free trade, he said. It facilitated higher productivity, higher wages and material progress. But ''this alone is too austere a message to sell to the general public'', he said.
''And frankly ... for precisely the point I have just made, in all the speeches, interviews and comments I have made on trade, I have never once said in New Zealand, `Vote for me: I'm in favour of free trade'.''
The bigger the trade deal, the more secretively it would have to be handled, he told his audience.
''I have said to trade journalists in Geneva and, let me admit to a certain degree of perverse pleasure, that if I were to become director-general [of the WTO], I would be a `trade journalists' nightmare','' he said.
''Actually, in public, the director-general needs to be a forceful public advocate of the system ... And we need the help of the world's media to achieve that. But when it comes to the sensitive negotiating issues, I believe the director-general must be completely silent in public and open to many different solutions.''
http://www.odt.co.nz/lifestyle/magazine/298464/making-trade-offs
While National have quite possibly made things worse with tax cuts lets in 2008/9 not forget they inherited an economy off 3 terms under Labour where despite the RB's warnings HC and co did nothing. On top of that looking back at the last and indeed present Labour Leader I have little confidence we would have been better off under Labour and arguably worse.
Both are in denial, both dont want to listen on the problems we face, neither have solutions. The only difference is who benefits the most from their respective policies short term. Just consider who pays the rump of tax, the middle earners. If we have a National Govn the middle income pays while the rich benefit and if it is a Labour Govn the middle income pays and the poor benefit (maybe).
What's a real worry is that this professor teaches the up and coming generation. She should be restrained
from passing on this extreme left wing nonsense to her pupils and charged with sabotaging the national effort. What she needs is a 12 month stint at earning her keep by the sweat of her brow instead of
being
paid by the combined income from penniless students. She would lose her pie in the sky theories within the first two weeks with the rest of her time devoted to contemplation until she sees the error of her ways.
The occasional beating on the soles of her feet may help concentrate her mind.
So you're happy with the status Quo:-
Extremely unaffordable housing (I guess that was your fortune made there)
A extremely bad net investment position of -70% of GDP
and a extremely biased tax system in favour of asset inflation.
Try thinking outside of you own skin.
Not sure where he's coming from since he didn't actually address any of the points, only that she is an academic (at a university which is the one place you really do want to see a hot bed of crazy and good ideas to remove the preference bias)
I'm just annoyed that I'm not allowed to do even the most basic plumbing work on my own dwelling - I might have to run hoses instead of pipes just to avoid having to pay for consents and overpriced plumbers for basic work
thanks. I generally fly close enough to the sun that I don't like to invite further danger. So if the system is broken I think it is better to fix the system than take shortcuts that reduce the entire system to an expensive mockery.
I'm looking to replace a copper hotwater pipe that goes through a meter block of moist concrete on it's way to the house (ie under the laundry).
I've cut a 300mm wide channel, and will probably replace the majority top of the concrete block with a low suspension timber and polystyrene blocks, taking plenty of care to preserve any structural areas. I was going to re-concrete and insulate the pipe it but it seems wasteful and cold.
Passing a bare copper pipe through ground connected concrete slabs is just so 70's energy plan.
But unless I find alternatives it's hiring a plumber and probably paying for consent to to fix the monstrosity. It is accessible by hatch, not sealed in cavity or covered by tile, nor is it foul/black water, so seems excessive.
I've worked academia and construction (also hospitality and health). Academia's harder and more dangerous, dangerous if you want to actually push boundaries in the area of social and economic reform. So Prof Kelsey and her discipline is 'restrained' through reduced funding and public denigration. Student's pick and choose who and what to listen to. Like a market place... Oh and there's legislation to stop anyone 'sabotaging the national effort'. I'm sure the SIS have a file on her.
Roads are made, streets are made, services are improved, electric light turns night into day, water is brought from reservoirs a hundred miles off in the mountains -- and all the while the landlord sits still. Every one of those improvements is effected by the labor and cost of other people and the taxpayers. To not one of those improvements does the land monopolist, as a land monopolist, contribute, and yet by every one of them the value of his land is enhanced. He renders no service to the community, he contributes nothing to the general welfare, he contributes nothing to the process from which his own enrichment is derived.
Winston Churchill
http://www.landvaluetax.org/current-affairs-comment/winston-churchill-s…
and everyone of those improvements paid for by the employers, every employer making a profit. government taxing them all.
Does your government get its hands dirty or part with its own money, do they swing the hammer to put electric lights in the house or water ... not they happily soak up FAR MORE CASH by pushing paper.
I'm betting Winston Churchill got a lot more money a month than a landlord got - he was a master of deflection after all
and every one of those employers made rich by the sweat of the workers,
and every one of those workers empowered by the tools of the factory owners,
and every one of the factories paid for by the loans from the banks,
and every one of those banks supported by the laws and grants of the governments,
and every one of those goverments...
you can keep going back around in circles until you tie yourself in a knot. Capitalism is a process dependent on every single one of its links, it's nonsense to pick one link out and declare it to be the engine of growth. It's nonsense when freemarket fundamentalists do it, and it's nonsense when stodgy old marxists do it.
you're making assumptions that are incorrect.
factories are paid for by shareholders. money is borrowed at banks and repaid with interest.
every step is stripped by government meaning each step has less value than the previous - and the government, (and also foreign investors/owners) don't put value or spending back into the working economy.
go work at some primary industry then tell me there isn't an engine of growth ... or are you going to tell me how much MBIE are "helping" farmers....
Marx saw capitalism as a progressive historical stage that would eventually stagnate due to internal contradictions and be followed by socialism. He chose to defined capital as "a social, economic relation" between people (rather than between people and things).
The question might be: "Are we stagnating, yet?"
Long way from Greece tax is collected efficiently ...greece nearly 90% pay no or incorrect tax Pensions were unfunded and taken early by too many. The exchange rate ( euro) was far to high for Greece to compete We visited before and and after the Euro came in Tourists then flocked to Turkey which became much cheaper We are not forced to take and look after 100,000 refugees as Greece will There is no bailout fund for NZ we have to survive by ourselves and we will The only problem here are huge asset bubbles in Auckland housing market..this is common to most western countries today so if that sinks the NZ economy so will it many others We still produce what the word needs ie food DAairy prices will come back
If you want to see Greece the making look at OZ The ecenomy there is inthe fifties They still have not even seen the Douglas Lange era and there is no political guts to do it either
Lotta handwaving and little evidence.
It's perfectly true that financialisation has created a bankster culture where as much energy (brain cells, no Peak Oilery 'round here) is invested in the invention of new tickets to clip rather than in the age-old Three C's. But that's just human nature: the medieval Church was just as adept - think of Indulgences - a licence to sin (and a nice revenue stream for the abbots)....
But one only has to compare the photos of immediate Post Great Leap Forward Chinese peasants (say, late 50's-60's - only half a century ago, best estimates were 30-80 million starved to death) with the current crop, to see that Advancement has come to, quite literally, billions of people in terms of basic creature comforts.
And that's down to trade, exchange, and an iron will to Make Stuff Happen. The particular cultural setting is largely irrelevant.
Are you serious "we control our own currency".Don`t believe we`ve done that since Roger Douglas experiment.Did you see by the way that Richard Prebble is advocating what Winston has been saying, since the new world order that was Douglas ,is now Key/Joyce became the voice for the rightness of money,not people?
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