The speed of the threat to the world economy has been stunning.
Equally, the monetary response has been huge. And getting huger (if that is a word) as evidenced by the latest US Fed move.
But you can't help but get the idea that we are just starting. More than US$5 tln in US monetary action plus US$2 tln in US fiscal action just doesn't seem enough to put their economy genie back in the bottle.
So minds are turning to what will.
Of course, the easy answer is, nothing will. But in fact, something will, even if it isn't a neat and entirely satisfactory solution.
"We have to do something."
New Zealand seems to have things under control. China too, somewhat, even if it is staggering.
But Europe and the US are the key economies that need to do something extraordinary to prevent the world from falling into a deep depression.
Subsidising businesses and workers can only ever be a transitional activity. And transitioning to what?
The next big impact will be that tax revenues collapse.
And that means that massive Government borrowing is about to have very long-term consequences. Sure it may save today, but consign the future to a less-than-ideal situation
Two high profile economists thinking about the looming problems see a raft of giant issues that need addressing.
Ballooning deficits are going to need some form of austerity, if only for the fact that borrowed money needs to be paid back. One clear lesson from the GFC (which in perspective is a relatively minor blip compared to what we are facing) is that most countries didn't return to 'normal' fast enough, delaying paying those GFC bills, and so we start facing this calamity in a worse position.
New Zealand is an exception here. We not only got through the GFC relatively safely, our debt levels (especially our public dent levels) haven't ballooned - even after getting a major natural disaster in the middle of the GFC. New Zealand has been uniquely blessed with generally good government. But not so most of the rest of the world, especially Europe, Japan and the USA, all of who have massive existing debt overhangs.
Those big country issues include what is now clearly counterproductive austerity, and "a poisoned political economy".
As they note this will strain already fragile relations between countries, "possibly to breaking point". And they correctly point out "it will also worsen the intergenerational rift. Leaving our children with an unaffordable fiscal burden, on top of a climate catastrophe is not the legacy we wanted, nor one they might be willing to take."
They call for "shock and awe necessary to get ahead of the pandemic, and deliver us from counter-productive future austerity, political conflict, and intergenerational schism."
And they call for the creation of new money.
Their specific proposal is to print, but this time for the fiscal authorities.
"The decade since Lehman’s collapse has already seen central banks break many taboos, but they must now cross the Rubicon of monetary financing. The case for them to do so has never been stronger, and in fact it may be irresponsible for them now not to do so," they say.
The traditional notion of helicopter drops, wherein central banks transfer cash balances to citizens, are being talked about again, but they work best when the problem is primarily insufficient demand. Moreover, the plumbing to make these drops work is not yet in place, and time is of the essence.
This crisis is different. It is governments that need to spend on healthcare, employment, critical supplies, state aid and bank rescues and are best placed for targeted interventions on all of these fronts. A one-off transfer of 20%-30% of GDP worth of cash to governments by their respective central banks may be the single best macro policy to fight the COVID-19 crisis.
It will provide the kind of lightning speed and gargantuan scale needed to outrun the meltdown and will leave no debt overhang or counterproductive future austerity. It will help avoid the kind of hesitation, from governments trying to raise cash or balance books, that can literally kill citizens and destroy economies.
They expect such a proposal will be met with fierce pushback, especially in the EU and especially by Germany. But as they say, this crisis is unprecedented and "gargantuan". And fiscal responses are the key, not monetary ones.
110 Comments
JA can be seen breaking taboo for the gun control after Chch killings, then this Covid-19 lock-down, now the heavy task ahead.. to fix this FIRE economy.. but alas.. herself, ministers, central govt, councils, oppositions, central bank, banks - are all in this together in 'sub-conscious' joined the herd club... it's going to be difficult poison to swallow, it has been shuffled to all from overseas, they thought the poison something NZ can endure, now somehow this poison is just getting more intense, added mixed with virulent concoction - how do we nationalise this pain further to our future generation? what to do..now.. what to do...hmn. - Well? the two high profile economist were also tied up on their mortgage, so again it's natural sub-conscious calling there. For me? I'd make the hard call to suck up from the past 15years of RE Wealth papers, deflate it to use as savings, if we want to be realistic that is, then shifted the more liquid one into real 'productive, farms/primary based activities again' - NZ is not build overnight by those 'printing, phantom numbers'.. get rid of those entities, that advises as such... they're basically on 'self preservation mode'.
So they are advocating this?
Of course they will create the money. What is the alternative? Mass defaults by households on all loans. Starvation? A criminally run chaos will huge unemployment? Return to subsistence living? All the overt monetary finance will do is replace some of the spending that has been eliminated by the lockdown. It will allow people to eat, pay rent and utilities and not default on nominal obligations. This in turn will save the financial system. It is, as Stephanie Kelton has called it, not a stimulus but a "staymulus". It is our job to stay home right now. This spending willl enable that. Some on this site seem to bemoan government spending one moment and then worry about financial ruin due to tenants defaulting on the other. With income support your mortgages will be paid. The money keeps flowing just enough to keep us stable and able to fight another day. We can emerge without all being insolvent. It will not cause hyperinflation.
Thought experiment...what do you think would happen in the USwhat tomorrow if the fed just created money and paid off all bondholders? A huge inflationary spending spree as the marginal propensity to consume is turbo charged? Or would it languish in current accounts or look for somewhere else to be saved and earn a bit of interest. Public debt is private sector savings. What would happen if the boj just wrote off its huge holdings of jgbs? To the real economy? I suggest nothing.
If there is no high inflation, if people still want our food exports and our economy is growing again and looks like a good place to invest why would foreigners take a huge loss by dumping the currency? The have to sell it to someone right? A lower exchange rate might help us now anyway. Sensible omf deficit spending does not lead to hyperinflation.
How about tax David?
It needs to be central to the conversation.
Land tax is the natural candidate.
Higher taxes on higher personal incomes is another.
How about stamp duty?
How about varied levels of GST? I know economists hate that, but it's done all around the world so it's possible. Keep GST at 15% for all food, groceries and utilities, increase it to 17.5% for everything else.
Then reduce business taxation by say 3-5%.
The above changes would help encourage business investment and a more productive economy. A land tax would help incentivise more efficient use of land, and help disincentivise land speculation.
People would hardly notice GST going to 17.5%, if that change does not apply to daily essentials.
We are looking forward here, not backward. In a new paradigm for NZ.
We will need more revenue, but we will need to approach that in a way that doesn't destroy the economy.
I am all ears if you have better ideas that balance the need for economic growth with social wellbeing.
Because it's easy to talk of 'greater level of imagination' without tangible proposals.
So I am all ears.
What's the alternative? A highly non-egalitarian future?
And all the social problems that come with it? (including high crime rates which affects everyone)
Personally, that's not the future I want to see here.
Are you suggesting there's no alternative? That we have to accept vast inequality and all of those social ills?
You are welcome to that view, of course.
I think a fairer (and by necessity more re-distributive) society is much preferable.
But then maybe I'm just a leftie.
We are going to have to grapple with all these questions soon, as a nation. People seem to be skirting around them, and I kind of get that given the immediate focus is on public health concerns.
BTW how do you possibly go about 'halving rents'.
I do think there will always be inequality, some people are just driven to achieve. Others have a more relaxed attitude to life. Left to their own means inequality would naturally occur over time, even just with physical attributes. I don't know a culture that hasn't got inequality, Scandinavia is close, as wages don't have the huge spread we have in the west.
I have a friend who's unattached, he just sold up in his mid 50's, bought a 45ft boat in Europe and is sailing the med and then the Caribbean until he dies, so he tells me. The boat cost 200k, he is not rich but his lifestyle is causing consternation amongst his friends. All of us are wondering if just perhaps 'he's got it right.' He would never even own a decent house in NZ with his wealth. He is also incredibly talented, he can do almost anything, just women and business escaped him. He doesn't even talk to us anymore, no emails no facebook, we got the odd pic of him in the sun with some hot chick, then nothing, perhaps she pushed him off the side and stole the boat, like I said not good with woman.
I always thought NZ was socialist, yet look at the inequality the crime and gangs. Yet we spend lots on welfare, perhaps not as much per head as we used to, buts theres more people. We also do welfare to the rich well.
Im my farming career the last decade has seen the emergence of the corporate farmer, if we don't act soon farming won't be a family affair, that has consequences to how we value land, employment and sustainability. Accountants don't make the same decisions intergenerational family farms do.
It's easy to fix the rental problem, Warning- the consequences of a credit bubble can be painful.
You are trying to address the 'wrong' problem, and therefore state we need growth. We only need growth as long as we have a debt based monetary system with interest. I thought the truly well informed 'interest' commenters have grasped this by now? It is the banks and the money system we use that requires this continuous, and dare I say it, destructive 'growth' at all cost. But, to be honest, there have been a few others, all of them more intelligent than me, who have called for a major reform of our monetary system... GO and re-read, re-watch all the wonderful resources and youtube clips out there about those topics. Perhaps now would be a good to do this with plenty of quiet time?
that's what we need , more government spending like we are not already one of the highest taxed nations in the world.
I think markets go up and down and the down part is just as important as the up. Risk is part of life whether crossing the road or investing.
If we had to do anything why not half rents?
Again, easy to throw out vague statements Andrew.
You might note that my speculative idea included reducing business tax.
Again, I am all ears in terms of how you would respond in terms of fiscal policy.
You seem to allude to not doing much, if anything.
How will we pay off our debt in that case,
Also how will we pay for a prolonged surge in our beneficiary bill?
How did we ever plan to pay off our debt? That one always baffled me. I think land taxes/ asset taxes, CGT etc, would see massive falls in the value of houses and land and that would flow onto bank problems.
I am afraid a big part of me thinks we are going to have to suck it up and see. I don't see why a successful business like the Warehouse suddenly needed a 67 million dollar taxpayer subsidy, are they telling us that the Warehouse business model is so precariously balanced that it cannot afford to shut down for a few weeks?
I think most of us are much more resilient than you think and the people we should help are the ones at the bottom, the one Warehouse makes it's fortune from.
The people we should help are young people with student debt and paying unbelievable crazy rents, trapping them in penury, unable to start families or ever buy their own property. We need to crash rental costs and Uni fees.
We shouldn't help landlords they already get a 4 billion dollar subsidy via the accommodation allowance. WFF already means many low income and even middle income families pay little or no tax. Landlords and tenants can sort rents out between themselves.
The economy I suspect is much more delicate than people think, due to the belief we can all get rich buying each others houses, while the Aussie banks extract 5 billion a year.
My business is suffering, I mean really suffering, farmers don't expect a bailout because they never get one, give them one and hands will be out all the time. This is a one off catastrophe, super hot and dry, no feed, unable to kill stock to take pressure off as works have slowed up, Palm Kernel unable to be imported due to Virus shutting down the industry in Malaysia . Facing an unbelievably tough winter and many farmers are going to run out of supplements in the next few weeks.
I had phone call this morning from farmer wanting hay, 4 days till he is out of feed, cannot kill stock, he doesn't know what to do. Animal welfare crisis. He is not expecting a handout he is going to figure it out and it's going to cost him a lot of money, he gambled on it raining, it usually does, this year he got it wrong and he will take a few years to get back on his feet.
The rest of us have to accept that we cannot all get bailed out. It's an impossibility.
I can't believe how badly some folk want to prop up the current failed system.
Harvey Norman seems to have so many hands, one taking the governments cash, another whipping the rent money from it's property owners while a third one pockets the $243m profit from last year.
As to farmers and the drought, didn't we get money for Rural trust, $150k? Share that between 20,000 North island. Farmer's.
It's going to reset some just need to look forward instead of back.
if our export markets tank then we really don't have a lot of options except a lower standard of living. A massive bailout would always be unfair, would create dangerous resentment in the populace and a risk of civil unrest.
I mean as an example do you bail out the landlords who have benefited from low interest rates and high immigration, to make fortunes by renting houses to people who simply don't have choices. Meanwhile risking our economy by borrowing massive amounts of debt. If that money had gone into productive enterprise we would all be a lot better off. Also 2/3rds of households have little/no or manageable levels of debt, bailing out indebted households would be incredibly unfair. and unjustly benefit the one third with all the debt, same as in farming.
which comes back to the same problem, " governments don't know what they are doing'. Remember John Key and Nationals goal to double Ag exports by 2020. School kids learn about supply and demand, the morons in National must have been sick that day. You cannot double supply without affecting demand and prices. So we borrow like crazy and fall off a cliff.
Then Joyce came up with LGFA to allow councils to borrow and spend because he thought that would invigorate the economy. Where did he go to school? Look how much better off we are now, we have over 12 billion of council debt and heading to 24 billion.
We need long term planning. What was the long term planning around the housing bubble? Where did anyone see that ending, were there any options that gave us a happy endings?
Where was the long term plan to deal with all the debt being issued to young people going to Uni, when the only thing thriving in the economy was a ponzi housing scheme being run by banks expecting a gov't bailout if it went wrong.
Where did anyone expect the ridiculous unfair wages being paid to top civil servants to end up? Some fairy tail, one where we all end up eating each others lunch?
Then immigration but that deserves a new rant.
In terms of being unable to kill stock - is that because meatworks are on lock down?
Surely if there is a looming animal health crisis, someone in government will be addressing this? I recall driving around Aussie during one of their droughts and being horrified at the state of the cattle.
yep, running at less than half capacity. I'm beginning to think no one knows what they are doing.
Having said that killing capital stock does not always create good outcomes on a longer time frame. The animals would probably prefer to go hungry for a bit than die young too.
actually I do know what the long term plan regards housing debt was. It was to inflate the debt away at the cost of savers, worked in the past. They just hadn't noticed the world had changed, so were forced to cut interest rates but then money got tight. Now it's about to get really tight and without inflation the real cost of money is going to change our world.
Imagine trying to pay off yesterday's debt with money that's harder to earn, and more valuable in the future?
And the elephant in the room is.
https://nypost.com/2020/04/01/corporate-america-should-stop-being-china…
The USA sea change.
Question, other than commodity spec trade (things that have price anchored to commodity trade markets). Who are the Australian or NZ companies that have made fortunes serving the China consumer markets?
Around about 100 years ago W. Harding became president running a campaign based about a return to normalcy. Biden may yet be able to succeed with the same sort of message. There would be irony in that because in his own convoluted way Trump has been striving for the USA to turn within itself, rebuild its own industries to serve its own people. That is based on the premise that the world needs the USA more than vice versa. Eight USA states have economies in their own right as large or larger than Russia. The size of it all means the USA could theoretically become its very own common market. Now if the people start really hurting and seeking to blame that might well mean as nation, the USA psychologically en masse, starts to channel that as a sentiment, into who actually needs China, look what they have done to us and/or me, let them get back behind the bamboo curtain and stay there.
What was looking to be a dull election is now a fascinating one.
The parties will need policy across a whole range of areas. And it will need to be policy they weren't even entertaining 3 months ago.
It will be especially fascinating to see what National come up with. The usual law and order and RMA nonsense won't be enough! You are going to have to THINK, Simon et al...
"This crisis is different. It is governments that need to spend..."
Yes they do.
And unpalatable though it may be to many, what do you do when your spend ? You buy. That, by our Government will be, Nationalisation. And how do you keep the balance of debt /spending under control? You move it from the Private Sector to the Public Sector. ie: less debt for 'us' as individuals and more debt for 'us' as a group.
Why else would they spend and not buy, given the results of the last lot of "stimulus?"
It's time for us all to look at where our wealth is stored, and if it's in anything other than where the direct efforts of nationalisation and debt allocation will be - then move it.
(PS: I know that what I'm suggesting is anathema to many, but we've been like kids in the sweet shop with our use of Capitalism - and look where we are - right here! Capitalism has to be returned to what it is supposed to be - the use of CAPITAL, not debt. And that comes from effort rewarded by production, not speculation. Once we've righted the ship with a period of 'State Control' then we can return our economy to a freer system. But not with the same economic imperatives that we have in place today)
bw, whilst I agree with much of your sentiment, can we point to occasions of periods of "State Control" that returned a freer economic system? Or freedom at all? This is the problem with idealism. In theory, yes. What a corker. In reality, just cronyism or worse still despotism.
Capitalist democracies are imperfect. They lead to cycles of forgetting, excess and reactionism. Yes. But can we point to any single better system? Monarchies? Nope. Oligarchies? Nope. Theocracy? Nope. Communism? Nope. Imperialism probably proved to be more durable than any other system (if the longevity of Rome is anything to go by) but leading an empire was a fairly precarious profession and war was a necessary stabilising factor. So nah.
As a species, we kinda suck. We can't apply idealism to our cultures because cultures are made up of us, which will always, always contain the greed, idiocy and naivety, meme/belief based decision making that it always has. We can try and regulate. We can try and create enough incentive to decency and humanitarian behaviour but we'll always be vulnerable to the demagogue, just as Plato predicted.
War was a necessary stabilising factor. How easily today that dreadful fact is overlooked. All of that imperialism, Ottoman, Habsburghs , Romanoffs, Bourbons and all the necessary conflicts, century after century fighting about “the balance of power” eventually culminated in WW1, the war to end all wars finished off too those tottering empires. Fascism & Bolsheviks jumped into the void and thus the seeds were sown for WW2 lead by Germany seeking retribution for their injustices. So 75 years on, has the world actually got to grips with living in peace?
Excellent piece from AUT's Tookey and Lanigan on the superiority of build projects to infrastructure ones in the recovery.
https://i.stuff.co.nz/business/120952132/heres-what-govt-needs-to-do-to…
Pretty much what we have spent the last 5000 years doing. Presumably that wasn't enough time to find the Goldilocks system? Human construct? Yes. And there is the issue. You can't take the human out of the human construct. The issue is us, our species, our neural and evolutionary capacity. You can try and apply frontal lobe decisions to our societal structures, but the amygdala is always going to drive some of that, no matter how rational we try to be.
Latest from Ray Dalio:
'What’s now happening with money and credit has never happened in our lifetime before, but has happened many times before that. I want to give you that historical perspective. It’s coming in the next edition in my series “The Changing World Order”.
For those who think they know how 'the system' works - standby for change. Looking forward to Dalio's next piece.
Has he got a point.
https://mobile.twitter.com/MatthewHootonNZ/status/1248781584603344898
https://youtu.be/zeF2rkyxDIo
Let's face it. The game is over. Nz doesn't do anything on a manufacturing level to speak of, neither do any of the other western nations. It's simply way too expensive, and most of the costs are nonsense, compliance, finance costs, insurance, leases. Set up a business in nz, and your advertising to all and sundry that your wallet is open to all. Same when you buy a house, lawyers, re fees, finance costs, rates, compliance costs, etc etc. This is why the economy is so hollow. Lend big money to small folk, then line up and take your slice of the pie. They are all consumer economies. This belies logic, and always has. The bailouts have only just begun, and in the future, the people will pay. No debt blowout from the gfc? Look at how much collective council debt ballooned from 2008 onwards. The govt slipped all this spending on to councils, and no one even noticed. (That debt by the way is somewhere between $25 to $30 billion, a massive % of our gdp)
Lower business tax? For the corporates yes, but for sme, I don't think so. Gst at 15%. Gst full stop. When I had a business, this was the one that angered me most. It's worse than a mafia protection plan. They actually want to take 15% from my sales, before I've even posted a profit. The big boys use policy to destroy the small inconvenient competition. When you have a sham of a govt, it's all too easy. Centralisation makes it all too easy to rob the masses, and spin rubbish. Look at the video, this reporter has got the right idea.
Austerity, remember Greece, when the banks had a lock in? Just before they opened they took a small sum of 40% on all deposits. Don't think it doesn't happen. They are playing this thing in slow motion, to prevent panic, and it's clearly working. That leaves time to protect yourself from the ravages of what will be coming.
but it's not only capitalism that uses its workers as pawns. Communism or socialism has the same outcome. In fact under capitalism usually workers are better off.
Wealth concentrates in all systems. Look at Mao, life had a very low value, Stalin had the windows on his luxury train blacked out when he went across the Ukraine, so he didn't have to look at starving Kulacs.
Universities have a strong socialist bias ,but are happy to charge the life, literally out of their students. You didn't hear universities complain when they made student loans non-recourse, oh no that was opportunity to charge more as loans were more secure.
The problem is that there really is a cold hand of capitalism, as there is with socialism/communism, and we can feel the chill on the back of our necks right now.
Political ideology. Capitalism, socialism and communism. Are these not really simply devisive discourse? I am not a fan of central govt, however, when I look at capitalism, which is somehow always mistaken for democracy, as if the words are interchangeable, they look more communist than ever. People queuing up to buy inflated products that are all the same. People buying houses, designed by starkitechts. When I look at the human aspect, I see that china has pulled millions out of poverty, in the west, the exact opposite, more poverty, more homelessness. State sovereignty was built on the idea of social contract, at least that how I always understood it. When govts fail with regard to this, then they fail, and what we get as a result is anybodies guess. I think there will a rising new phenomenon, that of individual sovereignty.
China invented a kind of capitalist incentive while keeping a central planning overlord. I don't think that's going to end well, too many perverse incentives, debt/gambling, worst of capitalism.
I think out democracy would have done better if we hadn't let those who profited from a unrestricted capitalist casino market, into positions of power. They believe in the meritocracy , they got were they got because they are smarter than the rest of us. Which is an oversimplification and not true.
However the centrist/socialists belief that they can manage the economy, is also creating perverse incentives and the failures will be just as spectacular.
An example of wrong incentives is the untaxing of gains on property and land by speculators, giving them a free ride on the rest of society. Housing not being counted in GDP figures.
Too true, Andrewj: communism tends to have a bunch of zero-wage workers - aka Slaves - scattered throughout their internment camps, and comprising of those who Don't, Won't or Can't toe the Party Line.....
Ye'd be hard pressed to find an exact equivalent in even a nominally Democratic Capitalist society.....
and yet both political parties in NZ are easy swayed. Helen Clarke set up the dairy industry restructuring act, even though at the time it was estimated that it would cost consumers tens of millions due to a lack of local competition, big winner - wealthy farmers.
National leaders were just as happy with mergers and acquisitions which took out competition, selling the idea that bigger and more efficient company margins would flow up stream to the consumer in cheaper services and goods, rather than downstream to the shareholder. Yet many in national made their money in banking, not producing goods but clipping customers tickets and taking cuts. They must have known what was ahead.
Latest from Robert Shiller:
https://www.nytimes.com/interactive/2020/04/10/opinion/coronavirus-us-e…
Great report IO. This is the great leader of the free world. To think people in the west, yet outside of the usa still hold it as beacon of democracy. When the president has to be rich to get elected, and when he's a celebrity, and a property tycoon, I guess the result was a forgone conclusion. I personally think trump's campaign was "make America GRATE again". It's nothing short of madness.
MMT ???
Some thoughtful analysis and an understanding of the currently entwined inside and outside monetary system is required.
Some possibly useful links:
https://krugman.blogs.nytimes.com/2011/08/15/mmt-again/
https://www.pragcap.com/my-view-on-mmt/
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1905625
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1723198
And the embedded links that I have not already chosen.
Yes, thanks. Will read. What I'm looking for is an answer as to whether MMT might see a path toward eliminating some of the worst of the shadow banking sector without taking us all down with them like last time. I see they are rearing their ugly head again as per this link from andrewj earlier today;
https://wolfstreet.com/2020/04/10/mortgage-forbearance-hits-shadow-bank…
I've said it recently, but I'll say it again because a respected journalist also said it into today's Herald:
https://twitter.com/FranOSullivan/status/1248730459745292288?ref_src=tw…
These guys havn't made their money in a vacuum, they have made on the backs of NZders. Do they need all these millions and billions. How about some contributions that would still leave you with a fortune?
Some few have helped, but the rest don't seem to want to.
I'm with Putin here. I mean it's ludicrous what these million dollar-hoarders stash away. I can understand somebody saving for their retirement, and maybe something for their children (though too much would be bad for them), but to keep on forever accumulating money for its own sake is beyond my understanding.
We need to get NZ working again as soon as possible and every opportunity to allow for more activity must be allowed proactively. Therefore, reduce income tax significantly; perhaps by 50%. That would put a lot of money in people's pockets straight away. Abolish corporate tax as only successful NZ companies pay anyway; and might not be a lot for a few years anyway. Introduce a land tax to off-set to some degree but at this stage it should not be cost neutral. Might take a few years to reduce the deficit but we need to grow our way of it.
Second, we need to look how we deliver welfare. I mentioned elsewhere income protection insurance as much better model to what we have now. A single person over 25 gets $480 a week including house accommodation supplement for Auckland. That's not even enough to pay my rent let alone eat.
Third, how we deliver education. These last weeks shows that we can embrace new technologies. One thing we can do is allow all parents, not seek permission, to use the Correspondence School. This resource is under utilized and if more children used it we would save money. Also bring back charter schools to get real competition in the market. We need to be more innovative here and the current teachers won't do it.
Third, extend ACC to cover illness. It is obvious that ACC delivers better outcomes than what the public health system does. What is the public health service purpose anyway? Primary delivery or safety net - seems a bit of both and neither at times.
I focused on those 3 areas as that is what we spend 75% of our budget on. If NZ wants to continue to have a prosperous future then we need to think about how we deliver these things. These are just ideas and I am sure they can be improved upon. Let's see.
You have obviously never had to deal with the mongrel corporation that is acc. Spit here.
They are an embarrassment to those country.
I will also add they in fact COST the country by forcing surgery that isn't required with regard times much longer to recover than they need to be. You voided your argument when you mentioned them.
I don't think I "voided" my argument. You use subjective experiences and that is not true for everyone. Also you compare "perfect" with "good". I never said ACC was perfect but it is demonstrably better than the public health system Finally, the current public health system has many many problems too. Nothing is perfect.
This is an easy fix.....
As work visas end make up a plane load to each country and send them home after the lockdown, in 12 months or so we'll have a very low unemployment rate. That helps AirNZ a lot to stay afloat. Kiwis will step up to the plate and change their jobs to suit.
End rental subsidies, then true rental values will kick in along with true house values which should be massively lower than what they are.
Do something about tourism, we can't completely stop it (my dream) but we can limit it to a tiny fraction of what it was. Let Queenstown crash and burn, and it's not the first time that has happened by a long shot.
The pressure tourism applied to everything, at least in the south is astronomical. It was f**king horrible!!!
We can do way better than the mess that caused. A huge hemp industry under all those centre pivots, when the water isnt used for grow that export it. A massive push to grow native bush on unproductive land so the bees can work and we can have it to play in.
Get serious with the pest control, we are losing that battle fast and poison is NOT the way forward. What can I say, I'm a rabbiter and actually know what I'm talking about, unlike the idiots running doc, ospri etc.
Some will hate it but frankly it doesnt matter what happens people are going to hate it.
Well that just makes us all poorer. There's no point taxing the wealth creators to give the money to people at home watching telly, if it stops the wealth creator being as efficient or adds unnecessary costs. It's no use eating ourselves ,we need to find a way through this mess and I actually think in the end the Gov't is going to be smaller and the economy will be more efficient.
Councils won't look anything like this.
Yes, we need to focus not on how to tax our way out of this, but on how to work our way out of this. I suspect central government will have to become a much larger employer through worthwhile, well paid, works programmes. There is so much physical work to be done in our environment on both public and private land and in our ocean and freshwater environments. We need something like the old MoW in size, but being a workforce in conservation/ecological restoration projects in purpose.
And yeah, big shake up in local government. Starting with a 50% reduction in existing CEO salaries in that sector.
Fritz, that is not the argument. I know is fashionable to call anything people don't like "neo-liberal" but that's not the case. Taxing people more is not going to create more economic activity. What we are actually talking about is who will do the economic activity - the State or individuals. I think it is clear that individuals will do a far better job driving forward the economy rather than a centralized planned one.
This thread hasn't added much, but the piece doesn't either.
Printing 'money' does nothing at all - produces Weimar Germany and Zimbabwe.
This is looking more and more like the trigger; the re-set itself was inevitable. And printing isn't going to make it prettier. I hink what saddens me most is the folk who have been here for a while, not moving the conversation on. We have to be discussing collapse and beyond, at this point. Going local with everything.
I am partly in agreement with you.
I wonder, and most will not agree with me here, if the better strategy was to let covid19 run wild in NZ.
Sure, there would be death, but there’s going to be a lot of death and misery from our current approach to the moral issue. Which leads us to think, we’re our politicians the best place to make a unbiased decision regarding this threat?
Schumpter’s prognosis of the fragility of Capitalism lead him to conclude Socialism will prevail. I wonder if we are about to open that door now.
Yes, it's fascinating looking back on the predictions of the classic economic theorists. Marx's prognosis too was as per Schumpter - but they saw the events that would overthrow capitalism as being different.
I think the form of capitalism reviewed by Marx and subsequently critiqued by Schumpter, transitioned toward socialism long ago - and we've been in a hybrid form since around the time Henry Ford decided to price his product in accordance with what his employees could afford. Hence, with Fordism/mass production we transitioned to a form of socialism. And we have been mis-pricing things (i.e., pricing under capitalism has not been in accordance with the labour theory of value) for quite some time. It's why physical work in the real economy has diminished in its reward in comparison to non-physical work and speculative endeavours.
Unlike Schumpter, Marx predicted socialism too would fail. He saw it as a transitional state between capitalism and what would eventually see capitalism's complete demise. And then he speculated as to a utopian form of social organisation that would emerge from the socialist transitional state, and he called that communism. Unfortunately for the world, a number of dictatorial/authoritarian states adopted the term but in no way implemented the vision. Marx's vision is encapsulated in this quote from him;
In a higher phase of communist society, after the enslaving subordination of the individual to the division of labor, and therewith also the antithesis between mental and physical labor, has vanished; after labor has become not only a means of life but life's prime want; after the productive forces have also increased with the all-around development of the individual, and all the springs of co-operative wealth flow more abundantly—only then can the narrow horizon of bourgeois right be crossed in its entirety and society inscribe on its banners: From each according to his ability, to each according to his needs!
It's all very interesting to ponder where we will end up.
We? Don't THEY determine what will be done, and how it will be done, and who will pay for it. In China, I've seen the capitalist side, take a walk to the bund, and you'll walk through more middle class then you could ever dream of. I personally do not advocate China's system, yet I recognise that we will probably get something similar. The new world order isn't going to be laid out by the lot that got to it the last 3 times. With interest, I can see one big difference between the west and the ccp. The ccp control the capitalists. They ensure they own more of the economy ie, 70%+, in the west the capitalists own the govt, any govt, left or right, blue red green, all of them. What concerns me is how do WE preserve what is valuable about the west, freedom of speech etc. I'm for decentralization, not too sure how it works, yet when we have centralised systems, like electricity etc, it's all too easy for a corporate to take control of. In a country where each house is self sustaining, it's a lot more difficult for a corporate to take control. And it's easier for the people to be politically neutral and think more clearly about the rest of the society.
We either think it through for ourselves, or become hostage to whatever THEY decide. Like central banks devaluing the value of your $, by printing endless amounts,did anyone get a say in that? Or how about our health system being hijacked by pharmaceutical corporates, did we even know that is what happened? The list is near endless. Each time a collective pool of wealth is put together, like kiwisaver, investment funds and so on, a few swoop in and take control of the lot. We need to make it much harder for them to rob us blind. Look at local councils, they have a massive amount of power over our wealth, and when have they ever been held accountable for their mistakes?
Blockchain. There, I've said it. The technological potential is enormous, and the fundamental idea is decentralisation. Digital technology can ensure privacy with communication, it can provide education services, online and affordable. It can provide a community with it's own currency, with it's own voting, or governance system. It can provide international connections, both economic and educational. It can provide services, especially financial services, at a fraction of the cost of today's banking system. So many digital assets, not just currencies, have already been developed. Imagine if each person in nz recieved a small % of the transaction fee generated through commercial activity, instead of all those ever increasing fees going to a few banks. This is possible now, digital currencies that return a % of every transaction it is used for, being shared out to all who have some of that currency. All those billions in bank profits, being shared by everyone. It's not just a dream, it's possible, today. Retailers can set up to take payments in digital currencies in minutes, they simply need a phone, or a laptop. Communities can use their own currency, and leave the central bankers, and the other bankers to get on with whatever it is they are going on about. Think about it.
You're right, I'm certainly no energy expert , you've got me there. The energy required for blockchain varies from currency (or asset), to currency. Bitcoin, and many others, are mined, and the energy required I can only imagine, I've seen some reports on mining companies etc. Other currencies are not mined, and some, like tezos, use the combined network users to complete the ledger transaction. That coin is one where the users all recieve a small % of the collective fees. ( hence, they are being paid for contributing to the ledger confirmation). I dont imagine the present financial system is cheap either, and when you add the value lost through endless printing,( remember the fed have said they will print infinitely if they have too) then I guess the energy equation may begin to be impacted, like I said, like you said, I don't know about energy, so perhaps you could look at that? Getting rid of banks is entirely possible, and a nation being in control of it's own money, is also possible. There is very little I imagine, that doesn't have some blockchain potential. Property, insurance, etc, have been migrating to blockchain in massive numbers. The shame of it is, that the big boys want to corner the entire potential before the cats out of the bag, as they know they'll never get it back in. Blockchain can potentially democratise entire sections of OUR system. Please, look at the energy, look into something like tezos as a model for the equation, and dont forget to factor in the cost of their solution, piles and pile of debt.
It's time to wheel out the greatest economist of all time: Mr Micawber from Charles Dickens' "David Copperfield". Micawber said:
"Annual income 20 pounds. Annual expenditure 19 pounds, 19 shillings and sixpence; result happiness."
"Annual income 20 pounds. Annual expenditure 20 pounds and sixpence; result misery."
Nothing more to say. It's really that simple.
And your 19 shillings of spending becomes someone else's 19 shillings worth of income which when they spend it becomes 18 shillings of income...
But if there is a sudden shock to the economy. Fear and uncertainty can rise. Some people lose their 20 shillings of income. Some people save 2 shillings instead of one. Very quickly there is much fewer transactions and the economy gets even worse...
So in summary complex economies / societies cannot be simplified down to a household budget.
The system's terminal if we don't have a radical leadership mindset change and, let's face it, that's not going to happen. But if we're going to try then first thing is first: start by getting workers back working as soon as they can work safely and not waiting for the end of the 4 weeks plus. Primary producers must be able to get produce to markets to avoid collapse and to avoid food shortages and massive food inflation. Services and work that is no longer viable must be reformed into something productive. Transfers of cash to the government won't help unless the money is spent wisely - the economy can't be saved unless it is made more efficient. Austerity won't work. Helicopters won't work. Only improved efficiency might.
Unsure about the global outlook, that eyeing US or EU survival mechanism.. since most of the blue team supporters (banks & politicians), really have the amateurish/short term philosophy.. that relying on China economy alone... to save us. Their money shuffling debt tentacles all over NZ, sad reality.
With respect I think the outlook is good if the lockdown stops in eleven days as I believe all the data now indicates that the mortality rate and rate of spread of Covid-19, is about the same as that of the flu, which kills about one person in a thousand or more precisely has an "infection fatality ratio" of about 0.1% :https://swprs.org/a-swiss-doctor-on-covid-19/#latest. Two Stanford professors actually think that the mortality rate is lower than the flu : https://web.archive.org/web/20200325103650/https://www.wsj.com/articles/...
The evidence is also in on, "excess mortality". This bug has NOT raised total death rates in all of Europe, the UK or the USA. Less people are actually dying this year than last year in most of Europe:https://www.euromomo.eu/index.html
The scare has partly been driven by bad data. For example, research now indicates that the Italian death figures are about ten times too high, as they count all people dying "with" Covid-19, as dying because of Covid-19. The lockdown in Lombardy, Italy also increased the fatality rate as 30% of the elderly there still live at home and many sick young Italians were forced to move back home from large cities, when the lockdown commenced.
A recent study also shows that the mortality rates were also vastly over stated in Wuhan, as the amount of people actually infected was a lot larger than those that had tested positive: https://www.medrxiv.org/content/10.1101/2020.02.12.20022434v2. This research found that as at February 11, 2020 (before the diagnosis definition changed) 1.9 million people in Wuhan probably had the virus, out of 10 million residents. This was about 100 times more than had been diagnosed as positive at the time. As a result the infection fatality ratio (time delay adjusted) was therefore only 0.12%. WHO claimed on March 3, 2020 that the death rate was 3.8% - probably at least thirty times too high.
The Wuhan study also confirmed that about 80% of people with Covid-19 in Wuhan were asymptomatic or had very slight symptoms which was why the reporting rate was so low. The transmission potential was also similar to the flu ie a reproduction rate or R of 0.58 by February 11, 2020. The lockdown had little effect on the decline in infections.
Based on the above Wuhan research, the total number of infected here must be at least five times the reported level of about 1,300 ie 6,500. The testers here will refuse to test you if you have no symptoms.
All this evidence shows why only four people have died in NZ from Covid-19 out of the 6,500 that probably have it, an infection fatality lower than the flu. This new corona virus is not dangerous. The epidemic has now peaked and it will probably end up killing less than 10 people. The flu kills 500 every year in New Zealand.
In my humble opinion, we have to end the lock down very soon, as the amount of suicides and deaths caused by it will exceed lives saved. A lockdown only makes sense if it reduces total mortality or if there is a possibility the hospitals are going to become overloaded as it merely "flattens the curve" and delays herd immunity. The chance of overloading in New Zealand is nil. There has only been four deaths and the peak has passed.
In Sweden, which had no lockdown, they had the same length of infection and rate of deaths as their neighbours. As stated by world leading epidemiologist, Professor Wittkowski (who invented the concept of reproduction rate when studying HIV) in a 4 April, 2020 paper; " Of particular interest is Sweden, where no “social distancing” policy was implemented. Still, there
was no difference in the shape of the epidemic or the height of its peak to the other Scandinavian
countries" :https://www.medrxiv.org/content/10.1101/2020.03.28.20036715v2.full.pdf+….
We could possibly retain infection control in rest homes but that is enough. It is time for a return to freedom.
Can someone with a scientific bent please help me insert "economics" into its rightful category within the periodic table:
NZ public & current govt, would love to watch this - during the lock-down period:
https://www.youtube.com/watch?v=MGrBCtOt4Qs
https://www.scoop.co.nz/stories/HL1507/S00101/the-fire-economy-new-zeal…
It is clear that we were unprepared for this sort of event. Thank goodness this is a very mild pandemic. This is true for almost every area of society. Because of this our government and MoH felt they had no choice but to implement a drastic worst case, zombie apocalypse, response. Once we get things back in order we should have a much better pandemic action plan that doesn't involve burning the economy down, medieval lockdowns and authoritarian rule.
Perhaps in the future we can have pandemic drills. All medical centres should have pandemic PPE kits. All citizens too. Like in WW2 when everyone had gas masks. Every person and every company needs a rainy day fund. Pandemic responses should be seen as a normal thing. Lockdowns would probably be unnecessary except as last resorts. This should be taught early on in schools. Multi generational living should be discouraged or at the very least old folk should have self contained living quarters. Taking sick leave should be encouraged and mask wearing mandatory for those with colds and flu.
A thing that surprised me was the exceptionally low tolerance for casualties. Up until now I thought the medical establishment had this sorted with reduced hospital stays, minimal post operative care, hospital ERs resembling those during the last days of Stalingrad, long surgical waiting lists, cancer drugs not provided because they were too expensive and surgery refused or discouraged for people nearing the end of life. People living too long was noted as a problem:
Living too long
Are We Living Too Long
If this virus popped up two hundred years ago it wouldn't have been noticed. The response today has been a uniquely Boomer one. It's as if Boomers cannot imagine a world without them in it. Such a world need not even exist. More than any other generation they have pursued the fountain of eternal youth. Once retired they imagine a life of world travel and riding motorcycles. Up until recently they thought there wasn't even a generation gap and were shocked when the "OK Boomer" thing started. They have almost no courage or resilience and live in sort of fantasy world. They are not psychologically well prepared for their impending demise.
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