Posts Tagged ‘ Roger Douglas ’

Why we should be grateful to Labour

langecabinet-august1987No, not the last Labour Government, the Lange / Douglas Labour Government of the 80’s.

We should be grateful that they made NZ more competitive and ditched subsidies for farming and manufacturing and lowered import tariffs on products.

Why?

Because imagine how those subsidised business would be doing right now? Imagine if a huge sector of our employment was based on subsidised businesses manufacturing products that were being sold on the international market.

We used to ‘make’ cars here, imagine if we were still doing that. What would GM and Ford (and Toyota for that matter) be doing about their plants in NZ if there were still here. They would be hot footing it down to Wellington for some taxpayer cash in order to ‘perserve’ the jobs at their factories, with the alternative being that they pull out of NZ leaving thousands of people unemployed. Can you see a National Government telling them to stick it? not likely.

All those businesses that left wingers of the Jim Anderton type wail about being wiped out in the 80’s that relied on taxpayer subsidies of one kind or another, would right now be lined up in front of John Key demanding rescue package involving sums of money that make Key’s current ‘bail out’ package look like a happy meal. Not only would we have been subsidising these businesses, but now we would have been borrowing money to prop them up just like the Americans are having to do with GM.

Least we forget, most jobs (excluding the railways which we now are going to have to prop up) in NZ are real jobs created by actual business, not by taxpayer subsidies and political expediency.

We owe Roger Douglas and the team that saved NZ from financial ruin in the 80’s a huge debt. Because without their actions we could be currently throwing millions of dollars borrowed on behalf of the taxpayer at those business that only survived because of taxpayer largess.

Is more spending the answer to the economic crisis?

The current economic ‘crisis’ seems to boil down to consumers all over the world spending more money than they actually have in order to sustain a lifestyle they can’t afford.

I’m not talking about some environmentally unsustainable lifestyle, but an economically unsustainable one.

If you go out and buy a new plasma screen TV with your credit card, sooner or later you have to actually pay the bill, the longer you leave it the more interest piles on top of the purchase price increasing your debt. Likewise a 30 year mortgage for a house that entails you paying twice the purchase price of that house in interest payments, then using the capital gain to buy a car with the paper value of your (well, actually your banks) asset, just makes no economic sense long term. This spiral of debt enables you to spend more than you earn each month fulfilling your lifestyle expectations. At some point it has to be paid for. You either need to earn more money, or at some point forgo material purchases in order to pay for everything, at worst you may have to even sell you house if it actually starts to drop in value thus not providing your lender with the security for all those other goodies you bought.

The expectations of consumers in both the ‘developed’ and ‘develeoping’ world is that their lifestyles will continue to improve, next year they can have a better car, a bigger house, a flasher TV. They now expect this and politicians know they are expected to deliver on this expectation or the consequences will be dire.

It doesn’t matter whether consumers demand this in a Democratic country or a dictatorship. The elected representatives know they need popular support to remain in power, and likewise the dictators in China know they could be thrown out if they fail to deliver on the promise of improved lifestyles – western lifestyles – for their subjects. So much for the claimed advantages of China’s system of government.

Will the huge debt Governments around the globe are taking on solve the problem?

The mess was caused by banks and finance companies, backed by hedge funds etc, lending money to consumers or indirectly giving money to companies to make things for consumers, who couldn’t possibly hope to pay it all back. 

Governments are now proposing that they will print more money, and give it to these same businesses so they can start leading again to the same consumers. If it was unsustainable for businesses, how with the Government solution be any difference?

The debt Governments are piling up will have to be paid for at some point, and the only way to do this is from taxes, you can’t indefinitely raise money through printing money and issuing bonds (debt). 

To me it seems like Governments are creating debt so they can give money to businesses so they can offer the finance to consumers so they can get themselves back into debt so we can return to the situation we were in a year ago. Everyone living beyond their means.

Governments that were so careful to live within their means, are now getting themselves into the same position consumers are in, living beyond their means. Governments are funded through taxation, and those taxes are created by consumers. So now Government has been sucked back into the debt cycle and is directly involved in enabling an unsustainable situation to continue a bit longer.

The pain will have to come at some point, we can’t go on living on debt.

Something has to change, and it may mean completely overhauling the way our society works and our governments are funded. 

Clearly the current model doesn’t work, and all governments are currently doing is trying to throw more money into the pot in the hope this will keep voters happy. Politicians aren’t really trying to solve the problem, they are saving their own arses.

Maybe Roger Douglas has a point. We really do need to re look at how things are done. The idea has been suggested before, it’s not old, because it has never been tried. If the situation is as bad a everyone says it is, maybe we really have to try something different.

Does Key really have vision or is he really just pandering to voters in order to sustain his own position. What will happen if all this money being thrown into the debt cycle doesn’t help?

Douglas is suggesting a completely new tax plan. This does something positive for low income earners, dropping the tax on low incomes altogether, and will make high income earners fact the true costs of ‘life’ which would put a dent into unsustainable borrow and spend lifestyle expectations.

The economy needs a jump start, but borrowing money to do this is just going to the same track that caused the problem in the first place.

Consumers/voters/politicians need to get real. The situation we are in is unsustainable, borrowing needs to be repaid, you can’t have a lifestyle you can’t afford and borrowing to do so just transfers the costs of the borrowing into the future.

The endless cycle of debt we all base our lives on needs to end at some point. We can either decide to do something about it now and make the changes now, or pretend that every-things OK and pay the higher price later on when the consequences could be dire.

Where is our ‘new’ government?

ship_sailing_off_edge_of_world

Key: "oh look Paula, isn't that those naughtly kids from Henderson back there?" Paula:"yes John, I'll box their ears when I get hold of them, why, and look, isn't that Fiji in the background, how fascinating!"

I don’t always agree with Garth George, he is a curmudgeonly old duffer and a weeny bit too conservative, in a big-state-muldoon kind of way for my liking. But today I do agree with him. WTF is John Key and his merry band up too?

There was always a sneaking suspicion that the Conservatives led by Key were just sleepwalking to power after Labour and Klark lost their way, but part of me hoped that that in fact they would, with the help of ACT, actually have a plan, and that in fact this plan would rather suit the dreadful economic situation we now find ourselves in.

So, here we are, it’s 2009 and by all accounts we are facing the most serious economic crisis since the depression of 1920.

Obama has just got through a package of something like US$819 BILLION of spending and calls the situation a “disaster”.

The German’s, Japanese, English, Australians, Russians, Chinese, Koreans are all committing billions of dollars, yen, euros and whatever to pull themselves out of the shit, the Singaporeans have actually broken into their piggy bank, a formally sacrosanct fund of the nations retirement savings to avert disaster!

And what’s Key up too?

Um, well, he’s had a break with the family. His social welfare Minister has boxed some kids ears in Henderson (West Auckland), there’s some shit going down (again) between him and his finance minister Bill English, and, well the Maori’s want to fly a freaking flag of the Auckland Harbour Bridge. Oh, and there’s some fuss in Fiji, big fucking deal. Who gives a shit about the Fijian’s, their economies probably smaller than the annual social welfare budget for South Auckland, let them work their own problems out, we have bigger fish to fry!

Look guy’s, I know it’s holiday season in NZ, most of us went back to work last week (if we still had jobs to go too) and actually there’s some very serious stuff going on that affects everyone here and we need to know what the hell is going to happen here to mitigate this. You know, like a PLAN, something beyond the autopilot of the reserve bank dropping interest rates (which the Banks seem to be ignoring anyway).

You’d hope someone like Key, who has been involved in the industry that sparked the current crisis, would understand the deep trouble we are in. Maybe he does, and maybe it’s so incredibly bad he doesn’t know what to do, he is trapped in the headlights like a opossum.

I sincerely hope not, because if Key & Co don’t have a plan, quite frankly we are fucked.

And while I’m expressing my doubts and disappointments, where is hell is ACT is all of this. Where is Rodney?

Of all the people I’d hope to see riding in on a white horse with a plan to save the day it’d be Rodney, backed by Heather and Roger, with a plan to save NZ and transform the economy into a winner of the economic crisis.

Not a freaking peep.

Well, it’s got me thinking. Is this so bad that everyone actually cut and run?

An awful lot of MP’s seem to be overseas at the moment, maybe they have cashed up their travel allowances, super funds, and buggered off to the Bahamas?

Our new government of ‘hope’ is currently AWOL. It’s not good enough and that wasn’t what we voted for. Unless something is done soon this will be the shortest National Government in history. Because when the jobs start drying up and the shit hits the fan in a few months it will be way too late.

We need some leadership now!

Roger Douglas interview

I have a lot of respect for Sir Roger Douglas. The fact that many people are still in denial (and will probably remain so until they die) does not change the fact that he was a key part of a government that saved New Zealand from a nightmarish South American scenario when the IMF was on the verge of running the country. So many peolpe forget this, some, who have presumably never bothered to find out the facts, don’t even know this.

Sir Roger Douglas is someone who genuinely cares about New Zealand and the success of every citizen. I won’t deny that he is deeply unpopular with some New Zealanders and has been blamed for all sorts of things. But the politicians those people support, are quite prepared to miss-speak to remain in power and really care about little beyond staying in power.

If you are thinking of voting for National in the coming election consider this; There is not a lot that separates National and Labour with policy, and I’m sure that what we will see is carefully nuanced policy differences released by National over the coming months, and you can guarantee these will all be flexible. It is more important than ever to clean up NZ politics which looks like spinning off down a corrupt path. ACT will genuinely offer a check on National, and the current team of two have shown consistency in this regard. National won’t want to share power, they will want to be ensuring that any partner will be as small and as weak as possible. So every voter needs to seriously consider splitting their vote to ensure that policies like tax cuts are not fudged.

I guess that sounds like a party political broadcast for ACT (I’m not a member), but it’s something that voters seem to forget – espeically voters on the ‘right’ – and this year more than ever it will be important.

Here is an excellent interview with Sir Roger done by Conrad Reyners, on the Salient blog, enjoy!