Unemployment is a human rights issue

The 13,000 rise in unemployment reported in today’s Household Labourforce Survey brings the total number of unemployed New Zealanders to 175,000 – the worst number in 20 year.

That represents 7.3% of our population, including 15.6% of Pasifika people and 15.1% of Māori and we know it is also likely to be worse for young people, people with disabilities, sole parents of young children, and people with a refugee background. Namely, most groups that we recognise are likely to be victims of discrimination. We have a Human Rights Act to protect against this, but it really only works in times of job shortages and can do nothing to address the structural barriers to employment.

In the words of the Beneficiary Advocacy Federation of NZ “The Welfare reforms are framed on the premise that the unemployed are not trying hard enough to find jobs. The reality is regular redundancies and businesses closing, employers posting signs outside saying ‘sorry no jobs’. The reality is families struggling to pay the rent, to pay the power and to put food on the table.”

In times of high unemployment, focusing solely on the “job seeker” compounds the existing discrimination and heightens the sense of stigma already felt by those affected.

This Government clearly believes that the market will deliver, and it does seem to deliver for their mates, but we know that in times of high unemployment it does not deliver for the marginalised.

Further, we know the patterns of discrimination evident in employment are also reflected in the pay rates of those in paid employment. We see this clearly reflected by the fact that last year the median income from wages remained pretty much static while the average wage increased by 2.7%. This shows that some people, those on high incomes, who we also know are more likely to be pakeha, privileged, males without any impairments, have not been impacted by the recession.

This is now likely to be further compounded as the ability of vulnerable workers to negotiate better conditions is further compromised by pending labour law changes and high unemployment. It’s hard to ask for a pay rise when you’re told there’s a long line of people who would be happy to replace you.

New Zealand was one of the founding members of the United Nations (UN) and played a significant part in drawing the Universal Declaration of Human Rights (UDHR) in 1948. Frank Corner, former New Zealand Secretary of Foreign Affairs, described New Zealand’s participation at the San Francisco conference as having “an impact that helped to change the course of history”. The UDHR guarantees everyone the right to “social security…and the economic, social and cultural rights indispensable for his dignity and the free development of his personality”. Specifically, it notes that everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control.

Having a human rights lens on unemployment allows us to accurately assess the true impact of the current financial mismanagement by the National Government. It is felt most harshly by those who have the least to begin with, and are the most discriminated against.

265 thoughts on “Unemployment is a human rights issue

  1. What is the Green’s solution then?

    I can think of several things off the top of my head that would reduce unemployment but all require sacrifice in some area:
    – Lower wages
    – Import tariffs to offset the cost of cheap overseas labour
    – Government subsidation of uneconomic businesses
    – Trying to lower the dollar through various means to favour exports
    – Tighter credit control to restrict credit expansion (which in my opinion is the main cause of our current woes, as well as the US & Europe).
    – Controls on globalisation

    So which lever are you going to pull to solve unemployment? And are you going to be honest with the public as to who wins and who loses? The fact is a government influenced shift from status quo is going to require sacrifice in SOME area. All you’ve done is identify a well known problem.

    Also if you’re going to use the UN Declaration of Human Rights could you take a consistent party approach? Progressive taxation, one of your economic policies to ‘enhance equality’ and presumably pay for increased unemployment benefits, violates Article 7 (and completely misses the bigger problem – globalisation and to some degree large corporations).

  2. Me thinks the original meaning (1948) of the terminology used in the declaration, and your interpretation of those terms are as different as the 1948 meaning of the word “gay” and today’s meaning(s).

    It was, as I read history, never the intent that the unemployed should be afforded the same standards of living as the employed. Rather, the intent was that unemployment should not be a terminal condition and that the resolution to that danger should no longer include such places as debtors’ prisons.

    There is absolutely NO ONE in this country who needs to truly suffer because they have no breadwinner in the family, our social security machinary provides sufficient for the continuation of life in dignity, not style, just dignity.

    Please move on. Perhaps finding ways to have me and others invest our savings in enterprises that will profitably employ people, rather than suggesting we are to be decried for our capitalistic greed would be a good place to start. Without capital, there can be no new jobs, including those in the civil service which require capital to establish and become operational.

  3. Jan says “Namely, most groups that we recognise are likely to be victims of discrimination. We have a Human Rights Act to protect against this”

    The point you miss is employers are legally allowed to discriminate against people who are less qualified.

    They would quickly go bust if they didn’t.

    Employment comes down to one thing – companies making good profits. That’s why business friendly policies have meant we have lower than average unemployment in the OECD.

    And the very reason our dollar is higher than historic averages is because our economy is doing so much better than most other countries.

    It would be nice to be doing even better, but considering the we are five years into the worst global financial crisis since the depresion, we’re doing better than most.

  4. Employment comes down to one thing – companies making good profits.

    Whereas that is exactly true, its worse than that.

    Employing people costs businesses money, and therefore businesses do better if they don’t employ people. Well, clearly, they have to employ some people, but as few as possible. Using technology to replace jobs is one of the most sensible fiscal measures that businesses in general can make.

    Because technology continues to improve, the gamut of people that technology can replace continues to broaden. Thus business doesn’t need people in general like it did in years gone by. Businesses need exactly the right people.

    That we are gaining an unemployable (groping for word, trying to avoid “class”…) section of the population is a growing reality, and is an elephant no-one wants to address.

  5. The challenge for this government is that given the inadequate level of benefits paid not everyone has ‘a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care’
    Meantime the government blames beneficarys for not putting enough effort into finding work when clearly the problem is there is not enough work to be found.

  6. “And the very reason our dollar is higher than historic averages is because our economy is doing so much better than most other countries”.

    Photo’s Phantasy world again.

    The reason why our dollar is so high is because our, long past its use by date, reserve bank act, keeps our interest rates artificially high. Attracting all the “fast” money looking for a home.

    Giving productive NZ business a repeated bashing with higher interest and land costs than competitors, along with an overly inflated exchange rate.

    The “business friendly” policies Photo talks about have given a free ride to corporates taking money offshore while small and medium businesses are dropping like flies along with their customers incomes.

    Business employees are also customers.

    NZ, like Australia, has had a pre-longed period of high commodity returns.
    National,s ineptitude and lack of planning squandered it.

    If any company manager, “left it to the market” to the extent National has, they would be sacked.

  7. Actually, having a liveable income should be a human right.

    We accept that someone can inherit unearned millions, but we do not accept that someone else should inherit enough, from our society, to live on, as of right.

    Who actually has the culture of unearned entitlement?
    The Koch’s, Romney’s, Bennets, Shipley and Keys getting thousands a day for contributing very little.
    Not a teenager who has been struggling unsuccessfully to find work for two years and is expected to live on $130 a week.

    The days of constant growth and full employment are gone.

    We can produce enough for everyone to live in comfort in NZ with fraction of our present activity/employment.

    I do not have the figures for New Zealand, but, rather than a more equal distribution of income making everyone poorer, if the USA’s current production was shared equally everyone in the States would have an income of around 180k annually.

    I still think a surgeon, teacher or entrepreneur should earn more than a cleaner, but by cutting extreme wealth there is plenty of room to eradicate poverty in New Zealand.

    No one except for some rare exceptional entrepreneurs, “earns” millions.

  8. “I still think a surgeon, teacher or entrepreneur should earn more than a cleaner” – But that’s not “fair”

  9. Maybe some see policies designed to reduce unemployment as unfriendly to business?

    In that they suggest their favour for business friendly policy means accepting unemployment, reduced working conditions and lower wages.

  10. How about shifting Work and Income’s focus from getting people into employment to encouraging business start ups by beneficiaries? This would allow people to fill needs they have identified. In addition the tax policies in NZ favour those with business and it doesn’t look like that will be changing any time soon.

    Of course they already offer this but the funding has been cut to the bone since the election that brought National to power in 2008 (how utterly predictable). Ridiculous because the funding for business start up is targeted to those disadvantaged in the labour market.

  11. Kerry says “The “business friendly” policies Photo talks about have given a free ride to corporates taking money offshore ”

    Translated – we need to crush ALL businesses in NZ, just in case one business, somewhere, might (horror of horrors) make a profit and take some of it overseas (just like our best companies make a profit and bring it back to NZ).

    You’re about half a century behind the times Kerry – it’s profitable businesses who create jobs – not governments.

    What the unions call massive cuts in public servce jobs from 38,000 to 35,000 has meant the public service is now 1.75% of the NZ workforce instead of 1.9%.

    The government could bankrupt the country by increasing the public service by 50%, and it wouldn’t even make a 1% gain in total employment.

    The private sector is where almost all the jobs are. And it’s not rocket science. When they are profitable, they employ more people.

    When there are governments who are not business friendly, increase compliance costs, increase tax etc, they will be less profitable and employ fewer people than they otherwise would.

  12. Kerry says “if the USA’s current production was shared equally everyone in the States would have an income of around 180k annually.”

    Yet another example of Kerry making up total and utter nonsense in his fantasy world that’s around 400% different to the real world.

    The total GDP of the USA, divided by it’s population, is $48,000 per person.

    http://data.worldbank.org/indicator/NY.GDP.PCAP.CD

    Kerry, you are so obsessed with your hatred of wealth that you have become delusional, and have resorted to making up complete nonsense.

  13. Kerry I don’t see where the number used comes from either.

    If the distribution were allocated among taxpayers it might make some sense… a valid argument… but the way you have it worded that interpretation isn’t really available.

  14. dbuckley

    Employing people costs businesses money, and therefore businesses do better if they don’t employ people. Well, clearly, they have to employ some people, but as few as possible. Using technology to replace jobs is one of the most sensible fiscal measures that businesses in general can make.

    While that takes care of the expenses (cost) side of the business ledger, you still need people with money to be depositing into the sales (income) side of the ledger.

    Workers are customers, there is a natural balance between utilising machines to make widgets for people to buy and people not having a job or income stream to buy the widgets.

    Getting the balance (or wealth distribution) right is something no monetary system gets correct.

    People with no money to buy machine made widgets are, as you say, the elephant in the room.

    I’m sure that in the post industrial world this anomaly will be rectified.

  15. Every now and again a RWNJ comes up with a statement that shows their pathological disconnect from reality.
    Rands, “The wealth creators” to describe parasites, as if the fact of having money, not work creates wealth. It may create wealth for that one wealthy person, but it does not create any more wealth.
    Key’s “we want lower wages”.

    Photo and others who live in a phantasy world.
    “it’s profitable businesses who create jobs – not governments”.

    It is demand that creates jobs. It doesn’t make any difference to the necessity for the job, whether they are paid for through taxation, Government charges or directly to a private provider.

    Interesting. In other words all those who had jobs in the Soviet Union did not have jobs because the Government could not possibly have created them. Similarly all those in the US military who are risking their lives to keep petrol prices down at the US pumps cannot really be working.

    Now we can see why Photo is so against Teachers.
    Them getting paid for having “no jobs” if they are employed by the State sector, Because “the State cannot create jobs”, must really get his goat.
    No wonder why he wants them all to work in the private sector.

    It is demand that creates jobs. And it is work that creates wealth.

    Photo is correct about one business reducing wages and social costs, but if they all do it at once then they will all go out of business as their customers no longer have any income to buy their products.

    Like the Aussie boat builders who exported their production to Thailand, who are now complaining the market in Aussie for their boats is disappearing. They seem unable to make the obvious connection. Thais on $100 a week do not buy 300k boats.

    Photo and his fellow RWNJ’s have been constantly saying the public service is so huge it takes away from the rest of the economy. Exposing another RW fallacy, the Laffer curve. Which ignores the fact that under our current system increasing State economic activity also lifts the private sector. All those State employees spend their earnings somewhere.
    Now they want to have a bob the other way and say the State sector is so small that cuts have little or no effect on unemployment.

  16. BJ the numbers were from Alter-net and I have to admit a mistake. Re-reading the source it states, family income of 180k.

    Though, income in the USA, as here, has little association with GDP. Or the heads of Goldmen, Sacks the world, would not be getting billions.

    It does not invalidate the argument though, that the oft repeated RWNJ statement that more equality in the USA, or here, would result in everyone being in “shared misery”, is false.

  17. Photo. When have I ever said anything against a fair profit for productive and useful business and/or entrepreneurs.

    I’ve said a lot about things like the financial sectors effectively taking a transaction tax on every transaction, the private sectors cockups and gambling having to be bailed out constantly and repaired at a huge cost. hot money attracted by our overly high interest rates pushing up the prices of non-productive assets, and the shear stupidity of selling necessary infrastructure, built over generations, for the private sector to asset strip.

  18. Photo. When have I ever said anything against a fair profit for productive and useful business and/or entrepreneurs.

    I’ve said a lot about things about the financial sectors effectively taking a transaction tax on every transaction, the private sectors ballsups and gambling having to be bailed out constantly and repaired at a huge cost, hot money, attracted by our overly high OCR, pushing up the prices of non-productive assets, and the shear stupidity of selling necessary infrastructure, built over generations, for the private sector to asset strip.

  19. Do you know what the funny thing with all this is? no one in this country on the left ever puts their money where their mouth is.

    There are ways that people can lower housing costs, food costs, and even transportation costs by simply putting their money where their mouth is, but they never do it.

    Perhaps it is time to stop moaning and actually get off your collective arse’s and actually create some tangible reasons for others to listen. One thing that is for certain in NZ is a the fact that there are a hell of a lot of wealthy left leaning people that are just as keen to stay sitting on their cash as any hardened capitalist pig.

  20. Only in your right wing nutcase fantasy world Photonz

    Translated – we need to crush ALL businesses in NZ, just in case one business, somewhere, might (horror of horrors) make a profit and take some of it overseas (just like our best companies make a profit and bring it back to NZ).

    Not to put too fine a point on this but that has absolutely NO relation to what Kerry has been arguing. Which makes it really hard to take you seriously. Have you ever tried ( I mean seriously tried ) to argue with (or even understand) what people here actually say?

    I think the last 30 years have pretty much proven that there is almost no hope of having a profitable manufacturing business in NZ, that is not based on agriculture – AS LONG AS THE IDEOLOGICAL REQUIREMENT THAT IT COMPETE ON ITS OWN WITH THE REST OF THE WORLD IS MAINTAINED. The departure of Fisher and Paykel is the door slamming shut… the lights are already out.

    Without some effort on our part there is no ability to maintain any manufacturing here, nor an ability to maintain R&D with the manufacturing elsewhere.

    The ideologue asks of course, what is the sense of doing things that others can do for us more cheaply. Yet agriculture alone cannot be the sole basis of a country’s wealth, if it wishes to be a first world economy.

    We are a nation of “do it yourself” fiends… and how is it that my “inefficient” fixing of my fence or painting of my house or repair of my “stuff” is economically tolerable? Could it be that I can earn only SO much money, and so find it cheaper to work, even if it is LESS efficiently, to obtain a result than to pay or borrow to import someone else’s work?

    How is it that we cannot understand this at the national level, when we instinctively understand and embrace it at the individual level?

  21. Yeah… sounded like a per-household number. Impressive no less given that the US GINI is around 46. Ludicrous arrangement really. Difficult to justify even on a nice day.

    Top to bottom – maybe 5:1 is justified. Not what we’ve got.

  22. “Culture of Entitlement”.

    Unintentional irony from individuals who are sitting on 100 thousand dollar pay rises, while their company tanks in the recession, salt their income away offshore to avoid taxes, expect taxpayer bailouts when their gambling fails, and ask for tax cuts while the deficit increases.

  23. Given that the median family income in the US is 50K the notion that altering the distribution could raise it to 180k is a startling bit of information… it highlights the unreal nature of such an excessive GINI.

    Impoverishing workers to allow business to profit even though competing at a distance with larger corporations in larger markets – doesn’t work.

    Selling off the country to allow us to afford to live as though we actually produce things… doesn’t work.

    Borrowing money to allow us to live as though we actually produce things… doesn’t work.

    The economics that can work for NZ are the economics of a small island far from other markets. We have to keep that limitation in mind AHEAD of ideologies.

    BJ

  24. Kerry,

    All those State employees spend their earnings somewhere.

    Again there has to be balance. The state employees gardener their pay from taxes collected from the non state sector.

    No private sector workers and businesses, no taxes to pay state employees.

    The tax take is declining and as such there are two choices. Tax the remaining private sector workers and businesses more. Or reduce state expenditure.

    The balance is out of kilter with too many overpaid public state employees (whose only tax contribution is GST) versus not enough private worker and business tax contributors.

    if we look at forecast we see a worrying trend. Increased taxation versus GDP.

    http://www.treasury.govt.nz/budget/forecasts/befu2012/011.htm

    Sure to kill any new private business development that will enable tax take increases through GDP growth .

    We are not growing the pie but the state is carving larger and larger hunks.

    Soon the balance will be no pie and no taxation to pay state expenditure.

    .

  25. It is statistically impossible for the tax take to be declining yet increasing as a share of GDP IF GDP is not falling (meaning we are in a recession).

  26. Gerrit,

    You have a fundamental economic misunderstanding. There is no need for any private sector in our economic system. It is quite possible for the state sector to produce and sell goods and services. Before corporatisation and/or privatisation, who paid for state owned electricity, trains, airlines, telephones, postal services and so on? Not the taxpayer; it was the customers who used these services. Well that’s not 100% true; the taxpayer did put in a lot of the capital, and did support non-profitable services, but this is not a necessity. Furthermore, it is not unknown for the taxpayer to provide capital for or bail out loss making private sector businesses … indeed this has happened a lot around the world lately.

    Indeed it is quite possible to envisage an economy with no private sector at all. This is not to say this is necessarily a desirable thing, but to claim the state sector can only exist if there is a private sector is plainly incorrect.

  27. Samieula

    There is no need for any private sector in our economic system. It is quite possible for the state sector to produce and sell goods and services.

    Theoretically you are right but that is not reality. Are you advocating such a society?

    And do you want to live in a society where private endeavour is owned by the state?

    You have a fundamental human endeavour misunderstanding. People want to be free of the state, not engulfed by it.

    SPC,

    So the treasury graph is wrong? Please explain where the graph showing tax revenue is projected to be over 35% of GDP (currently 25%) is wrong.

    If treasury is wrong then why are we paying the big bucks to the treasury staff?

    State expenditure saving if we got rid of staff who in your eyes don’t get it right, yes?

    .

  28. Why on earth should there be private business development Gerrit? The Chinese can produce anything we make faster and cheaper. I sometimes get the impression that this nation “played too much football without a helmet” when it was younger. We are on an Island with a small market thousands and tens of thousands of kilometers from any other market.

    This means that our natural “competitive advantage” in the sense of Riccardo is negligible, and will remain so – forever – in the current economic environment.

    Such a fact should be obvious to any reasoning person looking at the situation. Yet it eludes some of the most astute New Zealanders. The “lesson of Muldoon” was drummed into a generation and never once questioned as it should have been. For Muldoon’s failure was only that he failed to secure independence from the bankers first. He did not think big enough, and in excuse one might add that the error of the monetary system had begun before he was born.

    It is an impossibility, that a sovereign state, borrowing from itself, can actually “run out of money”. It is possible for it to break its monetary system by printing too much, but running out is NOT a possibility. Moreover, if the money is backed by something, so that it is redeemable, it is difficult for the state to print too much. It can “borrow from the future” as all borrowing is, to allow some project to go forward, but it is constrained by the redeemability requirement.

    Which points up the fact that foreign bankers have no actual power over a sovereign state. They have the power we allow them to have. The power that a monetary system that is based on debt allows them to have, and that is a puissant thing indeed. Yet at a stroke it can be removed from them. Muldoon didn’t recognize the risk they posed nor the power we actually held… and the moment of crisis was seized by some neo-conservative dickheads to transform the countries inhabitants into a free-market slaves. Which leads us to our current contretemps.

    1. Manufacturing next to nothing apart from “milk powder”
    2. House prices best observed with the Hubble Telescope.
    3. Low and stagnant wages
    4. Unemployment and more unemployment at the lower end.
    5. Skilled people migrating to other countries.
    6. Stalled development of infrastructure.
    7. Disastrously Distorted tax code.

    – probably a few more that we could add to the list. I am pretty sure there is common agreement that our economic system is a train-wreck in progress. Details being of course, a matter of disagreement.

    So we live in a situation where the notion of “private business development” is a trap for the optimistic. Middle tier merchandising is OK… taking a cut from the imported goods coming in, but actual productive work is a dead-end, as the only viable market is NZ and the requirement for growth is still built into the currency. So the only possibilities are to grow until you have to leave the country or fail.

    We are a nation in denial about what we need to do.

  29. SPC Posted November 8, 2012 at 6:41 PM
    All hail to the supremacy of capital …, really?

    Yes. Really.

    Without it what do you have? Taxation of government employees to transfer fiat money from one pocket to another while the standard of living decreases to nothing. Think of these things:
    – no new internal combustion engines coming into the country, so no rail, bus, van, car or motorbike renewal and so transport reduces back to the horse and cart. (you have to have capital to pay for imported goods prior to their being dispatched for sale, if you purchase through a third party (import wholesaler) they need capital to stock their warehouses – no capital no imports.

    – no new scale farming as the capital to purchase seed will not exist and so the most that could be sown would be the seeds that a farmer had horded from a prior crop.

    – no dairy exports, ships require large amounts of capital to procure so we won’t have any, and as our exporters will have no capital to assemble inventory and containment devices shipping companies won’t bother putting little old new zealand on their routes.

    – no more Frogblog, there are several hundred million dollars of capital invested in the telephony infrastructure, most of which will be useless in about five years. (025 phone anyone?)

    ^i^ ^i^ ^i^ ^i^ ^i^ ^i^ ^i^ ^i^ ^i^

    Since the first capitalist saved some of their income and used it to acquire a piece of equipment that made their labour more profitable (maybe a hunter who traded some meat for a piece of flint,) capital has been the only source of civilisation growth.

    That (civilisation growth,) being something you are clearly against, makes you an abhorance to me, so I think I’ll just ignore you from now on.

  30. BJ
    I think our salvation lies in our ability to conceive and produce something that costs virtually nothing to distribute on a global basis. While this has not been possible for earlier generations (like mine,) it is available to todays minds. Look at Xero Limited and what they have built in just a few short years. Look at our Boat designers who are able to sell their designs (a few terrabytes of data) globally to people with serious money. The scale of what can be achieved from out South Pacific nirvana is limited only by imagination.

    Unfortunately, we seem hell-bent on erradicating imagination and innovation out of our young by putting them into cookie cutter education where the lowest level of ability is treated as the blanket under which all sparks of greater ability are smothered. THERE lies our future downfall.

  31. I see all my latest posts (in all threads) have not been approved AND my previous comments have been deleted. To whomever moderates this board – care to explain why?

    [frog: Your comments were in the moderation queue and have now been released. Most likely reason for them being held is that you were not logged in as a frogblog user when you posted them. Nothing to do with your challenging the opinions of post authors.]

    Challenging policies is part of a healthy democracy, people should understand more about a topic before they commit to it. Debate is a pretty good way of achieving that. I’m not cemented in my ways – if I hear a good argument I can’t challenge i’ll go away, learn more and reevaluate my position. As everyone should do.

    I see you allow some comments through questioning your policies – do you have a threshold or something? 10 ‘negative’ comments and you’re banned? People come on here, both commenters and MP’s, making at times dubious claims, or claims without sufficient evidence – I come on here, offer an opposing viewpoint so they can attempt to back up their claims. What exactly is wrong with that? Or have you defined ‘trolling’ as anyone who dissents against your views?

    What exactly is the point of this board, backslapping? Sorry but i’m not into that. I’m not going to comment on something I agree with unless its pretty bloody amazing – what’s the point? I challenge posts on here to see if anyone can come up with a decent argument and challenge my own perspectives (and hopefully challenge others to think for themselves).

    Look forward to your response (and could you identify the offending post and state exactly why it warranted banning and removal of all previous posts).

  32. The solution is for those with conviction to put their money where their mouth is.

    It is time for those NZers with an understanding and a reasonable bank balance to forget about maximum monetary return and focus on simply doing the right thing.

    If I had money I would be doing it, I would be starting a range of initiatives to prove the value of some of these concepts being discussed.

    I couldn’t think of a more exciting way to use wealth than to build a better future for our country.

  33. Ah, the socialist mantra “THEY have to put their money where it will do US the most good”

    Sorry Shunda, as far as I am concerned, getting the maximum monetary return on my savings to pay for my retirement IS simply doing the right thing. As for saying “If I had money” you do! TAke the cost of your broadband conection and spend it on DOING THE RIGHT THING by your definaition. After all, socialism denies the concept of capital, so your little bit will be a significant contribution.

  34. BJ,

    Why on earth should there be private business development Gerrit?

    You saying that it should be banned? No more farmers markets for example?

    Not sure what you are saying or implying. Please clarify.

    The Chinese can produce anything we make faster and cheaper.

    So how will “we” pay for it? That is the balance the Chinese face. Sure they can produce but their customers cant pay unless they have something to trade or barter.

    Still a two way street.

    And no, the Chinese cannot produce one off, highly customised marine components like we do in the NZL marine business.

    Sure they can copy and mass produce, but ask to have a modification made or provide the same in a different substrate, or provide ultra sound void maps of carbon composites that insurance companies will except, they struggle to be price competitive with NZL manufacturers.

    Want a thousand widgets of the same specification and composition, go to China.

    Want a single widget taylormade for your particular application, come to NZL.

    Aviation market is the same.

  35. Ah, the socialist mantra “THEY have to put their money where it will do US the most good”

    No Dave, it’s the common sense mantra: “if you keep shitting in your own nest, your end up getting covered in shit”.

    But you just keep on shitting mate, hey, who knows, perhaps you will be the first person in history to sell the idea that ‘shit doesn’t stink’.

  36. Shunda

    your ability to associate my savings with sh1t is beyond me. I give in. I will give all my money away (to family) and demand that the state support me in acceptable style and comfort.

  37. Your nest is NZ Dave, not your bank vault.

    I am not a fan of socialism either, but I am also no fan of the default NZ property investor.

    We should do what works, not get caught up on labels, indeed, everything successful in NZ has followed that path.

  38. Gerrit, it is statistically impossible for the tax take to be declining yet increasing as a share of GDP. The exception to the rule is if GDP is falling faster than the tax take.

    What about that don’t you understand?

    So if someone says that the tax take is falling (it is currently below forecasts and the rise in unemployment confirms this) and that tax is increasing as a share of GDP (as you did), they are not using the same time periods.

  39. dave, as to the supremacy of capital – what capital? The capital we borrow from offshore – created via QE and then distributed through foreign banks and lent to as as debt for us to pay back. The interest we pay providing foreign bank profit for them to increase their capital reserves to meet new Basel standards. The value of our real work (real money) leaving our economy to subsidise their way out of their GFC.

    And yet we cannot create money via QE to make the same investment or spending choices, because this might devalue the dollar (and help us maintain jobs). So instead we acquire debt and because of a higher value dollar suffer further job loss.

    Because we must respect capital (made up offshore via QE) – sounds like our orthodoxy is cringing colonialism before foreign capital.

  40. On Planet Key, there is no shit. Well, there are no toilets at least, according to Emperor Key. There might be shit. It might cover the golf-courses. It might be hitting the fans. On Planet Key, no-one works. Perhaps there is widespread and debilitating constipation.
    It’s a special place.

  41. SPC,

    So treasury is wrong?

    Here is the link again to the graph

    http://www.treasury.govt.nz/budget/forecasts/befu2012/011.htm

    My reading is, as GDP drops, to maintain government expenditure at present levels requires a higher percentage tax take, as a percentage of the GDP.

    What is so hard to understand about that?

    More importantly, is it sustainable to keep increasing tax take from a flat lining GDP?

    When does NZL start to cut it’s cloth to suit the material available?

  42. …and a higher tax take will likely destroy GDP growth even further.

    Unsustainable.

    If we want more public spending, we must grow the pie.

  43. Tell that one to local government. My council appear to be very proud that they have “only increased rates by 4.3%”, or to put it another way, twice CPI increase and three times average wage increase.

    At some point, government have to realise that buying votes is a zero-sum game. The people you tax to pay for the others’ votes end up voting with their savings (spend them and then live of ‘others’,) or their feet (anywhere where the total level of taxation is less than here (if you earn well you only lose 45%).

  44. Gerrit, and others, have you considered, the private productive sector is choking, not because of too much taxation from the State sector, but because the State sector is too small to properly support the private sector.
    You can see the effects in Greece, and NZ to some extent, right now.
    Austerity in the State sector is shrinking their whole GDP, not encouraging private business.
    The last 4 years, in NZ, of shrinking Government expenditure has not resulted in the claimed surplus, as our tax receipts have declined with the attempted cost cutting.

    And because too much of our annual income goes offshore in profits and debt servicing.

    Successful economies have a much bigger per capita spend in the State sector. The ratio of tax to GDP though can be, not always, (some of them chose to keep taxes high and have a high social wage), lower because that State spending has also grown the size of the private sector.

  45. Gerrit,

    The state running businesses is more than just a theoretical possibility, it is commonplace in many countries, and made up a large part of the New Zealand economy until the mid 1980s.

    Also, perhaps you are getting caught up in thinking that only primary and secondary industries are productive? Much of what the state does is providing services in the tertiary sector of the economy. If this is non-productive, then so is the GP you visit when you are sick, the IT person you employ to fix your computer, the accountant you get to do your business finances and so on.

    Take away any of these tertiary sector services, then you’ll find that the rest of the economy will suffer. It doesn’t matter if the service is provided by the state or a private business.

    Now on to your point that people want to be free of the state, not engulfed by it. This is a very interesting question. I think that there may be several different varieties of “freedom from the state”. Many (most?) people do not like the concept of a Big Brother/1984 type of surveillance state. But when it comes to state provision of services instead of private provision of the services (e.g. education, health care and so on), then I think you’ll find different views concerning this role of the state.

    Interestingly, historically many of the political regimes which have tried to minimise the state’s role in the economy have also been big on monitoring and controlling people through use of surveillance, secret police and so on. (As have communist regimes at the other end of the political spectrum). I think the common thing here is that regimes that are unpopular with the masses end up using surveillance and police control to maintain power. Perhaps this is why dictators like Pinochet needed to resort to fear and terror to control their people … the majority of people did not want the sort of economic “freedom” that these regimes pushed, because it only benefited the minority, not the majority.

  46. SPC
    If you know of a banking source of borrowing to finance a business that doesn’t have existing capital as one of the pre-requisits for a loan I’d like to know who it is. I have a business they can fund.

  47. Gerrit, the tax take against GDP has been falling – as per your Treaury source.

    Apparently Treasury’s forecast of National getting us back to a budget balance (and then surplus) is reliant on the the tax take rising against GDP in the immediate future. A neat trick – as no tax rate increases are planned. How and why?

    It’s more common for GDP to grow and for this to result in increased tax revenues, but without much change to the ratio between tax collected and GDP.

    Treasury can expect to be disappointed, National will have to push out their budget balance aspiration date to 2017, as it won’t happen just because of a Treasury forecast (to please their Minister).

  48. dave stringer, so you are aware that this is a country where businesses find it hard to raise either capital or loan finance. Many business owners are limited to borrowing against the family home. No wonder they need to sell ownership offshore to grow further.

    One problem is the lender risk – there is no risk lending against housing, yet other lending involves business uncertainty. Especially in a country with a volatile currency with a tendency to being over-valued because of OCR settings.

    The same factor seems to deter venture capital investment – recently investors would rather go for the so called certainty of a finance company interest rate (to participate in the housing boom via property developer finance).

    This is why Greens and Labour are so concerned about the OCR settings.

  49. Good Grief Gerrit… I put the rest of that thought in posts ahead of it.

    There is NOT a method of paying for all the imports.

    There never was.

    There never will be.

    Which implies rather strongly that we should NOT be doing so much importing and we SHOULD be doing some things ourselves. Just as we “do it yourself” folks build our own decks and put up our own sheds and renovate our own houses. Which in turn makes the clear point that we cannot rely on the sacred “free market” and Riccardo to solve all our problems.

    Dave – Capital is not the ruling ring mate. The Sovereign State is, or can be.

    That Capital has the place it currently holds is a result of the debt based currency that is used to run all of the economic system… that makes the creators of our money more powerful than the state, much as Mayer Amschel Rothschild observed so long ago.

    It is hard to imagine another way… it has been so long twisted into the peculiar shape it is in now… but another way is required. Because as I point out in the piece above, none of the other ways work.

  50. Dave Stringer. How is it everyone is heading for countries that have higher progressive tax rates than NZ.

    Where is the brighter future that 35 years of tax cuts, for millionaires and foreign corporates, selling state assets, and austerity was supposed to deliver??

    All I see are boarded up shops, and small business closures as their customers incomes have dropped, because the money which was supposed to “trickle down” into more productive investment, goes to overseas derivative schemes and Hawaii holidays.
    And ever increasing numbers of unemployed or people on such low wages in precarious jobs, they may as well be unemployed.

    Cutting benefits and wages at the lower end is killing NZ business.

    No country has ever successfully and sustainably built a society by selling exports alone. A vibrant internal economy is needed for start up and innovative business. Nor has any business, or country stayed prosperous by “leaving it to the market”. As every entrepreneur knows you become successful by tilting the market as much as possible in your favour.
    The hands off, neo-liberal meanness typical of National, ACT and too many Labour MP’s, has never worked. “leaving it to the market” is not working for NZ business, exporters, Christchurch or New Zealand.

  51. I believe that society needs to spend significantly more on combatting poverty. The numbers that this country puts up in the negative social indicators such literacy, numeracy and domestic violence etc are all related to poverty and are quite embarrassing. While just throwing money at it is not the answer, we must accept that meaningful intervention will cost.

    But here’s the problem..I earn over the median wage and I don’t feel like I’m doing that great. I’m certainly not that keen on paying more tax.

    I wouldn’t be too worried about asking really wealthy people to pay more but I fear that this will simply lead to avoidance behaviour or, alternatively, rich people simply leaving this country. We see that already.

    Therefore, the only answer I come up with is a wholesale reprioritisation of spending to target poverty. Any penny spent by the government that isn’t part of a plan to break the cycle of poverty is wasted.

    Sorry, maybe slightly off topic but interested in other people’s thoughts.

  52. It seems this post by DS passed everyone by so I’ll repeat it in bold

    I think our salvation lies in our ability to conceive and produce something that costs virtually nothing to distribute on a global basis. While this has not been possible for earlier generations (like mine,) it is available to todays minds. Look at Xero Limited and what they have built in just a few short years. Look at our Boat designers who are able to sell their designs (a few terrabytes of data) globally to people with serious money. The scale of what can be achieved from out South Pacific nirvana is limited only by imagination.

    Are there any businessmen in the country with brains? Please stand up and be counted.

  53. Kerry

    the money which was supposed to “trickle down” into more productive investment, goes to overseas derivative schemes and Hawaii holidays

    Strange, I thought it went to WFF, DPB and other welfare initiatives. As far as I’m concerned, if a man born into poverty goes off shore, makes a fortune and spend some of it on holidays for his family you’ll hear no complaints from me – only from the GREENS with envy!

    Dbuckly
    there are many ideas, just no capital to invest. I read a proposal back in 2009 to put a global data haven (now called a cloud) in the southern pennines. If that idea had been taken up we’d have a vast new revenue source to offset our disaterous balance of trade, but the people looking at it couldn’t think of a way to fnd it . . . sad.

  54. Dave Stringer.
    You have been bamboozled by the Randian “wealth creator” myth. http://kjt-kt.blogspot.co.nz/2011/03/myth-of-wealth-creation.html
    All that extra money given to the alre4ady wealthy in tax cuts, lower wage bills and State welfare to the already wealthy has not resulted in extra productive investment in NZ. In fact it has dropped to a trickle, since 1984.

    WFF, DPB and other social insurance goes back into the economy and supports private business, individuals, increased demand and further growth which allows for a higher amount of tax and so it goes around.

    Low wage earners and social insurance welfare recipients spend/invest their money locally.
    The money which we have gifted more and more to those who not only are already rich, but contribute little, http://kjt-kt.blogspot.co.nz/2012/08/blog-post.html , is mostly invested in high earning ponzi offshore derivative schemes, offshore spending, including Hawaii holidays, and bidding up prices of existing assets such as land. That money is lost as far as investment in the NZ economy is concerned.
    I agree we should be doing something about the people who take billions of the state.
    These people. http://kjt-kt.blogspot.co.nz/2011/03/kia-ora-yeah-we-should-be-doing.html

    Note that welfare costs are going up because of Government policies of cutting wages and employment, destroying NZ small and medium business and off-shoring jobs and income.

    Though WFF is actually a subsidy to employers whose business is so inefficient that they cannot afford the true costs of their Labour inputs, which are then paid paid by other taxpayers, including more efficient businesses, who do pay decent wages…

  55. BJ says “I think the last 30 years have pretty much proven that there is almost no hope of having a profitable manufacturing business in NZ.”

    Modern machines means things can be produced much cheaper with less people, than they could previously.

    So as a percentage of GDP, and a percentage of our workforce, manufacturing has declined significantly, and will continue to – JUST LIKE THE WHOLE PLANET.

    If you want economic salvation, who in their right mind would look to a sector that has been in decline, decade after decade, globally.

  56. Kerry says “Cutting benefits and wages at the lower end is killing NZ business.”

    Years of Labour watching the whole country spend 15% EVERY YEAR more than it earned, is what is strangling business.

    Mortgage debt went from $60B to $160B. Farm debt and business debt both went up by similar amounts.

    We need years of the whole country putting an additional 15% of our income into debt repayment – just to get back to where we were when Labour came in IF THERE WAS NO INTEREST.

    But taking an extra 15% our of our spending would send the countries businesses bust up in no time.

    20 years (by 2032) has been said to be way too optimistic to get debt levels back to where they were.

    At the same at paying down debt, we also need to pay the higher interest, and we also need to save, and also to spend MORE otherwise the economy won’t grow.

    So there is four significant additional things we need to spend our money on that we weren’t five years ago.

    And we need get the rest of the world to buy more of our stuff as well, even though they have the exact same problem – too much debt.

    And Kerry’s solution to our massive debt problem?

    Get the govt to take on much more debt – the very thing that sunk Greece, Spain, Ireland, Iceland etc.

    That makes as much sense as other ideas like increasing our wages compared to other countries by helping manufacturing by printing money and devaluing our dollar – which has the exact opposite effect as a lower dollar means our wages DECREASE compared to other countries.

  57. Sorry Photonz – but anyone with a lick of sense would understand that we cannot continue to import everything.

    I have outlined several times the things that DO NOT work, impoverishing labor, selling off the country and borrowing money to maintain the import stream of EVERYTHING we use… those are not possible methods of proceeding. They are not sustainable.

    You aren’t even arguing the argument I offered here :-)

    I have a finite income stream in my household. As a result my “do it yourself” projects cover a wide range of things that COULD be done more efficiently and probably better, than are going to happen because I’m the one who has to do them… but I am not spending money I don’t have to do it.

    We can keep on worshipping the false God of comparative advantage and failing, because there is no such thing for this country, or we can start building stuff here.

    This is not a National issue it is a national issue, as Labour has for a long time worshipped at the same altar. That is changing slowly.

    Your ideological blinkers could probably be removed with a little outpatient surgery.

  58. Strangely enough Photonz, it is not GOVERNMENT debt that is the problem here. IS it! You made the list after all. It is private debt.

    Which is a symptom of debt based money and… private banks being in control of it.

    I notice too, that you provide exactly NO solution to the problem of stopping the bleeding. Just criticism of the only method that has ever worked. Did you think we would not notice?

    You and Bill English seem to have something in common.

    :-)

  59. Congratulations Photo. Managing to show a disconnection from reality, reading incomprehension or just not reading anyone else’s posts, ascribing to me views I have never had and cognitive dissonance all in one post.
    We were not talking about private debt this time, though I have talked many times about the stupidity of allowing increasing debt, just to bid up the prices of non-producing assets. That is the result of having almost infinite QE from the US going to banks, which they then charge us to borrow. And an OCR rate higher than everyone else attracting financial vultures.
    Even Muldoon had more sense than that.

    I havn’t supported National light since 1984.
    Though to give them their due they have recently proven to be much better economic managers than National. Not that that is saying much.

    I have never advocated more debt. We should be paying for our social insurance etc with similar progressive tax rates to the successful countries in the OECD.
    Gareth Morgan shows how. I suspect more money in the hands of lower income earners, instead of going offshore, would reduce the Government deficit, and private borrowing. Many people are increasing their mortgage just to survive on our low wages.

    Greece’s state deficit is due to both tax dodging by the rich, Germany’s QE, (lending money to the rest of Europe to buy BMW’s to keep their own economy healthy), the lowest wages for some of the longest working hours in Europe,(Hardly profligate) and like the USA, banking shenanigans. Austerity has lowered, Greece’s economic activity and the tax take even more. Making the debt much worse as a proportion of GDP and taxation.

  60. Every country expecting to become prosperous and pay back debt by out exporting every other country is fantasy. And a fight small countries like NZ are bound to lose.

    As is expecting China not to up their game, and do their own high end designing and manufacturing instead of lending everyone else money to buy their widgets.

  61. The Labour govt led us year after year, spending 15% more then we were earning, straight into the biggest financal crisis in 3/4 of a century, and Kerry says

    “Though to give them their due they have recently proven to be much better economic managers than National.”

    So you say you don’t support the govt going into debt, but you want them to spend more.

    You could reverse the tax cuts – that would claw back just $1.5 billion, still leaving the govt $15 billion PER YEAR short – but you want them to spend MORE than this.

    And you think they can do this without going further into debt – yeah right.

    If you DOUBLED the tax on everyone over 100,000, you’d only get an extra $6 billion – that doesn’t even cover half the annual deficit let alone allow for all the extra spending you want.

    If you DOUBLED the tax on everyone over $50,000, it STILL wouldn’t even cover the annual deficit, let alone allow for extra spending.

    And we haven’t even gone into the damage DOUBLING the tax on everyone over $50,000 would cause – the mass loss of peoples houses from mortgage defaults, the collapse of the building industry, the hospitality industry, domestic tourism, etc etc etc.

    Regardless of what govt is in power, we have at least 20 more years of paying back debt, just to get back to the same position as before the spending frenzy during the last five years of Labour.

    That’s 20 years where the economic brakes will slow any growth in the economy.

  62. BJ says “Strangely enough Photonz, it is not GOVERNMENT debt that is the problem here. IS it! ”

    If you don’t think the govt going into debt by $16 billion a year is a problem, then you’ve got rocks in your head.

    We already increased mortgage debt alone by $100 billion in the last five years of labour. If every cent of the $1.5b tax cuts went to paying off that debt, it would take 66 years.

    But of course it’s much worse than that – to pay off that $100b debt, we FIRST have to cover the ADDITIONAL $6 billion in annual interest.

  63. Y’know… you just got all het up about the gummint debt, but then IMMEDIATELY discuss the private debt.

    The gummint debt really isn’t that impressive and could be corrected quickly and simply, just fire the current gummint and get in some folks who aren’t actually scared to use taxes to raise revenue, and who aren’t married to the idea of forcing the workers to work for nothing and handing the rest to the owners.

    In other words, the bankrupt government (ethically and actually) isn’t going to work for us this time any more than it did last time. The systemic problems existed before the financial crisis – and Labour wasn’t a lot smarter about them.

  64. Photo. Are you arguing with me or your typewriter. It is your favourite party that is increasing debt. To pay for tax cuts.

    State debt went down when Labour was in. Under National it is rising steeply, for all the wrong reasons.

    Private debt is only a Government problem when Government encourages it and guarantees it.
    That’s called socialisation of private losses. Something which both capitalists and socialists consider wrong.

    Private debt went up, because Labour kept on with neo-liberal economics.
    All the things you want more of.

  65. Bj says “The gummint debt really isn’t that impressive and could be corrected quickly and simply, just fire the current gummint and get in some folks who aren’t actually scared to use taxes to raise revenue, ”

    Duh

    Every 1% increase in the top tax bracket brings in an extra $101m.

    Just to cover the annual $16m in govt debt, the top tax rate would have to go up by 158%.

    Total annual income tax take is $23 billion. We need an extra $16 on top of this to cover annual govt debt.

    That would need an increase of 70% of tax taken from EVERY tax payer.

    That would collapse the whole economy and bankrupt most people and businesses.

  66. Photo.

    Why would we raise taxes to pay private debt?? You seem confused.

    And you grossly underestimate the amounts available if some of the richest people in NZ actually paid taxes.
    Even IRD say half of them are not paying taxes in NZ.
    6 billion is roughly the amount IRD think we lost offshore in marginally legal tax dodging, last year alone.

    And the amount actual tax take would increase with increased employment, as those on lower incomes spend more in the economy.

    It may have escaped your notice, but everyone is leaving for Australia, which has much higher progressive taxes than us.

    National is increasing borrowing, for their deficit, because their wage cuts and civil service cuts are cutting economic activity making the tax take smaller, which is exacerbated by compounding interest and the stupid tax cuts.

  67. Kerry

    And you grossly underestimate the amounts available if some of the richest people in NZ actually paid taxes. Even IRD say half of them are not paying taxes in NZ.

    You have links to research to substanciate those accusations? Or are you “interviewing you keyboard”?

    6 billion is roughly the amount IRD think we lost offshore in marginally legal tax dodging, last year alone.

    Why are those useless public servants in the IRD not following up these losses they “think” have occured.

    Sack to lot and get people in that will.

    Or maybe there are no losses!!

  68. Duh yourself.

    16 billion (fixed that) is EASILY achievable if you have a working economy and a fair (and enforced) tax code.

    We don’t. We aren’t even close because we’ve cut our own heart out in the service of some neo-liberal catechism that makes us unwilling to support manufacturing self help.

    We aren’t going to GET close because we have a tax code that favors home owners and their foreign banks above all else and nobody is willing to fix it.

    It isn’t “comfortable” – the top rate in Sweden is around 56%. It IS feasible. Bill English was wrong in 1999, he’s wrong now, and learning doesn’t seem to be a strong point of his… or yours.

    Key probably understands enough to call it deliberate on his part. That makes him treasonous rather than dumb.

  69. BJ,

    There is a disconnect here.

    When the IRD had “full staffing” they did not collect the “lost” $6B that they “think” they could have.

    So the Greens are saying that the IRD with full staffing will be able to collect the “missing” $6B?

    Could it possibly be that there is no “missing” $6B to collect?

    That with automation (especially with GST payment) the requirement for IRD is less staff?

    And that the Greens are political point scoring?

    Be interesting to see Kerry or anyone come up with details of where the “missing” $6B the IRD “thinks” they have not collected, is derived from what commercial activity.

  70. Kerry says “Why would we raise taxes to pay private debt?? You seem confused.”

    What part of the additional “$16m in govt debt” do you think is private?

    Kerry says “And the amount actual tax take would increase with increased employment, as those on lower incomes spend more in the economy.”

    Yeah right – In your world someone spending $200 a week on their groceries is spending “more in the economy” than someone who spends $400.

    Those at the bottom pay very little tax. With WFF, 40% of people pay NONE.

    The top 9% paid $9.8 billion income tax (42% of all income tax)
    The bottom 58% paid $3.5 billion tax (15% of all income tax)

  71. BJ says “the top rate in Sweden is around 56%. It IS feasible. ”

    Each 1% increase in the top tax rate generates $101m in extra tax. Mvoing the top tax rate to 56% would generate just $2.3 billion.

    Your big solution hardly even makes a dent in the annual $16 billion of extra debt, let alone allow for even a cent of extra spending.

  72. Photon, I’m amazed that you belittle $2.3bil, especially given the song and dance you make over the $1.5b that is DPB… (NOT that I want to divert this thread!) And what you refer to as a “big solution” is surely just one facet of the solution.

    http://www.stuff.co.nz/business/opinion-analysis/7923877/Economic-degrowth-no-laughing-matter
    “Restructuring the work week to better distribute work hours would help reduce unemployment and poverty, while also improving the quality of life.”

  73. Gerrit… you’re the one who brought up sacking the IRD :-), I merely remembered who was doing it.

    As to whether they could recapture any of the money, that would depend a lot more on the legislation of the government in power than on their bureaucratic capability. The people who deal in defective ethics aren’t Green… I don’t even understand someone who has enough AND still cheats his country and his fellow citizens.

  74. The National party are against low paid workers and the unemployed as their actions have shown time and time again http://fmacskasy.wordpress.com/2012/11/11/john-keys-track-record-on-raising-wages-preface/

    National cut taxes for the rich and stuck up GST ( despite promises not to ), which hit the poor more.

    National dont care about the unemployed and use them to put pressure on and drive down the wages of those in jobs ……..

    More New Zealanders than ever are heading over to Australia to find work under John Keys national party rule, if the job market slows up too much in Australia and they do not soak up kiwi workers then it will become apparent just how useless and uncaring the Nats have been on the employment front.

    The Nats do however dish out lots of well paying jobs to former Natioanl mps and their supporters …… paid for by the tax payer http://norightturn.blogspot.co.nz/search/label/Cronyism

  75. fin says “Photon, I’m amazed that you belittle $2.3bil,”

    I’m merely pointing out that the Green ideal of high tax for the rich (putting the top tax rate up from 33% to 56%) would only pay 1/7th of our annual govt debt.

    It seems to be the Green answer to all problems, but in reality doesn’t change a lot unless you massively tax those on lower incomes too.

    Latest figures I have are over 90% of people earn under $70,000 and 80% earn under 50%.

    I actually don’t have a huge problem with higher tax rates on very high incomes.

    What I have a problem with is the deluded idea that the small amount generated from this will somehow answer all our problems.

  76. Photonz –

    You confuse “getting rid of government debt” with “fixing the economy”.

    The latter will take somewhat MORE government debt in the short term, to recreate the sector of the economy that National and Labour have together been gutting the past 25 years, in service of “the supremacy of the market”. Which process I have already explained, not only does not but CAN not work here in NZ.

    A manufacturing sector, inefficient as that seems to your blinkered vision, that produces things that we no longer have to import, and that pays people a decent wage that stays here in NZ – that sector reduces our import debt and reduces the need for government social services.

    Its important not to overdo it, it is important to be selective, to get full vertical integration of anything we build… the abuses of prior arrangements are legendary at this point.

    …and it all works much MUCH better if we take control of our own money supply, and do not have to fret about the bankers clipping tickets.

    BJ

  77. BJ – in case you hadn’t noticed, 85% of our economy is NOT manufacturing.

    Lets enter a fantasy world for a minute and pretend we can have a massive increase in manufacturing (bucking the gloal trend of several decades) – it is such a small part of modern economies it wouldn’t actually make much difference to our overall economy.

    Even when our economy was booming because we were spending 15% more each year than we earned, manufacturing was STILL IN DECLINE.

    Looking to manufacturing as our economic salvation is like thinking you’ll have a growing business by setting up a chain of shops selling smokers supplies, or CDs, or newspapers.

    There’s still money to be made, but the amount is getting less and less (in NZ and globally) compared to other sectors.

  78. “The top 9% paid $9.8 billion income tax (42% of all income tax)
    The bottom 58% paid $3.5 billion tax (15% of all income tax)”

    What proportion of the wealth do the top 9% have?
    It is A lot more than 42%, Which suggests we are under-taxed!

    I love how right wing apologists like to only use income tax in their statistics.

    They are not the only taxes.

    GST and other taxes which impact dis-proportionately on those who have to use all their income on daily needs, petrol taxes, power company profits (and other indirect taxes) and duties and excise.

    If you had actually been reading our posts, Photo, you would know that we do not think progressive taxes are more than part of the answer.

    The more than 16 billion, now going offshore in profits and cumulative interest needs to be changed along with a lot of other RWNJ lunacies.

  79. Gerrit.
    Google does over 300 million a year in business in NZ. pays tax on 4 million. That is just one.
    Interestingly enough, National proposes to change tax accounts publication legislation, so we will not know these figures in future.

  80. Photon says “What I have a problem with is the deluded idea that the small amount generated from this will somehow answer all our problems.”
    The ‘deluded idea’ you speak of seems to be your own interpretation. As I said, it’s surely just one facet of the solution.

    A recently retired (though still works to pay mortgage) anti-RMA man was ‘going on’ the other day and made a very good point. He is horrified that we (NZ) export so many logs. Why the heck don’t we sell timber?
    Presumably because the mill owner makes more money selling logs to China than selling them to a local company that could add value and then transport much less weight to China. How can this situation be changed?

  81. Fin. We do what the Aussies did. “We are going to sell you coal, but you are paying the extra for it going in our ships, not yours”!
    China doesn’t care. They will just print some more dollars.

  82. Kerry,

    At a tax rate of 30% Google would pay $100M. Where is the other $5.9B?

    Not many googles in NZL.

    What proportion of the wealth do the top 9% have?

    Wealth is not taxed so is immaterial in the discussion on how to collec t more taxes for redistribution purposes.

    Is a wealth tax proposed by the Greens?

    Hope your wife does not have too much jewellery to add to her taxable “wealth”. ;-)

  83. Kerry says “What proportion of the wealth do the top 9% have?
    It is A lot more than 42%!”

    Sounds like you’re just making things up again.

    How about the $6b in lost tax – anything to back it up, or did you make it up like when you got caught out with your rediculous claim of 20% inflation in food for the last year.

  84. Photonz – In case YOU hadn’t noticed a very large proportion of our excessive imports is manufactured GOODS. Since you insist on importing virtually all of them, you WILL bankrupt the country. I’ve shown why several times now.

  85. Photonz – Manufacturing isn’t about “money to be made” it is about money that is NOT spent overseas. Find your center. Breathe deeply. Think outside your little box.

  86. fin says “He is horrified that we (NZ) export so many logs. Why the heck don’t we sell timber?”

    Because most of the places we export to have very high tarrifs of processed logs, furniture etc, which means we simply can’t compete.

    The trade deal done by the govt with China has now opened the door for NZ to sell processed wood to the world’s largest importer of wood, but we compete with Siberia who because of land availability, scale and proximity, can produce processed wood far more efficiently than we can.

  87. bj say “Since you insist on importing virtually all of them, you WILL bankrupt the country. I’ve shown why several times now.”

    But funily enough, 30 years on, we’re still not bankrupt.

    Could it be that if I spend $25,000 on a car instead of paying $50,000 for a Kiwi built one, I have $25,000 to spend on other Kiwi businesses.

    Like service businesses, where a much higher proportion of what I spend goes to wages.

    Rather on NZ manufactured goods, where a LOWER proportion goes on wages (and a higher propotion on imported materials).

  88. 20% inflation on food was the real life experience of the company I work for, the rise in our own grocery bill and many other peoples. Sorry if realty does not match your expectations Photo. Many others have observed that headline CPI does not match what is actually happening to their costs.

    Photo. Says we cannot compete because of high tariffs. I.E. Other countries support local industry with tariffs to level the playing field. New Zealand, of course is too ideologically pure to do that. And because we unilaterally gave them up we have nothing to bargain with. Another RWNJ act of stupidity.
    Far from a level playing field, we gave overseas business lower interest rates, cheaper land, exemption from labour laws and preferential tax treatment.

    The value of making things here is the amount we do not have to import/borrow.

  89. Gareth Morgan, that rampant socialist :-) , suggests we tax wealth, over a certain amount, on the risk free rate of return. On the reasonable assumption that anyone with 50 million is not going to leave it earning nothing. They would have at least the same ROI as bank deposits, unless they are stupid. It also has the beneficial effect of encouraging investment of money capital. And capturing tax dodging arrangements.

  90. http://www.qualityoflifeproject.govt.nz/standard.htm
    The top 10.0% of wealthy individuals own more than half of the nation’s total net worth, while the bottom 50.0% of the population owns just 5.2% of total net worth”.
    Took 2 minutes to find on Google. Photo. This was a little while ago. 2007. All indications are that the top 2% have had 20% annual increases in wealth since then while everyone else has dropped. You can google that too.

  91. BJ,

    A wealth tax would be interesting to see formulated.

    Kerry want to set an amount but I can easily see wealth tax dodges if a minimum amount of “wealth” is allowed to be owned without taxation.

    Plus we need to quantify just what “wealth” is (as opposed to asset ownership) . I can easily see some people owning $50M in plant, equipment, stock, buildings, etc., but be capital poor.

    Are they really “wealthy” ?

    If there is “wealth” cashed in and stored in safety deposit boxes or squirelled out of the country how will that ever be quantified?

    Is someones $1M diamond ring “wealth”?

    Noticed that Gareth Morgan as a keen proponent of a wealth tax is not putting his money where his mouth is by volunteering to pay a wealth tax.

    Wonder why he does not lead by example? Asset rich but “wealth” poor?

  92. If someone had 50 million invested in capital and plant I presume they would be paying company tax and/or tax on dividends, plus tax on the PAYE payroll. Which would be, hopefully, more than return than bank deposits. I suspect in a lot of cases, if an investment is returning less taxable income, than the risk free ROI, then IRD should be investigating potential under declaration of earnings.

  93. I.E. There is no need to assess wealth tax on plant as the earnings for tax purposes should be transparent. Call it encouragement to invest in NZ productive capacity if you like.

  94. Gerrit, the point to having taxes instead of voluntary funding of government is that everyone in the same situation pays the same way. People are a lot more willing to pay if they don’t see free-riders in the system. The NZ system is full of free-riders and free-loaders who are NOT getting their dosh from Work and Income. So people are a lot more willing to cheat. Everyone is.

  95. photonz “But funily enough, 30 years on, we’re still not bankrupt”.

    Kerry “Yeah right. Who has just finished saying we are borrowing too much!”

    So you now think bankruptcy is now the same thing as borrowing too much?

    Half the home owners in NZ would be bankrupt in your world.

    Kerry says “No. But an awful lot of tax “minimisers”.”

    Not that you’ve managed to find anything to back up your $6m claim yet.

    Maybe have a look at the bottom of the hole you’ve been digging yourself with your rediculous 20% inlfation in one year claim.

  96. Gerrit.
    Generally I do not like exemptions. It immediately gives accountants a big hole they can drive a bus through. Exempting the family home, for example, from CGT, would see an awful lot of millionaires kids suddenly acquiring family homes.

    However we do already have “wealth taxes”, rates. So it is not impossible.

  97. For those that are asset rich, but cash poor we have tax on realisation. I.E. pensioners can defer rates in their lifetime. Businesses are not taxed until they make actual cashflow, or the business is sold, for example.
    An incentive to hang on to a business or asset to make an income instead of selling for a one off untaxed capital gain.

  98. A wealth tax would sure be a boon for employement of more state servants.

    We would need a multitude of “investigators” to assess every persons taxable “wealth”.

    I purposefully put a reference in regarding a person jewellery as this would be covered by a wealth tax.

    Just imagine the army of state servants (mind you private enterprise could get into the act) required to “investigate” all the privately held “wealth”.

    “lift your floorbooards there madam, I suspect you have gold stashed away and not declaring it for taxation”.

    Maybe we could have an inquisition like the spanish catholics did. Any “wealth” heretic would be burned at the stake.

    Just imagine a nation ruled by white coated little hitlers prying into every back yard and under every house.

    And the potential for corruption (would a lazy hundy per month to not notice my stash of “wealth” be sufficient?).

    mmmmmmmmmmmmmmmmmm

    Think I will apply for a job as a “wealth” inspector (inquisitor)

  99. Kerry says “20% inflation on food was the real life experience of the company I work for… ”

    So rather than selection of hundreds of products, scientificaly weighted to represent what NZ actually buys, with identical products costed and noted regularly, at shops all over the country, Kerry prefers to take inflation figures from a guess of one shopping list of limited products and differing quantities, from one place, which have not even been noted down, and no one has even been able to back up with any figures at all.

    Talk about flat-earth thinking.

    Keep digging your hole.

  100. BJ says “If we’re NOT in trouble here, what the fnck are the asset sales about?”

    The funny thing is the govt has sells hundreds of millions of dollars of assets every month, and buys others, and you don’t blink an eyelid.

    Not a whisper from the Greens when the labour govt sold coal mines to overseas companies.

    The asset sales are about many things, including getting Kiwis to save and invest in income generating assets instead of houses.

  101. “The asset sales are about many things, including getting Kiwis to save and invest in income generating assets instead of houses.”
    Kiwis, every darn one of us, already own the them. Thus we already have much invested in them for our own good and for our kids etc. For your quote above to be true, replace ‘Kiwis’ with ‘select group of wealthy who will enivitably become less and less Kiwi’

  102. The asset sales are about carving off the wealth that ALL New Zealanders own and getting it into the hands of the already wealthy and corporate investors who will then profit and the expense of ordinary New Zealanders.

    Under National the rich get richer and the workers get screwed . Their words run contrary to their actions and more New Zealanders are waking up to this as seen by National and John Keys falling poll ratings.

  103. Fin says “Kiwis, every darn one of us, already own the them.”

    Then you also own the debt – an additional $16 billion more in the last year alone (an additional $4000 each).

    And you’ll also own the new schools that are built from some of the proceeds.

    The interesting thing is that many who complain about “already owning” state assets are often those who have never ever contributed anything like their fair share to build up those assets in the first place.

  104. Kerry says “You know. Real ones on bits of paper.”

    Yeah – but you’ve just been unable for weeks to tell us what they are.

    Keep digging.

  105. Kerry,

    Once in a hole stop digging.

    You claimed that the IRD lost out on collecting $6B of taxes.

    That, at 30% corporate tax, means $18B of commercial taxable transactions were not collected by the state.

    Either your figures are completely wrong or we have a state tax collecting department totally inept.

    I tend to believe that the IRD is pretty efficient (they make sure I pay the GST collected on their behalf from my customers, plus provisional and final corporate taxes) so that leaves the opinion your figures are hogwash.

    In future none of your figures will be taken seriously.

  106. Gerrit says “That, at 30% corporate tax, means $18B of commercial taxable transactions were not collected by the state.”

    The total capitalisation of every company on the NZ stock market is $60B. Average dividend is 6% or $3.6 billion in dividends every year, with just over $1b in tax on those dividends.

    So Kerry’s claimed loss is FIVE TIMES MORE than EVERY dividend from EVERY public company in the country.

  107. BJ says “The departure of Fisher and Paykel is the door slamming shut… the lights are already out.”

    Your rose tinted manufacturing eyes probably think Fisher and Paykel made money from manufacturing appliances. Wrong.

    In fact they made the vast majority of their money – four times more or 80% of their profit, from hire purchase financing of their appliances, than they made from the manufacture and sale of them.

    I just got paid for my F&P shares today. Some have talked about the loss to NZ, but they don’t want to know about the positives.

    Thousands of Kiwi investors are being paid hundreds of millions of dollars more than anybody thought the company was worth. The price paid by Haier was nearly 400% higher than they were at the start of the year (33c in Jan, Haier paid $1.28)

    And like most of those investors, I’ll be reinvesting. So do I invest in
    – overseas shares which will bring the profits back into NZ.
    – NZ companies like Chorus who are investing billions in a high speed fibre optic network for NZ.
    – NZ companies like Mainfreight, who operate worldwide logistics and earn 75% of their revenue from offshore.
    – one of our big banks, and put a little bit back into Kiwi ownership.

    Any of those options will be beneficial to NZ – probably much more beneficial than owning part of F&P who hadn’t paid dividends for years, and was employing fewer and fewer Kiwis every year (while those companies above are employing MORE Kiwis every year).

  108. Your rose tinted manufacturing eyes probably think Fisher and Paykel made money from manufacturing appliances. Wrong.

    Well wrong again Photonz. I THINK that if F&P still made appliances here and we still bought them, that a boatload of money would not be departing for the places that make appliances overseas. That we would manage to employ SOME people making SOME things here, and displace a LOT of foreign imports.

    Not MY business to discuss what the “owning class” invests in. The “owning class” is, by its nature, a problem here. It is in control of the country and it is killing everyone else and then blaming them for dying of the multiple bludgeonings they’ve taken. You do not make money by owning it, money is work DONE.

  109. BJ,

    Some contradictions there.

    The “owning class” is, by its nature, a problem here. It is in control of the country and it is killing everyone else and then blaming them for dying of the multiple bludgeonings they’ve taken. You do not make money by owning it, money is work DONE.

    What F+P “owned” was not money but land, buildings, manufacturing plant, white wear designs, finance department, etc.

    How are they a member of the “owning class”

    They were trying hard to be a member of “making money do work” class.

    Care to list and shame any members of this “owning class” who hoard money that is so “killing” NZL?

    Waiting with bated breath. Be a short list I imagine.

    ——————————

    I THINK that if F&P still made appliances here and we still bought them, that a boatload of money would not be departing for the places that make appliances overseas. That we would manage to employ SOME people making SOME things here, and displace a LOT of foreign imports.

    Are the Greens advocating that trade barriers be installed to “protect” NZL industry?

    I guess you were not here in the 1960’s when those barriers were last in operation. Sure you might get a NZL made fridge but it was not cheap.

    Took a massive amount out off your take home pay. As were the Pye television sets and any other locally manufactured goods not exposed to competition.

    Anyone in a protected manufacturing industry could charge what they liked, you simply had no choice but to pay exorbitant prices.

  110. Looking in teh wrong place for dodgy numbers, Gerrit.

    Photo forgot to mention, for example, that the publically listed companies trading in NZ were accountable for less than 24% of GDP in 2010. Even less now. One of the reasons why the NZSX needs the asset sales, and Fonterra listing, to prop up their failing business.

    Photo also likes to push for the figure for our food bills because he knows full well I cannot release details of my employers accounts.

  111. The departure of F&P is sad, but not for the reasons that are bandied about here, and especially not for the loss of what little manufacturing F&P still did here.

    The reason Haier wanted F&P was that F&P have brains. F&P have (just a few) people who are really clever and have figured out ways to make home appliances better. The last thing Haier need is more manufacturing, and especially manufacturing in a place like NZ that is so far from anywhere and has such a small home market.

    Had F&P been a brains trust that just licensed out great ideas to companies like Haier then they could still be here, being a great exporter for New Zealand, whilst employing almost no-one, and not producing any product. The perfect company for somewhere like New Zealand.

    You can’t be a commodity goods manufacturer here. You have to produce specialist goods with smaller (and preferably, not so price sensitive) marketplaces and higher value.

  112. Kerry,

    So you are standing by your claim that the IRD should have collected $6B in taxation more then they did?

    Where was the $18B turnover in commercial taxable transactions?

    Should the IRD department not be sacked for such gross incompetance?

    Before claiming other peoples figures are dodgy, should you not make sure yuour own are 100% correct?

    You know, to avoid the pot, kettle, black, scenario.

  113. Gerrit… I have heard some of those stories about stuff being taken apart to get it here so it could be put back together… and that isn’t what I described in the lines you left out.

    Its important not to overdo it, it is important to be selective, to get full vertical integration of anything we build… the abuses of prior arrangements are legendary at this point.

    …and yes, some “stuff” will cost us more. You expected maybe a “free lunch”? It isn’t easy being an isolated small economy and keeping up with everyone else.

    There is however, another issue you aren’t paying attention to… with your wish that we just do the smart bits. The population of clever folks in China and the US and Europe is also larger than ours. They can be just as clever. It is NOT a “competitive advantage” and we can’t rely on it… AND… once you separate R&D from the manufacturing environment, it dies. Takes a while, but it dies. There is no way to maintain a relevant R&D effort if you don’t have access to the production environment. The boffins get offers and they leave for places where they can work on the real deal. The folks building stuff and paying for R&D don’t want the communications problems.

    So we can’t be an “R&D” nation without manufacturing stuff. Even if it costs us to build it and buy it, the money stays IN NZ and so our balance of trade improves.

  114. FFS Gerrit. Joining Photo in putting words in my mouth now.

    I did not say anything about IRD failing to collect tax due.

    The figures are IRD’s own estimate, not mine, about the cost of lost tax due to both evasion and avoidance by those who should be paying tax, but find ways to avoid it. Most are skirting the law, but many are marginally legal..
    Including the black economy, tax arrangements like the ones they caught the banks doing recently, (Do you really think that banks were the only culprits?) wine box style tax ” minimisation”, international transfer payments to hide profits (Why do you think Greece has so many shipowners? Oil companies are rather open about it.), landlords, company owners and cockies who “minimise” taxable income to maximize untaxed capital gains, income hidden in trusts and many other dodges.

    How the hell are IRD going to collect tax from avoidance/minimisation when successive Governments are silly enough to make avoidance arrangements legal, with complicated tax legislation clever lawyers and accountants can drive a horse and cart through.. Something we do have in common with the Greeks.

  115. Gareth Morgans idea is, rather than trying to catch tax cheats by constantly amending legislation, to try and shut the stable door, we simply tax wealth on the minimum it should be earning.
    It also has they advantage of encouraging productive investment of money capital instead of hoarding and ponzi speculation, which is where the stimulus to the banks in the USA failed.

  116. Kerry,

    Before you can tax wealth, you need to define it.

    What is wealth?

    Noticed you studiously avoiding my earlier question. No answers?

  117. And one advantage of a CGT is, it encourages owners of farms and other businesses to continue to develop them as a going concern, instead of selling as soon as they think they can get enough money out them to retire.

  118. Still not answering questions Kerry?

    What is “wealth”

    Is the increased value of the farms and other business considered “wealth” and as such liable for both the “wealth” tax and capital gains tax?

    Some clarification required Kerry!!

    Oh, and still standing by “the IRD missed $6B in taxation” statement?

  119. Kerry, it is the opportunity to make a CG that encourages indebted farmers to keep borrowing (against the rising value) and re-investing in their property – so when they finally retire they can then realise an even higher CG (keep their farm up to latest standard and desirable to buy).

    A CGT at 15% will not change this. Nor one at 30% with inflation accounted for.

    It only really ensures that all realised income is taxed, it’s part of tax equity. It will not change the economy as much as advocates, or detractors, say it would. What it achieves beyond broadening the tax base depends on what supporting measures occur alongside it.

  120. As to wealth tax, the only one that I’d look at is one on land available for but yet to be used for housing. Aren’t yet ready to develop the land for housing then pay a price for cutting off supply to others who are.

  121. I haven’t got a problem with captial gains tax on the basis that it’s income of sorts, although I don’t understand why the family home would be excluded, as per the current geens policy.

    However, there should be no need. The government already gets enough money – they just waste it.

  122. Gerrit

    True wealth is “control over work done”.

    Wealth in this country is a distortion of reality. As such it needs a much more complicated definition to capture most of it without adding to the distortions…

    One additional laughable bit is the notion that we own “land”. We may temporarily hold/possess property… but we can’t “own” something that outlives us by millions of years. Some of our “issues” come from that troublesome misunderstanding.

    Cat meet pigeons.

    :-)

  123. BJ

    True wealth is “control over work done”.

    So how is this “wealth” quantified?

    Cant tax something without giving it a value.

    Hope you are not suggesting I get taxed for controlling my workflow?

    Sure I can employ two people and run 24 hours a day but if you are taxing me for “control over work done” I wont bother.

    Would this “wealth” tax replace company tax or be additional?

    Any research or background information of “wealth” as “control over work done” synopsis?

  124. Like I said… it gets complicated. I don’t really want to analyze the thing fully… to do it right would take days.

    Control over work done is usually measured in terms of “money” but money is actually debt and control is a transitory thing mediated by banks and how reliable your customers are about paying you, but it also has to include things owned which are “stored” values of work done.

    I would prefer that land itself NOT be a measure of work done, but also not be owned by anyone at all… but in the current definitions, land has to be added in, in spite of the fact that it is NOT representative of work done, only of some amount of work that you and others are willing to pay the ownership. One has to reckon the land being worth nothing if nothing is produced (by someone doing work) with it. That is part of the complications. I do not want to go into more elaborate analysis, I am just saying it would take a significant effort to get right, and that is not my wish. I’d rather alter the way money is defined in the first place, put demurrage on it and force it out of the mattresses and hiding places that way.

  125. BJ says “I THINK that if F&P still made appliances here and we still bought them, that a boatload of money would not be departing for the places that make appliances overseas.”

    When Fisher and Paykel last had the majority of it’s factories in NZ, it was LOSING nearly $100 million per year. It’s share price went from a high of just under $3, down to a low of 33 cents.

    BJ says “Not MY business to discuss what the “owning class” invests in. The “owning class” is, by its nature, a problem here.”

    Such hatred for 2 million workers with Kiwisaver accounts(the vast majority of workers), and the 4 million of us who have a stake in the huge investments of ACC and the NZ Super fund.

    Kerry says “One of the reasons why the NZSX needs the asset sales, and Fonterra listing, to prop up their failing business.”

    Actually NZX was recently named by US brokers as one of their top pics for stocks in the Asia Pacific region (and the only NZ company on their list).

    And it’s hardly failing – it’s shares are up around 100% in the last two years (with the WHOLE NZ sharemarket up an average of over 20% since January).

    But then it’s just one more example of you claiming something ludicrous that has no basis in the real world.

  126. Kerry says “Photo also likes to push for the figure for our food bills because he knows full well I cannot release details of my employers accounts.”

    Yeah right – the price of a can of baked beans at the supermarket is suddenly a highly confidential trade secret.

    This is entertaining – Keep digging.

  127. Photonz, you are adept at missing the point and you will remain so it seems. I don’t care about F&P exporting their product. I care about US being able to buy something manufactured by US. As long as you focus on the money that the company itself makes or doesn’t, you miss the point of the money being shipped overseas to buy products that we COULD manufacture but don’t. Focusing only on the money is your biggest weakness. We are NOT running a corporation, we are trying to manage a sovereign state. The differences are real and important and you are completely ignoring them.

    I think you will continue to do so, as that IS the way the right wing likes to treat NZ… it is a corporation, to be gutted and partitioned and sold off by the corporate raiders who have managed to gain control of it.

  128. BJ says “I care about US being able to buy something manufactured by US. ”

    We used to do that, but nobody could buy much cause it was so expensive (and often pooly made) because there was no competition.

    Back then we got laughed at by tourists because they said NZ was like a time capsule from 30 years ago because nobdy could afford anything new.

    Someone I talked to last weekend preached the same line as you, but they bought their petrol at the cheapest place (not NZ owned), they bought their groceries from an Aussie supermarket, their appliances whoever was cheapest – usually from an Aussie chainstore, and their mortgage was with an Aussie bank cause they offered them the best deal at the time.

    The point is, if you can’t even get someone with your ideals to pay more to support NZ businesses, you’re in lala land if you think you can get the whole population to pay much more expensive prices for everything.

    Look at the example of Kerry – he’s screaming about expensive food prices, and they haven’t even gone up.

    I’d rather trade with other countries and be able to afford a comfortable life, than pull the drawbridge up and struggle to be able to afford to buy anything, all because of some skewed ideal that I’m somehow supporting NZ.

  129. I should add that I’m not against making things here – we should make as much as we can here – anything we can be competitive at.

    But looking for a miracle from the manufacturing sector which has been in decline globally for decades, is economic suicide.

    But it all comes down to productivity. If we produce expensive goods (i.e. produce less for the same effort) compared to other countries, we will only get further and further behind them.

  130. Photo stats. Or NACT stats.

    Selective use of statistics when they are being “economical with the truth”.

    Such as using the average wage to say wages have risen. When the reality for the majority is that they have gone down.
    Big rises for a few at the top and loss of jobs at the bottom end has pushed the average wage amount up.
    Real life for most people is still dropping disposable family income. And rising food, petrol and rent.

  131. Kerry,

    In the Herald today. Debt and profits going offshore now over 17 billion.

    You really must provide links with your assertions. You record is dismal with figures and this one is not shown up at all in the online edition of the Herald today.

    Is it in the print only or yesterdays issue?

    Or is it more likely a Kerry Thomas fabrication?

    How do we export debt? Surely we import debt?

    We do export Kiwisaver (and ACC plus a raft of other state savings) funds for investment overseas.

    You calculating that as exporting debt?

    Still waiting with bated breath on the links you were going to provide re the uncollected $6B in taxes the IRD were negligent in.

    Frog, can you release the Kerry post that is in moderation please.

  132. Kerry says “Such as using the average wage to say wages have risen.”

    Actually, I usually try to use median wages rather than average (median wages have risen from $671 to $800 per week from 2006 to 2011).

    see
    http://www.stats.govt.nz/browse_for_stats/snapshots-of-nz/nz-in-profile-2012/earnings-from-wages-and-salaries.aspx

    Or I use the food price index – a scientifically calulated list of products to reflect the weightings of what people actually buy, with regularly measured prices, from places across the country.

    You use someones grocery list for a boat and come up with an absurd and totally unprovable rate that’s TWENTY TIMES HIGHER than current food inflation.

    Then you complain about selective use of figures.

    Keep on digging – you’re halfway to China

  133. “You record is dismal with figures”

    Only in your and Photo’s imagination.

    And, I don’t comment unless facts back it upt.

    This from interest co. The investment deficit was 13.34 billion in 2008.

    “A combination of asset sales to foreigners and increased foreign debt has seen the net investment deficit (it has always been a deficit) rise from NZ$79 million or 1.2% of GDP in 1972 to a record high NZ$13.34 billion or 7.4% of GDP in 2008. This is referring to dividends sent back overseas to foreign owners or rising values of assets owned by foreigners or rising interest payments on debts owed to foreigners”.

    Note that the goods trade balance has always been positive.

  134. Kerry says “And, I don’t comment unless facts back it upt.”

    Unless it’s a case of a trade secret, like with your food price claim.

    Or lost in moderation. With your lost tax claim.

    Or simply just with no link, like mot of the rest.

    Kerry – you get caught out all the time making things up.

  135. More unintentional humour from, Photo, who thinks, because he knows three poor teenagers with kids, we are about to be invaded, and our economy, crushed by hordes of feral baby farming female children.

    Just gave you a link above, Photo, Gerrit.

    Given plenty of links in the past.
    I think there has been once, I havn’t been able to dig up my original link.
    Not surprising because I can actually read, and comprehend, instead of recycling NACT propaganda, and I read a lot on this stuff.

    Frog. Why is my previous comment in moderation?

    When have you used median income? And again you forgot to mention the concurrent rise in inflation over the same time period as the median income “rise” you claim.

    What do you think the idiots in Government borrowing 17 billion a year, to avoid raising taxes on the wealthy, does to our investment deficit??.

    And not a boat. A series of ships..

  136. Kerry,

    A link is a hyperlink people can click on to take them directly to the web page you are getting your figures from.

    Still would like to see the link where it is reported that the IRD has not collected $6B of taxation.

    It is a big slur on a state operation to claim such an occurance. For if the IRD did that “on purpose” by terning a blind eye to taxable commercial transaction, it would be called corruption.

    So front up and publish the link.

    Or are you recycling left wing propaganda that wont stand up to scrutinee in daylight?

  137. Kerry makes up something extreme that nobody anywhere has said, then pretends someone has said it ….

    “…Photo, who thinks, because he knows three poor teenagers with kids, we are about to be invaded, and our economy, crushed by hordes of feral baby farming female children”

    Kerry says “I think there has been once, I havn’t been able to dig up my original link.”

    You’ve been unable to give evidence and links several times – just on this page alone.

    You really are in another world.

    Keep digging. Newmont mining would be impressed.

  138. Photonz – You are not thinking cohesively here. You mistake the profits of a company with the well-being of the country as a whole. The company can make things and we consume them at a “loss” to the company and yet we can get “ahead” on account of the things we are no longer buying and importing from overseas. You cannot make it a matter of sums for F&P…

    “anything we can be competitive at” is an empty set (apart from the food we grow, and that is only working due to other people’s unfortunately reliable overpopulation) because of our location and market access. Once that is understood we can solve the problem. Until that is understood the mistake you (and many other Kiwis) are making is going to continue to eat away at the country.

  139. http://www.interest.co.nz/news/61913/government-runs-nz21-billion-deficit-first-three-months-financial-year-nz449-million-more
    “Government runs up NZ$2.1 billion deficit in first three months of financial year – NZ$449 million more than projected”

    http://www.stuff.co.nz/national/politics/7917096/Falling-tax-take-hits-Governments-Budget-deficit

    Here is the link for the quote in the previous email.
    http://www.interest.co.nz/opinion/52914/opinion-heres-three-charts-showing-how-foreign-profit-and-interest-drain-has-made-new-

    It shows how selling assets offshore, high offshore borrowing, paying the US, Oz and China for printing money, and offshore disbursements are keeping us poor, despite increases in GDP and a positive trade account in other goods and services.

  140. While we are talking about baked beans.
    Something that lower income earners buy more of.

    http://www.infometrics.co.nz/article.asp?id=5648
    “The consumers price index (CPI) indicates an 86% increase in the general price level of items typically purchased by New Zealand consumers since 1987. In comparison food items have generally increased by 99% (ie virtually doubled) and petrol prices have increased by 140%. In comparison the increases for the items selected by Kilbirnie Pak’nSave that I mentioned above have ranged from 140% (chicken) to 300% (BAKED BEANS). Capitalisation, mine.

  141. Kerry

    Enough links for you?

    That is 11% of $6B.

    Only 89% to go.

    Surely you would have a link to back up your total $6B claim or is it just a made up figure?

  142. bj says “You mistake the profits of a company with the well-being of the country as a whole.”

    Utter nonsense.

    bj says “The company can make things and we consume them at a “loss” to the company and yet we can get “ahead” on account of the things we are no longer buying and importing from overseas. ”

    More nonsense. If true, we could have companies all over the country making loses, going bust, and in your book it would be “good” for the country.

    What do you not understand about the fact that when companies repeatedly make loses, they close down?

  143. I will repeat the one that was in Moderation. Gerrit it is you who is going on about IRD incompetence. The problem is most of the tax dodging arrangements, like transfer payments, are illegal in many countries, and definitely amoral, but not here.

    Gerrit. Joining Photo in putting words in my mouth now.

    I did not say anything about IRD failing to collect tax due.

    The figures are IRD’s own estimate, not mine, about the cost of lost tax due to both evasion and avoidance by those who should be paying tax, but find ways to avoid it. Most are skirting the law, but many are marginally legal..
    Including the black economy, tax arrangements like the ones they caught the banks doing recently, (Do you really think that banks were the only culprits?) wine box style tax ” minimisation”, international transfer payments to hide profits (Why do you think Greece has so many shipowners? Oil companies are rather open about it.), landlords, company owners and cockies who “minimise” taxable income to maximize untaxed capital gains, income hidden in trusts and many other dodges.

    How the h are IRD going to collect tax from avoidance/minimisation when successive Governments are silly enough to make avoidance arrangements legal, with complicated tax legislation clever lawyers and accountants can drive a horse and cart through.. Something we do have in common with the Greeks.

  144. That is 11% of $6B.
    Don’t be a twit Gerrit. That is just two of the few that have been caught.

    I refer you too the post which is now, finally, out of moderation.

  145. Photo. Please explain how the USA managed in the past when exports and imports were less than 20% of the economy.
    Or the UK when they could compete with India for manufactured goods despite the low quality and high prices of the goods from the UK.
    Or the recent success of South Korea, and Singapore. Not exactly low wage countries.

    Didn’t have anything to do with protection and support for their own industries, of course!

  146. Kerry says “Enough links for you?”

    Your links are a TOTAL FAILURE to provide even one that backs up your figures of –
    – a 20% increase in food prices in one year
    – $6 billion in lost tax.

    You can’t provide any evidence of a 20% food increase in the last year, so you give figures for QUARTER OF A CENTURY longer than that (but fail to show wages went up by a greater amount – 147% – over the same period)

    That’s really the best you can do to back up your own claims? Really?

    Kerry says “If you give me an address I will post you the receipts.”

    Just tell us the 20% increase in the ten most bought items.

    Or is that a national secret too?

  147. Kerry says “Didn’t have anything to do with protection and support for their own industries, of course!”

    When we protected and supported our own industries we went bust.

    It cost so much more to produce everything, Kiwis couldn’t afford to buy anything (and exports suffered as well).

    That’s what happens when you’re a tiny country at the bottom of the planet, and lock yourself off from trading with the rest of the world.

    And you don’t even have a fraction of the fuel and mined commodities you need to survive.

  148. Congratulations Kerry.

    You’ve managed to blow away everything you’ve been saying for years about the decline in real wages ……..with your own link!!!

    “Things were obviously a lot cheaper back in 1987, but does that mean we were better off back in the 1980s? Well, no. On the whole we are doing better today. For although prices have on average increased by 86%, average wages have increased by 116% over the same period. ”

    Complete with a graph to show how wages have risen faster than prices over the last quarter century.

  149. Photonz – if we think about things in your little compartmentalized boxes, there is not a single thing that this country CAN manufacture competitively. That’s the result. That’s what you’ve proven repeatedly and without ANY thought about what it implies.

    I don’t care if the COMPANY doesn’t make a profit, or even makes a small loss… that’s exactly why government has to step into this mix to shore up the manufacturing sector in general so that we who consume things in this nation can do so without buying from overseas, particularly the big-ticket but fairly simple to manufacture things… and F&P was an excellent example of those. Our internal consumption is marginal and break-even is hard to manage in the limited market… so it does NOT affect the bottom line of F&P all that much. F&P might make something by exporting but the benefit to the country isn’t that F&P makes a profit… it is that every damned refrigerator in the country is NOT imported from somewhere else with the resulting export of money we don’t have.

    Spending money here in NZ keeps it from going overseas. How is this benefit to the COUNTRY not countable in your universe? Clearly you do not want any manufacturing in this country and that makes you 99 kinds of fool.

    For without the manufacturing you can also not have the R&D and without both of those you have nothing at all for most of your population of educated professionals to do except sell each other pieces of paper or ask if we want fries with our order.

    We’ve been through this before. The NZ economy cannot stand the slavish adherence to Riccardo’s principle. It collapses if that continues long enough and it is collapsing as I type these words.

    What do you do if you want to rebuild a bathroom but don’t have $10k for a professional job? Eh? Do you borrow the money? Sell your car?.. or despite the fact that it is less efficient… do you do it yourself?

  150. Gerrit says “That is 11% of $6B.”

    Wrong Gerrit – more like 1%.

    – The tax underpaid was $400m over 7-8 years up to 1995.(the other $200m was penalties)
    – that’s $60m a year average (Kerrys claim was a $6 billion loss LAST year alone).
    – it’s a decade out of date
    – Kerrys link says this was a record amount.

    Great links Kerry – keep digging.

  151. I have been repeatedly making the point over the last year.

    Incomes have been dropping for low income people over the time, while prices, of the things they need have risen disproportionately.

    Then Photo, just ignores it, and continually prattles on about average, incomes and prices.

    Which has little to do with the cost of living for our poorest people.

    Not surprising as Photo thinks they should not even be allowed to “breed”.

  152. Photonz says “we should make as much as we can here – anything we can be competitive at.”

    Pretty simple, you’d think.

    But out of this, BJ gets “Clearly you do not want any manufacturing in this country and that makes you 99 kinds of fool.”

    And to confirm BJs lack of understanding “It collapses if that continues long enough and it is collapsing as I type these words. ”

    Which ignores the nearly 1000% increase in our GDP over the time we’ve opened our markets ( since the 70s when we the policy of protectionism sent us bust).

  153. In your dreams. Photo.

    Borrowing offshore sent us bust. Not protectionism. If it was we would have gone bust in the 60’s.

    Except were we really bust?

    Or was it just the TINA people to justify dismantling NZ for their own profit.

    National seem rather ready to head for the same levels of debt again. Except, unlike Muldoon, they have nothing to show for it.

  154. The “average” New Zealander may be better off than in the 70’s. I don’t doubt it.

    But in that in no way invalidates the fact, as I am showing, that the majority are worse off.

    The increases went disproportionately to the top 4 to 8% and offshore creditors.

    Real wages and incomes, for the majority of New Zealanders, have declined.

    Cheaper flat screen TV’s in no way helps those who are now out of work on miserly benefits.

    And, new cars may be cheaper, but the costs of owning one, depreciation, petrol and maintenance are much higher. Especially depreciation.

  155. Kerry says “And, new cars may be cheaper, but the costs of owning one, depreciation, petrol and maintenance are much higher. Especially depreciation”

    Depreciation over a cars life is 100% of it’s cost, which as you say is cheaper.

    So obviously depreciation has to be lower – not higher.

    Duh.

    Keep scoring those own goals – you’re on a roll today.

  156. there is not a single thing that this country CAN manufacture competitively

    Thats just tosh, there are loads of things that NZ makes that are world class and world competitive. There just isn’t anything that everyday folk need or buy.

    It’s not simply a case of it would be nice to manufacture stuff here for sale in NZ, and accept that such goods would be less competitive in money terms than overseas sourced goods. The reality is that its not realistically possible to manufacture world quality goods in NZ; we just don’t have the capability.

    Take as a (topical) example washing machines. We used to make washing machines in NZ until quite recently. But now, we really can’t. And it is our fault we cant; during our watch washing machines went from being stupid hunks of iron that a bloke could assemble with his bare hands, to the technical marvel that the modern, world class washing machine is. And the ultimate wicked irony is that it is our innovation that made them that way.

    We were, for a while, able to play the manufacturing game, simply because we could sell these things off-shore. But eventually, as history records, manufacturing had to go elsewhere. The survival of F&P depended on it. Now look what has happened…

  157. Kerry says “Real wages and incomes, for the majority of New Zealanders, have declined.”

    In the last 15 years the minimum wage has gone up from $6.37 to $13.50 – That’s a 112% increase.

    Over the same period, from early 1997, the CPI has gone up 43%.

    It’s yet another claim that’s total nonsense.

  158. Photonz

    Analyze the words “anything we’re competitive at” in terms of “we are a small nation with a small market a long distance from any major market.

    Those facts create a handicap that no “NZ intellectual exceptionalism” (if such can be said to exist in a country where Jandals and Gumboots are the most popular footwear), can overcome. There IS NO COMPARATIVE ADVANTAGE TO BE HAD!!!

    Which means you can do what I describe, or you can abandon making anything here… at all… because you want to apply your condition…

    “anything we are competitive at” makes what remains that we can do, an empty set. I explained that in detail… you ignored it.

    Stop snarking and start thinking. You don’t seem to be doing much of that of late.

  159. “There just isn’t anything that everyday folk need or buy”.

    Houses. Food. Clothes.
    Seem to produce them fine, here.

    Or we did until we started to subsidise offshore manufacturing.

  160. “we are a small nation with a small market a long distance from any major market”.
    This is just a cop out. And wrong.

    Dosn’t seem to stop us exporting high volume low value commodities. It is even less of a barrier to low volume high value goods.

    But. Unless we stop the hemorrhage of wealth to non-productive banking and offshore profits we will never get out of the pooh no matter how much we export.

    This is instructive
    http://www.interest.co.nz/opinion/52914/opinion-heres-three-charts-showing-how-foreign-profit-and-interest-drain-has-made-new-
    And shows why asset and business sales offshore are one of the worst things we can do.

    Every country imagines they will get out of debt by having a positive trade balance with every other country. Even superficial analysis will show that this cannot happen. Not while every country has compounding debt to private banks.

  161. POOR PEOPLE, IN WHANGAREI, OR OTARA, DO NOT BUY THE SAME BASKET OF GOODS AS THE CPI, PHOTO. Using averages again!
    Even if the food CPI is correct, which is more than doubtful.

  162. Which ignores the nearly 1000% increase in our GDP over the time we’ve opened our markets ( since the 70s when we the policy of protectionism sent us bust).

    Yet our GDP per capita compared to the OECD average has dropped over the same period from us being 11th in 1970 to 22nd in 2008 (source: John Key) and continues to worsen.

    Our standard of living continues to decline, and has been for fifty years at least; we were 5th in the OECD in the 1950s. It is not a good story.

  163. Another joke from Photo. The parts of the world that did not open their markets to globalisation to the same extent as us, had much greater rises in GDP over the same time period.
    The ones where the State was definitely not, “hands off” outperformed all of the ones who bought the neo-liberal bromide..

    New Zealand has gone steadily down the OECD rankings by almost every measure, including the ones that RWNJ’s love.

    A failure by every measure.

  164. Well dbuckley it DOES have to be things that everyday folk need and buy.

    Like Washing Machines.

    …otherwise it does not displace consumption of goods from overseas and does not assist us with our trade imbalances.

    …and Kerry… you’re not paying enough attention to the point about manufacturing those EXPENSIVE goods here and marketing them elsewhere.

    For us to manufacture a lot of stuff we’d have to import some materials and build things we don’t build here at all anymore, and ship the goods to markets which have their own factories and many of their raw materials supplies, just down the road. We’d have to bring our labour and production costs in line with those of places like China and THEN eat the transportation costs.

    It cannot work. You KNOW it cannot work.

    The cost for us HAS to be larger, and it is no different from “eating locally” in effect.. and it is done by all the larger markets.

    So we cut logs and send the raw low-value goods somewhere where the labour to transform them into finished furniture is dirt cheap and it gets shipped back to us. So we pay for someone else’s work, but not for any of our own workers.

    It cannot work.

  165. So BJ we have to develop a health internal economy which doesn’t rely so much on exports or imports.

    Future fuel costs may make that inevitable anyway.

    The sort of economy every country has which is been internally prosperous.

    Isn’t that what you are trying to say.

    Something the Gulf States are already talking about for when their oil supplies dry up. Otherwise we end up like Nauru, but without the former guano importers to go back to for more money.

  166. BJ – your simpleton thinking is that we either manufacture everything here, OR we manufacture nothing and die.

    That’s taking extremism to the extreme.

    …..meanwhile….. back in the real world, we’ll do what you rubbish – we’ll make all the things we can, that we can make competitively.

  167. BJ says “So we pay for someone else’s work, but not for any of our own workers. It cannot work.”

    Except for the fact that
    – in your world manufacturing is EVERYTHING.
    – in the real world, maunufacturing is only a small part of the NZ and world economies (just 15%).

  168. No Photonz… there isn’t anything we can make competitively that makes a difference. Simpleton thinking is that we have to make “everything” here as I never said THAT. I said we needed some industry here and we do… and I stipulated vertical integration… but it is YOUR constraint that it all has to be profitable that makes a nonsense of making anything here.

    I despair of getting you to understand the difference between the individual corporation’s profits and the benefits to the society as a whole. You appear to be completely unable to encompass that these two things CAN be different.

  169. That’s pretty much it. We need to have an actual internal economy to achieve balance. Vertical integration or vertical within NZOZ to have stability. Enough production to displace significant imported goods. Export? Not in general of stuff manufactured here.

    It costs us but it saves us, because without it the economy unbalances, as it is unbalanced now, and after a while we have nothing at all.

  170. I think the point of this thread, that National have been a bad government who have grown unemployment to record levels has been lost …..

    National have no plan and just seem to be more frantically dishing out jobs, money and law changes to benefit their supporters before they get booted out come the next election.

    Im sure National will grow unemployment and make things worse before then.

  171. bj says “but it is YOUR constraint that it all has to be profitable that makes a nonsense of making anything here.”

    Unprofitable business close and everyone loses their jobs – what a fantastic solution you’ve come up with BJ.

    That you think that businesses whose lose money will improve our economy shows just how stuffed up your thinking is.

  172. Unprofitable business close and everyone loses their job

    Which is why I said that the state had to take a hand in supporting the business…. really Photonz, is there any point at which you are actually capable of grasping a complete argument rather than seizing on some tiny snippet of it? I know you are, or were, smarter than that… and it is getting very annoying.

  173. That you think that businesses whose lose money will improve our economy shows just how stuffed up your thinking is.

    That you cannot grasp HOW they can do so, shows how incomplete your grasp of the difference between a nation and a corporation is.

  174. BJ – Profitable businesses create more jobs.

    Unprofitable businesses reduce jobs.

    Either by cutting their own employees, or sucking subsidy money away from somewhere else to prop them up.

    To improve our economy we need companies that make money – not a whole lot of companies that lose money and either reduce jobs or suck money away from more productive industries.

  175. “Which is why I said that the state had to take a hand in supporting the business”

    Given that the state has no resources other than us, what you are saying is that we should support unprofitable businesses through taxation.

    Which is all very good except that it is in effect a perpetual motion machine, as there is no energy input, and we know how we’ll they work…

  176. BJ says “So we pay for someone else’s work, but not for any of our own workers.

    It cannot work.”

    Sorry to pull you out of your endless doom and gloom and negativity, but in the last 20 years we’ve added over 700,000 jobs – that’s nearly a 50% increase over 1,509,000 in 1992

    Even with five years of global economic crisis we’ve managed to add nearly 50,000 MORE jobs now (2,218,000) than at the peak of the boom in 2007 (2,171,000).

    I often wonder why you didn’t immigrate to the most left wing communist countries you could find which would obviously be your political utopia, instead of to one of the most freemarket countries in the world,that’s the exact opposite of your ideals, where you’re so obviously and continually miserable.

  177. Photo humour again.

    A large proportion of our population have already left for the markedly more left wing and socialist country next door.

    I wonder why people like Photo do not emigrate to countries where all their right wing no tax fantasies come true. Like Somalia. Where you can burgle your fellow citizens to your hearts content without the obstruction, of ‘horrors’, paying to help your fellow citizens climb the same ladder, previous tax payers helped you climb.

    Instead of constantly advocating failed right wing fuckups.

  178. Kerry – keep scoring those own goals.

    One day the Greens might realise that campaigning against mining in NZ, then complaining about Kiwis leaving for mining jobs in Aus, makes them look really, really dumb.

  179. Dbuckley. Money flow does work like a perpetual motion machine. Except when you stuff it up by treating money as if it has value in itself instead of being a proxy/token for work.

    Money as a medium of exchange is a concept in our heads, not a physical quantity.

    I can go on building houses in exchange for a market gardener supplying me food, forever.

    I cannot pay outside the system to a banker who wants ever increasing compounding amounts of money, for interest, for the land the farm is on, without increasing work done.

    I was suspicious when someone first explained the “magic of compound interest” when I was a kid. A hockey stick compounding rate of increase in wealth was never possible.
    It falls down when everyone tries to spend the expanding amount of money in a finite world.
    That is even more improbable than perpetual motion. That is making energy from nothing.

  180. Kerry says “NZ has had record export commdity prices too. What happened?”

    We now regularly have trade surpluses – something virtually unheard of in previous years.

    The July surplus last year was the first July trade surplus for 20 years since 1991.

    – From 03-08, just 3 of 72 months had a significant trade surplus
    – From 09-12, 24 of 46 months have had significant trade surplus.

    Last year we even had a trade surplus for the whole year, with nearly a billion ($999 million) more exports than imports.

    We’ll probably be down this year, although the latest figures for the September quarter show we exported $147 million more than we imported.

    Exports to China have gone up around 200% since we signed the free trade deal, and it’s now closing in on Australia as the largest buyer of our products.

    And the year to July we’ve exported $600 million more than we exported the year before.

  181. Kerry says “I was suspicious when someone first explained the “magic of compound interest” when I was a kid. ”

    Financial illiteracy is alive and well.

  182. Financial illiteracy is not understanding the fact that the infinite expansion in money supply required for compounding interest cannot be matched by production in a finite world.

    Making the collapse of the current financial system inevitable.

  183. “And the year to July we’ve exported $600 million more than we exported the year before”.

    Why hasn’t that been reflected in wage rises, rising prosperity like Aussie, Photo?

    Because it has gone in bank interest and offshore profit taking.
    Due to your mobs, fuckups.

    Managed to have a recession during a commodity price/export boom.

    Own goal. LOL.

  184. A 20% increase in jobs with …. 3.5 million to 4.5 million is a 28% increase in population… so we aren’t keeping up.

    Keep on trying to use statistics to mislead me Photonz, it is good exercise for me, working out which part of the truth you are omitting at any given statement.

  185. Kerry says “Because it has gone in bank interest and offshore profit taking.
    Due to your mobs, fuckups.”

    Wrong govt to blame – it was under Labour that household mortgage debt jumped from $60 billion to $160 billion.

  186. When did I ever say Labour was much better. Despite the opportunity they did not change anything materially.
    Why I left them in 1986.

    As Cunliff rightly said. Why when National proposes to amputate your leg, why vote for Labour when they still want to amputate, just with anesthetic.

    But it is National who still had a recession during an unprecedented commodity boom. When Australia did not.

  187. BJ says “Keep on trying to use statistics to mislead me Photonz”

    I don’t need to do that – you’re doing a good job misleading yourself.

    The increase of 700,000 jobs 1991-2011 from 1,509,000 to 2,218,000 was nearly 50% – not 20%.

    But then little is surprising –
    – you think we can improve our economy with loss-making businesses.
    – and Kerry questions there is such a thing as compound interest.

  188. Kerry says “But it is National who still had a recession during an unprecedented commodity boom. When Australia did not.”

    Kerry – you really are on another planet. The whole world including the most left and right wing govts went into recession.

    The only reason Australia escaped, was mining, which the Greens campaign against.

    There is a huge benefit to jobs and the economy from mining.

    Remind us of that as much as often as you like.

  189. Kerry says “We had the same boom in primary product prices to China as Australia did with mining.”

    We have a trade partner buying $6,000,000 of our exports every year and rising fast.

    But Kerrys boundless negativity sees this as a bad thing.

    I don’t know why you bother getting up in the morning.

  190. Ach… poor eyes betray me again… read 20 for 50 in your post. Fine though… if you can be proud of this sort of performance (pick 1985 for a start date… 1991 is as clear a cherry pick as there can be)

    http://www.tradingeconomics.com/new-zealand/unemployment-rate

    and the structural issues associated with a debt like this

    http://www.tradingeconomics.com/new-zealand/external-debt

    http://www.tradingeconomics.com/new-zealand/current-account

    then good for your rose-tinted glasses. They’re working well.

    The rest of us know better than to buy this sort of debt and we know better than to expect things to get better for New Zealanders… the only improvement we’re going to see is in our sales of food to the rest of the world and we’re already AT OUR LIMIT for producing food from the land in this country, because we’re destroying the country for the profits involved as we speak and the economy itself is unbalanced.

    Structurally unsound Photonz.

    http://www.realeconomy.co.nz/112-economy_as_unbalanced_as_ever.aspx

    …and it isn’t going to get fixed, not without destroying the country, no matter how hungry the Chinese get.

    Not unless we stop importing some of the crap, stop paying stupid prices for houses and stop expecting to live as a first world country when we rely on 3rd world production to support our consumption of “stuff”.

    There is no such thing as a post industrial economy that uses industrial products. It does not happen, it does not work. You can keep on banging the drum for competitive advantage forever, and you will be wrong…

    …forever

    http://www.huffingtonpost.com/ralph-gomory/manufacturing-and-the-lim_b_227870.html

    Our manufacturers cannot make a better cheaper product to sell in China or the US or Oz than the Chinese themselves can make. Not with labour costs and environmental regulations and all the other things being arbitraged to the advantage of internationally traded companies.

    It can’t happen. Not “is unlikely”. Is completely fucking impossible.

    The result of that little detail that you STILL do not actually admit in any shape in your analysis, is that we buy every goddammed thing from overseas because we’re married to the market by your ideology and it is destroying every single exporting industry in this country except for farming… which “thrives” by destroying the rivers and lands.

    Which leaves us with a massive debt problem, and trade and social imbalances that are structural, and not easily fixed. Which our current ideoillogical imbeciles in government think they can fix by doubling down on our strengths.

    …instead of shoring up our weaknesses.

    Sort of like this guy…

    http://www.dailymail.co.uk/news/article-1220536/German-armwrestler-shows-single-Popeye-esque-limb.html

    The problem for NZ isn’t that the farming sector isn’t strong “enough”, it is that every other sector except finance is dying. The high dollar helps nobody –

    – except the consumers of foreign goods.

    You like it the way it is… we got that. The nation will die if your lot stays in control too long. You need to get THAT.. because doing more of what causes the problem isn’t helping us.

  191. BJ says “Our manufacturers cannot make a better cheaper product to sell in China or the US or Oz than the Chinese themselves can make. ……It can’t happen. Not “is unlikely”. Is completely fucking impossible.”

    If you always take the most extreme position you can find, you’ll always continue to be wrong.

    We have over 20,000 manufacturing companies, many doing well, particularly where they make low volume niche products, inovative products protected by design patents, and products for sectors where we are world leading (i.e. dairy machinery and other agricultural equipment).

    BJ says “The problem for NZ isn’t that the farming sector isn’t strong “enough”, it is that every other sector except finance is dying.”

    Another example where you have to make up extremist nonsense to fit your preconceived views.

    The service sector is expanding, annual tourist numbers continue to grow, machinery exports increased by a quarter billion dollars in the year to June, etc

    Todays Herald “NZ services sector expands at cracking pace”
    http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10848486

    BJ – you’re drowning in your own negativity.

  192. It is to my shame that I have not yet explained it clearly enough for you to understand.

    It avails us not if we have a few people employed in building things that are too trifling a more advantageous place to make. There may be a few but those niche markets exist largely at the whim of a market that simply hasn’t gotten started sweeping up crumbs. I might doubt the 20,000, but it serves no purpose…

    …because you missed the point yet again.

    The purpose of supporting manufacturing of goods in NZ is TO DISPLACE IMPORTS OF FOREIGN GOODS and the resulting external trade imbalances and debt. Which is not accomplished by niche products. It is the bulk consumer goods we have to build, and such other things that we CAN build. Like rail cars and wagons, and whiteware and aluminium products and furniture.

    To that end it is not required that we do it for EVERYTHING in every sector, and it is not required that we make profits on everything we build.

    Our profits come from our agriculture, and it funds our imports by and large, and probably will continue to do so – but we gave up far too much in the backlash against Muldoon, who was actually doing the right things except for his failure to tame the banks before attempting anything.

  193. BJ says “….backlash against Muldoon, who was actually doing the right things…”

    You obviously have no idea whatsoever.

    Muldoon put a luxury tax on caravans, and immediately wiped out every caravan manufacturer in the country.

    He did the same on boats, and according to one boat building company who has survived over 100 years “in excess of 80% of boat builders were driven out of business” in just 5 years under Muldoon.

    He gave big subsidies to some industry and agriculture, so the more they produced and exported, the more money the country LOST.

    It made us less efficent, and our balance of payments got worse – not better.

    Everything cost more – NZ produced goods and imported goods – that nobody could afford to buy anything.

    So prices were frozen. It was illegal for shops to charge more for anything, even if it meant they were selling for less than their cost price.

    It was even illegal to get a pay rise.

    And our balance of payments (what you say will get better if we do this) was so bad, that we couldn’t afford to import petrol, so it became illegal to drive your car on a Thursday (or whatever day you selected).

    The worst 9 years of terms of trade (exports compared to imports) out of the last 55 years, were the 9 years ALL under Muldoon (and they’re significantly worse than ANY year since or previously).

    And you want to copy the policies that have gave us the very worst terms of trade in half a century, and expect they’ll have the opposite effect.

    And you say Muldoon was doing the right things – that’s really funny.

    MORE we produced, the MORE money we LOST.

  194. I was referring about the aluminium smelter, the dams, the other infrastructure he built. Apparently there is more to his era than what has been described to me to date.

    He used a “luxury tax”? I find the idea difficult to understand and wonder what rate that tax was at… as it must have been a whopper to wipe out every last manufacturer.

    If he did that it begs the question why… such a tax should not ever be necessary.

    The important thing he got right was the building of infrastructure. It was the lack of control of the monetary sector that screwed things up and I wouldn’t wonder if those taxes were put in place to pay off bankers. He was not smart enough to realize that a sovereign state not only can but SHOULD borrow from itself rather than from foreign banks.

    I can see how building massive infrastructure projects without managing the financial side properly would lead to results as you describe… and you are still looking at the wrong lesson.

  195. Muldoon did many things wrong.

    I remember the boat tax in particular. We went from taking a dozen yachts a trip to Australia to a single voyage with all the moulds.

    However that effort is insignificant compared with the neo-liberal efforts. How many more industries have been killed by Governments since in pursuit of, wholly illusory, benefits to farm exports. China would have bought from us anyway because it is in their interests to spend as much of their massive supply of US dollars as they can, on resources, while they are still worth something.
    (I am seeing the same thing now as manufacturers sell their plant to Australia and the islands).
    Yacht building in NZ has never recovered, as they get hit every time they put their heads up, with higher interest rates than overseas competition, an overly inflated exchange rate and favourable treatment, by our Government, for imports.

    And don’t forget the social welfare for sheep.

    However, “think big”, petrol rationing etc was a response to the effect steeply rising oil prices at the time were having on our balance of payments. Hardly Muldoons doing. If they had continued to rise, Muldoon would be a hero now for “think big” alone. Nobody was to know the USA would simply topple a few Governments to keep oil prices down.

    The big mistake was how they were financed. Muldoon was not alone there however. Most Governments around the world at the time got suckered into the IMF money making scheme for private banking. That also had to be bailed out, in most places, by Government funding, when many third world countries couldn’t meet the payments.

    I also remember Muldoon personally, as someone who was very concerned about doing the right thing for New Zealanders, unlike Key who seems to just want to add PM to his CV.

  196. It is funny that Photo is so happy with our present Government and critical of Muldoon’s National Government when our present lot are doing the same things.

    Tax cuts and subsidies to cronies, borrowing for welfare to National party supporters, artificially holding down wages, killing local industry, keeping our exchange rate artificially higth to give an illusion of prosperity, and doing nothing about the real underlying problems..

  197. bj says “The important thing he got right was the building of infrastructure.”

    No – he didn’t even get that right.

    He bankrupted the country to build the likes of Clyde Dam – it’s worth around $1 billion, but cost $4 billion to build (in today’s money).

    He built the Motanui petro-chemical plant, which was mothballed after a decade.

    One of the main selling points of building “think big” projects was to get the economy going, but most of the building was so inefficient we ended up paying MORE that what the finished projects were worth.

    That made us worse off.

    NJ says “He was not smart enough to realize that a sovereign state not only can but SHOULD borrow from itself rather than from foreign banks. ”

    Borrow what? Where from? We didn’t have anything to borrow.

    Inflation was already way out of control so printing more money would have lead to a death spiral.

    The policies you want were an absolute disaster last time.

    Instead of learning from history, you are desperately trying tell us something completely different happened – to fit to your preconceived ideals.

    BJ says “He used a “luxury tax”? I find the idea difficult to understand”

    An example of how little you know about the damage Muldoon did.

  198. Kerry says “It is funny that Photo is so happy with our present Government and critical of Muldoon’s National Government when our present lot are doing the same things.”

    Yeah right – so similar –
    – the most and least interventionist governments ever.
    – the biggest and lowest subsidies ever.
    – a govt who borrowed for everything, and one desperate not to borrow.
    – one that had not control over rampant inflation, and one that does.

    It would be difficult to think of a govt in the last 40 years that is MORE different to the current one, than the Muldoon govt.

  199. Kerry says “I also remember Muldoon personally, as someone who was very concerned about doing the right thing for New Zealanders”

    So concerned about NZ, that he got drunk and called an election by mistake.

  200. Borrow what? Where from? We didn’t have anything to borrow.

    I really didn’t think you’d understand.

    All borrowing is basically from YOURSELF. Your future self has to pay the money back.

    As a sovereign state this process is quite clear AND it is intergenerational, and the curious habit of thinking you have to borrow from someone else to do this sort of investment in the country and pay them interest, is encouraged by the bankers who profit from it.

    … and it is entirely unnecessary.

  201. BJ says “All borrowing is basically from YOURSELF. Your future self has to pay the money back. ”

    Ah – magicking up money out of nothing.

    The whole world could do that, then every country could magically be rich and everyone could live happily ever after and never have to work again.

  202. No Photonz, this is NOT majick… and it is no different from borrowing from a bank except that there isn’t any interest or banker involved… We still have to make up the delta.

  203. this is NOT majick… and it is no different from borrowing from a bank except that there isn’t any interest or banker involved… We still have to make up the delta.

    You can only borrow from someone if they have something to lend. When talking about money, there are only three places it can come from.

    The first is from someone who has unused, unallocated money.

    The second is by inventing “new” money, without increase in real value. See Helicopter Ben. This is sleight-of-hand, because what you are actually doing is ripping a little bit off every dollar bill in circulation and glueing all the bits together to make a “new” bill. Everyone with existing bills has lost a bit. Having just thought about it, its legal theft, just like taxation.

    The third way is by using time travel, and getting some money from tomorrow, and issuing it today. This is what modern banks do. Thats pretty close to majick. But there is a price to be paid for time travel, it isn’t free.

    Lets pretend we put the clocks back a few centuries, back to when banks hadn’t perfected time travel. Then the only way banks could lend money was money they had. Which makes option three the same as option one, so lets forget banks, time travel and majick. Where does that leave us? It certainly doesn’t increase our lending options…

  204. The second is by inventing “new” money, without increase in real value.

    If you are using it to build infrastructure that is of benefit to your society the increase in real value is simply deferred. This is an answer that has been explained by those notable socialists Henry Ford and Thomas Edison, and it really is trivially simple.

    There is no difference between the banks and the government when it comes to “creating” the money, except in the interest paid and to whom.

    So maybe you both need to go back and consider the difference. It isn’t “Social Credit” either, as that is a very specific notion about money that I have never espoused. There isn’t anything inherently wrong with it except for (IMHO) the complications and shenanigans involved in calculating how much of what to give to whom and why.

    The government can be and should be the bank that controls our money supply. Other banks may do other things, but the government needs to control the issuance of money and to make it redeemable and use that redeemability in terms of energy (work done = KWH) as a means of understanding how much there should and can be and how much we can borrow and pay back to ourselves over time.

    Real money has to represent work done. Anything else is a debt instrument and there is nothing inherently wrong with debt… as long as it isn’t confused with actual money.

    http://www.debtdeflation.com/blogs/2012/11/16/energy-production-and-entropy/

  205. I am in a shop. I have in my pocket two $5 bills. I wish to purchase an item that is $15. I don’t have enough money. Ok, then I’ll lend myself $5. I take one of those $5 bills, and lend it to myself. I then approach the counter. That’ll be $15 them man says.

    Will I be able to walk out of the shop with the $15 item?

    But the man behind the counter says “I know you db, you’re good for $5 of debt, you give me the $10, and I’ll give you the goods and you owe me $5″

    The difference between money and debt is very clear and easy to understand, and once one has that understanding, it is also immediately obvious why one can’t lend money to oneself. To do so would violate the difference between money and debt.

  206. If you are using it to build infrastructure that is of benefit to your society the increase in real value is simply deferred.

    Incorrect.

    Those folks who had bills that you ripped a bit of to make the new bills never get their bit of the bill back. They paid for your new bit of infrastructure. It may be that there is now a new bit of infrastructure that has value whereas before there wasn’t, to the benefit of society generally, but don’t lose track of who paid for it.

    Rather than doing a Ben, you could just have equitably demanded they hand over bits of their bills through taxation.

  207. Except. If the expansion in money supply does not cause inflation. I.E. If it just brings into play underutilized resources then the economy expands without ripping of part of that bill and everyone gains.

    Though inflation in the price of imports compared with local production is another story.

    That is my caveat on Russels QE. I doubt if it would be big enough to drop the dollar by enough to affect anything.

    Changes to the reserve bank act would be better..

    If the infrastructure allows more efficient use of resources or better production in future then again everyone gains.

    Similarly. Creating debt, for necessary infrastructure, without the intermediary of a bank, everyone gains. Except the bank.

  208. It is no more creating money out of nothing than the ledger entry a bank puts in when you take out a loan.

    China is doing it now to lend to the USA. Unless you seriously believe their is 3 trillion sitting in Chinese families bank accounts waiting to be lent. The only backing for that money is the belief, probably erroneous, that US workers production, over time, can pay it back.

  209. No dbuckley… the shopkeeper allowed you to borrow, but you still borrowed from yourself because ALL debt must eventually be paid back by the borrower. The bank simply does a sort of “arbitrage” between the present and the future. The government can and should sit in that role instead.

    This is not the same as money creation. Yet in the current environment the issuance of money by the bank IS money creation and in spite that there is no “opportunity cost” lost by the bank making the loan as it had no money until you signed the papers, you are charged as though there were. Sweet deal for the banks… sucks for everyone else.

  210. BJ says “No dbuckley… the shopkeeper allowed you to borrow, but you still borrowed from yourself because ALL debt must eventually be paid back by the borrower.”

    That’s that same as saying every time I borrow – whether a new fridge, a car, or $20 from my mate at the pub – I haven’t really borrowed from anyone. I’ve really borrowed from my own future, cause I have to earn that money to pay it back.

    Meanwhile back in the real world, my mate had to have a real $20 to lend me, the car dealer had to use real money to pay for the car, and the shop had to have real money to buy the fridge.

  211. Photo.

    How many billions, “in todays dollars” in foreign exchange has the Clyde dam and other hydro stations saved in paying for imported oil for power generation? And how much in future?

    That is the true value, not the accounting “book” value.

  212. Yup but the bank didn’t have to have $400,000 to loan you for the house… THAT is the part of the real world that we are discussing, not your bar tab.

    Which means that if you substitute the Government for the Bank all you’ve cut out is the middleman.

    Ordinary folks can’t just create money to loan themselves or anyone else.

    That’s something we allowed governments to do and governments, being comprised of fools, gave that power away to the bankers. Who used it to take control of the governments. How you can hate democracy so much I have no idea.

    :-)

  213. BJ says “Which means that if you substitute the Government for the Bank all you’ve cut out is the middleman.”

    So why not just get the government to take over every retailer in NZ?

    As you say “all you’ve cut out is the middleman.”

  214. Kerry says “How many billions, “in todays dollars” in foreign exchange has the Clyde dam and other hydro stations saved in paying for imported oil for power generation? And how much in future?

    That is the true value, not the accounting “book” value.”

    No – that’s a really stupid way to value it – because it doesn’t take the slightest account of whether it was worth it to build it in the first place – you make no differentiation on whether the build cost was $4 million, $4 billion, or $4 trillion.

    And it doesn’t take into account that both before and after Muldoon’s “think big” project, you could build renewable energy projects that produced 200-300% MORE electricity for every dollar spent.

    As an idea of how ridiculously expensive Clyde Dam was compared to other renewable generation, it that produces just 20% of Contact Energy’s electricity, but cost more to build than the whole company is worth.

    (Clyde Dam cost $4 billion in todays money, Contact is worth $3.5 billion).

  215. photonz1
    Posted November 17, 2012 at 1:52 PM
    Kerry – keep scoring those own goals.
    One day the Greens might realise that campaigning against mining in NZ, then complaining about Kiwis leaving for mining jobs in Aus, makes them look really, really dumb.

    I know this is an old post, but Photo, you seem to have forgotten the fundamental fact that mining in NZ (mainly for very low grade coal, which most countries wouldn’t bother with,) simply is not worth it – especially when Australia has not only higher wages/salaries for miners, but a higher grade and wider range of ores and minerals. Which theoretically means that they will receive better prices (than NZ would), in order to fund those higher wages/salaries and maintain the upkeep of equipment. Mining is not the solution if our ore is of low quality and sparse in quantity. It is a much worse option than manufacturing and makes you look stupid for suggesting it. In any case, it would merely be a very short-lived stopgap unless a hidden (and sustainable) treasure trove is found (and pigs learn to fly).

    photonz1
    Posted November 16, 2012 at 3:38 PM

    Kerry says: “Real wages and incomes, for the majority of New Zealanders, have declined.”

    Photo says: In the last 15 years the minimum wage has gone up from $6.37 to $13.50 – That’s a 112% increase.
    Over the same period, from early 1997, the CPI has gone up 43%.
    It’s yet another claim that’s total nonsense.

    Again an old post, but once again I wish to give my two cents worth. Photo you are forgetting that taxes, house prices, rates, rent prices, household expenses, GST and unemployment rates have increased (probably just as dramatically) in the same timeframe. Which means that increasing the minimum wage has only helped those that can find and keep minimum wage jobs keep their heads and perhaps their shoulders above water. And forget about students or beneficiaries!

    I do not know the average pay packet per week for a family or couple who are on the benefit or are studying. I do know that a single person, over the age of 20 who lives in the Wellington suburbs (renting of course) receives $230-$240p/wk on an unemployment benefit with an accommodation supplement. Tertiary students of the same age get paid around $210 or less, depending on their parents income – which might I add is an inherently stupid idea, since most students have moved out of home at an average age of 18 and are no longer being supported by their parents on a week to week basis. And if by some chance their parents are still supporting them with a weekly top up or allowance of some sort then they must be well off!

    Average rent of a 3bdrm flat in the Wellington suburbs is $400-$450 which then equals $133.35 per room. Add another $70 at least for groceries per person (and no luxuries either – just enough so that you can afford to eat 3 decent sized meals a day, with some form of meat and veges and maybe you’ll be able buy milk if you’re lucky) and the remaining $38-39 can be spent on things such as power, transport and mobile/phone/internet. Oh, and also this is a budget for someone who uses public transport because they cannot hope to afford buying and maintaining a car.

    Access to and use of either a phone or an internet connection is a basis for being able to follow out the terms of an unemployment beneficiaries’ jobseeker agreement, because it’s damn hard to find a job when you only have access to the library newspapers and a payphone (the majority of which run on prepaid cards anyway). And yes, you can doorknock, but it is extremely hard to get a job this way – not to mention exhausting, because with the cost of travel it’s cheaper to try and walk all over town rather than ride – as minimum wage employers no matter their industry do not usually have time to talk to you or look at your CV. (if you require links please refer to either the Studylink or WINZ websites, I have spent enough time on this comment and must get back to studying.

    Also, FYI – the rate for a student allowance increases at age 24 because the student allowance is no longer based on their parents income. That same single person with no children will then be eligible for a maximum of $244.96 per week. While I’m grateful for the change, it’s still hard to live on and does not mean that that is actually what you’ll end up getting.)

    I’d love to hear your thoughts on how a beneficiary or student should stop bludging off the government and wasting taxpayer money, when it’s clear that it’s taxpayers and high income earners that have money to waste in the first place.

    I have an idea that is a very simple concept. It definitely needs much more thought because I only just thought of it and I don’t know if it would help at all, but it would sure as hell make me feel better. Instead of worrying over implementing new taxes and/or changing tax rates in the next year or ten (because there needs to be more research and gradual implementation of reforms in order to make sure they work.)
    How about starting by cutting each politician’s salary, benefits and ‘perks’ to a rate that actually makes sense (which to me would be at least the average salary of an office executive, but I’m feeling vindictive right now. I’m feeling so vindictive that I’d resign anyone who earns over that average salary to the same fate.) and use that money in order to start funding the core changes that need to take place in the economical system. I’m sure if I can survive on $14 a week for food in order to save enough money for necessities such as clothes, shoes, medication and course supplies in a month, then they can take a pay cut. Hell, put them all on the benefit suitable for their relationship status and asset value for a month or two and see how they handle it. Better yet, give them the equivalent rate of a Student Allowance!

    I don’t pretend to know anything about economics except the fact that you’re in serious trouble if your expenses outweigh your profits. I do not have the qualifications or skillset necessary to make those core changes to our economical system in order for history not to repeat itself, so please do not ask me to come up with a better idea. I am not a politician or economy graduate and it is not my puzzle to solve. Like I said, this is just my two cents worth as person living at the bottom of the socio-economic ladder of this country.

  216. We don’t advocate communism here, we leave that to the right wing nutjobs who imagine they know what we think.

    We actually LIKE the idea of having everyone find their own place, and letting the market do its thing in general. We are simply aware that the market doesn’t always work. It sucks for healthcare, it fails at education and if applied to the control of our money supply it invites fraud and distorts every other market… but the market works better at a lot of things than having gummint sticking its nose into them.

    It just isn’t a universal answer to everything. Cutting the middleman out of the creation and control of our money supply is vastly different than having it run the fish & chips shop. Remember the silly example of me walking into a shop with $10 looking for a $15 purchase.

    The CREATION of money must not be linked to debt, and if it is not allowed to individuals, the only proper repository of that power is the democratic state which is how we collectively do the things we cannot do as individuals.

    http://www.debtdeflation.com/blogs/2009/01/31/therovingcavaliersofcredit/

    …and you fail to understand, as you continuously fail to understand the value of things.

    2100 GWH of electricity per year with no CO2 emissions.

    First we need to work out what that is ACTUALLY “worth” to us since you are using money to value work done… which is the EXACTLY BACKWARDS way of thinking about it we are used to. The estimate of what it is actually worth is more complicated than you probably imagine and I am only going to guess at it…

    So we have to consider what those GWH/Yr are worth if we had a CO2 charge that reflected the cost to the future of the damage of our emissions… say around $250/tonne. That’s a hard thing to guess at present… several factors go into it… including (among other unknowns) the real cost, the increased demand due to substitution of clean energy for dirty energy and improvements in supply that result. The fact that it is baseload (reliable and constant supply). Lines charges to be taken out… I can be sure that the “rate” that actually pertains once all the factors settle out is North of the 25 cents per KWH I pay now…

    I’ll call it 40 cents… but could be off by another 20 cents or so.

    So 2100 GWH gives us about $840 million per year at that rate. So in the past 20 years it is worth about $16.8 billion and over the next 100 it is in the near neighborhood of a hundred billion.

    …and you can’t use most other forms of renewables as baseload supply for an Aluminium smelter. That smelter’s output after CO2 output is accounted for is also of far greater value than the current distorted economic system applies to it.

    Which (among other reasons) is why it is utterly stupid to sell off the energy companies… their assets aren’t properly valued… not even close.

    What sort of values you actually use and apply to things, and why you choose them Photonz, I have no idea. I do know however, why the economic system we have is distorted and a number of the places where that distortion gets serious. The energy supply of the planet is one of the most serious of these… considering that the entire exercise is backwards from what reality dictates that it has to be.

    Economists don’t like turning their exercises in futility into a science…

    http://www.debtdeflation.com/blogs/2012/11/16/energy-production-and-entropy/

  217. Photo shows again he has failed accounting 101.

    When has share or book value had a solid link to earnings.

    Again. How many MJ of imported oil, at what cost, would have been required if the Clyde dam had not been built?
    How many MJ at what cost would it save in future?

    And how much extra interest on offshore borrowing would we have paid for the extra MJ?

    And that is before we go into the pollution and AGW costs of not having the dam.

  218. @ photonz1

    To a degree, Kerry is correct.
    There is often a difference between the investment value (i.e cost- benefit rationale) and the asset value (i.e. capital cost of expenditure).

    The basis of any business case should be RoI (or some other mechanism) over time – without it an appropriate cost-benefit analysis cannot be performed to justify expenditure.

    This analysis tends to answer the “Is it worth it to build this at all” question though it should be noted that the analysis tends to be static and, particularly for large capital projects that take a long time, cost-benefit should be routinely updated to take into account changing tech / market conditions / cost of credit etc. to continue justification for investment.

    @ Kerry

    To your point “When has share or book value had a solid link to earnings.” – this happens all the time.

    The P/E ratio is a commonly used simple measure of investment attractiveness. A lower ratio tends to equal a more attractive investment particularly if you intend to hold stock as opposed to trade, importantly, the ratio range is entirely dependent of the market segment (i.e. infrastructure/power tends to have a lower P/E range as they are “safe” investments as opposed to the higher P/E in tech business that is deemed to be “speculative”).

  219. Yep. Agreed that PE ratio and ROI etc can affect the share price and value, but not directly. There are many examples of businesses whose share value, for example, is based on hype and/or expectations, not earnings. Many valuations are dependent on accounting conventions used and can vary according to where the value is considered to be.

    E.G. If you are looking at buying a business you will be looking at cashflow ROI. So you can stay solvent and make a bit. The tax man will be looking at the accounts under the tax laws. The ROI for tax purposes can well be negative with a clever accountant.

    Like POAL land book value, on its one off selling value for residential property. Not on its ongoing value to both the port company and the city/businesses of Auckland.

  220. Tara. Totally correct. Photo is notorious on here for putting up statistics that only tell half the story.

    You may like to look up the income support policy group in the Green party. I am sure you could add some valuable real life insight.

  221. Tara says “Photo you are forgetting that taxes, house prices, rates, rent prices, household expenses, GST and unemployment rates have increased (probably just as dramatically) in the same timeframe. ”

    You say I FORGOT about increases in prices, IMMEDIATELY AFTER quoting me saying the CPI went up 43%. (over the same period the minimum wage went up 112%)

    What do you think the CPI increase is?

    (and unemployment in 1997 was 7% – pretty much the same as it’s been this year)

  222. Kerry says “Photo shows again he has failed accounting 101. When has share or book value had a solid link to earnings.”

    That’s a really dumb thing to say when the price to earnings ratio is the most common figure used across the world to value shares.

    It’s just about as dumb as saying the massively over priced Clyde Dam was worth it because it saved on oil imports.

    When for the same money, we could have produced 200-300% more electricity, and saved 200-300% more in oil imports – with renewable energy projects built at the normal cost both before and after Clyde Dam.

    That was a major problem with “think big” prjects – the primary reason for them was to spend big money to get the economy going, which over rode any concern over whether the NZ taxpayer was getting good value for money, or being totally ripped off.

  223. Agreed that PE ratio and ROI etc can affect the share price and value, but not directly.

    @Kerry – You have this a little about face.

    P/E ratio is an expression of relative value per share across a market. It cannot affect ‘value’ of a share – being the price someone will pay at a point – as being a ratio, it moves with share price.
    The way P/E does often directly affect SP is where the market deems the stock to be undervalued (at a point) and demand goes up, thereby setting a new P/E.

    RoI from a external POV (as an assessment of prior and potential future earnings – as opposed to current ‘value’ of an existing asset – is effectively the same as the P/E ratio if dividend (as opposed to potential capital gains) is the driver for stock holding.

    RoI from an internal capital investment POV (generally as a mechanism for assessing future value only of a non-existent asset) is a way of determining relative investment benefits.

  224. @Photonz1: To my knowledge the CPI is a statistic which shows the change of average prices from a number of outlets, for goods and services between two given time periods. In the long term it will show the overall trend of price fluctuation for the country. Like I’ve said, I don’t know much about economics, so please do correct me if I am wrong.
    I’m sure that every measure is taken, but there is no way that the prices of the sample range of goods and services are the same for every single income and/or household, in a given region at any one time, – let alone the whole country – when translating this statistic into real life. Therefore as always, some people will be affected more and some affected less by price fluctuations, depending on what their neccessary and luxury expenses are at the time.

    My sincerest apologies for not expressing myself clearly enough in my previous post. Please allow me to explain my argument better for you. (Please note that words in [] were implied meanings and words in bold are ones that you have not registered. It is probably my fault for limiting use of bold and italics for emphasis as I was taught to and I shall endeavour not to make the same mistake in future.)

    What I said was: you are forgetting [i.e. not taking into account] that [all of these factors] have increased (probably just as dramatically, [as the increase in the minimum wage rate]) in the same timeframe.

    Yes, the increase of the minimum wage is the higher percentage, but the CPI increase is still the larger statistic as it covers so many aspects of a persons expenditure e.g. a 4% increase in the minimum wage will not balance out a 4% increase in CPI (obviously). So while the minimum wage rate is increasing dramatically (112%), logically it must do so in order to try and keep up with the larger increase of the CPI (43%). Most minimum wage earners feel like their income has been declining because their expenses have steadily been increasing.

    The above example of wage to CPI ratio is even worse for beneficiaries and students as their incomes have either a)remained rather static with little regard to ever increasing expenses, or b) declined due to further restrictions on eligible assistance. (with the notable exception of student allowances for those who have turned 24.)
    Unemployment Beneficiaries are paid a (fixed?) percentage of the minimum wage rate for a 40hr work week. I can’t remember exactly what that percentage is, as it has been more than a year since I attended an introductory U.B. seminar. I do know that it is less than half the current M.W. rate, as per my previous post. (As 13.50×40=540. 540/2=270.)
    I cannot comment on other benefit rates as I do not know them. Maximum assistance figures for Student allowances are based on sveral factors, you can check these on the Studylink website. I realise the information there is not very clear, but please keep in mind that they will not neccessarily pay students the maximum assistance for a variety of reasons.

    I am not dismissing your logic in your debate with Kerry (re: declining incomes for average NZers) from the viewpoint of a minimum wage earners income, because you are correct (although you do not account for people who were previously, or are now earning above the minimum wage in your rebuttal to her generalization,) that their incomes are not declining.

    I am however, arguing from the viewpoint of beneficiaries – whose numbers are increasing, despite a massive flurry of increased restrictions, training program cuts, assistance cuts, benefit cuts (and refusals), since John Key became the Prime Minister. As well as tertiary students – who National are also fond of stripping assistance resources from and imposing further restrictions upon. Never mind that in order to get a job that pays above minimum wage or a decent salary, one generally requires relevant experience and/or a qualification so that they have a better chance at getting an interview.

    I do hope that you find this post easier to comprehend. I must go get ready for today, but I look forward to hearing your reply.

  225. Tara says “So while the minimum wage rate is increasing dramatically (112%), logically it must do so in order to try and keep up with the larger increase of the CPI (43%). ”

    No – it’s a percentage. So it for someone on a minimum wage who earned and spent say $200 a week, their earnings rose 112% to $442 per week, and spending on the same goods and services over the same period went up on average 43% to $286.

    All this is saying, is that someone on the minimum wage at the start of that period and still only on the minimum wage years later, would have increased their earnings nearly three times faster than inflation.

  226. Tara – Stats NZ describes CPI measurement limitations quite well (emphasis added):

    A common confusion associated with the CPI is that it should exactly represent an individual’s personal inflation experience. The goods and services used to calculate the CPI and their relative importance reflect purchases made by all New Zealand private households. The basket includes a large variety of goods and services, which is very unlikely to exactly match the purchases of any individual household

    So in a nutshell, while it’s a useful measure in aggregate terms, CPI is indicative only.

    The real impact of inflation entirely depends on the individuals purchasing habits.

  227. Photostats. Only half the story again.

    Ignoring the fact that many who were on the minimum wage are now on, even lower, welfare, and many, especially in retail, who were on well above minimum wage, are now on minimum wage.

  228. The only problem with comparing rise in wages with inflation over the period is that the CPI does not include housing. A rise in rents may place many in a worse position. Just as a rise in mortgage rate would for those who own a home.

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