The Land of Plenty?

New Zealand has long been known as the Land of Plenty, and with good reason – the land and the sea provided many people with an abundant healthy diet; we were the first country in the world to achieve an 8 hour working day and we were considered the ‘social laboratory of the world’ with cradle to grave support for those who needed it.
But yesterday, Statistics NZ revealed that for half of all of us, New Zealand is the Land of Not Enough.
Its New Zealand in Profile 2014 booklet shows 48% of New Zealanders don’t think they have enough money to live on.
The Green Party doesn’t believe this is inevitable. We believe inequality is a result of Government decisions and Government decisions can restore the balance:
We could raise the minimum wage and strengthen employment rights so everyone gets a fair return for their labour. We could set national water standards and fishing limits so people were able to feed themselves from our water ways again. We could regulate our supermarkets so they don’t mark-up fruit and veges by 500% while breaking even on chippies and sugary soft drinks. We could ensure everyone who is not able to work has enough to look after themselves and their children. We could offer low interest loans on solar and ensure people get a fair return on the power they generate, so costs are reduced…
This isn’t about more government spending it’s about smarter government.
This land can be plentiful again. New Zealand should be a great place to grow up for everyone not just 52% of the population.
This is something that was a part of my identity growing up. I thought of us as a country that believed we all deserve good lives and a fair future.
This is the Green vision and why we are here.

52 thoughts on “The Land of Plenty?

  1. I think you need some lessons in basic economics. The greens preach equality, but this is an impossible and an undesirable goal because we all have different objectives in life. Successful people I know have worked extremely hard to get to that position. You want to penalise them for working hard?

    In respect of fruit and vegetables, while I’m not sure of the mark up I buy some from markets which are usually but not always cheaper, and even grow a few myself. Chip pies, we buy at the supermarket. They are an inexpensive treat for my three children. Are you suggesting they should not have a treat and that chippies should be taxed high?

    I struggle to follow the logic of economic thinking of the greens. Essentially it seems that your party should be the judge on what I should buy, and what you don’t approve of you will either legislate, tax or ban? Is that true?

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  2. Jan
    a friend of mine pays his ex-wife $200,000 per year. She complains that it is not enough to live on, so she would fit into your concept that “New Zealand is the Land of Not Enough”.

    Yet again a simple statement, in this case that people would like to live better than they do, gets turned into a government failure by a Green Party MP. There is no need for this, if you want a socialist state, where everyone supposedly earns and lives the same, then say so and take away the Green label from your campaigning; while the two are not incompatible, they should be distinct so that voters can vote for the environment AND society that they would like to see.

    incidentally, if your statement “We could raise the minimum wage and strengthen employment rights so everyone gets a fair return for their labour” is accepted, then your other statement “This isn’t about more government spending” is in error, as increasing minimum wage would impact all pensions and many government employees’ wages.

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  3. I disagree Dave. There IS a need for this, based in the rising inequality and effort to blame the poor for their poverty – in a country where the only real earnings come from resource extraction and farming (and an occasional epic from Peter Jackson’s industry).

    Remember, we’re the “Mexican’s with Cellphones”. My countrymen easily recognized what I recognized back when I got here. New Zealanders who actually have work, work ridiculously hard for what they get in terms of buying power.

    The owning class has all the advantage here, the working class – the PAYE proletariat – is being drowned in debt, in higher prices for housing and consistent overtaxing in the lower and middle income ranges relative to the upper income earners, the people whose income is not in a form that PAYE can get at.

    GST increased, the top tax decreased, and what SHOULD have happened was just the reverse. In a monetary system based on debt and embracing free-market-capitalism, the only way to maintain any sort of equality is strongly PROGRESSIVE taxation and good government services. That we don’t even trouble ourselves to tax some of their privileged income, is a disturbing injustice.

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  4. BJ
    is this on the right thread? I’m not following you. What is the “this” that we need?

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  5. Wow! 48% of the population don’t think they have enough to live on.
    It is hardly surprising is it? In fact I am amazed that more than 20% of the population think they have enough. After all look at the views of some of our politicians.
    David Cunliffe claims he can only afford a “do up” property and that he is only in a “middle-range” situation for wealth. This is a man whose main home is valued at $2,500,000 and who has a family income of at least $500,000.
    The co-leader of the Green Party complained that, about 5 years after she became an MP with it’s munificent salary and perks, that she had to move to Dunedin in order to afford a house.
    These are the people who we are expected to believe are only in politics to serve?
    Everybody wants an income that is 50% more than they already have. Quoting this statistic as being meaningful is ridiculous.

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  6. I suspect those who personalize this issue by citing David and Met are missing the point and have forgotten their history. The main reason behind the statistic quoted in static or falling real incomes of many on middle to low incomes over the last 30-years coupled with rises for the top quarter. This came about because of the supposedly necessary reforms the likes of Douglas, Upton and Prebble (with assistance of public servants like Graham Scott, Rod Deane) began. These reforms included the ECA, and used a principle called TINA.
    The planned heaven resulting from the reforms has not resulted in a miracle for us all. Some have gained, but many have not. As well as the real income statistics figures quoted above we have growing private debt and the current account deficit; both of which are alarming and probably unsustainable.
    People are now waking up, hence the percentages referenced.
    Critics of the message cite someone able to pay ex-wives $200,000 a year and claim the ex-wife can’t cope. To my mind this shows extreme wealth/income for the ex-husband and a wife who learned to live extravegantly while married.

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  7. @Graham Howell.
    You are obviously reading something other than this post in order to comment as you do.
    “As well as the real income statistics figures quoted above” you say.
    There aren’t any such figures quoted. The ONLY statistic quoted is that 48% don’t think they have a big enough income. It may be true that some people don’t have high enough incomes, and I only say MAY, but a silly justification based on people’s opinions, which is the only thing quoted, doesn’t justify any such claim.

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  8. Alwyn, The “quote” was reference to to my comment about the falling or static real incomes for the majority and rising real incomes for the top. Statistics NZ, bless them, still report this data….. and SNZ’s latest report needs to read along-side analysis by the Ministry of Social Development itself, for example, The Living Standards Report.
    In connecting the dots, I hypothesis that if the majority have falling real incomes then their living standards drop, and private debt also increases. The Reserve Bank publish reports breaking down private debt into categories such as limited liability company debt, farm debt, mortgages, credit card etc. Makes disturbing reading.
    The Current Account deficit is caused partly by the difference in the value of physical exports/imports and repatriated profits of foreign owned businesses such as the banks. The later is huge as sometimes the physical trade is in surplus.
    My earlier post and this one tries to link some of the mess we are in; a mess ex-merchant bankers and others claim not to understand.
    Jan’s post simply identifies the latest report showing the general public are waking up to the lack of the miracle promised in 1984 eventuating.
    I also note that much of the “planning” of the reforms was happening behind the scenes in Treasury and the Reserve Bank during Muldoon’s tenure.
    That Douglas, Kerr, Brash etc are no longer influential does not mean their proteges are not still preaching from the same gospel. I am presenting an opposing view which Jan’s post indicates many now are waking up. That is, the refroms have failed.

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  9. Many of our National friends seem to enjoy politics as a spectator sport requiring heckling of the opposition rather than honest examination of facts. Indulging in stereotypes and prejudices and casting ad hominem mocks in ample doses is not how we teach our children to behave, and I would hope that we could be similarly adult and look at the facts that support everything that Jan was stating.

    It’s not just a feeling that half of Kiwis people feel they have very little wealth. The Fact is that the top 1% of Kiwis own more than double what the lower 50% of Kiwis own. This are indisputable facts. “The top 1% owned 16.4% of wealth” ( TeAra.govt.nz page ) while “the bottom half of the households only owned 7% of the total wealth.” ( TeAra.govt.nz page)

    What is amazing is that conservatives indulge in such specious comments concerning 200K alimonies or suggestions that the mere mention of the massive wealth inequality in NZ is a prelude to guillotines or a Bolshevik Revolution.

    Get a grip. Our tax system is highly regressive placing the greatest burden on those who are least able to pay, while a privileged one out of 100 Kiwis reap more than double the benefit than 50 others of their countrymen. We are all for meritocracy, but do we really believe that the one percent are 100 times more brilliant than 50 out of 100 Kiwis?

    Come now. Let’s all admit the truth- our system has been stacked in favour of the most privileged one percent and it is time to admit it, and make adjustments so that merit continues to be rewarded, but not in such a blatantly avaricious and unfair way. Have they no shame? We need to institute a progressive tax system on income and treat realized capital gains for what they are: income. National claims that progressives have no way of paying the bills. Actually we do- they just don’t like the ideas of progressive taxes or a one time wealth tax.

    Further to Jan’s point, it is not an illusion that Kiwis are working harder and making less. Our GDP per capita increases are healthy, yet our Gross National Income per capita has been in steady decline since the so called “liberal economic reforms” NZ has instituted. This also is not a “feeling”. It is a fact. Take a look at the chart.

    The so called reforms were exactly those that favoured the 1%. Did this result in greater wealth for New Zealand citizens? The answer is that while a very few have become extremely wealthy, our national income has gone down. More and more, Kiwis are becoming tenants in their country being bought up by an elite that has little interest in the economic hardship that half of Kiwis face every day.

    But they can relate to the economic plight of a white wealthy male having to pay his former wife 200K per year. It gives you an idea just how disconnected from everyday life the world of a Kiwi elite is. Given the irrefutable facts I have related, it is particularly amusing when conservatives utter with gravely condescending tones how such criticisms come from those who don’t understand economic realities. On the contrary, they average Kiwi understands economic realities far better than the privileged economic elites ever will.

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  10. …yet our Gross National Income per capita has been in steady decline since the so called “liberal economic reforms” NZ has instituted. This also is not a “feeling”. It is a fact. Take a look at the chart.

    Nice chart, John. And its absolutely true. Unfortunately, it starts at 1970. Given the data depicted on that chart, one could well conclude there was a correlation between the decline illustrated and the so called “liberal economic reforms”.

    The reality is that the decline had been in place for decades prior to 1970, a time which predates the so called “liberal economic reforms” of the 1970s.

    As I noted in another thread, its convenient for some to blame the “so called “liberal economic reforms”” for all our woes, but the facts don’t support such an argument. There are deeper reasons why our GDP per capita continues to fall, and they have not a lot to do with the so called “liberal economic reforms”.

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  11. Alwyn, Graham is just telling you the same thing I did, but he’s being more accurate and quite polite about it.

    Your favorite party and ideology is fomenting greater and greater inequality as a POLICY.

    The wealthy are wealthy because they deserve to be and changing their god given right to pay lower effective tax rates than the rest of the population is unpatriotic and disrespectful. After all they earn all that money by the hard work of being owners. If the rest of us have to actually work and produce to earn a living that’s OUR fault. Key was as crooked as a dog’s hind leg long before he returned to New Zealand. The smiling assassin made his dosh as a FOREX trader working at the very top of what is now known to be one of the most corrupt of all financial markets.

    That anyone in NZ trusts him would be thoroughly bewildering to any New Yorker. Were National’s partisans all beaten with a gullibilty stick at birth? I mean seriously, my crap detector pegs almost every time the man opens his mouth. Not ALWAYS. Sometimes it seems that he is just doing it for practice.

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  12. “…yet our Gross National Income per capita has been in steady decline since the so called “liberal economic reforms” NZ has instituted. This also is not a “feeling”. It is a fact. Take a look at the chart.”

    What peculiar logic lets you interpret this chart to mean that GNI/capita has been in steady decline? The chart doesn’t have anything at all to do with that claim. It purports to be the ratio of GNI to GNP, not GNI per capita at all.
    Now, if you can produce a graph with GNI on the Y-axis and year on the X-axis, and it sloped down you might be able to make that claim. However your graph isn’t any such thing.

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  13. This is somewhat off topic with respect to NZ but this is the most appropriate place to post it…

    http://www.rollingstone.com/politics/news/the-vampire-squid-strikes-again-the-mega-banks-most-devious-scam-yet-20140212

    Alwyn – you do have to pay attention to little details that are just stuff you actually KNOW… like the population has been increasing over time.

    This ratio you are so willing to ignore says that our income is going down relative to the extraction of value from the country and our labour. We are producing more but being paid less. “Productivity” is increasing. SOME people are getting wealthy, but MOST people are getting poorer.

    This matches exactly with everything else we see. It matches well with the policies of the National Party. It amounts to theft.

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  14. @alwyn Before you dispute that GNI per capita is going down, perhaps you should check that fact. If you want logic, consider a chart that plots GDP per capita over GNI per capita. Did you consisently fail your maths class? The chart is identical to the GDP/GNI ratio. Logic will tell you why that is so- I will leave it to you as an exercise you can toil away at home on.

    Anyway, at least dbuckley understands that GDP per capita is going up as GNI per capita is going down.

    Let’s look at what is happening. In economic theory, increasing the money supply increases economic activity. The free market radicalism popularly known as neoliberal economics is at the center of the trend to increase control over NZ assets and domestic production. As international finance goes up, so does GDP, but we locals don’t see any of that- “Finance charges” on this international beneficence is consuming all of the increase in production. Currently, these stand at near 8% of GDP and as you can see, the trend is rosey if you are an international banker. Not so much if you are a Kiwi worker looking at the decline of the middle class in general, and the family bank account in specific at the end of the month. Nobel prize winning economist Joseph Stiglitz has commented extensively on neoliberalism’s effective impact on countries turning smaller economies into colonies of the dominant economies. In the context of EU/US based international finance, the fact that the system functions as neocolonialism does not mean there is some sort of overt imperial intent. This is not the case with Russian and Chinese financing. Why foreign finance deals matter is pretty clear to Ukranian protesters in the street protesting Putin’s moves to return Ukraine as a vassal of Moscow’s resurgent empire.

    Foreign investors in NZ simply are looking for more places to rent money to the world. Borrowing money is virtually free in the US, and this money has been flooding small economies in search of high interest rate loans. It’s quite a trick to borrow money for free in the US, move it to NZ (driving up or forex as Bill English so wittlessly complains about) so that it can return a healthy interest rate on loans to Kiwi businesses or families to “buy” homes. They aren’t buying homes- they are renting. The businesses aren’t expanding their businesses- they are renting it out, and letting the international banks have the first crack at their till- gobbling up all the new GDP wealth and sending it back offshore.

    That’s one of the key reasons why GNI per capita is going down even though GDP per capita is going up.

    The neoliberal idea was that access to vast amounts of international capital would follow if NZ entered into radical “reforms” of privatization and removal of barriers to capital movements. GDP did go up, but the amount of wealth staying in the pockets of Kiwis is going down.

    As anyone reading my posts knows, I am as much against a return to command control policies as I am to the cult god of free market radicalism that National and Labour MP’s regularly worship. That god simply hasn’t delivered the promised miracle. Instead, it has weakened our autonomy, and the economic welfare of Kiwis has gone down, not up with 25% of our children in poverty, the GNI/capita going down, not up, and wealth further concentrated in the hands of the 1% (as I quoted earlier- the 1% own more than double what the 50% of Kiwis on the low end of the ladder own.

    If this is not the trajectory we desire, then it is time to discuss a new approach to responsible economic stewardship, not rehashes of neoliberalism.

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  15. That graph, if it is all the information you have does not show either of the claims made in the folllowing sentence.
    “Anyway, at least dbuckley understands that GDP per capita is going up as GNI per capita is going down.”
    It doesn’t show that GDP/capita is going up.
    It doesn’t show that GNI/capita is going down
    The only thing it would show, assuming it is accurate is that the ratio of GNI/GDP is declining.
    I am not going to give you all the numbers that are in the years that graph shows. The interpretations you are making cannot be derived from the graph so it would be a waste of time. I will just give you a couple of years, with figures from the World Bank. For 2004 and 2012 the numbers for GDP/capita and GNI/capita in US$, as well as GNI/capita at PPP are as follows.
    2004 2012
    GDP/capita (US$) 25,000 37,750
    GNI/capita (US$) 21,140 30,640
    GNI/capita (PPP) 23,370 30,030

    Both GDP/capita and GNI/capita have both risen during that period. The ratio of GNI/GDP may have declined but so what? The GNI/capita has RISEN, not fallen during the period, which is not what you are claiming.

    It is a pity your knowledge of logic and of economics so deficient that you don’t even understand why your claims are so foolish.

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  16. Pardon me for contradicting your self professed expertise in economics.

    Have you run across the name Bernard Hickey? He actually is an economist and is frequently cited by the NZ Herald and other major papers. Since you appear to like pictures and stuff, here is a video of Hickey giving it to you in terms you probably can grasp. It is video so you won’t have to bother with all that reading and stuff. Feel free to skip ahead to 2:22 if you are bored by the introductory economic details.

    If you’d like that in a static picture to gaze at for a while here is the chart. I cannot account for the difference between World Bank data and IMF data. Stats.Govt.Nz uses IMF data and Hickey cited them as his source. If you think the government and Hickey are in error, you best scribble a few notes to them and set them straight.

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  17. So… not ONLY are we getting more unequal, we are getting poorer in terms of GNI per capita.

    Yet the people trust John Key, the high powered FOREX broker who came back to NZ with a larger amount of money than he was paid, after working in the industry that gives us this…

    http://www.ft.com/intl/cms/s/0/a296da48-9579-11e3-8371-00144feab7de.html?siteedition=intl

    http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/10623966/Bank-of-England-drawn-into-forex-rigging-scandal.html

    http://www.bbc.co.uk/news/business-26041039

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  18. @JM.
    Wow, you regard Bernard as am economist from whom you get your opinions.
    Excuse my laughter. He is a journalist, and not a bad one. He is certainly not a highly qualified ecomomist as you appesr to regard him.
    And yes, my economic qualifications are much, much, higher than his.

    @bjchip.
    “we are getting poorer in terms of GNI per capita”.
    You appear to have a most peculiar view of reality if you can manage to come to this conclusion after seeing the numbers I have shown you.
    When I was at school 30,030 (the GNI/capita at PPP in 2012) was greater than 23,370 (the GNI/capita at PPP in 2004) When the figure in 2012 is greater than the figure in 2004 most people would say we were better off, not “poorer” as you appear to think.
    Your comprehension of numbers, and economics for that matter, is about par for the Green Party MPs I’m afraid.

    This discussion is, of course, far away from the logic(?) that the original poster was arguing. To say that 48% of the population don’t think their income is high enough is not evidence at all that people are worse off than they used to be.

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  19. “my economic qualifications are much, much, higher than his”

    Well I suppose you expect us to take that on faith, but congratulations on your virtually contentless non response response.

    You cite nothing to refute what a publicly recognized authority has stated, and expect readers to believe assurances from a self professed expert masquerading under a pseudonym.

    If readers have any doubt about this poseur “expert”, they can consider what Treasury.govt.nz has to say on the subject. ““The average income of New Zealanders, as measured by real GDP per capita, is currently similar to its level in 2004.” (source) Must be the blokes at Treasury also do not have qualifications as high as our dear Alwyn’s. Alwyn is positive we are doing better. In fact, he can point to the same dataset and claim that NZ citizens are twice as rich now as we were in 1994.

    Delusional. But no doubt well paid by NZ’s 1%.

    Sorry mate. It was a cheeky try though- I’ll give you that.

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  20. Sorry, I am paying attention to the real world, not whatever you are using.

    GNI per capita peaked in 2003. The money is flowing out, the country is exsanguinating through debt and foreign owners collecting the fruits of our labor.

    A lot of the debt is mortgage interest and the legally advantaged income of owners who rent their houses out. Do THAT and the mortgage payment is deductible… the foreign bankers love that bit. Stiglitz NAILED this and you seem to think that the colonization process is just wonderful… well it is, but one has to consider who it is wonderful for.

    The people of the country, apart from the 1 percenters are getting poorer. The foreigners and the 1 percenters are better off. The environment of the country is being destroyed, the climate of the planet is being destroyed and the future of our children is being sold.

    That’s OK because those things don’t count. This is National’s notion of a good deal for New Zealand.

    People who don’t know any better are lied to and misled by people who do not care much WHAT happens to the country itself, or to future generations as long as the money is right. YOUR version of our economy can’t grow any more, that’s why assets had to be put on the block. I doubt you really understand why that happened.

    You claim to be an economist. I believe it, as such attitude and comprehension problems are hard to come by without the “benefit” of that formal discipline. There ARE a few economists I respect… Stiglitz, Keen, Stern and a few others…

    That’s it though. Real money represents work done. Your money can’t buy anything from me.

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  21. It was a nice close and flourish. There are a couple of good sound bitable lines in there for the evening news. So something like this is the spine for the economic narrative.

    Next perhaps you have to go after the apathy factor by making political gatherings fun. Almost as if they are celebrations for progressives, and the political stuff is kind of a brief sharp garnish during gatherings of joy. Nobody likes to attend meetings with grave messages that everyone has heard before and the prospects of progress seem so out of reach. But if there is no joy, there will be no building collective energy. Alinsky’s sixth rule is: “A good tactic is one that your people enjoy. If your people are not having a ball doing it, there is something very wrong with the tactic.”

    In those gatherings we collect contact info for a social network like the one Obama’s geeks built as described in the book “Victory Lab”. We then build outward to the voters who are persuadable. The key innovation is to profile voters and tailor messaging to them based on those profiles. This uses standard data mining techniques that US marketers use that can for example identify when a young couple is likely expecting a child before their relatives do.

    The literature and vision provides the backbone to the victory, but it is incorporeal. Without the arms and legs of a smooth running and technically adept campaign organization, we shall not deliver election results Greens can achieve.

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  22. Anyway, at least dbuckley understands that GDP per capita is going up as GNI per capita is going down.

    I do? I’m not convinced that I understand it, or indeed if it is even important.

    What I do understand is that New Zealand’s GDP per capita relative to the OECD average has been falling for a very, very long time. Since 1950, our GDP per capita relative to the OECD average has fallen from being 60% above average to 80-something percent of the average. That is a huge and continuing fall.

    This thread (and, unfortunately, many others) ticks the boxes of Green Party thinking that show the mark has been missed. Any thread with the words “neo-liberal” or “1%” or, even better, both, is rearranging the deckchairs on the titanic. By the time neo-liberalism entered the Kiwi vocabulary, we had had decades of decline. Talking about 1970 being a benchmark is equivalent to putting one’s head in the sand.

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  23. I don’t give a flying, um, thing for GDP or incorporeal backbones or any of the pseudo intellectual crap you lot are promulgating. What I know is this. Once I was a highly qualified electronics tech contributing to the wealth of this country and being paid well for the privelege. Since a serious motor accident while on my way to work my injuries were misdiagnosed and therefore not repaired, I have been abandoned by ACC and made to feel like a cap-in-hand Oliver begging WINZ for a little more. After 17 years living on a ‘benefit’ cunningly disguised as abject poverty and being treated like a third class leprous parasite I have had a gutsful. If this is the way our fair land treats a law abiding, hard working citizen when he falls on hard times I can only say a heartfelt “BOLLOCKS” to the whole sorry business. Not only do I get considerably less than the minimum wage I miss on on tax reductions as well. The government simply alters the gross amount of benefit so that the nett works out the same!!! Despite my injuries there is work I could still do. However as I was injured at age 42, had little training in alternative work, and no experience when I did retrain I am still waiting on replies from well over 200 CV’s I have posted out. Get real folks, while you debate the finer points of economic theory the 48% are sliding deeper into the sewage pond. As for those who say, “I worked hard for my money;” so did all your employers on the shop floor, except their hard work only grossed a measly $13.75 per hour. By the way if you think I am nowt but a grizzler I am actually a good humoured happy go lucky sort of chap. Yes money is very tight but I am alive and have family and friends who love me. I simply use the factual story of my own experience to highlight the 48%’s need to be heard, taken seriously and not to be treated as mere statistics in a rather snotty debate on matters fiscal. Don’t even get me started on over-priced real estate and undemocratic Reserve Bank shenannigans… Peace be on you all!

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  24. @John Messerley. You tell us that Treasury have said

    ““The average income of New Zealanders, as measured by real GDP per capita, is currently similar to its level in 2004.” (source)

    Then you give a supposed source which, if followed, points us to an OECD definition of real GDP. If you have a source for your supposed quote why didn’t you bother to give it?

    @bjchip.
    “GNI per capita peaked in 2003″ That statement is simply not true.

    @dbuckley.
    Now you tell us that you never made the (false) statement being attributed to you. What you do say makes sense. The ridiculous statement that “real GDI/capita is falling” was the statement that I said was false. At least you don’t promote that stupid proposal.

    @Jackdaw.
    Why do you accept, and promote, the stupid claim that
    “the 48% are sliding deeper into the sewage pond”?
    Is it really necessary to push something that doesn’t justify it when all that is being shown by that supposed statistic is that 48% of people say they want more?

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  25. My apologies. I did not test the link and must have pasted the wrong one.

    Here is the the link to the 25 November 2011 briefing to the incoming minister of Finance. Nonsense you claim- we are doing great! Just look at WorldBank’s data between 2004 and 2012! “GNI/capita (PPP) 23,370 30,030″ Wow- you think there was a 28% increase in GNI per capita. Yet Treasury claims our GDP was barely back to 2004’s GDP per capita.

    It is yet another indication that you have a warped view of economics at variance with those in the press or at Treasury. That doesn’t mean that you are wrong. Many thought that Greenspan was horribly wrong about his religious belief that markets are self aware and require no regulation. You appear to be of that religious belief, and cherry pick facts and statistics to fit those beliefs.

    Me? I’ll stick with the data and mainstream economic analysis. Given that payments to international financiers is almost 8% of GDP, the treasury statement is in line with Bernard Hickey’s that GNI is headed in a downward trajectory.

    It leaves your opinion as an outlier. Thanks for playing.

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  26. @dbuckley You make it seem that there is no concrete proposals being discussed in these posts. Jan made a couple in her post. During the last few weeks, I have outlined some approaches that are worthy of discussion. For example, I don’t recall Greens either here or elsewhere in the world enumerating a plan to use carbon taxes to encourage repatriation of middle class jobs to one’s country.

    The common ground we have is that the country’s trajectory is headed in the wrong direction and that the purchasing power of the Kiwi consumer needs to be addressed. If you have something other than generic criticisms of the proposal I outlined, I welcome your comments.

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  27. Alwyn – I refer to this chart.

    https://www.interest.co.nz/sites/default/files/embedded_images/image/gdp_vs_gni_1.gif

    I see the World Bank has it different, yet most New Zealanders are still worse off.

    I refer to the reality of inequality, something specifically promoted by the policies of theft you seem to favor.

    http://www.teara.govt.nz/en/graph/23813/distribution-of-household-wealth-2001

    For MOST of New Zealand there has been a significant decline in their resources and well being, and that is a problem which you are so far ignoring entirely.

    For MOST New Zealanders the money being counted in the GNI per capita (or GDP per capita or anything ELSE per capita) never appears in their wallets. The GDP mostly being 1 percenters creaming it while everyone else tries to cope with the gross pollution of their environment behind the drive to find more export income (to pay for our importing every last thing that we consume).

    The distortion of Ricardo that drives this seems common to Labour and National at this point, but it IS wrong.

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

    The export of our increased “production” as interest payments and dividend payments is just as wrong. Inviting foreign capital to NZ to buy up assets and reap profits is STUPID. Only capable of being regarded as good by free-market-fundamentalist economics. Only benefiting the wealthy. It is a form of re-colonization that Stiglitz warned of and National is proud of.

    So should I trust a former Foreign Exchange Banker

    http://www.bbc.co.uk/news/business-26041039

    or a Nobel Prize Winning Economist

    nobelprize.org/nobel_prizes/economic-sciences/laureates/2001/stiglitz-lecture.html

    decisions, decisions.

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  28. @dbuckley You make it seem that there is no concrete proposals being discussed in these posts. Jan made a couple in her post.

    Ok, lets play.

    Jan says: “We could raise the minimum wage” [assuming, for a moment that "could" implies a "concrete proposal"] Well, I’ve been arguing that for a while, usually using the terms “frequently and aggressively”. Though Jan is arguing it from a (hard to find the right term, so apologies if this isn’t quite right) from a social standpoint; I argue it that it from a business perspective.

    Jan says: “strengthen employment rights so everyone gets a fair return for their labour.” This just leads to the question of what a “fair return” is. I’ll return to this point in a subsequent posting.

    Jan says “We could set national water standards and fishing limits so people were able to feed themselves from our water ways again.” No real comment on this at this time.

    Jan says: “We could regulate our supermarkets so they don’t mark-up fruit and veges by 500% while breaking even on chippies and sugary soft drinks.” We could regulate the entire supply chain. I’m far from sure its a good idea though. Frankly, I’d rather have government charges subject to Commerce Commission regulation.

    “We could ensure everyone who is not able to work has enough to look after themselves and their children.” Again, look back through the history, you’ll see I’ve argued in favour of this many times. It has even led to me being called “left wing” – urgh! (I’m not a right winger either).

    Jan says “We could offer low interest loans on solar and ensure people get a fair return on the power they generate, so costs are reduced” – Yeah, this policy is a mess, and will result in a wealth transfer, with the poorest paying the price, so I’m not in favour of this policy until it is fixed.

    So nothing earth-shattering here, and more to the point, nothing that hasn’t been discussed many times already, and really pointedly, nothing that will actually improve New Zealand’s lot.

    We’re in an election year, and really, nothing has changed since the last election. If you fancy seeing how exciting that isn’t, have a look at the last post in this general thread from July 2011. This is about exactly the same issue as in this thread…

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  29. If anyone wants to speak on Jan’s proposals they are more than welcome.

    @dbuckley Do you have any specific comments on the proposal I made about carbon taxes to serve the dual purpose of emissions control and repatriating middle class jobs?

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  30. Mr. Messerly,
    could you please define the upper and lower classes in modern New Zealand context, so that the type of jobs to be repatriated can be understood?

    Many thanks.

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  31. I would think, since he is describing repatriation of “middle” class jobs, that you’d at least want that defined as well ;-)

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  32. BJ
    You’re right of course, but I thought if we had definition of the outsides, what was left would be the middle :-)

    Coming from a country that has Royalty, Upper Class, Middle Class and Working class, essentially defined by your heritage, I felt I needed to understand where he was coming from. In good old Blighty, any one who didn’t work for an hourly rate (working class), or live on inherited land and cash (upper class) was defined as middle class. So Lawyers, doctors, shop keepers, bank managers, etc., fill the traditional definition, and I don’t think that’s what he was going on about. Do you BJ?

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  33. It is true a decline started in the 1970s, perhaps because we stopped having a guaranteed market in the UK and we did not adapt to having our main exports anything but agriculture products.
    What I find interesting is the fact that “liberal economic reforms” did not stop the decline in GNI/capita, and if anything it accelerated…..along with our income inequality….which was at the heart of Jan’s post.
    That, to my mind makes the reforms a failure…and today is the International Day for Social Justice…. NZ in this regard is going backwards.

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  34. The semantics of the term “middle class” that is relevant to this discussion has to do with sufficient income to sustain a robust consumer economy. I ran across an IMF paper written a year ago that defined middle class as those people with salary and benefits sufficient to devote one third of their income to discretionary spending.

    Given the context of the discussion, I don’t see the utility of defining a category “upper class”. An optimal consumer economy would maximize the number of people who had at least the middle class level discretionary spending. In the optimal scenario, there would be few if any members of the “lower class” or whatever you want to call it.

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  35. OK, I’ll forget upper and lower classes, let’s get down to the Middle Class properly then.

    What is the definition of “sufficient income to sustain a robust consumer economy”?
    After all, it’s rather difficult when you define one indeterminate phrase with another!

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  36. My trial balloon number was that if Kiwis had sufficient salaries and benefits that one third of their income was available for discretionary spending, that this would be sufficient for a healthy economy.

    In the Christchurch case of the Elite Trailer worker having their manufacturing job exported to China, I stated that a middle class job was being lost- and that by eliminating expensive Kiwi Labor that this company would have an advantage over their competitor Briford who many here would probably agree is doing the right thing by refusing to manufacture in China. The problem I was pointing to is the cannibalization of middle class purchasing power. The welder’s salary according to Careers.govt.nz is from $47K to $57K. So if we accept the Government’s identification of $30K per year as the minimum required for necessities, then the welder had at least one third of their salary available for discretionary spending. So what jobs will be left after the rebuild is over. Plenty of jobs at McDonald’s, janitorial positions and so on. What I was pointing out was that without that discretionary spending, no one will have any money to spend on a trailer.

    It has been, and continues to be a death spiral.

    That is where we stand. Many think the forces at work are indeterminant but I don’t see that we need to be especially mystified by the dynamics in play, or the vocabulary necessary to describe it.

    Anyway, my proposal in a nutshell was to propose that countries increasing their emissions would be subject to a carbon tax in order to pay the enormous hidden costs of climate change. So in such a world, the Elite Trailer company would not get rid of his Kiwi workers, because the Chinese manufactured trailer would be more expensive.

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  37. S’truth John, though the defense of the middle class here should not HAVE to depend on the Carbon Addiction of our trading partners.

    Yet I understand the reason it works for us and have proposed it often enough, though not with such precision, myself. You’re on a winner I think. Have you suggested it to the party? I don’t recall you being in the economics discussions.

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  38. defense of the middle class here should not HAVE to depend on the Carbon Addiction of our trading partners.

    It doesn’t have to. The point is that many Euro countries and some of our closer neighbors- especially those threatened by rising sea levels- would go more green if they didn’t have to slit their economic throats to do it. But if there are green economies that give substantial economic advantage to products from countries that have higher production costs because they are green or at least have their emissions heading in the right direction, then there is a practical path for our allies in those other countries to make the right economic development policy decisions.

    As for me, I have been out of the country for the last 10 years. I’d be happy to help out where I can, and would like to be more involved when I get us all more settled in- big family, and lots of moving parts make that a nontrivial work item.

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  39. Ayup… we moved here from Pasadena (JPL) in Sept 2003 so I understand how absurdly confused that process is. Glad to have you back. Your 11:15 post has been forwarded to the economics policy lead of the Greens verbatim. That discussion is coming to a conclusion and I felt some urgency to push it forward. One can never have too many good ideas.

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  40. John, despite some searching I cant seem to find what your proposal is, other than the note above stating “countries increasing their emissions would be subject to a carbon tax”. Pointer please?

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  41. Graham notes:

    It is true a decline started in the 1970s…

    No, it didn’t. The decline continued through the 1970s. The decline had been in place for decades prior to the 1970s.

    You could argue that the economic reforms made the decline less bad, or more bad, or no different. But you cant argue that the economic reforms started the decline, any more than you can say the UK joining the (what was then called) common market started the decline.

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  42. @dbuckley Sorry- I now can see how hard it is to find posts on this site. The proposal came up in the context of this Thread. I think I started describing it first in the note beginning “Let’s be practical and admit the ETS is not changing emissions behavior.”

    As an aside, I favor a more complicated way of doing the tax using an auxiliary “Commons” currency, but it can be omitted for simplicity sake. What I like about the variation is the political feature of enhancing longevity of the policy when conservatives are in power. It is far far politically easier to repeal taxes than it is to take away money in people’s bank accounts.

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  43. Ok, ETS, what a great place to start.

    I’m anti-ETSs, for a number of reasons.

    Firstly, as there is no exchange where one can swap CO2 for money at any price, I find ETSs vaguely immoral, about in the same way as indulgences. Perhaps a better way to think of an ETS is the issuing of a “licence to pollute”. Pay the money, and you may pollute away. As an environmentalist, I think this sends entirely the wrong message.

    Secondly, ETSs lack efficacy – though, as BJ has pointed out more than once, that could be fixed by the simple expedient of upping the cost a magnitude or two. If one were to use the ETS as a cash generator, that would (in theory, anyway) certainly raise the level of funds an ETS could generate. This perhaps goes directly to your statement “Let’s be practical and admit the ETS is not changing emissions behavior.” But I’m not actually happy about the ETS as a “funds generator”; its reason to exist is to reduce planetary damage.

    Thirdly, the cost of any ETS will ultimately fall upon the consumer. Sure, you hear that ETS “will hit business where it hurts”, but that just isn’t the case. The costs just go down the line.

    The only variation of this is where business A figures out that it can use ETS to its advantage over business B when they are in competition. B is doing business as usual, and the additional costs from ETS fees has caused his products to cost 7% more to produce, so the retail price goes up by (say) 22%. A figures out he can do it better, with a cost price increase of jut 1.5%. So the retail price of his product goes up. But not by the expected 6%, but by 17%. So the consumer loses big time. The costs are, as ever, passed down the line.

    Sidenote – those consumers are the voters, and the voters currently aren’t on board with saving the planet. Thus try to do anything remotely workable that costs money, and the scheme will get trounced by the next incoming national government. This is the lesson from history. Politics cant get too far ahead of the voters.

    Fourthly, as the consumer bears the brunt of the cost, the manufacturer, producer or importer or whatever has no practical incentive to alter behaviour in any way. Back to point 1, its a licence to pollute, and his customer is willing (if not happy) to pick up that cost. The only incentives that work for business are those that reduce costs, and thus add to profits and dividends. I thus have an (unproven) suspicion that tax breaks to improve environmental behaviour would work much better than costs, as breaks benefit those who can make a difference and encourage them to do so; costs just get passed on down the line.

    Fifthly, the price signalling arrangement that an ETS is supposed to bring to a consumer only works if the consumer has choice. Amongst the largest embodiments of carbon to Mr Average are power and transport, and in a choice-free scenario all they can do is opt to consume less. Many studies have shown how inelastic electricity consumption is, and I suspect that without viable alternatives, transport is about the same.

    Sixthly, the financial cost of an ETS falls on those least able to afford it. The less well off typically have older cars with poorer fuel economy, live in houses with zero insulation, and use warehouse-supplied resistance heat.

    So no, I don’t like ETSs.

    We have to figure out how to change emissions by, well, changing emissions, not by using a derivative in the hope that a price signal will fix everything. So if one were a government with power, one might rearrange the electricity generation so that either the consumer has choices (green energy, green tariffs) or that overall one has a less emissiony generation mix.

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  44. Ok, so we both agree we think ETS is not a good solution. But that’s off topic. It only happenned to be the context of an alternate economic solution that is on topic because it is aimed also at addressing the problem that NZ is no longer the land of plenty.

    So if you want to talk about alternative economic proposals in this thread, let’s stay focused.

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  45. There is only one reason to use the existing ETS, which the Greens almost refused to support at all back when it was made law in the first place because WE preferred tax to ETS then, and still do. That reason is that it is ALREADY law and altering the terms does not require a lot of parliamentary legerdemain. It can be done before Russel Norman is even made a Minister :-)

    That’s its advantage. The second advantage is that once the hammering on that front begins the alternate proposal we PREFERRED will look a lot better… to National and possibly to Labour as well.

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  46. So, BJ, taking that list of six points above, apart from a slight rewording of point one, below, in what way does a carbon tax not fail in exactly the same way as an ETS?

    Replace “Perhaps a better way to think of an ETS is the issuing of a “licence to pollute””. with “Paying carbon taxes exonerates a company from any concerns about carbon emissions”.

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  47. John – that would require discipline… Are you actually suggesting that we control ourselves? :-)

    What you suggested –

    “Let’s look at the GST. What if there were a surcharge on products from countries that are increasing their emissions”

    – will work. Whether we can get it passed I do not know. The ETS is in place and could be altered in an hour.

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  48. The thread has become an interesting dialogue…I thought I might add my ha’pennies worth (and if I exaggerate its value, woe is me…)
    To compare NZ and the rest of OECD with on e measure is limited, especially if we are comparing with a post WW2 as Europe and Japan were still very much recovering from that event in economic terms (and yes, the USA was relatively unscathed economically as was NZ).
    If we wished to look at the NZ economy since the whalers (c1810) we might see it as almost always reliant of extracting natural resourses – if not plundering them. We have had insufficient indigenous/domestic capital in a classical economic sense, with much of it being (still) imported. We have boomed when commodity prices have been high….and most of our busts (except for 1987 and 2007) happen when commodity prices fall.
    What I find interesting, and why I look to 1984 as a water-shed year is the rise in inequality both as a measure of income and asset distribution in a significant sense started then and in terms of mind-set around egalitarianism changed…. and that in part was at the heart of Jan’s original blog. We are more unequal now, yet one of the myths presented by Douglas, ably supported by many within Treasury (eg Graham Scott), the RBNZ (eg Don Brash), the Business Roundtable (eg Roger Kerr) to name a small number was that we would all prosper and become wealthy but there would be a “lost generation” (quoting the 1987 briefing paper from Treasury to the incoming government). Sadly, our child poverty statistics since then suggest they missed the “s” after the word “generation”

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  49. Gentlemen, you are off topic.

    Not so; there are multiple topics being discussed simultaneously. And Frogblog has just logged me out, so I have some retyping to do :( But hang about, it’ll be worth it!

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  50. Let’s look at the GST. What if there were a surcharge on products from countries that are increasing their emissions. Say that surcharge was proportionate to the damage caused to CO2 sinks (deforestation), or the increases in Greenhouse gas emissions. Say these Emissions surcharges were significant enough to cause consumers to buy NZ products or those produced by other well behaved Green economies?

    I have a natural dislike of complicated tax systems. Ideally, I’d like us to adopt a single transaction tax, replacing all other taxes. Perhaps [like this]. In one fell swoop we get to fire almost everyone at the IRD, and make all the tax lawyers redundant, and reduce the costs of compliance for business. What is there not to like?

    But that is a digression. New Zealand’s GST implementation is (perhaps almost naively) simple, with a single rate that applies to everything without exception. By way of comparison, the UK’s system has multiple rates (including not one but two that are effectively 0% but have to be accounted for differently) and it is an absolute nightmare, and a continual source of employment for tax experts and the courts [example].

    So, on principle, I’m strongly against complicating the GST system.

    Furthermore, as you are applying a differential tax to foreign goods only, and not to NZ made goods, this looks to me like a trade tariff by another name, and such things bring forth the ire of the WTC.

    Putting both those concerns aside, let us consider what would happen if we did vary GST rate on foreign goods by pollutant.

    The first observation is that businesses are generally immune to GST; the impact of GST falls on consumers, so there will be no change in business behaviour for goods it buys for its own use.

    As this measure will have an impact on consumers, its probably worth putting it against the list of objections I have to ETSs above. The only objection that may not generally apply is number 5, as generally, goods are mostly not identical and will thus have differing additional taxation impacts. Other than that, all the other objections apply.

    But all of this is just foreplay. The real issue is how consumers will perceive this taxation behaviour by their government.

    This will be perceived not as “jobs for Kiwis”, but brand discrimination. I can buy a New Zealand made good at price X, yet the internationally recognised brand, which the customer will perceive as superior, is even more expensive in New Zealand now than it was. If the Kiwi brand was perceived as equal or superior, then the consumer would have bought it anyway.

    So ultimately, it doesn’t matter if such a scheme would work or not. What matters is that it would not be acceptable to the people, and thus it, and any party implementing it, would be “gone by lunchtime”.

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