I spoke with independent economist David Skilling about a presentation he gave to Treasury on Wednesday about New Zealand's productivity catastrophe over the last 15 years, and what to do about it
While I appreciate he is acknowledging the problem; is he also unable to name it?
Ie. the ‘reforms’ of rogernomics and ruthenasia stopped public credit creation for public wealth investment. Leaving private banks the near monopoly of credit creation in our economy; which they push into real estate, and higher costs of living/business.
When do we start talking about using public credit/sovereign credit for investing in gross capital creation in Nz?
Based on his treasury presentation, I’m worried that mr skillings approach leans more towards a dangerously US centric military Keynesianism than the strategic national development Nz needs.
On the military sovereignty side, Ukrainian Kiwi academic Reuben Steff of Waikato/EU, suggests a strong neutrality - which would also make sense on a trade level in this changing (and changed) world
My feeling is that we keep looking for someone else to do the borrowing. Treasury / government would like the private sector to borrow, while the private sector would like the government to do more (well not everyone). We have the results in that if neither borrow the economy stops. David’s comment that the govt ran 15 years of surplus, he is not mentioning the private debt that was doing the work during that period.
This conversation should be mandatory listening for every politician, business director and student at every level! However, the punch line at the end is the most telling problem. Getting the mass of voters to address and change the inequity of tax-free(ish) leveraged land & property investment and looking to re-invest in R&D, SME's etc.
When we listen to a Luxon of this country say 'I'm rich so I'm sorted!', most people say, "I want some of that too!' When they realise that his wealth is largely from property buying and selling, they see it's easy, bank's fall over themselves to lend against land & property, then they go in that direction. Virtually no politician will stand on an unearned wealth tax & CGT policy because in a three year term government, they know it's a vote looser and frankly too much trouble because MSM is too wedded to the right-wing to ask searching questions about our terrible productivity and investment record by NZ Corp.
So what to do?
Keep banging on to voters that the gravy train of land & property unearned wealth has stopped and their personal wealth will continue to decline if they don't vote for parties that will change the tax regime in NZ (eg the TOP's of our politics!)
And get off their lazyboys and look to the harder work of investment in NZ companies through, for example Sharesies and the like. The returns if done effectively far outway potential property value growth.
Thanks, Bernard. I wonder whether some of our politicians etc do not want to look at alternatives for our economy and change the Northstar because they are the ones that are benefitting from things as they are at the moment!
A few things surprised me with this mini-hoon and the Treasury talk.
Lots about a changing world and risks. Yet the only mention of climate change and environmental limits was by the Treasury host giving a summary of questions that there wasn't time to ask (or was it just a low priority in economic discussion?). Yet climate change, the accelerating decline in energy return on energy invested, the breaching of at least 6 of 9 global biophysical thresholds, are coming our way big time. Increasing inequality and low wages featured very little in the description of where we are and what changes are happening.
The data showed (and Bernard pointed out) that the last thirty years or so have been an economic failure for Aotearoa. So it was good to hear talk about a bigger role for government being advocated - notwithstanding the Treasury host asking a question about how that lined up with Hayek's views - even if the subtlety of being a currency issuer was glossed over in favour of some hand wringing over public debt and lack of capital generally. To be fair David Skilling explicitly commented that Aotearoa was an exception in terms of the level of public debt in advanced small economies.
Bernard, you should have asked him why he is based overseas and specifically why in The Netherlands? I believe he would achieve so much more for New Zealand if he would be based here!
Brilliant, Bernard. Thank you!
“Net debt was about zero”?
Ie. net investment was about zero?
While I appreciate he is acknowledging the problem; is he also unable to name it?
Ie. the ‘reforms’ of rogernomics and ruthenasia stopped public credit creation for public wealth investment. Leaving private banks the near monopoly of credit creation in our economy; which they push into real estate, and higher costs of living/business.
When do we start talking about using public credit/sovereign credit for investing in gross capital creation in Nz?
Based on his treasury presentation, I’m worried that mr skillings approach leans more towards a dangerously US centric military Keynesianism than the strategic national development Nz needs.
On the military sovereignty side, Ukrainian Kiwi academic Reuben Steff of Waikato/EU, suggests a strong neutrality - which would also make sense on a trade level in this changing (and changed) world
https://link.springer.com/book/10.1007/978-981-96-0282-7
My feeling is that we keep looking for someone else to do the borrowing. Treasury / government would like the private sector to borrow, while the private sector would like the government to do more (well not everyone). We have the results in that if neither borrow the economy stops. David’s comment that the govt ran 15 years of surplus, he is not mentioning the private debt that was doing the work during that period.
This conversation should be mandatory listening for every politician, business director and student at every level! However, the punch line at the end is the most telling problem. Getting the mass of voters to address and change the inequity of tax-free(ish) leveraged land & property investment and looking to re-invest in R&D, SME's etc.
When we listen to a Luxon of this country say 'I'm rich so I'm sorted!', most people say, "I want some of that too!' When they realise that his wealth is largely from property buying and selling, they see it's easy, bank's fall over themselves to lend against land & property, then they go in that direction. Virtually no politician will stand on an unearned wealth tax & CGT policy because in a three year term government, they know it's a vote looser and frankly too much trouble because MSM is too wedded to the right-wing to ask searching questions about our terrible productivity and investment record by NZ Corp.
So what to do?
Keep banging on to voters that the gravy train of land & property unearned wealth has stopped and their personal wealth will continue to decline if they don't vote for parties that will change the tax regime in NZ (eg the TOP's of our politics!)
And get off their lazyboys and look to the harder work of investment in NZ companies through, for example Sharesies and the like. The returns if done effectively far outway potential property value growth.
Thanks, Bernard. I wonder whether some of our politicians etc do not want to look at alternatives for our economy and change the Northstar because they are the ones that are benefitting from things as they are at the moment!
A few things surprised me with this mini-hoon and the Treasury talk.
Lots about a changing world and risks. Yet the only mention of climate change and environmental limits was by the Treasury host giving a summary of questions that there wasn't time to ask (or was it just a low priority in economic discussion?). Yet climate change, the accelerating decline in energy return on energy invested, the breaching of at least 6 of 9 global biophysical thresholds, are coming our way big time. Increasing inequality and low wages featured very little in the description of where we are and what changes are happening.
The data showed (and Bernard pointed out) that the last thirty years or so have been an economic failure for Aotearoa. So it was good to hear talk about a bigger role for government being advocated - notwithstanding the Treasury host asking a question about how that lined up with Hayek's views - even if the subtlety of being a currency issuer was glossed over in favour of some hand wringing over public debt and lack of capital generally. To be fair David Skilling explicitly commented that Aotearoa was an exception in terms of the level of public debt in advanced small economies.
Bernard, you should have asked him why he is based overseas and specifically why in The Netherlands? I believe he would achieve so much more for New Zealand if he would be based here!