High migration and rising land values disguised average growth in real GDP per hour worked of 0.35% per annum since 2012; Per capita GDP down 2.1% in last six months
With banks all set to continue to make lots of money out of our housing market with bits tacked on, what do you make of HSBC's decision to pull out of retail banking in NZ?
"HSBC is no longer accepting new applications for home loans including top-ups of existing loans, term deposit applications, account opening applications, and debit Mastercard applications."
Speculative housing is a dangerous game that ultimately hurts our country. I ponder often how to get Kiwis to shift to a better model of wealth creation and distribution. AI might be a nice spanner in the works.
Thanks for the incredible insights Bernard. You’ve got me thinking about what action is needed.
Where does one start? It's worse than basically nil growth since 2012. Its nil growth since 1996. More than one generation. I honestly can't see anything changing it. I've given up. Skilled people leave and we bring in equally skilled people from poorer countries. The annual rate of immigration at 2% of total population (highest in the OECD) means that within 35 years half of us will be represented by individuals who have emigrated from those other countries. Less than 50% of New Zealanders living in New Zealand will have been born here and of those 50% that have many will have just one generation of Kiwidom culturally behind them. And that means we'll change in many ways quite profoundly. Nothing wrong with an explicit choice to do that in order to make a better society - and it may - but to do so simply to continually elevate the price of houses is the path to a dysfunctional society.
Yes, the immigration trick worked for America back in the day, but the path to wealth then was actual hard work not housing. We absolutely need a reset on that idea - regardless of whether we can handle the increased immigration or not
Hard work - yes probably, but even more importantly, real work. T he world of workers has become so degraded with a heap of bul***it jobs that are either paid peanuts or alternatively huge salaries for doing nothing at all beneficial
The truth is, the flawed ideology of our 2 major parties is serving the elite at the expense of the majority, and will continue to do so unless we change it. MMP gives us the opportunity to redistribute power away from Lab/Nat, every time we vote, imo it is time to use it to bring about the change we desperately need. There are some really good options in the left bloc. If we continue to support the same parties every election, we will get the flawed, divisive society we have now.
the real crisis in the making is our balance of payments deficit - for the three years ending this current financial we will have run up a total of $50billion in debt across the border to fund our collective lifestyle - the biggest problem with all of this property price inflation is that it has created a false wealth effect - the property speculators think they are rich but it is smoke and mirrors wealth our grossly over valued exchange rate allows them to run up debt against the collective to pay for their expensive imported cars and shifting money off-shore and having expensive foreign holidays that as a nation we can not afford. Our big problem is that the least productive part of our economy has captured a vast proportion of our nominal domestic wealth and is spending like a drunk on a bender. The parlous state of our trade deficit should be self rectifying by causing the exchange rate to drop to about 1 NZ peso to 20 US cents. Unfortunately all of the borrowed money flowing into our economy has the effect in the short term of bidding our dollar up. At some point in the very near future reality must come home to roost. Expressing out foreign borrowings as a percent of GDP is a spurious correlation as GDP is meaningless when it comes to paying our bills at the border - all of the recent disasters have actually increased GDP but at the same time have caused a drop in earnings at the border while increasing spending on imports. Our real crisis is that a large part of the NZ economy is deadweight cost on the productive sector - we cant afford our wealthy as their wealth is a mirage.
TO ILLUSTRATE THE ISSUE SUCCINTLY - OUR ANNUAL TRADE DEFICIT = 50% OF OUR ANNUAL EXPORT INCOME - AS A NATION WE ARE SPENDING 150% OF WHAT WE ARE EARNING AT THE BORDER!!.
It's funny as we have a lot of (renewable) energy potential. We are just very poor at converting that energy into productive output. Plus we import too much energy (fossil fuels) for our industry and transport sectors. Essentially to support an unsustainable "kiwi dream" lifestyle. It's a vicious cycle as the pollution from our production (methane) and the energy (coal, oil) used to create this production is also tallying further costs in emissions and further imported offsets to cover those costs. The fossil fueled sectors - farming and transport - are externalizing their costs to society.
Really enjoyed this longer read. Seems as if there is better ways to measure and manage our economy but it seems as if we can't put down the sugary lollie pop of housing.
Personally I really like the treasury's living standards framework and He Ara Waiora although they could be hard to measure well.
Bernard suggest you also look into the correlation between our low pop density and particularly low urban density and low productivity. I think you will find there is a causation effect there. See: https://worksinprogress.co/issue/the-housing-theory-of-everything
This is a question I have been asking myself for many years:
why do we need growth?
To grow we need to consume more and as we are quickly finding out our planet does not have infinite resources. Admittedly we consume less if we do it more efficiently.
Humans consume about 70% of the food resources on the planet. World population is expected to peak at 8 billion. Even at the present rate of growth the arithmetic doesn’t look good.
I would prefer you had a proper holiday and left the Kaka in the NZ forest for at least 3 more weeks. We all (subscribers, BH and LG will all benefit in the hectic and important times coming up.
I've been wondering if there is some learning curve equivalent as a comparison for how "bad" the NZ government is at turning policy into better productivity vs overseas examples.
With banks all set to continue to make lots of money out of our housing market with bits tacked on, what do you make of HSBC's decision to pull out of retail banking in NZ?
"HSBC is no longer accepting new applications for home loans including top-ups of existing loans, term deposit applications, account opening applications, and debit Mastercard applications."
Speculative housing is a dangerous game that ultimately hurts our country. I ponder often how to get Kiwis to shift to a better model of wealth creation and distribution. AI might be a nice spanner in the works.
Thanks for the incredible insights Bernard. You’ve got me thinking about what action is needed.
Where does one start? It's worse than basically nil growth since 2012. Its nil growth since 1996. More than one generation. I honestly can't see anything changing it. I've given up. Skilled people leave and we bring in equally skilled people from poorer countries. The annual rate of immigration at 2% of total population (highest in the OECD) means that within 35 years half of us will be represented by individuals who have emigrated from those other countries. Less than 50% of New Zealanders living in New Zealand will have been born here and of those 50% that have many will have just one generation of Kiwidom culturally behind them. And that means we'll change in many ways quite profoundly. Nothing wrong with an explicit choice to do that in order to make a better society - and it may - but to do so simply to continually elevate the price of houses is the path to a dysfunctional society.
Giving up appears maddeningly, the only sane option.
Yes, the immigration trick worked for America back in the day, but the path to wealth then was actual hard work not housing. We absolutely need a reset on that idea - regardless of whether we can handle the increased immigration or not
Hard work - yes probably, but even more importantly, real work. T he world of workers has become so degraded with a heap of bul***it jobs that are either paid peanuts or alternatively huge salaries for doing nothing at all beneficial
I really enjoyed that read, thanks Bernard. Now go and apologise to Lynn about your holiday distraction!
Wow, so interesting. Lots to ponder on there, thanks. And the skink is beautiful!
Lovely your encounter with the beautiful skink, Bernard, I bet it wished it had its camera with it
Two options
Emigrate
Get TOPS above 5%
A win for TOP’s Raf Manji in Ilam would set a cat amongst the pigeons! (Are we allowed to mention cats when talking about TOP 🤔)
The truth is, the flawed ideology of our 2 major parties is serving the elite at the expense of the majority, and will continue to do so unless we change it. MMP gives us the opportunity to redistribute power away from Lab/Nat, every time we vote, imo it is time to use it to bring about the change we desperately need. There are some really good options in the left bloc. If we continue to support the same parties every election, we will get the flawed, divisive society we have now.
the real crisis in the making is our balance of payments deficit - for the three years ending this current financial we will have run up a total of $50billion in debt across the border to fund our collective lifestyle - the biggest problem with all of this property price inflation is that it has created a false wealth effect - the property speculators think they are rich but it is smoke and mirrors wealth our grossly over valued exchange rate allows them to run up debt against the collective to pay for their expensive imported cars and shifting money off-shore and having expensive foreign holidays that as a nation we can not afford. Our big problem is that the least productive part of our economy has captured a vast proportion of our nominal domestic wealth and is spending like a drunk on a bender. The parlous state of our trade deficit should be self rectifying by causing the exchange rate to drop to about 1 NZ peso to 20 US cents. Unfortunately all of the borrowed money flowing into our economy has the effect in the short term of bidding our dollar up. At some point in the very near future reality must come home to roost. Expressing out foreign borrowings as a percent of GDP is a spurious correlation as GDP is meaningless when it comes to paying our bills at the border - all of the recent disasters have actually increased GDP but at the same time have caused a drop in earnings at the border while increasing spending on imports. Our real crisis is that a large part of the NZ economy is deadweight cost on the productive sector - we cant afford our wealthy as their wealth is a mirage.
TO ILLUSTRATE THE ISSUE SUCCINTLY - OUR ANNUAL TRADE DEFICIT = 50% OF OUR ANNUAL EXPORT INCOME - AS A NATION WE ARE SPENDING 150% OF WHAT WE ARE EARNING AT THE BORDER!!.
It's funny as we have a lot of (renewable) energy potential. We are just very poor at converting that energy into productive output. Plus we import too much energy (fossil fuels) for our industry and transport sectors. Essentially to support an unsustainable "kiwi dream" lifestyle. It's a vicious cycle as the pollution from our production (methane) and the energy (coal, oil) used to create this production is also tallying further costs in emissions and further imported offsets to cover those costs. The fossil fueled sectors - farming and transport - are externalizing their costs to society.
If we look at the list of countries that are more productive per capita, I suspect we'd see
-oil producers,
-industrial powerhouses, and
-tax havens.
Of those three groups, which would be the easiest for us to try and join?
Kia Ora JP,
Do you have some data to support your suspicions here?
Maurice
Any list, such as: https://www.worldometers.info/gdp/gdp-per-capita/
Thanks for that 😊
Really enjoyed this longer read. Seems as if there is better ways to measure and manage our economy but it seems as if we can't put down the sugary lollie pop of housing.
Personally I really like the treasury's living standards framework and He Ara Waiora although they could be hard to measure well.
Bernard suggest you also look into the correlation between our low pop density and particularly low urban density and low productivity. I think you will find there is a causation effect there. See: https://worksinprogress.co/issue/the-housing-theory-of-everything
This is a question I have been asking myself for many years:
why do we need growth?
To grow we need to consume more and as we are quickly finding out our planet does not have infinite resources. Admittedly we consume less if we do it more efficiently.
Humans consume about 70% of the food resources on the planet. World population is expected to peak at 8 billion. Even at the present rate of growth the arithmetic doesn’t look good.
Bernard and Lynne,
I would prefer you had a proper holiday and left the Kaka in the NZ forest for at least 3 more weeks. We all (subscribers, BH and LG will all benefit in the hectic and important times coming up.
Please, no posts for Three weeks!
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Peter Miller
I've been wondering if there is some learning curve equivalent as a comparison for how "bad" the NZ government is at turning policy into better productivity vs overseas examples.