32 Comments

This is a wonderful piece Bernard, thanks! Our country is truly at a fork in the road........we have to continue to find ways to encourage those media voters to take the path less traveled!

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hope you have a security detail Bernard. you’re getting a little close to the elite operating model here!

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A brilliant “state of the nation” summary. It frustrates me immensely that the facts and opinions expressed here are not even close-to -adequately being raised nor discussed and challenged by the media generally, especially mainstream, nor in political circles. Luxon is yet another bumbling

self-serving conservative with apparently no solutions for our predicament, and Seymour, though slicker with his words makes equally empty pronouncements. We urgently need new political drive. Well done Bernard. So well expressed.

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Clearest and most incisive analysis around by a long way. Says the unsayable and nothing has blown up yet…

A wee thought about wasteful spending. Strikes me that this intersects with the infrastructure underinvestment in an interesting way, where ultimately wasteful spending results often from under- rather than overspending. For example, Te Huia is patently wasteful spending because the train as delivered is no damn good for anything much but school holiday excursions. It could have been a commuter train and changed housing and transport dynamics substantially for the better if a whole lot more had been spent - on rolling stock, the route, the line, the terminals, the timetable, everything pretty much - to make it go faster, and go where where people want to go, which is central Auckland, when they need to. This is symptomatic – no single infrastructure project will deliver the kind of benefits promised, or fail to confirm the naysaying, unless it is integrated into a network of consistent quality and sufficient reach, capacity, and reliability.

But still, one dud train doesn’t change the fact that, especially in a time of fuel inflation and shortages, never mind runaway global warming, rails are hugely less harmful and more efficient ways of moving anything than road transport can be. Are we really too small and too impoverished and too politically venal to consider the big picture?

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Well written Bernard, a great piece!

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Beautiful work Bernard. You nailed it! Totally agree that the poorest are too busy slaving away to have any hope of coming up for air and to take a look around at what's actually going on. 10/10!

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Good stuff Bernard! So all the parties in Parliament are supporters of the status quo and not worth voting for. I've recently watched a couple of interviews with Raf Manji and it appears that TOP is genuinely against the status quo and offering a great alternative. I hope they get some attention and get into Parliament. They'd be a much needed jolt to the stodgy conversation.

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Send this one to the inbox of every MP....red flagged to the leaders

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I suspect they already know this one way or another. Most of them are property owners.

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The political stalemate over creating a fairer tax system that includes some form of wealth or at least capital gains tax depresses me. While not a fan of referendums for all cases I do wonder if a citizens initiated referendum on a wealth tax could help move the discussion forward. Getting 400k signatures is clearly a large hurdle but a question framed around something like dropping the lowest income tax rate to 0% funded by a tax on net wealth over $2m (ie fairer tax not more tax) would benefit the large majority of the population (most people including beneficiaries would get an extra $1400pa), and proportionally would be most advantageous to those most in need given current living cost pressures.

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The main benefit of a referendum would be to get community discussion going about the fundamentals of capitalism in our society and how we might go about replacing it with a social and economic framework that benefits the people who produce wealth. It could avoid the distraction of party interests and focus the basics.

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As appealing as referendums sound, I’m very much against them. There’s a great irony that our citizens initiated referenda laws only exist because of private lobbying from Grey Power to the Bolger govt.

We’ve already seen how the cowardly punt of Marijuana legalisation to a referendum question has been used to put the matter to bed. A referendum on wealth taxes would face a deluge of FUD of colossal magnitude. There is no possibility of a good faith debate when the wealth of so many moneyed interests would be at stake. The outcome of the referendum would be treated as a way to consider the matter settled once and for all, and no expense would be spared to nail it into that coffin.

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Agreed. But a secondary outcome of building a movement to challenge the system may be worth it. A loss on the day is not a defeat as the push to legitimise marijuana shows.

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Yes I think the points Liam raises are reasonable but given current prospects for change is there that much downside? Also the money is only likely to really mobilise against once (if) the process gets as far as a referendum, by which point 400k Nzers would have shown support. There is also meant to be a $50k spending limit (although no doubt ways and means around that)

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So pretty much anyone with an “above average house” and some retirement savings would be taxed as part of a wealth tax? Did you roll a dice and come up with $2m as a random figure? Ping anyone who has a bach or beach house. The good old envy tax.

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You are right in that I pretty much just picked a figure. The exact details weren't really the point. However I would be quite surprised if over 10% of individuals had $2m of net wealth. Generally it is better to have tax at a low rate so you wouldn't want to exclude too much of the base. I also disagree with it being envy. I don't think it fair that someone working and earning $14k pays 10.5% tax while many home owners made hundreds of thousands of dollars in tax free capital gains in the last couple of years.

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I think that while wealth tax in theory sounds all very equable. In practice its almost impossible to administer as wealth is easily hidden and for many of the wealthy is cross borders, jurisdictions and subject to wildly moving fluctuations in exchange rates and value. The wealthy play with tax residence and like the googles and amazons are ships they fly flags of convenience. Its almost impossible to tax wealth with out having control of it. These are some of the arguments for central bank issued digital currency. But this is a long time off. Taxing land however. very easy.

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Not sure if very easy is true politically (farmers etc) but yes perhaps land might be a more practical option. The fair economic return approach advocated by Susan St John has some attraction as an alternative too.

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Agree this is possible unfortunately I am not able to spearhead this move.

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I'm glad you highlighted some reality about the 'cost' of borrowing Bernard. For years, it's been effectively free for goverments to 'borrow' (even that word is doing a lot of work when you're a money printer) with bond buying. Great public infrastructure is absolutely a choice and, contrary to all the fears of "future generations being burdened with debt", if done properly it is only beneficial for future generations. It's so ridiculous that some imaginary future cost causes us to sacrifice very real productivity - wasted in lost labour time, wellness and innovation potential - because of the massive fight we need to have over every single cycleway, train track, climate, health or education program... and all so politicians can play their game on easy mode, compaigning on taxes and deficits rather than having to talk about things that actually matter.

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Love it when we put the clearly obvious in front of every one and call out the political posturing for what it is. However you may be giving some of our politicians too much credit. I'm still to be convinced many of them have any deep understanding of economic matters at all but are more driven by popular short term ideals or perception.

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Hi Mr Skeptic

Most politicians don't need to know much about anything. They just vote in parliament as instructed. Even Louisa Wall voted party line.

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There has been a lot of comment about the coming brain drain .. Yet every day I keep seeing continued evidence it actually happened quite some time ago.

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Gary Dyall

I seem to recall the National Party PM Robert Muldoon saying about the brain drain of Kiwis going to our next door neighbour that it improved the brain power of both countries. What say you Nicola Young?

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He tino pai tō kōrero Bernard.

It's all incredibly grim one year out from an election, watching Labour and National taking up all the noise and observing conversations in the workplace with people picking sides between the two over the inflation issue.

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If by 'none' of the major parties you mean 'not Labour or National' - the Greens' tax policy includes a wealth tax.

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Excellent piece Bernard. We need to also highlight the fundamentals of how capitalism in Aotearoa could not survive without speculation best manifest in the housing casino. Most of the manufacturing jobs that historically produced profits here,and in other “western” countries have been exported to cheaper labour places such as China. That leaves us with a “financialised” economy attended by service industries such as tourism. These in turn subsist on lowest possible wages and consumption by a few better off locals ( restaurants etc) and wealthy tourists. None of these build houses or much else. Indeed for ideological purposes , Thatcher and her Kiwi acolytes deliberately forced people into the property by doing away with public housing a) by selling it off, b) by not building enough housing, public or private to meet people’s needs. I noted the demise of public and quasi-public retirement savings schemes that ran in parallel. An investment property has been deliberately made the only “safe” way of saving for retirement. If you got in early enough. To this extent I disagree that many support the housing bubble and attendant inflation. With our current capitalist formation, to quote Thatcher, there is no alternative. As Bill Sutch said all those years ago, we’re on a quest for security.

One piece of evidence for the fragility of the housing bubble and a possible lever to deflate it is the desperate struggle within the state and private capital to sustain public infrastructure: no local authority is willing to put up taxes(rates) to met the real cost of crumbling water, sewage, public transport, etc. replacement. Let alone build new facilities for new housing needs. A variation on a capitalist gains refusal. Local government vies with national government for printed, non-asset back money to meet their needs. I don’t see property rates going up by the 40% gain in property values any time this week.

In this sense, the crash of 2008 lives on. Capitalism and its state administration has no real answers. We can’t re-jig housing, especially public housing, without threatening the very basis of neoliberalism, indeed the very heart of “our” (of course, it’s not really ours, but that’s another discussion 😊) economy.

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Excellent piece Bernard. Really appreciate the analysis.

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