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ROBERT MacCULLOCH: Is National's Economic "Strategy" Already Unravelling?

When Tony Blair's New Labour government came to power in 1997, he pulled off a remarkable string of three election victories. The "trick" of this achievement stemmed from Blair's promotion of, in particular, the financial services industry in London, and his support for light-touch regulation. The entire UK economy was lifted. Tax revenues soared from that industry, even as bankers paid themselves huge bonuses. They loved Blair. So how did he placate the left of his party? Blair poured those tax revenues into "rebuilding" the National Health System, which was his main election promise. He won support from both right and left, at least for a time. The way Blair made it happen, though, was on the back of a booming economy, and that one industry in particular.



Meanwhile in NZ in 2023, our economy has barely been growing this past year. In GDP per capita terms, we're currently in recession. Total GDP is rising only on the back of soaring immigration. Without a Blair-style boom, how can National pay for the required investments in health-care, education and infrastructure? It can't. What large industry can National rely upon to engineer a boom? It is far from obvious.



The way out would have been for National to propose an entirely new approach to welfare, such as moving to a savings-based Singapore-style model, for example. But the party has no intention whatsoever of doing anything that could remotely be labelled as "radical" .. which means it can not appeal to any significant potential efficiency gains that will help ensure our welfare system can do more for the same level of existing funding.



This National government could well unravel.



Robert MacCulloch holds the Matthew S. Abel Chair of Macroeconomics at Auckland University. Rob blogs at Down To Earth Kiwi

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72 Comments


AND THE BEAT GOES ON This article is absolutely typical of the NZ parroted version of Western neo-classical economic tripe. Predictably it doesn't even bother to distinguish between the productive real economy and the parasitic financial economy, AKA, the 'rentier', or 'FIRE economy' (Finance, Insurance, Real estate) in our broken Western models. It is made even worse by holding Tony Blair's policies as some sort of model when he is one of the most evil genocidal NWO SOBs ever to walk the planet - it was as though the entire article was conceived within a bubble that is completely bereft of global geopolitical facts or economic history. The status-quo morally bankrupt pseudo-science totally ignores the way Western countries create money - this alone…

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Rusling Mcgehan
Rusling Mcgehan
Nov 11, 2023

Sorry Robert but this economic statergy should never have got this bad. For 6 years National sat in lame opposition as Labour added to their lose fiscal values to make the poor better off and send the rich further offshore.

As for Tony Blair, a dodgy little grifter of the last century and the last person we should hold up to fix anything. This sod and high priest of the WEF is now running the climate pandemic and trying to shut us all down especially our very critital primary sector for starters.

Stop looking backwards to go forwards, Luxon and National receive the majority of the votes so it's up to them to show us the way. Personally I think…

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Very well said Rusling!!

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The Singapore-style savings model would be no help. Muldoon had to get rid of the Rowling version of it. Such fund is invested solely in govt securities and the interest paid credited to members accounts is a charge on the Budget which nearly swamped Singapore.


I created a variant scheme for Samoa with the Board having external members as watchdogs. Investment was unlimited and private businesses were invested in. Eventually even members were able to borrow against their savings. That Fund, SNPF, has had its 50th anniversary.

Welfare in Samoa is largely tribal. Chiefly authority extends to ordering people to work and if they have a major accident they will be provided for by their local tribe for life.


Our…

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People in governments get elected by promising to give people more of the things they want.

The things that the people want have to be paid for with tax revenues, that the people pay in the present, or debt, that this borrowed and has to be serviced and repaid by the people in the future. People like to believe that someone else pays for the things the government provides. They would not be seduced by election promises if they understood that they have to pay for the things they are promised themselves. The productive working people who produce and deliver consumer goods and services provide almost all of the money that is spent by people in governments!

They Pay as they Earn by…

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Ted Mulholland
Ted Mulholland
Nov 10, 2023

Wow! So much negativity toward an administration that hasn’t yet been sworn in.

People easily forget New Zealand has a government chosen by the current democratic system, MMP. It’s a diabolical system that enables a party with 6% of the vote to determine the policies and future direction of a country in absolute turmoil.

A system that permits 6% of voters to attain 8 seats in parliament and gain enormous power while a Green Party with 3 electorate seats and 15 overall has no power at all ( and thank heaven for that) is a particularly dumb system that no other country on earth follows.

Good luck with a democratic system that allows such idiocy!

Girt up your loins New…

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