Originally Posted by
Logen Ninefingers
People may be ‘over politics’ but unfortunately the problem with have in New Zealand is that we have a plethora of problems and no obvious solutions.
If you look at a model of society that would please both Left and Right, probably the template is the Scandinavian countries where they have high private sector innovation and productivity, high private sector incomes across the board, and high taxation paying for a gold standard social welfare system, health, education etc.
The issue in New Zealand is that we don’t have high levels of innovation and productivity, we don’t have high private sector incomes across the board, we don’t have a taxation system which has captured any significant revenue from the main driver of the ‘wealth effect’ - the property industry. But we do want a gold standard societal structure and of course high living standards. We have high public sector incomes, high ivory tower incomes, a traditional primary produce sector which is under attack, a ‘low wage economy’ built on high immigration. We can’t pay our way so we rely on borrowing to paper over the yawning cracks in our finances.
If you are on the Left you say ‘nobody gets left behind, I want the gold standard so I don’t care about high borrowing - the system will collapse at some stage anyway’.
If you are on the Right you say ‘I know we are in the cactus as a nation but I won’t admit the fundamental economic problems that exist in New Zealand, I’ll maintain the fiction that a change of government can fix unsolvable issues’.
Unfortunately I think New Zealand is going to go through a rude economic realisation by ‘a thousand cuts’. Slowly over a period of years we are going to realise that individually and collectively we are no nearly as wealthy as we thought we are, and the illusion was only fostered and maintained via vast quantities of cheap borrowed money.
The biggest shock will be New Zealand moving into a prolonged economic downturn while the US economy continues to grow necessitating further interest rate cuts by the Federal Reserve. Thinks will then getting very painful here.