"The election was not about the economy. Why?" by Brian Easton
JAS
The election was not about the economy. Why?
In a few months, the 2005 election debate may be forgotten, as we focus on
the real economic issues that were hardly addressed during it. The most
salient include:
1. The Current Account Deficit: we are working (and holidaying) for 11
months and spending for 12. Private foreign debt is high and growing. If
there are ructions in the world financial system, New Zealand will suffer
because of the private debt and deficit overload. (The good news is the low
government debt may help us to manage the crisis.)
2. The oil price spike, mainly arising from the shortage of refining
capacity: we don't know how long or how damaging it is to the world economy,
but it is impacting on ours.
3. Inflation: low unemployment, cost pressures and the oil price spike add
to the problem.
4. The growth path: we have to move from a low productivity
growth/labour-extensive growth strategy to a high productivity one because
the sources of additional labour are running out. (One of the sillier
episodes was a group of politicians saying on TV that we needed more
economic growth, as if the aspiration would magically produce the desired
outcome. I did not hear a single practical policy discussion, although there
was the usual cant of ideology unsupported by facts.)
I have summarised each briefly because, I promise you, commentators and this
column will be repeatedly coming back to them once the election partying is
over.
Regrettably, as a result of the election we have to add a fifth concern,
exacerbating the others.
5. Fiscal stability: election promises of tax cuts and spending will be hard
to meet.
One estimate had National promising a net increase of $4.5 billion a year in
spending, three years out. That is a big fiscal injection of about three
percent of GDP.
Labour retaliated, according to this estimate, with $1.2 billion pa extra
cuts and spending. Both estimates could be contested - they seem a bit low
to me - but even Labour will have difficulty keeping to its promises without
knocking the economy off course into more inflation, a bigger current
account deficit and lower sustainable growth. Expect a vigorous version of
the usual post-election government expenditure review.
National went into the election with the most impressive finance team of
politicians ever: Reserve Banker Don Brash,merchant banker John Key and
ex-Treasury official and previous Minister of Finance Bill English. And yet
they ended up with an excessively expansionary - many would say
irresponsible - fiscal package (unless they had some secret plan to cut
spending, which they hotly denied).
Had you doubts of this assessment, consider their last announced policy, the
temporary tax reduction on petrol. It was an attempt to curry public favour,
without addressing the real problem of the oil price spike, by shifting it
onto the fiscal deficit. Who does such brazen cynicism remind you of? Rob
Muldoon of course. And yet the three are not economic Muldoonists.
Perhaps the New Right believed its own propaganda, that its measures of the
80s and 90s had put the economy onto a golden path (albeit one that was some
20 percent lower than when they started). So instead of arguing that we had
serious economic challenges and National had the men to address them, they
assumed everything was satisfactory and the issue was about spending any
future gains.
My doubts about such gains were confirmed by one statistic. In the six
Labour years, real income rose about 21.5 percent and real private
consumption by 25.7 percent. (Real government spending rose about 22.2
percent.) The figures mean that private consumption is already outstripping
what we were earning. That's the reason that the current account looks so
shaky. And yet - and yet - National was offering a further three percent
boost.
It was, of course, not in Labour's interests to tell you that despite the
excellent economic performance, we still face challenges. It went into the
election on "you've never had it so good" slogan, and came out with "and
it's going to be even better". Well, yes, we have never had it so good. But
to get better is going to require some hard work, beginning with more fiscal
discipline.
Joy
"JAS" <jas...@yahoo.com> wrote in message
news:dhpugs$n42$1...@lust.ihug.co.nz...
> by Brian Easton
> My doubts about such gains were confirmed by one statistic. In the six
> Labour years, real income rose about 21.5 percent and real private
> consumption by 25.7 percent.
In this household we must have missed out on that rise in income. 2% is all
I've seen and I'm still having to run the house on the same money I got in
2000.
If I add in the rising value of the accomodation I bought in 1999, then
maybe, but I'll never see that money unless I sell and buy less of a house.
Gosh, what business do you have to be in to get 21%?
Joy
Janice
Joy wrote:
> "JAS" <jas...@yahoo.com> wrote in message
> news:dhpugs$n42$1...@lust.ihug.co.nz...
> > by Brian Easton
> > My doubts about such gains were confirmed by one statistic. In the six
> > Labour years, real income rose about 21.5 percent and real private
> > consumption by 25.7 percent.
>
> In this household we must have missed out on that rise in income. 2% is all
> I've seen and I'm still having to run the house on the same money I got in
> 2000.
Demand a wage rise. :-)
Rob J
> by Brian Easton
>
> The election was not about the economy. Why?
> In a few months, the 2005 election debate may be forgotten, as we focus on
> the real economic issues that were hardly addressed during it. The most
> salient include:
>
>
snip
Easton is well known for his left-wing views and using pejorative terms
like "New Right" confirms his inherent bias, and thus limits his
credibility as an independent commentator.
Brian Dooley
wrote:
It's only 3.22% per year.
Roughly the same as GDP.
That's as good as it gets.
--
Brian Dooley
Wellington New Zealand
Brian Dooley
wrote:
But is he correct, and if not then why not?
JAS
"Brian Dooley" <bri...@paradise.net.nz> wrote in message
news:8729k198i81q4iak5...@4ax.com...
> On Tue, 4 Oct 2005 08:40:08 +1300, Rob J <ro...@nospam.nospam>
>>> The election was not about the economy. Why?
>>> In a few months, the 2005 election debate may be forgotten, as we focus
>>> on
>>> the real economic issues that were hardly addressed during it. The most
>>> salient include:
>>snip
>>Easton is well known for his left-wing views and using pejorative terms
>>like "New Right" confirms his inherent bias, and thus limits his
>>credibility as an independent commentator.
>
> But is he correct, and if not then why not?
He is only "left winged" compared to the far right. If one compares Easton
to left economists - say compared to the libertarian left of Michael Albert
or Robin Hahnel, economist at the American University in DC, Brian Easton is
centrist, and even quite conservative. see:
http://www.zmag.org/content/showarticle.cfm?SectionID=26&ItemID=7529 for an
example of non-Marxist left views that are against social democrats (left
Keynesian) and "lemon socialists":
For the Political Economy Seminar at the University of Massachusetts at
Amherst on March 8, 2005
Social Democracy: Giving Credit Where Credit Is Due
I mean it as a great compliment when I say that capitalism functions poorly
indeed without social democrats. The "golden age of capitalism" was due
more to the influence social democrats exerted over capitalism than any
other single cause. Only when social democratic policies have been ascendant
has capitalism proved able to avoid major crises and distribute the benefits
of rising productivity widely enough to sustain rapid rates of economic
growth and create a middle class. Political democracy in the twentieth
century also received more nurturing from social democratic parties than
from any other single source. However, despite their important
accomplishments, crucial compromises social democrats made with capitalism
bear a major responsibility for the failure of the economics of equitable
cooperation to make greater headway against the economics of competition and
greed in the twentieth century.
Of all the political tendencies critical of capitalism, social democrats
have participated in reform campaigns and electoral democracy most
effectively. Sometimes social democratic parties won elections and formed
governments that carried out major economic reforms. Other times reforms
that began as planks in platforms of social democratic parties out of power
were implemented by rival parties decades later. Some of the major reforms
social democrats deserve a great deal of credit for include old age
insurance, universal health care coverage, welfare for those unable to work
or find work, financial regulation, stabilization of the business cycle
through fiscal and monetary policies, incomes policies to combat cost-push
inflation while reducing income inequalities, and long-run, comprehensive
planning policies to promote growth and development. Wherever and whenever
social democrats were politically stronger, reforms were more numerous and
went deeper. Social democrats were strongest in Sweden from the mid-1950s to
the mid-1970s where social democratic reforms achieved their apogee. Social
democracy in Germany was strongest under Helmut Schmidt and Willy Brandt in
the 1970s. The high point for social democratic reforms in the United States
occurred prior to World War II during the New Deal of President Franklin
Delano Roosevelt. The high point in France and Great Britain occurred
immediately after World War II when a united front government in France and
Labor Party government in Great Britain each ruled briefly. Lyndon Johnson's
"war on poverty" in the mid-1960s and Francois Mitterrand's first year in
power in 1981 proved to be short-lived resurgencies of social democratic
agendas in their respective countries.
Failures of Social Democracy: The Benefits of Hind Sight
I do not pretend to offer a comprehensive critique of social democracy. In
this essay I do not even address what I consider to be the greatest failing
of twentieth century social democracy -- it's failure to oppose Western
imperialism and support Third World Movements for national liberation. I
only consider the economic ideology and programs of social democracy, and
review only the work of two authors whom I consider particularly insightful.
Michael Harrington and Magnus Ryner are peerless students of social
democratic history whose support for their cause did not prevent either of
them from writing critically. As the leading social democrat in the United
States from the 1960s until his untimely death in 1989, Michael Harrington
combined insider knowledge with a critical detachment derived from viewing
powerful European social democratic parties from the perspective of a small
party in the United States that could not have been farther from the halls
of power itself. In The Next Left: The History of the Future (Henry Holt &
Co., 1986) and in Socialism: Past and Future (Little, Brown & Co., 1989)
Harrington provides a sympathetic, but critical evaluation of social
democracy. In "Neoliberal Globalization and The Crisis of Swedish Social
Democracy" published in Economic and Industrial Democracy (SAGE, 1999), and
in Capitalist Restructuring, Globalization and the Third Way: Lessons from
the Swedish Model (Routledge, 2002) Magnus Ryner provides an insightful,
up-to-date analysis of the "Swedish model." Harrington and Ryner both try to
explain why social democratic reforms were not more successful in their
heyday, lost momentum in the 1970s, and were rolled back over the last two
decades. . ... "
Rob J
>
> "Brian Dooley" <bri...@paradise.net.nz> wrote in message
> news:8729k198i81q4iak5...@4ax.com...
> > On Tue, 4 Oct 2005 08:40:08 +1300, Rob J <ro...@nospam.nospam>
>
> >>> The election was not about the economy. Why?
> >>> In a few months, the 2005 election debate may be forgotten, as we focus
> >>> on
> >>> the real economic issues that were hardly addressed during it. The most
> >>> salient include:
>
> >>snip
> >>Easton is well known for his left-wing views and using pejorative terms
> >>like "New Right" confirms his inherent bias, and thus limits his
> >>credibility as an independent commentator.
> >
> > But is he correct, and if not then why not?
>
>
> He is only "left winged" compared to the far right. If one compares Easton
> to left economists - say compared to the libertarian left of Michael Albert
> or Robin Hahnel, economist at the American University in DC, Brian Easton is
> centrist, and even quite conservative. see:
No, you mean he is centrist compared to your hard left POV, which means
he can still be leftwing just not as much as you.
Once again: the term "New Right" is pejorative and indicates an inherent
bias.
Janice
Rob J wrote:
> In article <di4q9j$vq7$1...@lust.ihug.co.nz>, jas...@yahoo.com says...
> >
> > "Brian Dooley" <bri...@paradise.net.nz> wrote in message
> > news:8729k198i81q4iak5...@4ax.com...
> > > On Tue, 4 Oct 2005 08:40:08 +1300, Rob J <ro...@nospam.nospam>
> >
> > >>> The election was not about the economy. Why?
> > >>> In a few months, the 2005 election debate may be forgotten, as we focus
> > >>> on
> > >>> the real economic issues that were hardly addressed during it. The most
> > >>> salient include:
> >
> > >>snip
> > >>Easton is well known for his left-wing views and using pejorative terms
> > >>like "New Right" confirms his inherent bias, and thus limits his
> > >>credibility as an independent commentator.
> > >
> > > But is he correct, and if not then why not?
> >
> >
> > He is only "left winged" compared to the far right. If one compares Easton
> > to left economists - say compared to the libertarian left of Michael Albert
> > or Robin Hahnel, economist at the American University in DC, Brian Easton is
> > centrist, and even quite conservative. see:
http://www.zmag.org/content/showarticle.cfm?SectionID=26&ItemID=7529
>
> No, you mean he is centrist compared to your hard left POV, which means
> he can still be leftwing just not as much as you.
Hard left? Brian Dooley? How ridiculous you sound Rob, --you are
sounding more and more crazy each day. You lost, take a break.
>
> Once again: the term "New Right" is pejorative and indicates an inherent
> bias.
New right is perjorative and yes they do have an inherent bias mostly
because
they are blinded by ideology.
JAS
"Rob J" <ro...@nospam.nospam> wrote in message
news:MPG.1db1037da...@news.chc.ihug.co.nz...
Or as right winged as you. It is all relative. However, calling one "left
wing" or "right wing" MUST be backed up with some sort of definition and
evidence. How can one be ""left wing" when many are much farther to the
left (as is professor Hahnel).
Your logic is like saying Taupo is in Southern NZ.
It is... compared to Auckland.
Rob J
jgr...@ec.auckland.ac.nz says...
Ah, you're right about Easton then.