Hard News: The Base
106 Responses
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I’ve just had a student in here, asking me about his exam result for last year. He got a good grade, which anyone would be proud of, a high honour. But not the grade he wanted… And no amount of me telling him that he had actually done rather well made up for the fact that he didn’t get that higher grade. He’ll get over it in time, and after a while it will cease to matter, as he moves on to his first job, and starts chalking up some successes there.
So yes, when someone wants to be leader, and presumably Prime Minister one day, then it *is* a matter of setting aside personal ambition, even though you may still end up with an interesting and worthwhile job to do. It can be done – witness Michael Cullen – but just because it can be done doesn’t make it an easy task.
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Sacha, in reply to
So far, the only people I can see doing it are David Shearer and David Cunliffe
They don't manage their party's comms or strategy development.
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Sacha, in reply to
what is back-room standing as code for here?
People behind the visible front-people. Influential but nothing sinister intended.
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I have very little sympathy for the pain of setting aside one's ambition of becoming Prime Minister, and settling for Ministerial position. And Cunliffe is still working for himself, not just the team --- no doubt he wants to be a Minister; no doubt he wants to do well.
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The thing about Cunliffe that I like and is lacking from our current politics is the ability to take a complex issue and distill it and explain it in public discussion. It's nice to have a politician who is making decisions for us try to explain what they are doing and is actually prepared and able to debate. I've often felt like he is showing us the working, not the spin.
Don't know if he'd make a great leader, but damn Labour needs some heft and to show that their front bench is up to the task.
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DexterX, in reply to
The thing about Cunliffe that I like and is lacking from our current politics is the ability to take a complex issue and distill it and explain it in public discussion. It's nice to have a politician who is making decisions for us try to explain what they are doing and is actually prepared and able to debate. I've often felt like he is showing us the working, not the spin.
Very much agree - he makes an art of it.
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Kiwi Nomad, in reply to
Yeah, but see that's the problem... everyone, including Labour, the Greens and all NZ's political parties have bought into neo-liberal economics without realising it... NZ is not sliding away under a mountain of debt, if you are referring to sovereign debt. Private debt is another matter, and if NZers are to be able to reduce their debt, then the Government must pick up the slack and spend... The so-called 'debt' problem has mislead most, if not all, economic commentators in NZ... A study of Modern Monetary Theory (MMT) would actually lead to correctly understanding the economic problems we face and the likely solutions to these problems. It's not rocket science!
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In the meantime, Prostetnic Vogon Joyce's latest Dooh Nibor move is to raise the minimum student loan repayment rate well above that of Australia. Don't be too surprised if we start seeing more student bankruptcies in response.
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Bart Janssen, in reply to
It’s not rocket science!
I'm sorry but because New Zealand has no space industry all funding for rocket science has been terminated.
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Are the Nats going to admit that this in fact has the same effect on weekly income as a tax rise, and ask why students and graduates are the ones who are asked to make the sacrifices so that tax cuts can continue to be given to those on higher incomes?
The Nats behaving like corporate raiders- take over, sell off, kill off.
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Sacha, in reply to
And previous changes in Kiwisaver taxation were employees paying so their bosses could trouser more of those other cuts. The direction is strictly one way.
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Angus Robertson, in reply to
A study of Modern Monetary Theory (MMT) would actually lead to correctly understanding the economic problems we face and the likely solutions to these problems.
Lots of inflation.
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DexterX, in reply to
A study of Modern Monetary Theory (MMT) would actually lead to correctly understanding the economic problems we face and the likely solutions to these problems.
Give us the skinny on this in 100 words or less.
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BenWilson, in reply to
Give us the skinny on this in 100 words or less.
I'll do it in 20. The money quote from the wiki article
...responsibility for avoiding inflation and depressions lay with the state because of its ability to create or tax away money.
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BenWilson, in reply to
It's not rocket science!
No, it's not at all. In fact, it's the mainstream stuff that seems like rocket science. If making broken rockets is your bag. The idea that the government can't fix the economy takes years of indoctrination to accept, because it relies on outlawing practically everything that would work.
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DexterX, in reply to
To you Ben and anyone else
and the likely solutions to these problems.
??
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BenWilson, in reply to
I won't presume to reply on Kiwi Nomad's behalf. I assumed the problem he was talking about was that private deleveraging as an economic solution means prolonged recession until that process is complete, because spending money paying down debt means not spending money on other things, such as goods and services from NZ businesses that rely on people buying their goods and services to remain in business. If the government is also doing the same thing, paying off debt by cutting back on expenditure, then they are fueling the same problem. As a solution, it is pretty much "let's push the economy into a Great Depression, because after that, things can only get better". Which is true, but it's obviously not the only solution. As a nation which still has actual sovereignty, we could expect more from our leadership than allowing the place to become Third World as an answer to our inability to compete with the Third World.
As I understand MMT, they are not against issuing fiat money to pay government bills as a way of taking control of inflation, because they believe that the currently popular method of lending money to banks directly and relying on the money multiplier theory is foolish. They believe the theory is false, dangerously so, banks are under no obligation to do anything good for the economy with the money they are effectively gifted and the government is thus completely hamstrung when it comes to controlling inflation - banks can issue debt or not, and charge what they like for it, depending on what is most profitable for them. It puts the entire economy in their hands, ultimately, because tinkering with taxation is politically hard and takes a long time, and because the tax take fluctuates as the economy fluctuates, the political power ends up going in reverse, the banks end up dictating all fiscal policy.
They are already able to do this to individuals - my bank can raise or lower the biggest factor of my cost of living, my mortgage, over a reasonably short amount of time. I have no real options if interest rates rise but to make cutbacks in my expenditure so as to manage the mortgage, and if it becomes unmanageable they can foreclose me.
I think Kiwi Nomad was suggesting (and if he wasn't then I'm suggesting it) that the major parties have fallen for the big economic fallacy of presuming that the government is in the same kind of situation that I am, powerless in the face of banks to do anything other than make cutbacks in fiscally tight times.This is a classic and massive mistake in neoliberal economic thinking. Governments interact in an entirely different way with the economy to the way individuals, or households, or even companies do. I can't levy taxation on other people, nor can I print money. The government therefore has an entirely different set of options to deal with the economy than I do - they can use both of those powers to balance the books at any time. The idea that they must rely on private debt and expenditure control to do so is a vast fallacy that would appear to go unchallenged by any major party. It ignores half of the possibilities and creates a problem which suggests that it is actually possible to bankrupt the government the same way an individual can be bankrupted, with the only solution being to sell off government assets. This is false, a huge lie which is so pervasively and widely believed that it takes me writing this kind of post to cover it when the twenty words I gave in the previous post should do, and even then, few people are convinced because ... I speculate ... it's a lie that's got so big that it has its own momentum.
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Sacha, in reply to
Government also already has the option of insisting that banks maintain better capital adequacy ratios, including specifying certain classes of lending like mortgages. They choose not to, and this current bunch continues to willfully conflate private and state sector debt without any effective challenge to their lies.
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Rob Stowell, in reply to
Interesting ideas, for sure.
I can’t levy taxation on other people, nor can I print money. The government therefore has an entirely different set of options to deal with the economy than I do – they can use both of those powers to balance the books at any time.
If you consider that monetarism was in large part a response to ‘the problem of inflation’ it explains (some of) the preoccupation with limiting money supply. Brash kept throttling our economy throughout the 90s just doing his job- keeping inflation between 0-2%.
Inflation seems fairly benign from here, but that hasn’t always been the case- and it’s the obvious reason Govt’s power to print money isn’t unlimited.it is actually possible to bankrupt the government
If you share a currency with other countries and a central bank (like the EU) it is entirely possible. It’s interesting how other ‘currencies’ are emerging in Greece (ie barter systems).
In wider terms, while the world runs on interstate trade (which requires a common unit of value, still at present mostly the $US) isn’t it also possible to have an effectively bankrupt govt- to the extent that other countries/traders/banks simply won’t deal with the currency they issue? That wouldn’t be a problem in a country which didn’t essentially rely on external trade- but apart from maybe Myanmar/Burma, I can’t think of one off-hand. -
Deborah, in reply to
apart from maybe Myanmar/Burma
North Korea?
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Inflation seems fairly benign from here, but that hasn’t always been the case- and it’s the obvious reason Govt’s power to print money isn’t unlimited.
I don't know who has ever proposed that it isn't. It's a tool, that can be used within constraints to produce inflation and control unemployment, in a far more direct way than using debt as an intermediary. When Bernanke recently attempted to use it to prevent the recession caused by the deflation of the property bubble, he increased the money in print from $850 billion to $2.15 trillion over a year and a half, and managed to move inflation from -2.1% to 2.7%, which goes to show how much we overrate the amount of printed money in circulation as the key driver of inflation. More than doubling the supply of money contributed 4.8% to inflation. What people often don't realize is that the main source of inflation is debt, and the multiplier effect, which is not at all reliable. Doubling the money supply could have meant 100% inflation if the banks had done what Bernanke wanted and cranked out more debt. But they didn't do this - they had become risk averse and just kept the money. He would have got a much more pronounced effect from printing that money and just giving it to Americans to spend, or putting it straight into balancing the budget.
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Angus Robertson, in reply to
As a solution, it is pretty much "let's push the economy into a Great Depression, because after that, things can only get better". Which is true, but it's obviously not the only solution. As a nation which still has actual sovereignty, we could expect more from our leadership than allowing the place to become Third World as an answer to our inability to compete with the Third World.
As a means of operation doesn't MMT mean the same thing "lets devalue our currency to that of the 3rd world, so that we can compete with the 3rd world"?
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Stephen Doyle, in reply to
With our low wage economy and corrupt banana republic government, aren't we Third World already?
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BenWilson, in reply to
As a means of operation doesn't MMT mean the same thing "lets devalue our currency to that of the 3rd world, so that we can compete with the 3rd world"?
I don't feel qualified to answer, my understanding is that MMT isn't a single policy, but rather a recognition of the tools that can be used and how they interact, and it rejects the idea that some of them must never be used. I guess I should ask why it is that you think that is what would happen, and consider the advantages and disadvantages if that is what would happen. A high currency is not an obviously good thing - exporters are constantly hoping for it to go lower. It could counterbalance the effect of putting up the OCR, which seems to push up the dollar - then the OCR might be a useful tool again - when it's stuck at near zero it loses all power. A raising OCR would do a lot to cure our property inflation problem. By adding one tool the bag, we can get out of this trap. We could cool property inflation, do as we please with the dollar, and balance books, all in one move.
But I'm guessing here. Another consequence of having a non-simplistic economic model and theory is that there are multiple strategies that are possible, just as doubling the number of swords one is holding more than doubles the skill required in wielding them. I expect there are different ideas amongst the main MMT theorists, depending on the conditions that they find, and the exact nature of the economies that are being managed. It's not one size fits all, that's another neoliberal lie.
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What the hell is going on?
The absence of anyone from Labour on The Nation was explained by Garner at the very start of the show. The programme had invited Labour’s Spokesperson for Economic Development and Associate Finance Spokesperson, David Cunliffe, to discuss more or less the same things that Norman and Peters were discussing on Q & A – the future direction of the economy. Cunliffe was happy to appear but, conscious of the current sensitivities in the parliamentary party over Labour’s leadership, sought an assurance that that topic would not be canvassed in the interview. He received that assurance in writing from Executive Producer Richard Harman and Garner himself.
Despite those assurances, Cunliffe’s appearance was later vetoed by what Garner called Labour’s ‘top team’ which he defined as ‘David Shearer and the media team’. The reason given was apparently that the ‘top team’ didn’t want anything to distract from Finance Spokesman David Parker so close to the Budget.
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Anyway, ‘the top team’ didn’t like Cunliffe’s brilliant speech and he was apparently bawled out by Shearer and others and told the speech was’ naive and stupid.’ That tends to be the price you pay for idealism. And, according to the extremely well informed Duncan Garner, the price may be high for Cunliffe who has been ‘put in his place, somewhere down the bottom of the pecking order’.This is so utterly stupid that it beggars belief. Cunliffe is not only intellectually brilliant, he is by far Labour’s most accomplished debater in the House and on television and radio. No-one in the Labour Party can hold a candle to him as a media spokesperson. Stammering and stuttering seem to be the main criteria for that at present.
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