So after two terms of the National Party running New Zealand we’re told that things are going well but the reality is that we’ve now got stories where for two terms the debt of the government increased but now they’re getting into surplus gradually but the problem is this – we’re seeing a corresponding increase in debt after 6 years of deleveraging by the public as people moved to consolidated debt into something more manageable. The problem is, as Professor David Harvey pointed out when talking about Marx and Engels, is that capitalism doesn’t actually address the problem but rather move it around – in the case of two terms under National what we’ve seen is the government pretty much transferred the debt from the private sector to the public sector and now the process is reversing – the public debt is decreasing (debt per year rather than debt over all) and private debt is increasing; not just housing, which makes up the majority of New Zealand debt but also private debt when it comes to consumption (credit card, store cards etc). Housing debt is a problem and as long as house prices remain stable then everything is at least ok on that front but the big concern is the area of personal debt such as credit card debt, store debt, personal loans which tend to be provided on an insecure basis, higher interest rates (to offset a certain number who default on their debt) which leads to instability as the amounts become larger and larger. I’m not going to be the doom and gloom merchant because I believe these issues are addressable but unfortunately so far we’ve had the line from the right that private debt is good because it is the byproduct of rational self interest where as public debt is automatically bad because government is inherently wasteful with money.
The other part of equation is this; the belief in this idea that the market will magically will make sensible long term decisions because after all it is all propelled by this idea of individuals seeking out opportunities that benefit them – supply and demand. People are demanding something and an enterprising person will start up a business to manufacture, import etc. to meet that demand. The problem with that is that it assumes that firstly humans are rational all the time, it ignores the cumulative effective of large numbers of people gravitating towards one idea over another (see the ‘irrational exuberance’ where speculators used risk modelling only to find that they ignored the cumulative effect of everything turning to crap at the same time), it also ignores that you need people trained and educated as to provide a work force but there lies the problem because if you want to diversify the economy you’ll find that most will gravitate to the status quo unless there is direct intervention by the government in some way – allocating more funding to particular tertiary education courses, setting up a tax structure that favours a particular industry, for example, a tax and levy holiday to new businesses in the information technology sector for up to 5 years as to reduce the barrier to entry especially in the early years where most businesses are either making a loss or if they are generating a profit it is at the low end of the scale (very little room to making large investments to grow the business faster). The problem with National is that we’ve already seen almost two decades of extreme hands off approach to managing the economy (before Labour got in) and when Labour did get in 1999 there was a more hands on approach was taken to the economy which included a focus on diversifying the NZ economy beyond just a reliance on agriculture – and in many cases what we see today with names such as Xero, Fianz and other software vendors – they’re the beneficiary of those changes made. The problem is now with the current election we’ve seen National take their hands off the wheel believing that once again the free market will do what needs to be done with minimal intervention – something I’m sceptical as to whether it’ll work given that in the past it hasn’t worked.
I’ve just finished watching the leaders debate between Labour and National ( link ) and to be honest it is pretty depressing how on one hand we had John Key constantly repeating the same talking points which made the debate boring because there was no engaging of John Key with David Cunliffe. The end result was a debate where the two spoke over each other rather than to each other – critiquing, point and counter point so that ideas could be discussed and us the voters could see the ideas behind the the front men, the ideas that would be implemented once said party is in office and they can start implementing said ideas. It is the one of the reasons I don’t like debates – if it isn’t the respective participants repeating their learned lines then you have the candidates spend half their time trying to find technicalities or minor flaws in what the person says rather than actually critiquing the heart of the idea being promised by the opposition. So I sat back, watched the spectacle but then jumped on Reddit to see what other people were saying – although the Labour loyalists were adamant that David won the general consensus by those unaffiliated to a party was that the debate was pretty damn depressing to watch – there was no winner and the watching public were the losers in that nothing fruitful came of it.