Don’t know the best way to put this but ill try.
As much as I love this country, we have fallen soo far behind. I don’t want to get to political, but I think Labour tried to fix it in one way, now Nat will try the other. Neither will work in the time they have.
We always prided ourselves on our past accomplishments- women vote, Hillary, Rutherford, Nuclear Free, Maori Batallion - and what we are as a country - massive dairy producers, amazing tourist destination, friendly people. But we have dwelled on it too long and got complacent. Our desire to repeat our past success has made us miss opportunities that require years of investment, and meant we are now in a cultural and economic hole that will be increasingly difficult, expensive and time consuming to get ourselves out from.
We have a tiny population and limited housing in an empty country where people have limited desire and finances for kids. Massive farms that produce income for a few overseas investors or historic families. Massively increasing inflation and cost of living due to our long supply chains and small industry base, especially compared to overseas. Falling education at a time we needs teachers, medical persons, engineers and tradies… unis are slashing courses, councils are running out of money, and overseas investors will funnel more out of the country.
I just want others thoughts around this - I have multiple ideas and theories, but I want to hear from you all.
I think a lot of this comes down to the neoliberal reforms of Rogernomics. Neoliberal capitalism is a failed experiment at this point, that trends towards wealth disparity and concentration of wealth with the elite. We were sold on the dream of a free market helping everyone, but it has not done this.
This isn’t unique to NZ, of course. Just look over at the UK and the current Tory government. Massive inflation, cost of living out of control, and a housing shortage.
Without protection for the working class against exploitation the trend will always be towards wealth hoarding. Our current system rewards greed, selfishness and shortsightedness.
How do we address this? Well, Labour was beginning to try with things like raising the minimum wage and FPAs. Nothing much will improve in the next 3 years, however.
I would argue that Labour’s plan, while well intended, worked better as a vote gatherer than supporting the middle/lower classes. It effectively increased the cost of a working hour, without touching the value that work hour provided - artificially increasing wages without increasing the value that wage provided.
It effectively increased the cost of a working hour, without touching the value that work hour provided - artificially increasing wages without increasing the value that wage provided.
This is the exact myth we’re told under neoliberalism that the comment you’re replying to sets out - increases in productivity or value are already not leading to increased wages for workers. Working a little bit more/harder to generate more value doesn’t reflect higher wages in this system.
Plus our lower productivity compared to many developed nations is because of low wages. Increasing wages means employers have more incentive to invest in those people, including training, better tools, and process automation requiring fewer, higher skilled staff.
Basically, you can fake it till you make it. Increasing wages leads to higher productivity long term. Low wages make employees replacable and there’s no incentive to invest in them.
This is so evident in NZ businesses, I have seen this so often it is sad.
Highly skilled and productive people feel like they have to leave to get a pay rise.
I feel like this one is an egg or chicken arguement - you could also argue that because each individual provides such a small amount of economic value compared to other countries (reference back in 2010 was ~80k per capita vs 300k-3mil overseas) we can’t provide the wages, or tax revenue to grow.
You could try to argue that, but one option (high wages) lead to higher productivity because it incentivises investment in staff and tools.
Keeping wages low does nothing to incentivise investment in higher productivity, so productivity stays low.
One option is better for companies (keep existing profits), the other is better for the country (lower short term profits until productivity rises).
This is quite difficult to pin down.
When looking at productivity over time, the productivity over time stats; the increase in productivity aggregate is approx 1.4 between 1996 and 2022. This didn’t make much sense to me until I looked at the definition of the index, the growth of 1.4 is normalized for inflation and wage growth because the labor cost is one of the inputs.
So we as a country have increased output by 140% between 1996 and 2022 over and above cost increase. This could easily be read as the wage growth lagging the productivity growth by around 1.3% per year.
There are a few other things that are going to happen over the next 30 odd years (in my opinion); mainly driven by climate change. A lot of money that currently flows out of the country will stop, oil will generally be supplanted by locally produced electricity (a large % of this money will stay in our economy), climate resilience will force us to prioritize local production.
I really wish that kiwis would prioritize local banking; billions flow out of the country every year that don’t need to. Obviously we still need competition, but a few local banks could displace the foreign owned banks.
Basically what I am getting at is that our economy seems to export taxable money; if that money had stayed here tax could have been collected and fed back into our systems to increase what could have been provided; especially social housing and education spending.
Basically what I am getting at is that our economy seems to export taxable money
This is structural. New Zealand has a really low level of domestic ownership of productive assets, and a corresponding obsession with an unproductive asset i.e real estate which creates our incredibly high levels of household debt (as you point out, mortgages are held by Australian banks).
Everything will be fine. We’re still first on Everest!
(But I hear you. I think about this often)
