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Dr. Michael John Kidd |
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Lawyer & Pastor |
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A New Economics By Michael Kidd Our Government’s borrowing of $300 mil/wk is blasé and has the effect of pumping up the supply of money, the goods and services produced in NZ simply not being able to soak up. The problem is actually lack of capacity in our economy: the rate of inflation in NZ has increased markedly. The alternative of cutting welfare, is only a reaction based on the large numbers being a cause, rather than a symptom. Besides, this approach will cause deflation. Hiking taxation is also illusory as it creates more avoidance and has its limits, as the real problem is the money we owe the rest of the world, as a country. There needs to be a fundamental re-appraisal. Wiedemer & Co correctly predicted the GFC, and they say the ‘aftershock’ will be higher inflation and dramatic interest rate rises, and falling property values. All of which will become evident 3 or 4 years after. The bailouts both in NZ and USA will cause drops in real estate values because the flood of money will cause higher interest rates long term. Recent updated valuations attest to this drop. The rubric now is NZ property is overvalued by 25%!! Here are some self evident truths: *Money instead of being a means-of -exchange has become a store of value that is notoriously liable to fail, affecting the real world’s production of goods and employment. *Illusory savings and efficiencies tend to create more human misery. *The age of mechanization, computerization and robotization was meant to benefit mankind; instead increasing numbers of people can’t find work that pays a living wage. *The excess or profits go to the owners of those things instead of the common good. It is clear that the NZ Government won’t be able to repay the money borrowed in the last three years, and inevitably will face a ‘Sovereign debt situation’ 1). Primarily, because the Euro crisis will cause a global downturn. It is simply no answer to say our future resides in Asia, and let the Chinese buy up all our assets -when we don’t want to lose our way of life. Asian friends constantly criticize our welfare system, forgetting the history of struggles in their home countries against war lords. Welfare should be re-designed as a basic living wage and a bi-partisan approach taken to reform. The monetization of our benefit systems needs to examined as there are better ways such as providing subsidized housing, food and free education; and emphasizing that locally produced goods are a higher value when it provides jobs. A job-is-better. With more jobs, at least people will be able to afford the supermarket prices and it might become economic to produce more here, instead of the down ward spiral of slashing wages and importing “cheap food”. If we made more things in NZ, we would export less people to Australia, and our balance of trade would improve. Ravlich points out the creation of underclass in NZ due to the loss of Trade Union representation and employment bargaining: the loss of social and cultural rights soon followed under neo-liberalism. For some time, NZ has had a two speed economy with elites controlling the media and parliament. Political correctness flows from this homogenization where dissent is effectively stamped out. The young, Maori and Pacific Islanders are shut out that is why nearly 1/4 million people are not enrolled to vote. Nearly 10,000 of these people are in prison. Money is a poor master and our current economic system only rewards those with the right CV. Economics is dominated by people who belong to either the Keynesian or Friedman schools, or whether you believe in the critique by Marx, or the benefits of free enterprise. As I wrote some 33 years ago at University, Marxism, as such, has never been implemented as the politicians like Lenin, Stalin, Mao and Castro have used it for their own ends to take away individual freedom. A biblical basis accords with comprehensive support for individual rights and the central place of family which are aspects missing from either the “left” or “right” version of economics. Jeremiah 17:9 The heart is deceitful above all things, and desperately sick; who can understand it? References AG Ravlich (2009) Freedom from our Social Prisons: Lexington Books UK D Korten (2010) Agenda for a New Economy: Berrett-Koehler USA D & R Wiedemer & C Spitzer (2011) Aftershock: Wiley & Co USA ………………………………………………………………….. 1) The pattern of loaning countries money they can’t repay and then they end up selling off state assets and cheap resources has been commented on in Confessions of an Economic Hit Man, by John Perkins http://www.economichitman.com/ |