Tuesday, January 29, 2008

No answer

John Key's speech-writers had nine questions for Helen Clark:

• Why, after eight years of Labour, are we paying the second-highest interest rates in the developed world?
• Why, under Labour, is the gap between our wages, and wages in Australia and other parts of the world, getting bigger and bigger?
• Why, under Labour, do we get a tax cut only in election year, when we really needed it years ago?
• Why are grocery and petrol prices going through the roof?
• Why can't our hardworking kids afford to buy their own house?
• Why is one in five Kiwi kids leaving school with grossly inadequate literacy and numeracy skills?
• Why, when Labour claim they aspire to be carbon-neutral, do our greenhouse gas emissions continue to rise at an alarming rate?
• Why hasn't the health system improved when billions of extra dollars have been poured into it?
• Why is violent crime against innocent New Zealanders continuing to soar and why is Labour unable to do anything about it?

Unfortunately, neither the speech-writers nor John Key's policy-writers have virtually any answer to the obvious follow-up question: "What the hell would National do about any or all of these nine?" The answer to most of them still seems to be  either "Beats the hell out of me," or, "Much the same as Labour."

UPDATE: The Hive claims there was plenty of detail, all of which they liked.  I'd suggest however that the liberal use of phrases like "focus on," "more careful with" and "unrelenting in our quest" speak less of detail than they do of wishful thinking.  Every government since Jenny Shipley's has promised for example to "reduce the burden of compliance and bureaucracy."  Not one has yet managed it.  Key offers no details of how his government would be any different.  Like all such promises have proved to be, John Key's promise is all sizzle, no sausage.

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2 Comments:

Blogger Greg B said...

Two notes:

1. I've been reading many books about inflation recently. Can't imagine why!

2. Given the high level of 'employment' and social support currently enjoyed by the proles and the disconcerting frequency of murders what will the crime rate be like if we have a "recession"??

1/29/2008 05:32:00 pm  
Anonymous Andrew Bates said...

PC,

I'm not convinced the interest rate is higher than it would be if we switched to some sort of intermediate market mechanism. (By this I mean the RBNZ saying "we're not printing any more money so you banks and lending societies need to bid for it".)

We've been printing stacks of money which has fueled underpinned massive malinvestment and a reduction in the underlying real capital base. This would lead to the inflation we're now seeing but not to lower interest rates - the rates would reflect the need for reduction of consumption and increased saving.

In a market environment you would expect the rates to drop following the recent liquidation. I agree that pushing them up in response to the regulation-fuelled increase in the cost of housing is mistaken but am not sure this translates to our interest costs being too high.

Of course, it's impossible to tell what interest rates should be but I'm inclined to agree with Shostak that rates have been held artificially low for political reasons.

What makes you think they should be lower? Comparisons with other developed countries are a bit limited if those countries have a similar monetary system.

1/29/2008 10:20:00 pm  

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