I really think Verity Johnson is one of the best political columnists in NZ. She represents educated middle class Auckland who are lefty by simple virtue of being a decent human being who has compassion for her fellow Aucklanders.
Her latest column explodes one of the great neoliberal myths, that the Government is a household that has to cut its budget the way a household does…
Verity Johnson: ‘Running the country like a household’ is a political con
OPINION: I hate budget week.
Hate it with a true, enduring, ruminate-about-this-at-1am, walking around the empty kitchen gesticulating with a teaspoon, pointing at the furniture and saying emphatically, “but the thing you don’t understand is…!” kinda fury.
Why? Because I can’t stand how they speak to us.
They being the Government, and us being me and you, the poor mug of a taxpayer. I don’t mean the incomprehensible acronyms, the unintelligible jargon, or how they all fancy themselves.
I mean how they tell you we need to run a country like you would a household.
You know what I’m talking about. It’s when Nicola Willis said this week, “New Zealand is a country that has run out of credit cards.” Or last year, saying that the government’s budget is “just like a household” budget and that it needs to balance its books.
Ever since its election, it’s used this analogy of ordinary household budgeting to justify its economic attitude. (All the while implying that, under the Labour Government, we all acted like an irresponsible little spendthrift who racked up 10k of AfterPay debt on UberEats.)
I hate this deeply dangerous, disingenuous metaphor. And I hate how this thinking has been pistol-whipped into us over the past two years, with all the subtlety of a drug dealer promising to break out legs by Friday unless we cough up.
So, let’s get one thing straight, you do not run a country like you run a household.
It’s deliberately misleading to say that. (So much so that economists in England started protesting its usage on the BBC.) Household debt and government debt are totally different.
Household spending has a limit on how much you make and how much you borrow, right? You make 60k a year, you’ve got a 5k limit on your card, there’s caps. Plus, if you max out that card, and you can’t pay it back, eventually someone’s gonna come and take your TV.
That’s categorically not how governments work. They don’t have fixed income (if they run out of cash, they can raise taxes, borrow from overseas lenders or get foreign investors.) They also don’t really have a fixed credit limit on what they can borrow. (They have something called a GDP ratio, ie. how much they’ve borrowed as a country versus how much their annual output is. In the UK, that’s 95.5%. In NZ, last year we’re at 45%. So by global standards, we’re actually doing really good.) And also, if the government doesn’t pay it back, no one takes the TV. As Andrew Dilnot, former head of the UK statistics authority said, unlike households, countries don’t die, retire, or ever really pay back their debt.
So in a very literal sense, this metaphor is whack.
…she’s 1000% right, this ‘‘Running the country like a household’’ myth has always played to small business morality while actually empowering Big Business greed.
We don’t have a Government debt problem, we have a private business debt problem!
We should be taking on more debt to fund infrastructure, but this false ‘Running the country like a household’ myth gets trotted out to shut that argument down and it’s so the right can manufacture their own agenda to promote private business interests over the collective good.
This is late stage capitalism on a burning planet, we have run out of time and need to rethink the neoliberal mythology our entire economic and political construct is built upon.
Change is coming whether we want it or not.
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Nicola Willis is most likely a very good house keeper in her home, not so good in the house of representatives. Comparing household budgets to Government budgets, new ferry boat investment with Ferraris and Toyotas and Government support for business and people during a global pandemic as wasteful spending only shows clearly how her mind works.
Nicola Willis is just explaining what she has been instructed to do but she has taken it upon herself to do that in a way that a ten year old might understand. Nicola Willis has no qualifications that would be expected of a competent minister of finance other than to turn predetermined policy into children’s bedtime stories intended to put a considered proportion of the electorate safely to sleep.
Unfortunately for Nicola a fair and growing proportion of the electorate is either wide awake or having nightmares.
Great post!
Not so sure she runs a good household budget either remember on her salary she couldn’t buy popcorn or go to the movies
Good point, Nicola Willis may keep a good house but most likely only with austerity budgets, explains the not being able to afford popcorn, or taking the kids to the movies. Nicola can though afford an $1,100 blue dress designed in the UK and worn on budget day. Jacinda Ardern as PM at least purchased and promoted the local NZ design and manufacturing industry.
Margaret Thatcher said the problem with socialism is that you eventually run out of other peoples money.
Wrong. Because the countries money is the creation of the Government it can not go bankrupt but can create more money. However in creation of money and funding public good, it must have available resources to be mobilised so excess money does not cause inflation.
Margaret Thatcher said that there was no free lunch.
Wrong. Everything depends on the energy coming from solar radiation and it comes free. Ancient solar radiation gifts provide coal, gas, and petroleum as a free gift on nature. The water cycle that provides water free is also created by free solar energy.
Margaret Thatcher said that there was no magic money tree.
Wrong. For every country that has its own fiat currency has a source of money. The Government’s Reserve bank creates the money and backs its value for the country. That trust in the moneys value enables the transactions of the citizens. The cost should be considered the labour and resources used in production not the money.
Margaret Thatcher said that there was no such thing as society. There are individual men and women, and there are families.
Wrong. Humans are social beings that gather together in social groups such as families, Churches, sports clubs, political parties, choirs, hobby clubs, social clubs, and amateur dramatic groups. The people contribute to the group for it to function as a social group.
Margaret Thatcher said that the Government had to work within its income just like a household.
Wrong. Because the countries money is the creation of the Government it can not go bankrupt but it can create more money. However in creation of money and funding public good, it must have available resources to be mobilised so excess money does not cause inflation.
Margaret Thatcher said that the environmental challenge which confronts the whole world demands an equivalent response from the whole world. Every country will be affected and no one can opt out.
Correct. She was tutored in chemistry by a Nobel Prize winner and thus understood the reality of climate overheating and the economic chaos caused.
Verity is obviously in touch with real people which is something the current government would not know anything about. While I don’t approve of all her lifestyle choices she would be a lot easier to get along with than anyone in the current government.
i love Verity because she is a real person who lives her life the way she wants and is in constant contact wuth real Kiwis not just the inflated ego rich pricks .
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