GUEST BLOG: Bryan Bruce – Crisis? What Crisis?
Right wing Neoliberal governments love to talk up a crisis, real or imagined, because it helps sell the austerity measures they want to push like cutting public services.
Why?
Because it is central to their ideology that there should be less government, less public expenditure and less tax in peoples’ lives. It really helps them to justify the autocratic decisions they take under urgency ([delete space] as our current National/Act/NZ First coalition has done) if they can claim we are facing an economic crisis.
But are we?
Let’s take the issue of debt.
Our country is in too much debt and we’ve got to “balance the books” is a mantra you will increasingly hear from Finance Minister Willis as she softens us up for what is likely to be an austerity budget.
Now while living beyond our means is something we understand from our own personal experience is not a great thing,we also know that the days when we could save up to buy a house are long gone because house prices keep rising at a faster rate than we can save. For most of us then, taking on a mortgage debt that we can manage from our income is not exactly a bad thing.
One of the measures economists use to determine how much debt a nation can comfortably carry is the debt-to-GDP ratio. (GDP being the value added created through the production of goods and services in a country) According to the Organisation for Economic Co-operation and Development our current debt-to-GDP ratio is 56%.
Sounds bad doesn’t`? Especially when the pre-Covid aim was to keep our national debt below 30%.
Sounds like a crisis!!
Until, that is, you look at the OECD’s chart of debt-to-GDP ratios and see that of the 42 countries they list, 26 of them are carrying more debt than New Zealand. Here’s a selection.
NZ 56%
Australia 70.8%
UK 104%
Canada 113.3%
France 117%
USA 144%
Italy 148%
Greece 193%
Japan 254%
(Source )
The reality is that in the wake of a disastrous pandemic our debt-to-GDP ratio is lower than that of many other countries.
So let’s just get a grip.
Bryan Bruce is one of New Zealand’s most important and respected documentary makers. His work is available on bryanbruce.substack.com
Trouble is there are an awful lot of tossers that don’t have a f’ing clue so they just parrot what Luxon says. So called businessmen that don’t really know their arse from their elbow.
Simple solution, don’t give tax cuts and pay down debt quicker then. But no, they are full of it.
Others are doing worse than us, so no matter how badly off we are, we’re still OK? Is that it?
It sounds like that’s the argument being put forward. So get a grip.
No it means this pathetic fixation on zero debt ( which your wanker coalition don’t actually believe) is f’ing ridiculous. Those countries are better off than we are.
Your idiot coalition spout bullshit, but won’t attempt to pay down debt faster despite the austerity. WAKE UP
Some of those comparisons are a little unreasonable- Australia has functioning primary production, Japan has functioning industry the US has the advantage of holding the world hostage to their ‘global reserve currency’ even if it doesn’t produce anything anyone wants. But yes, we certainly have every reason to expect we can run debt-to-GDP ratios as bad as complete s**thole countries like the UK or Italy.
If you consider our debt is bad think again
Some bang on about it but they don’t stop to think about the state of our infrastructure such as hospitals, school etc and that we have a low wage economy.
If more debt was taken on we would be able to build decent infrastructure and attract decent staff.
I can see to some extent why you need a decent rate of return on roads but cannot understand the same logic being applied to health, education, police and social policy.
A happy healthy society will generate it’s own positive rate of return, a unhealthy unhappy society will generate a negative rate.
Simple really.
Great stuff Bryan – the facts you present highlight a situation reminiscent of that when FDR said; “We have nothing to fear but fear itself”, and from which, but for a lack of the policies he promoted, we might extricate ourselves. But the Capitalists hated Roosevelt for being a “socialist” and so subsequently cancelled all his initiatives until finally, under Clinton, they got rid of the Glass-Steagall Act and the #@%&@! really hit the fan.
Yes when in doubt say the words “fiscal cliff” …say them as often as possible until you feel you have scared everyone.
Funny how it is the same people who think it fine for the banks to lend us individuals multiple 100% of our annual income but will and gnash their teeth over a 56% figure for Government.
How many house holds have only 56% debt ? fuck all .Most have over 100% and total household debt is 146% of GDP 540Billion .Now that is the real problem here in NZ NOT GOVERNMENT DBT .Why do people in the street think it is ok to have personal debt of that level but think it is bad for the government to have one third of that level of debt .If i was a banker I know who I would rather lend to and it is not the over debted households
Yes, Gordon too many New Zealanders have a tick em up bro mentality keeping up with the Jones!
Luxon spent two years trying to talk the economy into a recession when in opposition .6 months in government and he finaly has his wish ,but has no clue what to do about it .
Problem is diddly squat long term investment has been done with any debt taken on.
Don’t have a problem taking on debt if its for worthwhile infrastructure but alas we think in five year cycles not thirty so when a hospital say, gets built there is generally enough beds for five years time of growth not thirty and don’t get me started on the bloody highways we build one lane and get nowhere in a hurry, increasing cost on all fronts, producer, carrier, consumer, environment the whole shooting box.
If our imports cost more than we get for our exports then we have a debt (usually in US dollars) to pay. The rest of the debt (deficit) must be owed to our own banks that deal in NZ dollars. Those banks create NZ dollars by putting numbers of dollars into the borrowers accounts while putting an asset for the same amount in the banks account. The borrower gets money in his/her account and in double-entry bookkeeping gets a liability in the borrowers accounts. Why not have the government short circuit it all and just create the money for the state to use for public good? The government can not control the money supply to prevent inflation if it does not know how much money the banks have created.
Yes, Gordon too many New Zealanders have a tick em up bro mentality keeping up with the Jones!