Welcome to 2014- An Election Year

Who is the stupid who refuses to be fixed?

As 2014 dawns we should all recollect that it is an election year and the chance for New Zealanders to exercise their right to vote and to decide the future for their children and for future generations.
As the 2013 local body elections demonstrated the big problem facing the nation is voter apathy ( an issue that is evident in Cameron's Tory governed UK)  as voters come to believe that even if they vote against the incumbent the conservatives will get back in.

One only has to scan the headlines of the NZ newspapers to see how this message is reiterated until it has sunk into the subconscious thinking of voters. From opinionista pieces advocating further tax cuts, arguing that there are too many divides in the opposition to be credible governments compared to the over-whelming arrogance of the neo-liberal, asset selling Key led National-Act Government, that asset sales are of great economic benefit to NZ voters,  to puff pieces promising greater futures based on the "aspirational" purchasing power of the privileged 1% we are being "stroked" into accepting the belief that since the advent of the Key-English New Zealand has never had it so good and that Key, a creation of the PR company, Crosby-Textor,  can walk on water.

However, these opinionista pieces don't always stand up to detailed scrutiny. John Armstrong's call for Key to continue his tax cuts for the wealthy policies is demonstrably irresponsible , the argument that Key is the font of all accurate knowledge of economics, world affairs and ethics and is, therefore, able to walk, with his entire family and security guards in tow, all the way to his home in Hawaii ignores his constant inability to accurately recall much of his past or demonstrate knowledge of his or his cabinet's portfolios and should cause New Zealand voters pause to reflect on consequences of either not voting because "the opinionistas tell me that Key will win so why bother?" or carefully examining the policy directions being offered by Labour, by the Greens, by NZ First and, as a last resort, by the National-Act parties and then heading for the polling booths and voting for a return to responsible economic management, a return to ethical and responsible government and a return to

The NZ voter under a Key led and owned National-Act govt.

government for and by the people which means a NO vote for those who would asset strip the country, introduce failed education policies in order to pander to a soliltary, discredited political party and generally mismanage the economy to such an extent that poverty, food bank queues and inequality have increased along with public debt.

The answer to the intial question posed.

I, for one, agree with the young woman in this photograph for it answers the question posed in the initial photograph of this blog.

Christmas Greetings to all Tade Unionists from........ the Pope.

A note that Simon Bridges and Jammy-Lea Ross should take note of.

It's a pity that many in this present NZ Government cannot realise the sanity of this statement.

More on being apoplectic over the Len Brown affair.

The witch hunt demand for Len to resign, that has been orchestrated by the malcontents on the right wing of the Auckland City Council and building on the Slater - Wewege mud raking attempt to blackmail the Mayor into resigning in favour of their favoured candidate, should be lanced before it, like the boil on the body politic it is, bursts leaving none of those involved uncontaminated.

Ex Deputy Mayor of Manukau, Sua Willie Sio. MP states the motivations of those involved very pertinently in a facebook post and on the Daily Blog the hypocrisy of those feeding the hysteria is demonstrated in the article "David Farrar calls for John Key to resign"

In the aftermath of the Council Debate  more has been revealed about the "Auckland Five" and their agenda - leaving Auckland contemplating the old Biblical adage "Let he who is without sin cast the first stone." It would appear that Quax has never been a cooperative council member and has failed to file his returns for at least two years (2011-2012)and when he has questions have been raised. that Brewer has failed to declare a four day free be trip to Australia (22.12.13. Brewer attempts to cover his tracks - uses the "blame the employees" strategy to divert attention from his own indescretion and hypocrisy) , that Linda Cooper campaigned on supporting the introduction of  the Living Wage for Auckland Council employees and has reneged on support at least twice... Hypocrisy reigns supreme amid these five conspirators.

Instead of getting on with the job they were elected to do these five Councillors have declared themselves witch-hunters.

Auckland and its Councillors need to  pull up their "morally outraged knickers" and  get on with the job of governing the city, ensuring that the Auckland Plan, efficient public transport and the assets of the city are protected and retained for the benefit of those who come after.

Inequality and the Left- From Social Europe Journal. A view that resonates in New Zealand.

Inequality And The Left

16/12/2013 by Simon Wren-Lewis 2 Comments

Simon Wren-Lewis

In the debate over inequality and priorities set off by Ezra Klein’s article, Kathleen Geier writes (HT MT) “the policy fixes for economic inequality are fairly clear: in no particular order, they include a higher minimum wage, stronger labor unions, a more progressive tax system, a more generous social welfare state, macroeconomic policies that promote a full employment economy, and much more powerful government regulations, particularly in the banking and finance sector.” And part of me thought, do we really want to go back to the 1970s?
Maybe this is being unfair for two reasons. First, in terms of the strength of unions, or the progressivity of taxes, the 1970s in the UK was rather different from the 1970s in the US. Second, perhaps all we are talking about here is swinging the pendulum back a little way, and not all the way to where it was before Reagan and Thatcher. Yet perhaps my reaction explains why inequality is hardly discussed in public by the mainstream political parties – at least in the UK.
The 1997-2010 Labour government was very active in attempting to reduce poverty (with some success), but was “intensely relaxed about people getting filthy rich as long as they pay their taxes.” This was not a whim but a strategy. It wanted to distance itself from what it called ‘Old Labour’, which was associated in particular with the trade unions.  Policies that were explicitly aimed at greater equality were too close to Old Labour [1], but policies that tackled poverty commanded more widespread support. Another way of saying the same thing was that Thatcherism was defined by its hostility to the unions, and its reduction of the top rates of income tax, rather than its hostility to the welfare state.
I think these points are important if we want to address an apparent paradox.

As this video illustrates (here is the equivalent for the US), growing inequality is not popular. Fairness is up there with liberty as a universally agreed goal, and most people do not regard the current distribution of income as fair. In addition, evidence that inequality is associated with many other ills is becoming stronger by the day. Yet the UK opposition today retains the previous government’s reluctance to campaign on the subject.
This paradox appears all the more perplexing after the financial crisis, for two reasons. First the financial crisis exploded the idea that high pay was always justified in terms of the contribution those being paid were making to society. High paid bankers are one of the most unpopular groups in society right now, and it would be quite easy to argue that these bankers have encouraged other business leaders to pay themselves more than they deserve. Second, while Thatcherism did not attempt to roll back the welfare state, austerity has meant that the political right has chosen to paint poverty as laziness. As a result, reducing poverty is no longer an uncontroversial goal.[2]
What is the answer to this paradox? Why is tackling inequality not seen as a vote winner on the mainstream left? I can think of two possible answers, but I’m not confident about either. One, picking up from the historical experience I discussed above, is that reducing inequality is still connected in many minds with increasing the power of trade unions, and this is a turn-off for voters. A second is that it is not popular opinion that matters directly, but instead the opinion of sections of the media and business community that are not forever bound to the political right. Politicians on the left may believe that they need some support from both sectors if they are to win elections. Policies that reduce poverty, or reduce unemployment, do not directly threaten these groups, while policies that might reduce the incomes of the top 10% do.
This leads me to one last argument, which extends a point made by Paul Krugman. I agree with him that “we know how to fight unemployment — not perfectly, but good old basic macroeconomics has worked very well since 2008…. The causes of soaring inequality, on the other hand, are more mysterious; so are the channels through which we might reverse this trend. We know some things, but there is much more room for new knowledge here than in business cycle macro.” My extension would be as follows. The main reason why governments have failed to deal with unemployment are accidental rather than intrinsic: the best instrument available in a liquidity trap (additional government spending) conflicts with the desire of those on the right to see a smaller state. (Those who oppose all forms of stimulus are still a minority.) In contrast, reversing inequality directly threatens the interests of most of those who wield political influence, so it is much less clear how you overcome this political hurdle to reverse the growth in inequality.
[1] This association is of course encouraged by the political right, which is quick to brand any attempt at redistribution as ‘class war’.
[2] The financial crisis did allow the Labour government to create a new top rate of income tax equal to 50%, but this was justified on the basis that the rich were more able to shoulder the burden of reducing the budget deficit, rather than that they were earning too much in the first place.
This post was first published on Mainly Macro

On asset Sales and arrogance

"When faced with a vote of no confidence the best idea is to insult the voters." John PinoKeyo Key.

The Anti-Asset Sales Referendum results poured in with a resounding message to the Key government... STOP!! we don't want you to continue selling off the country's assets to your asset stripping mates.
The country learnt its lesson from the resounding failure that earlier asset stripping left us with. The research into the "benefits" of asset sales has demonstrated the risk and poor returns to the country as a result so back off and admit the "mandate" Key trumpets was conditional on you actually listening to the will of the people.
Unfortunately for New Zealand the Prime Minister and his corporate cronies clustered around the Cabinet table and closeted in secret dealing board rooms in Tamaki and Epsom are deaf to the sum of the electorates and simply declare that those who didn't vote are in total agreement with the policy and thus the "mandate" remains...to drive NZ into a client state status to any foreign asset stripping corporates who recognise a fire sale when they see one.

On being apoplectic, angry and Browned off- the Auckland Mayoralty affair

I suppose I should be apoplectic. I suppose I should be angry. I suppose I should be offended. I suppose  I should be outraged. I suppose I should be livid. I suppose I should be incensed. I suppose I should be baying for Len Brown’s blood.

At least that is what the prurient, the righteously outraged of the C&R, National, ACT and associated hangers on would want me to be.

But I’m not, at least not with Len Brown.

I am, though, apoplectic, angry, offended,outraged, incensed and baying for the blood of the holier than thou prurient and salaciously salivating opinionistas and right-wing councillors like Dick Quax and company. For these people are the people who have demonstrated a desire to ignore the manifold infrastructural problems, left behind after generations of inadequate governance by the Citizens & Ratepayers (National Party in drag) Councils,  that besiege Auckland and to concentrate their pusillanimous minds on the minutiae of the Mayor’s sexual dalliance.

I voted for the Mayor to be a responsible governor of the city based on his performance in Manukau and as Mayor of Auckland. I voted for the Mayor on the basis of his vision for the city. I voted for the Mayor on the basis of his record as a Mayor. I did not cast my vote  on the basis of the Mayor’s private life for if I did allow my vote to be persuaded by the private lives of those who would represent us on the Council I would probably be very limited indeed as to who I could cast a vote for.

I simply do not believe that what a person does in their private life should affect the person’s ability, as a Councillor or Mayor, to act in the greater interest of the city. There is a caveat to that. If the Councillor or Mayor was known to be a swindler, a scam artist or involved in self serving business manipulation then there is a legitimate argument to question their involvement in public administration.

However, this caveat does not apply in the Len Brown affair. Len Brown has a clean business record as a Councillor and as a Mayor. What is of concern is the readiness of those who are apoplectic, angry, offended, outraged, livid, incensed and baying for blood to accept and act upon the proposition presented by John Palino’s aide de camp Luige Wewege and the obnoxiously offensive Cameron Slater that blackmail is an acceptable tool in local body and national politics, especially if their candidate or group are to be defeated at the ballot box.

I would and will find it incredibly easy to decide not vote for or side with the group or any of the councillors who have allowed themselves to be persuaded that the revelations and subsequent enquiries into Len Brown’s private life and his affair with Bevan Chaung are the basis for undermining the progress being made to build Auckland’s infra structure and develop its services to the rate payers under Mayor Brown’s leadership.

Len Brown need not resign for to do so would be to give credibility to those who would prefer blackmail over policy, would prefer blackmail over performance and prefer to live in the dark, black underbelly of politics rather than developing and presenting programmes that ensure Auckland becomes and remains a liveable city that one can be proud to live in. Unfortunately, those who would discredit the office of the Mayor, those who would work to destroy Len Brown’s political credibility and record remain as embarrassments to the citizens and ratepayers of the city and region.
Surprise, surprise the councillors proposing to move no confidence in the Mayor have revealed themselves. They are  Dick Quax, Linda Cooper, Cameron Brewer, Sharon Stewart and Denise Krum.Their record speaks for themselves.

PS: Sua William Sio has put the case to support Len well on Facebook.

These political cartoons are worth sharing and using whenever the PinoKeyo Cabinet open their mouths to annouince new policy initiatives based on neo-liberal fallacies,

Great arguments for the minimum wage or living wage- how the Nats attempt to counter them.

The Treasury's advice to Key to remove unemployment statistics from the list of embarrassing policy failures.

The fallacy of comparing the country's budget tpo family house keeping exposed.

What Hekia Parata dreams of...

Simon Bridges' nightmares

Nelson Mandela's Death- an obituary for a great and inspiring man. (Social Europe Journal)

This obituary for Nelson Mandela says it all as we reconcile ourselves to the passing of a great, inspirational and respected man. 

I was struck by the sincerity and relevance of Helen Clark's reflections on the death of Nelson Mandela on Radio New Zealand yesterday.  Her intimate knowledge of his life, his actions and philosophy spoke for us all as we reflect on

Nelson Mandela’s Political Legacy

05/12/2013 by Henning Meyer 1 Comment

Nelson Mandela

This evening has brought very sad news. The former South African President – and one of the most respected and inspirational political leaders of recent times – Nelson Mandela has passed away aged 95 after battling ill health for some time. There will be no shortage of tributes for a truly great man who has shaped modern South Africa but I would like to use this post to put some of my own thoughts about the great man in order.
So what was so special about Nelson Mandela? I think what has impressed me most about him and the live he has lived is his deep commitment to a cause – the cause of abolishing Apartheid and creating a new South Africa in which citizens can live together regardless of background. I have been to South Africa a few years ago and of course there is much more work to be done before the country can fulfil its true potential. But what was achieved by Nelson Mandela and his followers is a true revolution.
The second aspect that has deeply impressed me is the way in which this revolution was achieved. After leaving prison following decades of imprisonment, Nelson Mandela was not bitter or out for revenge but showed great strength of character by setting in motion a process of reconciliation – leading it by example. This combination of dedication to a just cause and the great strength of character shown pursuing it in my eyes is the foundation of the legend that he is. It is also the reason why he was such a dignified leader.

Nelson Mandela’s Political Legacy

How will people judge the live of Nelson Mandela? What will his political legacy be? Nobody knows yet but I hope that the qualities I mentioned above – dedication to a just cause and great strength of character – will become more of a political model in a world in which these characteristics are all too often absent. “Pragmatic” day-to-day management of the status quo – the dominant political model of today – can never replace the dedication and character shown by people like Nelson Mandela.
There surely are enough things in today’s world that need to be changed but a leader of Nelson Mandela’s calibre is nowhere to be seen. For many of our contemporary politicians even accepting the task of fundamental change seems too daunting. That’s why too many of them don’t even try. This needs to change and leads me to my favourite Mandela quote, meant to encourage people not to discard their ambitions but to try realising them: “It is always impossible until it is done”.
Today, the world has lost an inspirational leader and a true role model. He will leave a void that will be very difficult – if not impossible – to fill.

Addendum by Irascible Curmudegeon:
It is, I think, a pity that New Zealand will be represented at Mandela's funeral by a man who has no recollection of the anti-apartheid movement, the protests against apartheid in 1981 or has any real knowledge or appreciation of the real contribution Mandela made to South Africa, to New Zealand's race relations and the world.
Mind you the UK will be represented by another Tory, in David Cameron, whose experience of the anti-apartheid movement and the influence of Nelson Mandela is as questionable as John Key's and the New Zealand National Party's.

Neo-Liberal Economics a faulty concept based on corrupted statistics. (Social Europe Journal)

Flexicurity: The Model That Never Was

06/12/2013 by Ronald Janssen 1 Comment

Ronald Janssen

This article is highly pertinent when read against the neo-liberal employment law reforms being propounded by the National-Act government's Simon Bridges and his side-kick Jami Lea Ross. It demonstrates the fallacies that their anti-Union, anti-worker logic is based on.

Flexicurity – Remember the flexicurity model that was launched by the European Commission in the mid 2000’s? Claiming that there existed such a thing as a ‘golden triangle of flexicurity’ (see illustration below), the Commission urged member states and trade unions to give up on job protection in exchange for adequate unemployment benefits and active labour market policies.
The inspiration for this was clearly found in Denmark with the country being hailed as the perfect illustration of how a flexible labour market with low restrictions on employers to fire workers could still offer high security of employment.

Source: OECD Employment Outlook 2004

In this context, the latest OECD Employment Outlook from the summer of 2013 is extremely interesting. In this publication, the OECD thoroughly reviewed its database on job protection indicators. In particular, job protection arrangements resulting from collective bargaining practice and case law have now been included more systematically than was the case before. This implies that these new OECD indicators should provide an improved picture of reality, in particular when weak job protection in labour law is corrected by collective bargaining agreements and/or case law imposing additional and more stringent job protection.

Flexicurity, what flexicurity?

This review of the OECD database leads to surprising conclusions, in particular regarding the system of flexicurity in Denmark. The graph below shows the newly estimated employment protection indicators for regular (open ended) contracts, thereby also adding job protection in case of collective dismissals. The value of the employment protection legislation (EPL) indicator in the graph is obtained by applying weights to these two sub indicators, with regular contract protection counting for 70%, and collective dismissal protection for 30%. Indicator values close to zero indicate a very low level of job protection, whereas scores going up to an indicator value of 5 or 6 point to employers experiencing extreme difficulties in firing workers.

Protection of regular workers against individual and collective dismissals, 2013

Source: http://www.oecd.org/employment/emp/oecdindicatorsofemploymentprotection.htm

The graph shows that Denmark does not have a labour market that is particularly flexible. With an indicator value of 2.3, the level of job protection in Denmark is not below but exactly at the OECD average. It can also be seen that regular contracts and collective dismissals in Denmark are protected at a level that is similar to Germany, Spain and Greece. Also, Danish job protection is not very much below the levels of job protection registered in France and Italy. Meanwhile, the gap in job protection between Denmark and the flexible Anglosaxon labour markets is significant, with the UK and the US at values as low as 1.5 and 1. In practical terms, the 2.3 score for EPL in Denmark translates into 4 (2)  months of advance notification for a white collar (blue collar) worker having 4 years of tenure in the job, with additional notification periods, procedures and delays in case it concerns a collective dismissal.
Delving deeper into the history of the statistics allows us to further back up the conclusion that the OECD has been widely off the mark on this all these years. In the final graph we see the values for the sub-indicators on job protection of regular contracts for the year 2004 as estimated by the OECD back in 2004, (source: the OECD  2004 Employment Outlook). These are then compared with the EPL values for the same year 2004 which are now to be found in today’s 2013 OECD database. From this comparison, it is clear what has happened. Back in 2004 the OECD (the blue bars in the graph) estimated that regular jobs in Denmark were poorly protected with an indicator value of just 1.5. Based on the estimates done in 2004, Denmark could indeed be characterised as having a flexible labour market, with the degree of job protection as low as in the UK and Ireland and substantially below continental countries such Germany or France. (Look at the poor protection NZ has for individual regular jobs compared to Denmark on which this article is based. Note there are no protections for collective employment protections recorded for NZ either.)
Now look at the red bars, registering the current OECD estimate from 2013 of the level of regular job protection back in 2004. This turns the picture completely around. For Denmark, the new estimate for 2004 now comes out substantially higher, at a value of 2.1. This actually means that, in contrast to the estimates from the earlier database, Danish workers in 2004 were benefiting from a level of job protection that is twice as high as in the UK and is not far removed from the job protection levels of France and Germany.

A similar comparison (not shown here) can be done on the other sub-indicator, the protection of jobs in case of collective dismissals. Its conclusion is that, in case of collective dismissals, Danish workers were as strongly protected as German workers and even more protected than their French or Italian colleagues.

All of this actually means that the whole policy of flexicurity, as it has been promoted all these years by the European Commission, has been based on a statistical illusion. The argument according to which the success of labour market performance in Denmark can be put down to the fact that workers and not their jobs are being protected is simply not correct. Through its system of collective bargaining, Danish workers are being offered robust levels of job protection. The true peculiarity and advantage of the Danish system lies in the fact that Denmark invests heavily in both passive and active labour market policies. (Note the conclusion... it is certainly damning for New Zealand's employment and productivity statistics.) It does not lie with employers having the possibility of easy firing.

The nett result of Privatisation of the State Assets - expressed as a graphic

This cartoon displays the results of privatisation of the State assets, especially public utilities. The mistake of wholesale sell down of State assets is being recognised, painfully, in the UK and across Europe as the realisation that private ownership of what were once public utilities, developed and provided for the common good, has meant asset stripping for greater private profit.

Where the money will go as the country's assets get sold off to foreign asset stripping corporates.

All the more reason to vote NO in the citizen's initiated referendum oposed to the sale of New Zealand's state assets.

Wealth distribution theory according to John Key.

How John Key sees the world the justification for tax cuts for the uber wealthy.

Despite all evidence to the contrary John Key, Bill English and their asset stripping mates persist in believing the myth of the golden deluge or trickle down economics to justify increasing taxes on the workers while cutting tax for the uber wealthy money speculators.

 An even more graphic demonstration of the social structure that corporate feudalism has imposed on our society. As the countries assets are steadily hocked off to the corporate raiders and asset strippers the concentration of the country's wealth and benefits in the hands of the top.0001% of the population will be even more pronounced.

Hekia Parata reacts to new studies showing that her policies have failed national & international standards.

The National Party caucus react rationally to research that reveals Education policy failures against International and National Standards.

With much support from Key Gerry takes the privatisation of assets literally, displays his assets ready for a quick sale..

Gerry Brownlee takes asset sales literally.

Two Graphs that explain a lot - why PinoKeyo is being "supported" by Double Dipton in public as the country gets flogged off.

The debt John, The gambling banker, has run up since coming to power according to the Reserve Bank. A graphic demonstration of how bad  economic managers he and his deputy Double Dipton English are. This probably explains why Key is so keen to put NZ's assets up for fire sale bargain basement prices in the face of public opposition.

The Reserve Bank demonstrates Key's incompetence as a manager of the economy.

The latest Roy Morgan Poll results tracking the likelihood of a National win in the 2014 election steadily down ward.

No wonder PinoKeyo is looking to divine intervention from a more conservative party. Expect the closet warfare within the National-Act caucus to start spilling blood.

These Need No explanation.-- Tell PinoKeyo that his policies are wrong.

These need no explanation - the economics of selling the State assets (especially those developed for the public good) in any form of Private ownership is questionable and, as similar policy decisions have proven to lead to asset stripping and exploitation of the country by the corporate "investors," forced governments in Europe to reassess the neo-liberal, Thatcherite policies. 
New Zealand has already seen the negative results of earlier asset sales which ended in the Government having to repurchase. Now, driven by ideology rather than economic commonsense, the Key-Joyce-English government are determined to rile the public and continue putting the country on the auction block.
The referendum is the chance to tell the National-Act government to stop asset stripping the country.

Loss of Humour- another victim of privatisation policies

Humourless and Passionless in the quest for leadership.

Judith Collins takes aim at the individual's sense of humour as she seeks to privatise all possible personal assets.

The Bellman has been predicting that Judith Collins would reveal her Thatcherite tendencies at some point as the internal feuding for the leadership of the National Party heats up and so it is with her latest demonstration of the problems that the sale of personal and State assets is causing individuals in the National-ACT party.

The Bellman has assured us that Judith Collins was one of the first to embrace the privatisation of personal assets to demonstrate her support for the sale of all of the State assets before the 2014 election.

Apparently Judith Collins sold her sense of humour to Gerry Brownlee in a deal that required Ms Collins to stump up a deal sweetener of a contribution to Gerry's election campaign Vote catching bench plaques. Unfortunately for both Judith and Gerry someone got wind of this inspired strategy and started posting their own versions thus upsetting the Brownlee quest to become the supreme ruler of Christchurch.


When Collins learnt that David Cunliffe had used a series of puns in a humourous blog comment Collins' sale of her sense of humour left her with only one recourse- a vocal demonstration of her belief that she is the only person able and allowed to comment on issues and that anyone who dares hold that belief up to ridicule must be abused and accused of "sexism" or "personality assassination."

Humourless and passionless Judith Collins took the hook and awaits being reeled in.

At the risk of being accused of carping on, but by hoki one cannot help it, one must conclude that her reaction to the Cunliffe fishing puns has revealed two things: (1) that she is quick to snap at a baited hook and will be easily reeled in by a cunning fisherman like Cunliffe and (2) that if she does succeeed in pushing Key and his favoured successor, Joyce, out of the way the New Zealand voters will be subject to a disciplinarian who will remove all sense of fun from the NZ psyche.

Economic Fallacies of the Second Great Depression (Social Europe Journal) that under pin the present Government's policies

Four Fallacies Of The Second Great Depression

21/11/2013 by Robert Skidelsky 1 Comment

Robert Skidelsky

The period since 2008 has produced a plentiful crop of recycled economic fallacies, mostly falling from the lips of political leaders. Here are my four favorites.

The Swabian Housewife. (in NZ read "Waitakere Man" )“One should simply have asked the Swabian housewife,” said German Chancellor Angela Merkel after the collapse of Lehman Brothers in 2008. “She would have told us that you cannot live beyond your means.”

This sensible-sounding logic currently underpins austerity. The problem is that it ignores the effect of the housewife’s thrift on total demand. If all households curbed their expenditures, total consumption would fall, and so, too, would demand for labor. If the housewife’s husband loses his job, the household will be worse off than before.

The general case of this fallacy is the “fallacy of composition”: what makes sense for each household or company individually does not necessarily add up to the good of the whole. The particular case that John Maynard Keynes identified was the “paradox of thrift”: if everyone tries to save more in bad times, aggregate demand will fall, lowering total savings, because of the decrease in consumption and economic growth.

If the government tries to cut its deficit, households and firms will have to tighten their purse strings, resulting in less total spending. As a result, however much the government cuts its spending, its deficit will barely shrink. And if all countries pursue austerity simultaneously, lower demand for each country’s goods will lead to lower domestic and foreign consumption, leaving all worse off.

The government cannot spend money it does not have. This fallacy – often repeated by British Prime Minister David Cameron – treats governments as if they faced the same budget constraints as households or companies. (in NZ this is the favourite mantra of both Key (the gambler) and English (the "finance" minister) But governments are not like households or companies. They can always get the money they need by issuing bonds.

But won’t an increasingly indebted government have to pay ever-higher interest rates, so that debt-service costs eventually consume its entire revenue? The answer is no: the central bank can print enough extra money to hold down the cost of government debt. This is what so-called quantitative easing does. With near-zero interest rates, most Western governments cannot afford not to borrow.

This argument does not hold for a government without its own central bank, in which case it faces exactly the same budget constraint as the oft-cited Swabian housewife. That is why some eurozone member states got into so much trouble until the European Central Bank rescued them.

The national debt is deferred taxation. According to this oft-repeated fallacy, governments can raise money by issuing bonds, but, because bonds are loans, they will eventually have to be repaid, which can be done only by raising taxes. And, because taxpayers expect this, they will save now to pay their future tax bills. The more the government borrows to pay for its spending today, the more the public saves to pay future taxes, canceling out any stimulatory effect of the extra borrowing.

The problem with this argument is that governments are rarely faced with having to “pay off” their debts. They might choose to do so, but mostly they just roll them over by issuing new bonds. The longer the bonds’ maturities, the less frequently governments have to come to the market for new loans.

More important, when there are idle resources (for example, when unemployment is much higher than normal), the spending that results from the government’s borrowing brings these resources into use. The increased government revenue that this generates (plus the decreased spending on the unemployed) pays for the extra borrowing without having to raise taxes.

The national debt is a burden on future generations. This fallacy is repeated so often that it has entered the collective unconscious. The argument is that if the current generation spends more than it earns, the next generation will be forced to earn more than it spends to pay for it. (this is the favourite mantra of the disappearing ACT party and, on occassions, Key (the money dealer) )

But this ignores the fact that holders of the very same debt will be among the supposedly burdened future generations. Suppose my children have to pay off the debt to you that I incurred. They will be worse off. But you will be better off. This may be bad for the distribution of wealth and income, because it will enrich the creditor at the expense of the debtor, but there will be no net burden on future generations.

The principle is exactly the same when the holders of the national debt are foreigners (as with Greece), though the political opposition to repayment will be much greater.

Economics is luxuriant with fallacies, because it is not a natural science like physics or chemistry. Propositions in economics are rarely absolutely true or false. What is true in some circumstances may be false in others. Above all, the truth of many propositions depends on people’s expectations.

Consider the belief that the more the government borrows, the higher the future tax burden will be. If people act on this belief by saving every extra pound, dollar, or euro that the government puts in their pockets, the extra government spending will have no effect on economic activity, regardless of how many resources are idle. The government must then raise taxes – and the fallacy becomes a self-fulfilling prophecy.

So how are we to distinguish between true and false propositions in economics? Perhaps the dividing line should be drawn between propositions that hold only if people expect them to be true and those that are true irrespective of beliefs. The statement, “If we all saved more in a slump, we would all be better off,” is absolutely false. We would all be worse off. But the statement, “The more the government borrows, the more it has to pay for its borrowing,” is sometimes true and sometimes false.

Or perhaps the dividing line should be between propositions that depend on reasonable behavioral assumptions and those that depend on ludicrous ones. If people saved every extra penny of borrowed money that the government spent, the spending would have no stimulating effect. True. But such people exist only in economists’ models.

© Project Syndicate

This cartoon sums up the policy directions of the Key owned National-Act government.

This attitude is the one we have come to expect from John Key... a total lack of moral responsibility in the selfish quest for aggrandisment.

John Key's cold hearted refusal to recognise the responsibility of the State to compensate the families who lost loved ones in the Pike River disaster and  the recent appearance of the Jammy-Lea Ross / Ports of Auckland / Slater-Lusk framed anti-worker, anti-Union bill and the up-coming Simian Bridges created Employment law amendments are a reflection of the attitudes expressed by this pointed cartoon.

Those that drive companies into the ground and then demand and receive a taxpayer funded bail out are those"entitled" to a golden deluge rewarding them for their incompetence while those that work and positively contribute to the economy are to be squeezed and vilified for daring to claim and fight for protection and their rights.

The attitude of Key to the families of Pike River reflects the beliefs of the complaining "Banker" in this cartoon.

"Democracy is such a waste of time and money." John Key

This is typical of John (Pinokeyo) Key.

The latest demonstration of Key's belief that democracy is a waste of time, a waste of money and should be ignored in the interests of asset stripping New Zealand is shown by his cynical decision to sell off Air New Zealand and, no doubt have Genesis Energy on the block, before the Citizens Initiated Referendum opposing the Sale of New Zealand's Assets to foreign asset strippers.

"What? Me worry about democracy? Never, as long as I can flog off the State Assets and even reward the asset strippers with a cheque to help them buy I'm happy." John Key.

And this lot don't even sing in tune except when it comes to pillaging the State.

Nats resurrect the ghosts of 1932 and 1951 as Jami-Lee's Bill is defeated.

Massey's Cossacks used to attack strking workers in 1913... resurrected by Botany MP, Jami-Lee Ross.

The close won defeat of the Ports of Auckland inspired anti-worker bill, sponsored by the often unseen Botany MP, Jami-Lee Ross, should be seen as a brief flicker of sanity in a Parliament that has been held in a time warp that alternates between the mid nineteenth century and the McCarthyite madness of the 1950s ever since the election of the Key-Joyce dominated National government. (if, as the Bellman predicts, the Collins faction gains ascendency watch out for the National Party to regress further into hard-line conservatism).

Jami-Lee’s bill was a combination of Nineteenth century draconian worker exploitation and anti-Union rhetoric of the McCarthyite “50s and the Muldoon “80s which, in a more rational and realistic parliament, been laughed out of the debating chamber as well as being heartedly ridiculed by critical media analysis with Jami-Lee being publicly pilloried for being the privileged chump he so capably parades around the House.

The bill capably demonstrated that Jami-Lee is no more that a shallow, inexperienced, privileged and easily manipulated MP who is at the beck and call of those with anti-worker political and management agendas and who should not have been rewarded with the “dignity” of having his bill treated as a serious and thoughtfully drafted piece of legislation.

Empty rhetoric from the Nats to disguise their true agenda

Mind you the level of thoughtful analysis of the ramifications of the Bill coming from the National-Act MPs during the debate was hardly inspiring and well thought out. In 99% of the cases the rhetoric was cliché filled, emotively empty and sounded as though we were being given a re-run of 1932 and 1951 National Party Hansard records.

The National Business Review reported that Jami-Lee had been advised on the wording and purpose of his bill by the management of the Ports of Auckland whose anti-employment contract and anti-worker agendas demanded the strike breaking provisions written into the bill. Rumour also had it that the bill had been further worked over by the young Nats who reef fish around the Slater-Lusk blog-site group. Given that the NBR report and the rumoured involvement of the Slater-Lusk group is true then one must seriously question the ability of Jami-Lee to be seen as an MP who genuinely has the needs of concerns of his constituents at heart. Instead one must see him as being the easily manipulated tool of those whose self interests over-ride the common good.

Unfortunately for NZ workers the National-Act government have an equally obnoxious piece of anti-worker, anti-union legislation waiting in the wings- the Simon Bridges (he of the “If I shout and bluster loud enough I’m telling the truth” persuasion) sponsored “Employment Relations Amendment Bill” which is designed to strip workers of fundamental work place rights.   On the other hand, here is what the Labour MPs have been saying about the Ross-Bridges bills.

The Bridges’ Bill probably explains why the National-Act caucus voted en-bloc for the Jami-Lee bill as, if they did vote it down, it would have made Simon Bridges look powerless and ineffective and expose the flaws in his Employment Relations Amendment Bill.

Performance Pay- a myth that has had its day

The article by Polly Toynbee in the Guardian provides solid reasons why the mythical efficacy of performance based pay should be pushed right off the table as being, like other neo-liberal ecomonic policies, a fallacy based on faith rather than empirical evidence.

National internal feuds increase- the rats desert.

The list of deserting rats grows as the feuding between Very dry Joyce and Tinder dry Collins increases in intensity within the National Caucus closet.
While the cartoonist chooses to show PinoKeyo as orchestrating the leaving, like the Captain of the Concordia, the desertion is a result of the constant sniping was between Collins and Joyce within the caucus forcing those who cannot take the increasing heat to pack their bags and head for bluer pastures in which to trough. In the meantime Key attempts to strut the world stage - a poor fool seeking his five minutes on the stage before disappearing into the cast list of history.

And the Ship sails on- rudderless, captainless and mapless

The only policy that Key has remained consistent on... corporate cronyism.

The Bellman has always said that the Key (Joyce) and English management of the NZ economy was  captaincy by the clueless armed only with the mantra: "If I say it twice it should be right and if said thrice it is the truth"... even if Mercator had forgotten to include the map.
Brain Gaynor's piece in the NZ Herald (!!) is a great indication of how directless and clueless the Key government is when it comes to managing the economy or, for that matter, selling off the State assets to cover the huge holes their incompetence has left in NZ's economic and social structure.