John Key in the Wall Street Journal
The Wall Street Journal has a story on Jon Key’s response to the credit crisis, with the headline You Can’t Spend Your Way Out of the Crisis.
“We don’t tell New Zealanders we can stop the global recession, because we can’t,” says Prime Minister John Key, leaning forward in his armchair at his office in the Beehive, the executive wing of New Zealand’s parliament. “What we do tell them is we can use this time to transform the economy to make us stronger so that when the world starts growing again we can be running faster than other countries we compete with.”
Keeping the tax cuts will be a good start then.
That idea — growing a nation out of recession by improving productivity — puts Mr. Key and his conservative National Party at odds with Washington, Tokyo and Canberra. Those capitals are rolling out billions of dollars in stimulus packages — with taxpayers’ money — to try to prop up growth. That’s “risky,” Mr. Key says. “You’ve saddled future generations with an enormous amount of debt that then they have to repay,” he explains. “There is actually a limit to what governments can do.”
It isn’t quite an either or. NZ is spending a fair bit on a stimulus package – but it is mainly infrastructure spending being fast-tracked, than permanently increasing social spending beyond our ability to pay.
Mr. Key’s coalition government, which includes parties to the right and left of the Nationals, has moved fast to implement a program of tax cuts, regulatory reform and government retooling. He won’t label it supply-side economics and smiles when I ask if he’s a Milton Friedman or Friedrich Hayek acolyte. “I’m not deeply ideologically driven,” he says. “I believe in good center right politics.”
But wait – Labour kept telling us he is a dangerous ideologue?
“We have been on a slippery slope,” Mr. Key says, pointing to the country’s slide to the bottom half of the Organization for Economic Cooperation and Development’s per-capita GDP rankings. “So we need to lift those per-capita wages, and the only way to really do that is through productivity growth driving efficiency in the country.” He talks at length about how to attract and retain talented workers. What does he think about populist arguments about the end of capitalism? “Nonsense!”
The end of capitalism- film at 11.
For now, the prime minister is focusing on chipping away entrenched regulations that drive away foreign capital — a contrast to the U.S. and Australia, which are reregulating their markets in the wake of the financial crisis. “Good regulatory reform can be an important catalyst toward driving economic growth and coming out of the recession faster,” Mr. Key says. His government is revising legislation meant to protect New Zealand’s pristine environment from private-sector development but misused by greens to stymie all stripes of business plans.
Worth reading the full article
Hat Tip: Anti-Dismal
March 9th, 2009 at 1:08 pm
Good article.
I’m sure quoting Key saying ‘no i’m not’ is a good rebuttal, but you could do better.
I thought that was UF’s thing?! Sounds pretty weak for ACT. Maybe i’m out of touch.
Yay, learning!
March 9th, 2009 at 1:19 pm
In my new affirmed role in the blog as traitor to New Zealand, I am going to formally propose that Australia invade New Zealand and kidnap this man – then take him back here and install him as replacement for our own bumbler.
http://www.news.com.au/heraldsun/story/0,21985,25157502-662,00.html
Or maybe we could come to a mutual Prime Minister sharing agreement?
Or (finally) we just convince you lot to become our 7th state and just take him.
March 9th, 2009 at 1:22 pm
This is the goal, no one would disagree, and will be what his fate depends on.
March 9th, 2009 at 1:24 pm
Somthing I will give Key, he does seem to command quite a bit of respect internationally for having a professional’s grasp of what money is and how it works!
Must suck to be a right-wing paper in the USA, if you have to look as far afield as Noo Zeeland to find a poster boy to extol?
March 9th, 2009 at 1:25 pm
Tim – throw in Steve Price to captain the Kiwis and I think you’ve got a deal!
March 9th, 2009 at 1:26 pm
This stuff is music to my ears. I completely agree with John Key. It gives me some hope for New Zealand, as doing the right thing when everyone else is panicking is highly likely to lift us up the OECD GDP PPP ladder. Certainly Japan, the UK and the USA are slipping at the moment. Avoiding following them down is the first trick, but combining that with genuine boosts to productivity could transform our relative position.
March 9th, 2009 at 1:30 pm
Are such clear, concise statements by Key as to what his plans are available anywhere in the NZ domestic media?
Or is the WSJ the only one interested in carrying them?
March 9th, 2009 at 1:31 pm
With reference to Tim in OZ’s comment above, here’s another take on Rudd’s approach (which is different to NZs but possibly this is because NZ doesn’t have surpluses in the same category of the mineral rich Great Southern Land); http://www.smh.com.au/opinion/comrade-rudds-great-con-game-20090308-8sce.html
March 9th, 2009 at 1:38 pm
Rakaia George – Seriously, After watching the World Cup final, I don’t think the Kiwis need him!
March 9th, 2009 at 1:42 pm
Loved the last lines of the article. THJ, Too Honest John
March 9th, 2009 at 1:45 pm
My perception is that the NZ media’s questions are always coloured by domestic politics in some way – Key probably feels slightly more at ease with the WSJ.
March 9th, 2009 at 1:49 pm
…despite the fact that anything he says will get back to NZ sooner or later.
March 9th, 2009 at 1:54 pm
I Fwded the WSJ article to a mate, who was less impressed than I and came back with the following:
Key doesn’t provide any reasoning, hypothesis or explanation for why he’s rejecting the stance of every other major Western nation (and their economic teams) in responding to the financial crisis, other than “We think it’s good policy to…” A responsible journalist might have been interested in asking Key to his explain his argument, but then the Wall Street Journal is the equivalent of the National Business Review in New Zealand. Its editorial page has been criticized by the Columbia Journalism Review for “inaccuracy and dishonesty”.
So, to see a centre-right Prime Minister getting a fawning soft-ball interview in the pages of an American conservative newspaper isn’t exactly surprising.
[DPF: The Columbia Journalism Review is notoriously leftwing, so citing them to attack the WSJ, is hardly persuasive]
March 9th, 2009 at 2:02 pm
Productivity increases and being wary of saddling future generations with ‘too much’ debt would seem to qualify as good enough reasons in themselves – i don’t think they necessarily have to be compared with what ‘the others’ are doing.
March 9th, 2009 at 2:02 pm
I think you are wrong RATTY he is rejecting the stance of some major Western Socialist Governments because he is aware of the immense damage the former New Zealand Socialist Government wrought.
March 9th, 2009 at 2:02 pm
What does he think about populist arguments about the end of capitalism? “Nonsense!”
Someone tell the ‘going John Galt’ types — you know the ones who intend to drop out of society and take their magnificent ‘productivity’ elsewhere because they don’t like John Key or Obama or whoever. The people who think they are indispensable to society.
There are no people so intelligent and excellent that they are irreplacable. That’s capitalism.
And I liked Key’s optimisim – as I always do- in the article.
March 9th, 2009 at 2:20 pm
So Ratbiter throwing truck loads of taxpayer money and saddling their great grand children with the debt is the way out of teh hole
Not IMHO What we need is less government more good governance less moronic laws more sensible workable laws more good morals more good ethics less bad ethics less bad morals more money in the taxpayers pockets so they can make their spending decisions free from government dictate.
Inshort out with the old in with the new.
March 9th, 2009 at 2:21 pm
“That’s capitalism.”
Well of course, but productive people cannot be so in the mire of socialism. In case you missed it Ruth, socialism is an attempt by ivory tower academics to regulate capitalism. There is a difference between the two economic/ political concepts.
Some productive people rightly object to fuckwits messing with their objectives and tend not to live in places where they are not permitted to produce. They move elsewhere. Ever heard of Monaco? Its a stark contrast to Havana.
You need to decide what you want Ruth, just as productive people do, and have the right to do.
March 9th, 2009 at 2:21 pm
Einstein.
No, seriously.
March 9th, 2009 at 2:37 pm
“My perception is that the NZ media’s questions are always coloured by domestic politics in some way”
That may well be your perception. The reality is that NZ’s mainstream media is virtually a closed shop of one dimensional socialists who will only ever report from that perspective.
As for the WSJ being “left wing” that is wrong. Anyone who knows of the political schism between the WSJ journalists and its editorial staff would have to laff at the ignorant left wing propaganda of Ratbiter et al.
News item-
Just hours after the public learned on May 1 that Murdoch had popped the $5-billion question, the WS Journal’s union – representing roughly 2,000 Dow Jones employees – released a statement opposing the sale. Journalists across the nation joined in, criticizing Murdoch’s “ego” and questioning his “editorial integrity.”
The Journal’s union, which has openly opposed Murdoch’s bid, is now courting several “billionaires with integrity,” according to IAPE Local 1096 President Steve Yount’s June 5 statement. But the prospective buyers contacted by the union – Warren Buffet and Ron Burkle – are both left-wing supporters of prominent Democrats.
http://www.businessandmedia.org/articles/2007/20070606153803.aspx
March 9th, 2009 at 2:40 pm
How the Rules Were Rigged
Derivatives claims are not stayed in bankruptcy. (Yet another brilliant innovation from the 2005 bankruptcy reform legislation.)
If AIG were to go down, derivatives counterparties would be able to seize cash/collateral while other creditors and claimants would have to stand by and wait. Depending on how aggressive the insurance regulators in the hundreds of jurisdictions AIG operates have been, the subsidiaries might or might not have enough cash to stay afloat. If policyholders at AIG and other insurance companies started to cancel/cash in policies, there would definitely not be enough cash to pay them. Insurers would be forced to liquidate portfolios of equities and bonds into a collapsing market.
In other words, I don’t think the fear was so much about the counterparties as about the smoking heap of rubble they would leave in their wake.
Additionally, naming AIG’s counterparties without knowing/naming those counterparties’ counterparties and clients would be at best useless, and very likely dangerous. Let’s say Geithner acknowledges that Big French Bank is a significant AIG counterparty. (Likely, but I have no direct knowledge.) BFB then issues a statement confirming this, but stating it was structuring deals for its clients, who bear all the risk on the deals, and who it can’t name due to confidentiality clauses. Since everyone knows BFB specialized in setting up derivatives transactions for state-affiliated banks in Central and Eastern Europe, these already wobbly institutions start to face runs. In some cases this leads to actual riots in the streets, especially since the governments there don’t have the reserves to help out. If you’re Tim Geithner, do you risk it? Or do you grit your teeth and let a bunch of senators call you a scumbag for a few more hours?
March 9th, 2009 at 2:54 pm
Baiter: Anyone who knows of the… [thing] ….would have to laff at the ignorant left wing propaganda of Ratbiter et al.
(1) Spelling of laugh. It does not rhyme with chaff.
(2) So your main form of argument is still just sneering at people, not actually explaining why you’re right? No surprises there…
March 9th, 2009 at 2:54 pm
Yeah, John is looking cool at the moment but will he start sweating when the pressure comes on. For the sake of the country I hope he holds his nerve as I’m sure the dark side has it’s temptations.
March 9th, 2009 at 2:56 pm
“So Ratbiter throwing truck loads of taxpayer money and saddling their great grand children with the debt is the way out of teh hole”
No, gd, please read what I actually said. The world is far too complex a place to reduce everything to “you’re either with us or you’re against us”
March 9th, 2009 at 3:06 pm
“Spelling of laugh. It does not rhyme with chaff.”
Haha, so damn stupid couldn’t even pick up the logical error. When I said
“As for the WSJ being “left wing” that is wrong.”
I of course meant “right wing”.
The left’s great comprehension skills on show again.
Right on to “laff”, but can’t even get close to identifying a major mistake in the logic. (even when it is the result of an error)
March 9th, 2009 at 3:12 pm
but But But that what Barry Gordy and kevvy are all doing JK to his credit is not throwing as much or in as many directions
Good Grief
the 3 Musketeers I mentioned have taken an elephant gun to it and are spraying it around like there was no Tomorrow
And their wont be at the rate their going.
I mean if their fix was so successful why arent the markets responding in a positive rather than negative way Cause the markets dont believe they can fix the problem
Governments cant fix this problem on their own
What they have to do is stayout of it and give the taxpayers and citizens the means to do it. All the Gumint should be doing is going after the bastards who caused the problem and stringing them up as a leeson and passing good governance based laws and getting rid of the laws that encouraged the bastards in the first place.
March 9th, 2009 at 3:34 pm
By “coloured” I meant any question will inevitably be followed up with questions about the political implications, or questions will simply be framed in a ‘opposition party says this, what do you say to that?’ way. The WSJ doesn’t give a damn about that stuff, so Key probably feels more at ease with them.
March 9th, 2009 at 4:10 pm
Well Ratbiter, consider this.
By avoiding a larger fiscal stimulus, the Government not only avoids increasing Government debt, but also gives the Reserve Bank more room to provide a monetary stimulus, which costs the government nothing. New Zealanders’ owe more than they lend, so there is a net gain to the economy in reduced interest rates. People who hold cash do see poorer returns, but that gives them an incentive to place it in productive investments instead. This increase in the supply of cash (outside traditional bank deposits) improves the corporate bond market, will improve the sharemarket, and encourages capital investment in innovation, all of these will offer better risk-adjusted returns. Meanwhile, the cost of capital has reduced, also increasing capital productivity. The strengthening of the local bond market will also reduce reliance on foreign capital and, over time, reduce the invisibles deficit in the balance of trade.
Conversely, if the Government put in a larger fiscal stimulus, the Reserve Bank would be less likely to cut interest rates (in Australia they made no cut this month), and Government borrowing would further crowd out private sector investment and raise interest rates due to the increased demand for money. The UK and the USA are likely to have nasty problems in this regards.
Far better to have a bigger interest rate cut than a bigger clumsy stimulus program. IMHO. Especially if the Reserve Bank has room to cut rates. We do in New Zealand. They don’t in the UK and USA.
March 9th, 2009 at 4:27 pm
This is also from the WSJ.
Have a look at this!
http://www.stuff.co.nz/dominion-post/news/2023650/Baa-humbug-The-US-verdict-on-farm-burps
It is truly remarkable that our scientists are spending our money on this unscientific dead-end methane non-problem while US farmers are getting the benefit of New Zealand science developed at Massey University called Zero Till which means that US cattle pastures can be counted as carbon sinks. Hence, when our cattle farmers have to buy carbon credits because of our methane they will probably buy them off US cattle farmers who have focused on the use of pasture soils as an efficient means of sequestering carbon using our technology developed by scientists who were not corrupted by the climate change research bonanza.
This makes a mockery of Key’s claim that we are focusing on improving our productivity. We are actually hell bent on destroying the competitive advantage of our most productive sector.
HE needs to get better advice urgently and make sure the Select Committee can at least discuss the science of our own pastures – the IPCC says nothing about them so he would not be challenging the Testaments.
The US scientists who developed these theories also conceded that New ZEaland farm pastures are more efficient carbon sinks than US pastures because our pastures grasses are perennials unlike the US grasses which are annuals.
When will someone in Parliament ask why we the only country which counts ruminant belching as an anthropogenic greenhouse gas.
Last time I looked our cows were not running on fossil fuel but were eating grass which had captured carbon dioxide from the atmosphere. But junk science goes round and round and of course this is really about indulgences and flagellation more than science.
March 9th, 2009 at 4:30 pm
Note that Mr Aspin got it terribly wrong when he said the US cattle farmers had missed the fact that they would benefit from our research. THey already have benefited from our research and have not been wasting time barking up the wrong tree trying to knock off a non -existent possum.
March 9th, 2009 at 5:40 pm
Good comment, Vibenna.
NZ’s room to move on interest rates is just about the only thing we have got. We mustn’t blow it. The advantages of interest rate cuts must be reflected in PRODUCTIVE investment, not in continuing to inflate housing speculative price bubbles.
Fiscal incentives for productive activity (or rather the removal of disincentives) and removal of obstacles to development are a necessity right now.
March 9th, 2009 at 11:20 pm
Owen – Its not just the livestock industry being sold out!
The same has happened with the Potato Industry. MAF SFF, EW, Hortnz and others all contributed to a “Potato Nitrogen Calculator” Basically a software model of a potato plant to work out a theoretical nitrogen and water demand.
End result:
New Zealand Farmers have to pay just as much to access it as Foreign ones despite the taxpayer contributions (as well as in kind contributions from farmers offering paddocks for trials)
AND it was marketed and available overseas before it was released in NZ.
March 10th, 2009 at 11:19 pm
Dull – DUFFo (as in the Beer of Homer)
WSJ reveals that Key is the only “Western Leader” proposing a “Market Solution” to this crisis.
Shit we need to be worried!!
Cognitive Dissonance prevails.
Hey John – “morass” and “sublime” (not subprime) are words that you need to understand
March 11th, 2009 at 12:03 pm
Good article by Mary Kissel in the WSJ, but was there a follow-up editorial in that newspaper on Key?
I ask because the Christchurch Press today (March 11) and presumably other Fairlyfukked-owned newspapers have a story by Michael Field saying the WSJ hailed John Key for his economic stimulus package. John Key came out favourably in the WSJ report, but only because of what he said. There was no suggestion the WSJ was “hailing” him. It was a professional, well written story by Kissel, not a puff piece.
Can anyone throw light on whether the WSJ has printed a subsequent editorial on Key, because I can’t find it?