$300m a week
December 15th, 2010 at 9:00 am by David FarrarThe Government is now borrowing $300m a week. This level of borrowing is simply not sustainable. The answer is not to tax and spend as Labour has promised (they have indicated they will increase at least the top tax rate) but to restrain or even reduce spending.
The OBEGAL (Operating Balance Excluding Gains and Losses) is forecast to just his surplus in 2015. To achieve that will require massive fiscal discipline – no spending sprees in both the 2011 and the 2014 election years. And even after 2015, massive restraint will be needed to give us a cushion going forward.
By 2015 core expenses are forecast to be 31.7% of GDP, down from 34.9% this year. That is going in the right direction but still too high in my opinion. I’d like to see both National and Labour indicate what their desired level of spending as a % of the overall economy is. These would not be legal straitjackets, but targets they can be measured against.
I think a realistic long-term goal is in the mid 20s – maybe as high as 28% but no higher. If we keep spending down, then the average economic growth will be significantly higher – and that is how we create jobs, grow wages, and close the gap with Australia.
December 15th, 2010 at 9:28 am
” If we keep spending down, then the average economic growth will be significantly higher – and that is how we create jobs, grow wages, and close the gap with Australia.”
o rly??
Vote:December 15th, 2010 at 9:35 am
At least we still have all that pristine schedule 4 land unspoiled by filthy mining.
Vote:December 15th, 2010 at 9:36 am
Borrowing money to make tax cuts wasn’t a great move was it? And can we finally put to bed this myth that tax cuts stimulate the economy, there is zero evidence of this.
Really the problem is National don’t have the guts to make the tough decisions about reducing the deficit. Up to now it has been a ‘cross the fingers’ attitude with the economy, do nothing and hopefully things will come right. They aren’t coming right and we are meant to be 2 years passed the worst of the recession.
What National will do is make token cuts in areas that their polling tells them won’t upset the public or won’t upset their voter base and they will cruise into the next election with a smile and a wave and a large deficit.
[DPF: No money has been borrowed for tax cuts. The earlier tax cuts had far greater spending cuts to fund them, and the 2010 cuts were funded by the GST increase. Please don't lie about this.
And reducing the size of state absolutely grows the economy. If you study all OECD economies over the last 50 years, the correlation is extremely strong. You can't cherry pick one country in one year]
Vote:December 15th, 2010 at 9:38 am
Given this result, those earlier income tax reductions were an awsome idea.
oh, wait…
Vote:December 15th, 2010 at 9:38 am
“fiscally neutral”
Vote:December 15th, 2010 at 9:39 am
“By 2015 core expenses are forecast to be 31.7% of GDP, down from 34.9% this year. ”
These “forecasts” have proven to be worthless.
Vote:December 15th, 2010 at 9:39 am
I admit to not being very economically literate in the big scale of things.
I am however a self-employed businessman and I have always been reasonably successful….. and I can’t help but wonder how the f**k we are going to pay this debt BACK?
Who is lending our government all this money and on what basis do they think that we are worthy of seemingly unlimited credit in the billions of dollars for years into the future?
If I operated my business like this (consistently borrowing 31% of what I earn with no visible prospect of reducing this significantly), I would be BANKRUPT wouldn’t I?
I think we are in deeper shit here than people generally acknowledge and it is not a pretty picture at all.
Vote:December 15th, 2010 at 9:39 am
The electorate need only look at what’s happening to European economies to see this is madness.
But when you and your govt have ones head firmly up your arse you won’t see nothin.
All it takes is another bubble to burst somewhere….China or Aussie and it’s all over.In the meantime let’s worry about Kate and Wills or Oprah,that’s what we seem to be consumed with.
Our media play no role in informing the citizenry about substantive matters any more,only wise after the event.
Vote:December 15th, 2010 at 9:41 am
It’s often mentioned that one reason for the subdued business activity is because people are using their tax cuts to pay off debt, buying less cars and TVs etc. Is there any data on how the private debt level is trending, especially in comparison to government debt?
Vote:December 15th, 2010 at 9:47 am
There are some big assumptions being made if this is going to be the case. Namely taxation revenue will have to increase by 35%, while expenses increase by only 24.6%
And Treasury’s oil price assumptions are just a guess at best – “the price of oil is assumed to rise to US$89/barrel by March 2015.” Er, that’s what it is now.
http://media.nzherald.co.nz/webcontent/document/pdf/hyefu10.pdf
Vote:December 15th, 2010 at 9:48 am
“‘Given this result, those earlier income tax reductions were an awsome idea. oh, wait…”
How insufferable. The country is in this position because of reckless vote buying by the Klark regime, and the loony left belief in Keynesian economic policies and consumerism.
Secondly, your propaganda chiefs running the media are going to crucify any politician who does do what needs to be done. If English and Key ever did develop the guts to do what is necessary, they will be out of office. Then we’ll have even more incompetent managers in Labour and the Watermelons, and then this country will really understand poverty.
Let’s get it done I reckon. The sooner the citizens of NZ wake up to the disaster that socialism always is, the sooner our economy will recover. We need a completely fresh start, and that will only happen when the current loony left social and economic policies are permitted to mature to their inevitable totally destructive ends.
Vote:December 15th, 2010 at 9:49 am
Thanks John Key and Co. you bunch of incompetent dickheads.
Vote:Thanks for the tax cut I didn’t need or want.
Thanks for putting us in a position where asset sales and/or austerity measures will become a necessity.
Thanks for nothing.
December 15th, 2010 at 9:50 am
David you do realize what running a surplus means don’t you? When a surplus is run the government taxes more New Zealand dollars that it spends i.e. the private sector must go into more debt to meet its liability to government. After such a massive debt orgy in New Zealand getting the government book into surplus should not be the priority, repairing the private sectors balance sheet is where attention should be directed. BTW, New Zealand will not be the next Greece, it is sovereign in its own currency and can always meet its bond liabilities via computer keystroke.
Vote:December 15th, 2010 at 9:54 am
Labour raising taxes again, they lost alot of people from NZ last time ( including me ), sounds a great plan, how about they make it easy for the NZ economy to go 3rd world in the 21st century & mandate dialup as the only internet access as well.
Given NZ’s debt is what 22% of GDP, I think the tax cuts were important, NZ had to rejig it’s tax structure to encourage higher earning, especially with the competition for talent from Australia.
What really grates is Labour sniping from the sideline when they inherited a competitive economy & turned it into a mess.
Vote:December 15th, 2010 at 9:55 am
Where is the leadership? Labour-lite has failed miserably during its two first two years in office, because it decided to continue on the path to mediocrity established by comrade Clark & co.
Key and English seem to be vacuous, feeble politicians incapable of taking the hard decisions required to correct course.
Vote:December 15th, 2010 at 9:56 am
@YESWEDID
You’re deluded. You are your lefty buddies who spent up during the party years up to 2007 are now getting your beans.
Helen built an empire based on massive surpluses. Remember, even though the government was making massively more than it needed, she kept on increasing taxes through her term. Nothing was enough for greedy helen and her cronies.
Unfortunately, todays borrowings are the hangover from Helens excesses.
A 33% tax rate is perfectly reasonable if you have a sensible government. I believe it should still be lower.
SUre, we’ll have more boom / bust cycles. But, the secret is not to spend it all during the boom. Save some for the rainy days. Don’t spend it all, right Helen?
She was a disaster.
Vote:December 15th, 2010 at 9:57 am
m@tt speak for yourself, I was facing a 20k tax differential NZ vs Oz before those tax cuts, combined with better internet connectivity in Oz, it would have been hard to justify staying in NZ.
Vote:December 15th, 2010 at 10:00 am
Let’s make a start by selling Farmer Cres to the Chinese.
Vote:December 15th, 2010 at 10:01 am
@ m@tt you can make a voluntary contribution to the IRD of your unwanted tax cut. Or give it to charity.
Vote:December 15th, 2010 at 10:02 am
Even Bill English admits that the tax cuts weren’t fiscally neutral and did not have the desired affect.
Maybe they could have structured the tax breaks differently, like raising limit of the top tax rate to a 100k instead of abolishing it and closing the loopholes.
Vote:December 15th, 2010 at 10:03 am
Some steps to alleviate this situation:
1. Cap spending at 25% of GDP;
Vote:2. A major privatisation reform program needs to be implemented – the public sector is far too large and some Ministries could be abolished altogether;
3. Raise retirement age to 67 then to 68 and eventually 70 over next 25 years;
4. Compulsory super scheme similiar to Singapore;
5. Significant reform of the welfare system;
6. Abolish ETS;
7. Increase our wealth through increased output and mining;
8. Increase spending on R&D;
9. Flat 15% income, GST and corporate tax rates.
10. End Treaty of Waitangi settlement payments.
December 15th, 2010 at 10:07 am
Labour increased government spending hugely, vastly. This was based on the flawed notion that there would never be another recession.
In order to get elected National promised not to cut any major Labour programme. While this promise is understandable on one level, it is reckless on another. National doesn’t believe that these programmes such as WFF, free student loans etc, make any economic or social sense, but it believes the electorate is so dumb that they have to promise to keep them anyway. It is not prepared to put the legwork in to discuss the problems. The strategy appears to be to just promise to keep them and hope. At least if you are a minister you get well paid, lots of super perks etc etc. When you get voted out it’s someone else’s problem.
But now we have the GFC. This is a game changer.
Given the fiscal crisis we now face, the responsible thing to do is to call an early election to seek a mandate to make the required changes. We cannot wait another year. Business as usual is just gambling with our future.
Has Key got the balls?
Vote:December 15th, 2010 at 10:07 am
Yes, heaven forbid we be “austere” with taxpayer money. If only we could continue Labour’s profligacy measures.
Vote:December 15th, 2010 at 10:07 am
Tony Wikrent on three tax cuts that didn’t work.
In fact, there have been three grand multi-year national experiments with Republican / Conservative tax cutting over the past century. And all three experiments resulted in the average American becoming poorer, the real (industraal) economy in tatters, and spectacular financial crashes.
Vote:December 15th, 2010 at 10:13 am
And what’s national’s answer?
Privatise a prison, award the contract to a pommy company so see more NZ$ head overseas as the profits are repatriated.
Is there not a NZ company capable of doing the job, or is there still a cringe element in National that believes we still need mummy?
Vote:December 15th, 2010 at 10:14 am
This debt is Cullen’s legacy. Time for National to make the hard decisions and do something about the main causes such as WFF, Superannuation. No more mucking around the edges for chump change. Gwilly above nails it. Time to grow some balls John and Billy. (we know you read this blog faithfully)
Vote:December 15th, 2010 at 10:18 am
This is what you get when both main political parties practise triangulation politics, as well spelled out by lefty Chris Trotter in a column in the Christchurch Press yesterday (and presumably in other Fairfucked NZ newspapers).
A paraphrase:
Abandon fixed ideology and incorporate in your political message elements that appeal to both the Left AND the Right.
Intensive and continuous polling of the electorate.
Constant repositioning of political parties to keep them “above and between” the extremes of Left and Right.
As Trotter concludes:
Vote:December 15th, 2010 at 10:21 am
Joe90 – So let me get this straight – if we take less from everyone’s pay packet, then the country goes down the gurgler????
What I think we need to consider is – we take less from everyone’s pay packet, and REDUCE THE BLOODY GOVERNMENT SPEND.
We do not need the govt to be taking care of our every decision. They need to step back and let us take responsibility for our own lives. This generation of “we are owed our handouts” is complete bollocks and is driving us bankrupt – $300 MILLION a week!!!!!! FFS!!!! This needs to STOP!
Cheers
Bandycoot
Vote:December 15th, 2010 at 10:26 am
Here’s a question: what do you think happens to the $300 million a week the government is borrowing? Do you think they light it all on fire, or does it feed into the wider economy? What do you think will happen to that economy – most of which is currently in recession – if you suck out another couple of hundred million dollars a week? What will happen to company profits? What will happen to the bankruptcy rates of small/medium businesses? What will happen to the unemployment rate?
[DPF: It feeds into the wider economy which helps in the short-term, but fucks you in the longer-term as the interest on it destroys wealth, as a greater % of GDP goes towards paying the interest instead of wages, goods or services]
Vote:December 15th, 2010 at 10:30 am
Although that is six questions, I`ll offer an answer.
It will go up.
Vote:December 15th, 2010 at 10:31 am
And so many dumbarses think the head of the household can make the residents pay a large portion of their money to him, spend some of it collecting, accounting, and enforcing payment then returning the residue to those who will spend it on consumption, gambling and entertaining themselves and all the while telling those in the family who created the original wealth they will have to pay more as there is insufficient for the idle to enjoy.
Vote:Income greater than expenditure equals stability and comfort.
Income less than expenditure equals poverty and stress.
Very hard in’nit.
December 15th, 2010 at 10:33 am
Well maybe sucking $300 milliion out of the system instantly would have a negative impact – but seriously, how long do you think you can borrow more than you earn before it all goes tits up anyway?
And promising to tax those “rich pricks” is not an acceptable answer.
Vote:December 15th, 2010 at 10:33 am
@ Danyl I think it represents poor-quality spending, deprives the private sector of finance, inflates our exchange rate and imposes a burden on future kiwis when it needs to be repaid. Borrowing to fund consumption is just dumb.
Vote:December 15th, 2010 at 10:34 am
It will go up.
Right, so let’s follow that thought. If you see a massive surge in unemployment, and at the same time slash welfare spending what do you think will happen to the crime rate? Keep in mind that you’re also unable to afford more police or prisons.
Vote:December 15th, 2010 at 10:37 am
I’m sick of lefty economics illiterates (yeswedid, joe90, et al) here on this blog trying to fib about tax-cuts of how useless it is. They always pointed to some online opinions, which is non-peer review.
Can you do your homework by digging the economics literature to read about tax-cuts? I’m not gonna do your homework for you, but please, educate yourself before trying to make informed comments. Try RePEC or SSNR, which are 2 popular sites that economics researchers from around the world reposits their research papers (conference proceedings, pre-print, short, working, journal, etc,…) there for free. Educate your wee brain first before participating. That would be probably save me & others from quoting you refereed papers that you should have dug/read on your own. Start reading economics refereed papers and not point to uninformed online opinions.
Vote:December 15th, 2010 at 10:38 am
Can some economist tell us please why the free-market model hasn’t kept NZ’s economy in balance.
As an export-dependent nation shouldn’t our dollar move up and down with the NZ economy relative to the rest of the world. Shouldn’t external factors such as commodity prices and import prices affect exporters and importers — and the firms, people and organisations that connect to them directly or indirectly?
Therefore when we have been in chronic balance of payments deficit for years, shouldn’t the kiwi dollar naturally fall and the economy slow down? Isn’t that what a free currency is supposed to mean – an automatically adjusting device that stops us get caught in a currency-based trap like Ireland and Greece in the euro zone?
Tell me, Mr and Ms Economist, if the kiwi dollar moved in this way, wouldn’t we naturally have slown down?
Tell me please also whether the big banks, pipelining in money from Tokyo and European savers to pump into property loans at as much as 105 per cent of value, haven’t been disrupting this mechanism? Haven’t they caused the debt blow-out and indirectly the overspending and the under-saving?
Also, tell me please, given the way bankers (and ex bankers in finance company) lent tens of millions to property dreamers like ACT backer David Henderson, of Christchurch, where the hell do banks recruit staff?
Vote:December 15th, 2010 at 10:41 am
Depends whether you are talking about the short term or long term. Without corresponding tax cuts, it would hurt some in the short term.
But what about framing it the other way: what would happen if the government tripled spending – would the economy suddenly soar? Obama’s trillion dollar stimulus, which has been a complete failure, suggests the answer is no.
Vote:December 15th, 2010 at 10:42 am
Danyl, may I suggest that you go to Not PC and read his blog on economics? You’ll be very well informed, I can tell you.
You said…
Keep in mind that you’re also unable to afford more police or prisons.
What’s the primary role of the government again? (Well it is law & order, judiciary & defense. Its role is not to spend on Work for family, but those 3 mentioned above? )
As I said, go and read Not PC blog.
Vote:December 15th, 2010 at 10:43 am
Without corresponding tax cuts, it would hurt some in the short term.
Ah, but you’ve already had the tax cuts – three rounds of large scale tax cuts in three years. That’s what they’re borrowing $300 million a week to fund.
Danyl, may I suggest that you go to Not PC and read his blog on economics? You’ll be very well informed, I can tell you.
Great. Now I have tea all over my keyboard.
[DPF: Don't lie Danyl. The 2009 tax cuts were funded from spending cuts that were far far larger than the tax cuts. The 2010 tax cuts were funded by the GST increase.]
Vote:December 15th, 2010 at 10:48 am
Ahem
Every Picture Tells a Story
In particular you should look at the rise in personal disposable income and total Federal tax revenues. Also note that the awful, greedy Bush tax cuts of 2001 and 2003 caused the richest quintile to pay a greater share of the total tax burden. Hardly surprising when you see that the economic growth pushed millions more into the upper income brackets, meaning that they not only were getting jobs but their job income was increasing.
Finally – I see the old Hoover Tax Cut canard being raised again. It should be noted that even the sub-link itself notes the following about the far more important tax increases under Hoover when he did a 180 turn from his 1929 policy:
By almost any reckoning, it made the Depression worse, not better – not that Mr Wikrent wants that understood. Fortunately the US Democrats did understand this time – that moving trillions from the private to the public sector is a fail.
Obviously Labour and the left does not believe that – which is why we will be looking at tax increases after 2014 or 2017 when they get back into government. Only on “rich” people you understand.
You think those “rich” people are sticking around or coming back for this crap – or not talking to their lawyers and accountants in preparation?
Vote:December 15th, 2010 at 10:49 am
Obviously Bill and John do believe in stimulus packages- why else bail out the kiwi fruit industry, drought stuck farmers, finance companies, Warner Bros, RWC 2011, Canterbury earthquake victims etc… Not saying these aren’t worthwhile investments but you can’t complain about stimulus packages and demand tax cuts and advocate funding for your favourites causes all at the same time.
Vote:December 15th, 2010 at 10:52 am
I think we can be relieved we have a responsible government taking reasonable but not slahsing and burning.
Vote:Drastic responses and high taxes would put us in an even worse situation.
Forget the Labour propaganda and try to remember the government is acting on the best advice available from the Treasury, govt officials, the Reserve Bank etc.
If there was a magic bullet don’t you think they would have found it by now? Somewhere in the world?
December 15th, 2010 at 10:52 am
Gee Tom, did you see the writing on the wall.
Vote:December 15th, 2010 at 10:54 am
If there was a magic bullet don’t you think they would have found it by now? Somewhere in the world?
You mean somewhere like Australia, where they had a huge government stimulus and lowered taxes for low income workers, avoided a recession and now have robust economic growth? Somewhere like that?
[DPF: That is Australia that lowered taxes around eight years in a row? That had the Labor Government implement similar tax cuts to those promised by Howard and Costello?]
Vote:December 15th, 2010 at 10:57 am
I have a suggestion to all the politicians, government hangers-on and so-called ‘economists’ out there…
Scroll back up this comments thread and READ what Gwilli wrote here at 10.03am.
Seriously. Go read.
Vote:December 15th, 2010 at 10:58 am
Danyl- the problem with Australia is that they have strong unions, falling unemployment and healthy wage increases causing high government tax receipts- thats got to be a terrible thing eh..
Vote:December 15th, 2010 at 11:01 am
Danyl:
The problem with you Lefties is that, like Social Credit nutters, you think you can create wealth by decree.
Australia’s wealth comes from its minerals, much in demand during China’s current boom.
There’s also another factor we all should consider – every Kiwi. Is NZ just too small an economic unit to be viable?
If the choice is Tonga style independence or being an Australian state, most Kiwis would choose the latter, I expect, judging by the continuing exodus to that country.
Perhaps we should consider joining Australia while we can. If we are Third World-scale impoverished they mightn’t want us, especially if the ethnic make-up of NZ by then differs too much from that of Australians.
Vote:December 15th, 2010 at 11:06 am
NZ’s public debt is still only 22% of GDP, so quite sustainable. Compare with Japan at 189%, Greece at 126% and still hanging in there with a German bailout, and Singapore with 113%. New Zealand shouldn’t be borrowing at all now. It’s the price of nine years of Labour government spending on all sorts of rubbish. But it isn’t the end of the world.
http://en.wikipedia.org/wiki/List_of_countries_by_public_debt
Vote:December 15th, 2010 at 11:07 am
Of course the tax-cuts didn’t work, when have they ever worked?
National campaigned on economic competency and has failed miserably. This country is the Ireland of our South Pacific, or maybe even the Greece?
Vote:December 15th, 2010 at 11:08 am
Jack – our wealth and wellbeing will clearly come from a long term coherent, incisive approach to economic development – the cycleway.
Vote:December 15th, 2010 at 11:11 am
Well, Falafufu, please tell us how the latest round of tax cuts were useful? According to Bill English we had less tax income and the economy did not pick up as expected which also led to less tax income. Hardly an online opinion, admittedly not a peer reviewed paper, more like economic reality.
It is pointless to constantly point at peer reviewed theory when that theory does not comply with reality.
Granted there could be (and probably are) a number of other factors, but you cannot disagree with the fact that the latest round of tax cuts did not have the expected results.
I have to laugh at the other comment regarding the previous Labour government.
Here we are, 2 years into the National government, and we have reduced taxes and increased borrowing. And who’s fault is it? Labours, of course. Yeah, right.
Vote:December 15th, 2010 at 11:14 am
Well you’re the one who’s all over the place telling anybody who’ll listen how intelligent you are Falafulu Fisi so perhaps you’ll be able to help me out on this one and tell me how tax cuts work.
Vote:That’s all I want, how does lowering taxes stimulate an economy and where have tax cuts led to a growing economy with more jobs and higher wages?.
Or is your argument so powerful that it’s not necessary to talk about it?.
December 15th, 2010 at 11:21 am
davidp-
Vote:True our govt debt is still low at only 22% of GDP (it was a lot less 2 years ago), but so were Greece’s and Ireland’s before their economic growth went into free-fall and crippling private debt impacted on the govt debt. Bill and John need to get their act together because the Aussie banks won’t stand by us forever.
December 15th, 2010 at 11:21 am
Yes, that’s the point. We can’t have our cake and eat it too. All western countries are having the same fun with this. We either need to cut spending, or raise taxes. You raised the entirely valid point: what would cutting spending do to the economy? The flipside valid question is: what would raising taxes do to the economy.
Vote:December 15th, 2010 at 11:22 am
“If you see a massive surge in unemployment, and at the same time slash welfare spending what do you think will happen to the crime rate? ”
This is such a disgusting cowardly lie. During the Great Depression people never suffered any radical increase in crime. The problem is not poverty. Crime has greatly increased over the last fourty years while poverty has radically declined.
The real problem is the Progressive’s deliberate destruction of the moral fibre of our society. The intended outcome of a planned political strategy.
Furthermore, to threaten such events is just the most disgusting and amoral example of political blackmail anywhere. Man you power obsessed leftists are pieces of work.
Vote:December 15th, 2010 at 11:23 am
Danyl said:
Yes and blown all the surpluses that Johnny Howard left over – remember Key had none of these to blow as the fuckwit Cullen left the cupboard bare, and Oz now also has close to a record government deficit, with no control over public spending there either – It’s going to get a whole lot worse in Oz before it gets better.
Vote:December 15th, 2010 at 11:26 am
Danyl, that is pure propaganda. Australia has sectors of its economy in recession (e.g. manufacturing), but at the same time it’s mining sector is still in boom. This has distorted it’s economy but has remained overall out of recession. NZ was mismanaged by Labour during the 2000′s with Govt. spending growing at unsustainable rates – leading to our productive sector going into recession long before the GFC hit in 08/09. We have a small mining industry and cannot shift to rely on it during the recession in other sectors. As it is our oil and gas industry is punching above its weight in contributing to our balance sheets.
Smaller government will relieve stress on our productive sector. But an instant smaller government will hurt “joe/ sue average”, and to stay electable, National have to play the long game. Incremental shifting of our economy away from reliance on government spend, and towards a more free and productive private sector – the wealth creation machine that when firing on all cylinders will contribute more to the government coffers for essential government services. It’s finding a sustainable balance however and we are currently far out of sync. Radical austerity changes will prompt a radical response – look at UK, Greece, France, Spain etc. Riot police in the streets because of radical government funding cuts is overall damaging to the country. If we have scope for steady as she goes, even if that means borrowing in the present, then that is what we should do.
We must grin and bear it.
Vote:December 15th, 2010 at 11:28 am
Try googling – there must be a thousand articles a month arguing this point. But on the flipside, we have trillions of dollars of proof that stimulus spending doesn’t work.
Vote:December 15th, 2010 at 11:29 am
This is such a disgusting cowardly lie. During the Great Depression people never suffered any radical increase in crime.
Tell me about the farm, Lennie.
Vote:December 15th, 2010 at 11:40 am
Wow, Redbaiter arguing for a massive increase in government spending. Who would have thought.
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=956864
Emphasis mine.
Vote:December 15th, 2010 at 11:45 am
How hard is it? – Government spends less on all it’s pointless, power grabbing policies, it takes less from us (which is NOT the same as it giving US back OUR money) which leaves more in the overall kitty for sue/joe average to spend as they see fit.
Government will never be able to conjure productive jobs out of the ether, but they could certainly step back and let them be developed by those businesses/employers at the coal face.
Vote:December 15th, 2010 at 11:49 am
I’ve read lots both for and against queenstfarmer but according to Falafulu Fisi, if they’ve not been peer reviewed they’re not worth squat.
Vote:So instead of telling me I’m an economically illiterate idiot it would be nice if the economically intelligent Falafulu Fisi could do a wee bit of peer reviewing on my behalf and refer to articles that support his argument, which, apparently, is so powerful that he doesn’t feel the need to talk about it, that lowing taxes will stimulate an economy with resulting employment and wage growth.
December 15th, 2010 at 11:49 am
mavxp: But an instant smaller government will hurt “joe/ sue average”, and to stay electable, National have to play the long game. Incremental shifting of our economy away from reliance on government spend, and towards a more free and productive private sector….. If we have scope for steady as she goes, even if that means borrowing in the present, then that is what we should do.
I think that’s right, steady with incremental changes is much more likely to be sustainable and far less likely to backfire or have unintended consequences. The quick-fix may sound good in idealist’s heads but it’s likely to stuff things even more, you just end up with a different sort of mess.
Things with minimal immediate effect, like Kiwisaver subsidies, and things with major long term implications like Super should be addressed quickly.
Vote:December 15th, 2010 at 11:57 am
@ Maxvp
Vote:god points made in your 11.26am comments.
National have to shift in small increments – to go full noise on asset sales/slash wff etc etc will alienate the soft middle. they need to embed policy and bit by bit chip away at the mess left by the previous administration. smaller government has to be the goal.
the talk on todays thread about taxes shows a lot of left/right posturing. lets remember whose money it is …..
i think we can cut some slack to the Nats as they steer the economy thru the post GFC. NZ as an island nation dependent on markets that have been severely impacted by GFC.
second term though the blow torch should come on. the nats need to address the “hard” issues pre-election so they can enter a second term with a clear mandate.
December 15th, 2010 at 11:58 am
Folks
Everyone who takes out a mortgage to buy a house spends more than they earn – usually more than they earn in 4-5 years!
Borrowing isn’t bad in itself, and a glottal borrowing of less than 33% of income is regarded as quite appropriate by lenders AS LONG AS what is borrowed is spent on ASSETS, preferably ones that appreciate in value.
When we borrow to pay regular bills, (food, rates, SKY TV, booze, etc., then we are committing fiscal suicide and need to look at our daily spending, cut a new budget that keeps us within our means, and look for ways to increase our income. When we earn more than we need to spend we should use it all to pay off debt until we have none, and then go have a party, party, party.
The problem for taxpaying Newzealanders is that we have a tradition of government swings. First one that takes a terrible fiscal situation, sorts it out and gets to the point of starting to pay off debt, then a replacement that spends everything available, borrows more, establishes life-style expectations for peep who can’t sustain them themselves and then gets voted out of government for the cycle to start again.
The only way out of the situation would be to legislate fiscal-fitness, except that legislation can be legislatively removed and we don’t have a constitution to enshrine such a restraint in, so that option is out.
Today, we need a brave government that tells the public service to pull in its belt and get real. Things like *accumulated sick pay of 250 days, (or in some agencies unlimited sick leave on full pay), *use of external contractors to do the same work as regular employees on a pay rite at least twice that of the employee, *rejection of restructuring plans with very high payoff because some of the people who make the decision will lose their exulted positions, *sticking with outdated approaches to complex work because adopting the new ways common in the world might be interpreted as having got things wrong in the past, *spending thousands of dollars on recruiting advertisements when the person who will get the job has already been identified but we have to make the process look good, *paying five times the reasonable rate for a service so that there will be plenty of heads to heap blame on when things go wrong, there are so many things that could be done better, but not while the turkeys set the date for the new Christmas.
PS everything with a * at the beginning in the above sentence I can personally give recent examples of.
Merry Christmas all, and if you’re on a benefit, I hope you enjoy my food and drink.
Vote:December 15th, 2010 at 12:06 pm
I reckon we have to finish the visionary Key cycleway to get us out the economic morass we are in. Only that brilliant initiative will change NZ forever.
The other stuff, e.g. welfare reform, control spending, abolishing the ETS, etc is just non-sense spouted by enemies of this firm and decisive government.
Vote:December 15th, 2010 at 12:13 pm
One does wonder what the National government’s game is? They have not rolled back any of the radical social reforms of the previous regime — even widely vilified anti-smacking legislation has remained untouched.
Having said that National and John Key was elected primarily to do something positive about our economic situation. At the moment I am seeing costs go up to the average household — GST up to 15%, petrol now at two dollars per litre, electricity prices rising — with only a small decrease in personal income taxes to compensate.
I just agree with DPF — we need to cut government spending. We have far too many benefits and entitlements from the government which means that many many families in New Zealand are reliant on government welfare. I thought National was supposed to be about strong families, individual liberty and self-reliance? I would like to see the National party get back to those core values.
I understand that Labour is about big government and lots of government spending. But surely National is supposed to be different? If we cut welfare spending, which in my mind is just excessive, then surely that would be a big chunk of government spending reduced? Then we could have lower taxes and less government and more freedom and more individual and family responsibility. Isn’t that what National is supposed to be about?
Vote:December 15th, 2010 at 12:18 pm
Manolo – Those ideas are indeed far too right wing. Cycleways are the future.
Vote:December 15th, 2010 at 12:18 pm
We are dealing with two big numbers to calculate the deficit. So if spending is up and revenue is down then the deficit widens possibly as much as 3billion if both moved about 1.5b.
Vote:December 15th, 2010 at 12:23 pm
As for the tax cuts, as both were fiscally neutral they are unlikely to have short term effect.
Vote:December 15th, 2010 at 12:24 pm
“But surely National is supposed to be different?”
Not at all.
Labour and Labour-lite, aka National, are joined at the hip. Looking at the facts, and not at the founding principles of the National Party which this government abandoned immediately after taking office, there is little or no difference between the two parties.
Sad, but true.
Vote:December 15th, 2010 at 12:55 pm
[DPF: No money has been borrowed for tax cuts. The earlier tax cuts had far greater spending cuts to fund them, and the 2010 cuts were funded by the GST increase. Please don't lie about this.]
I’m not lying about this, even the government stopped using the term ‘fiscally neutral’ for this years tax changes. The changes in the tax system from 1st October meant the government reduced it’s tax take and therefore has to borrow more to fund the deficit. While at the same time predicting large deficits.
The economic ‘wisdom’ is that people will spend the extra income they get from tax reductions and this will create demand that produces jobs, as people spend this money the government picks up tax revenue due to GST and PAYE from new jobs.
However what really happens is people pay off debt so that little extra economic activity happens and the government does not claw back much additional tax revenue. Long term paying back debt is a good thing but it does nothing to help the government balance the books this year or next so they borrow to fund the gap and cross their fingers it will all come right someday.
Vote:December 15th, 2010 at 1:05 pm
“A survey of 1000 voters has shown 70 percent of them haven’t noticed any benefit from the October tax cuts, which Prime Minister John Key is finding difficult to understand.”
Vote:December 15th, 2010 at 1:08 pm
“The Government is denying it is softening up voters for state asset sales, and says it wants to get value from all the family silver as the deficit continues to balloon. “
Vote:December 15th, 2010 at 1:19 pm
Bill English had signalled in his Budget address that a large deficit was on the way. A combination of factors such as the credit crisis and debt bail out globally impacted on all countries and New Zealand was fortunate to have had escaped relatively unscathed.
Vote:However the debt is increasing exponentially per day and the Govt will have few options but to move to a sell down of state assets and slash spending.
Gwilly (109) has some good suggestions to get the country moving.
December 15th, 2010 at 1:42 pm
DPF wrote: No money has been borrowed for tax cuts. The earlier tax cuts had far greater spending cuts to fund them, and the 2010 cuts were funded by the GST increase. Please don’t lie about this.
I realise Treasury and the Deputy PMs office have some Orwellian line in which the tax cuts were fiscally neutral and the government borrowing is to fund spending, and I guess you’re obligated to regurgigate this. But the reality is that the government cut taxes thus reducing its income (the GST increase did NOT compensate for the latest round of tax cuts, either in theory or in practise) without reducing spending and is borrowing the shortfall. By any definition they’re borrowing for the tax cuts.
Vote:December 15th, 2010 at 2:08 pm
Danyl – dont mind big boy – he’s been a bit off lately…
Vote:December 15th, 2010 at 2:09 pm
By any definition they’re borrowing for the tax cuts.
No, they are borrowing for the continued spending. Big difference.
Vote:December 15th, 2010 at 2:14 pm
No, they are borrowing for the continued spending. Big difference.
If you bet your paycheck at the casino and lose, and then borrow money to pay your mortgage, are you borrowing to pay for gambling or borrowing to pay your mortgage?
Vote:December 15th, 2010 at 2:20 pm
Can those National supporters creep back in their cage? If Helen Clark did anything wrong, we hasn’t John Clueless not reverted her decisions? He hasn’t turned back ANYTHING. So clearly the Nats must believe what she did was worth keeping. The Nats went in on a platform of doing what Labour did, but on a bigger scale.
Helen + Cullen were frugal people compared to the loons who are now borrowing $350 million a week.
That trainset about which you Nat supporters got so mad, is just TWO WEEKS OF BORROWING.
Maybe I shouldn’t should because we can’t get through to you.
The best defence you have is: John Key is not Helen Clark.
How sad.
Vote:December 15th, 2010 at 2:21 pm
Strange is it not, bad spending, hospitals, children’s health etc, good spending according to right wing types, bailing out farmers who should have had a reserve put away instead of the holiday in Europe each year.
Vote:Christ the numbers who rant we are against socialism, then turn around to rant how much they are in favour of corporate welfare for the right people.
December 15th, 2010 at 2:24 pm
DPF: Don’t lie Danyl. The 2009 tax cuts were funded from spending cuts that were far far larger than the tax cuts. The 2010 tax cuts were funded by the GST increase.
Nope. Every year National has spend more than the year before. The cuts were only cuts in increases, not in real spending. Just like the cuts the Tories make in the UK.
Borrowing $350 million a week, utterly, utterly mad.
Vote:December 15th, 2010 at 2:27 pm
grumpyoldhori: how much they are in favour of corporate welfare for the right people.
I’m waiting for you to quote such right wingers.
…
Still waiting.
…
Waiting.
…
Ah, there aren’t any? Right. We don’t want corporate welfare, and yes, we have a crony capitalist system. But don’t claim rightwingers like that.
Vote:December 15th, 2010 at 2:43 pm
If you bet your paycheck at the casino every week and lose, and then borrow money to pay your mortgage, are you borrowing to pay for gambling or borrowing to pay your mortgage?
I’d ask an accountant – it’s called cost accounting.
The problem with those who equate a tax cut with “spending” is the assumption that all income is owed to the government, except that which the government graciously “spends” by allowing us to keep. The far-left may love the sound of that arrangement, but the vast majority don’t.
Vote:December 15th, 2010 at 2:57 pm
The underlying figures in the May Budget showed English’s tax-go-round was already $460 million short of sufficient cash to fund the big personal income tax cuts in this financial year.
The Budget pointed to a funding shortfall of $1.085 billion over a four-year period
But the Government cannot escape the fact that Treasury forecasts on the $1.085 billion cumulative shortfall have now tripled to 3 Billion!!!!!!
Vote:December 15th, 2010 at 3:07 pm
The problem with those who equate a tax cut with “spending” is the assumption that all income is owed to the government, except that which the government graciously “spends” by allowing us to keep. The far-left may love the sound of that arrangement, but the vast majority don’t.
It’s not ‘the far left’ but the will of the majority that determines the degree of taxation and spending. Each government is elected on a mandate to tax the public and spend their money according to their campaign promises, and Key, English et al won the last election on an explicit promise not to cut spending.
Vote:December 15th, 2010 at 3:25 pm
Add to gwilly’s list
Overseas aid/spending/development or whatever they call it.
If we have to borrow to give it to some one else why can’t they borrow it themselves and pay their own interest on the loan?
Doesn’t make sense to give money away if your broke.
Vote:December 15th, 2010 at 3:28 pm
Some seem to be saying the tax cuts are the cause of the deficit but at other times say that (70% think that) the tax cuts are not noticeable – I presume from that they have been balanced by the GST increase.
Some of the reduced tax take could be due to timing and may recover a little. If people knew tax cuts were due this year they may have deferred income on their books so they could take advantage of that reduction, but next year will have to pay tax on that income, albeit at a slightly lower rate.
The increase in GST rate won’t even figure in the first half year total.
Gwilly’s 9. Flat 15% income, GST and corporate tax rates will not help the deficit , and will raise the effective tax rate for low income earners.
Vote:December 15th, 2010 at 4:17 pm
Best thing to do is start to let go government employees, the middle management who don’t do anything. Keep the front lines, or even hire more. Bureacrats waste money while justifying their jobs. I know of many in our local government. . Since Helen Clark hired 16000 bureaucrats, has anyone seen better results on the front line? As I recall, they were short police, doctors, nurses. Bureaucrats hire their cronies and then justify their jobs. This is compounded with pet projects. Like tributaries that flow into the river, the river keeps getting bigger. These are tough decisions that need to be made, but John Key isn’t going to do it. No balls. All he has done is Increase government spending by 4 billion in two years when there is a deficit of 250 million a week??? I like the flat tax idea, that should help the economy.
Vote:December 15th, 2010 at 4:19 pm
Is English one of Obama’s disciples?
While the Messiah spends as if there is no tomorrow, over here the minister of Finance appears unable to control waste and looks paralised by fear and inaction. http://thehill.com/homenews/senate/133563-senate-dems-unveil-11t-omnibus-spending-bill-
Vote:December 15th, 2010 at 4:20 pm
jackp, the deficit is now $350 million a week.
I’ll make the prediction that 6 months from now it will be $500 million a week.
And John Key will be just as popular.
But NZ can fake reality only for so long. And the reality is that we are waaay to poor to run a European style socialist country.
Vote:December 15th, 2010 at 4:55 pm
DPF’s explanation:
has already been described as “Orwellian” but really, it’s not even up to that standard. Swiftian, perhaps.
Oh cripes, I just blew most of my wages at the whorehouse. I guess I’ll just hike up the rent I expect my tenants to pay to cover it. Of course I still have to visit the payday lender. But not to fund my whoring, you understand, I’m not irresponsible or something. It’s to fund important stuff like rent and food.
How dare you call me profligate… the cash I shoved down a g-string this morning comes from a totally different source from the cash I’m spending on necessities this afternoon! See?!
Vote:December 15th, 2010 at 4:58 pm
I find it amazing that people are arguing on this forum about the impact (or not) of the income tax reductions. The treasury estimate is that the shortfall is a little over a billion dollars a year. Come on people, that’s New Zealand’s borrowing FOR THREE WEEKS at the current rate. The tax reductions don’t even cause a blip on the charts.
The traitor Key campaigned in 2008 on not cutting spending. I think he would have won the 2008 election without making that promise, but that’s a moot point. He didn’t campaign on handing sackfuls of cash over to a racist minority, but that too is a moot point. I think he has 1 more election with no effective opposition, during which he will need to dispense some medicine in the form of radical and massive spending cuts. After that, it’s quite likely Liarbore will have re-formed behind a new leader, and may start making inroads.
The answer is not to argue about whether the government’s decision to steal less money from the productive has contributed to New Zealand’s parlous economic position. The answer is to start looking at which departments, QUANGOs, pet projects and barrels of pork to stop throwing money at. The answer is to take on-board some of the recommendations from the 2025 Taskforce and the Welfare Working Group (and I don’t mean komrade Bradford’s head-in-the-clouds BS, I mean real suggestions like ensuring life on welfare is less financially rewarding than life on the minimum wage).
At a time when the country needs real leadership and vision on the economy, it is stuck with a smiling, waving buffoon and someone who has such a deficit of self-awareness he couldn’t see nobody wanted him even when he led his party to the worst defeat in its history. Fucking seat-warmers, at best.
Vote:December 15th, 2010 at 5:22 pm
And all this had already been called in 2009 by Roger Douglas.
Full of stuff to quote, but here some morsels:
The $15 billion plus dollar deficit means a debt of almost $3,500 dollars for every New
Zealander – that is $14,000 for a family of four. …
As I said 18 months ago in the House, ‘National suffers from the tyranny of the status
quo. The only thing they know is how to spend. And if spending means borrowing, then
they will borrow and hope’.
Nat supporters, you realise that John Key is buying his popularity with your kids money?
Time to ACT now.
Vote:December 15th, 2010 at 5:22 pm
Berend, last night the news said 250 million a week. Ferrar says 300 and now you say 350. I voted for change and more prudent spending when I voted for John Key and National. So far, I haven’t seen any of this. IT’s time John Key just stop worrying about the poles and start cutting back on government spending. Maybe he should start listening to Don Brash. Too bad the liberal press keeps putting him down because he has some good ideas.
Vote:December 15th, 2010 at 5:52 pm
Where’s Philu when you need him?.Didn’t he have a love affair with the drugs? Perhaps he could offer some good advice. If you have a 300 mill a week habit it’s probably time to go cold turkey.
Vote:December 15th, 2010 at 6:03 pm
Got any answers for the problem Mr Key or Mr English. Hey Mr Brownlee when will the old ladies home be fixed?
Vote:Lets blame the earthquake said the lying low life pollie to the bewildered public!
December 15th, 2010 at 6:17 pm
The logic in saying the government is “borrowing” to give back to its citizens is fucked, to say the least. At worst it is pure bullshit propaganda.
The borrowing is being done to continue to fund our gargantuan state sector and welfare bill, and unless National make a serous attempt to tackle this (and they won’t) our borrowing, deficit, and public debt in relation to GDP will continue to go up.
Vote:December 15th, 2010 at 6:22 pm
As if to prove my point, I post the above then immediately read:
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10694446
Vote:December 15th, 2010 at 6:34 pm
And now a bailout for the West Coast.
Show me evidence anywhere on the planet that government stimulus actually helps economies. Study after study shows that if you divide the cost of stimulus by the number of jobs it creates – which, by the way, is always badly overestimated – you get a cost per job of anywhere from $100,000 to $250,000 cost per job.
Which is nothing more than a tangible measure of how ineffective government is at this and everything else in working out where labour, or indeed anything, has highest value.
Indeed the evidence points in the exact opposite direction. Governments that do not intervene in economic downturns see their economies recover faster. And the greatest economic tragedy of all in capitalist countries, the Depression, had the most massive intervention, and the majority of unemployment in the Depression came after Roosevelt’s most serious interventions. These are not coincidences.
Shame on Key, Brownlee, English, and Cullen and Clark before them, for their populist and despicable mismanagement.
Vote:December 15th, 2010 at 7:27 pm
DPF – why don’t you post something a bit more realistic about National? You and I both know that there isn’t a snowball’s chance in hell that National will deliver remotely what you and I believe and know to be needed. Just who does John Key get his advice from? Winston? Cullen? Who?
Vote:December 15th, 2010 at 7:38 pm
Spend, spend, spend. Make economy grow.
We had this a few days ago with the debate on the Obama No-Tax-Hikes:
See. Giving “the rich” more money won’t work, because it’s trickle down economics, because if you’re focusing relentlessly on spending as the economy, then of course the debate has to devolve to trickle down. And of course it won’t work – because pissing money up against a wall does not work, irrespective of whether the source is your credit card, 2nd mortgage. tax cut or WFF.
It’s not about spending. It’s about investment – and NZ’s lack of such is driven by several factors, including, but not limited to, tax cuts. The left can jack income taxes on “the rich” to their hearts content: the right can cut them – and it will make no real difference.
Start with first principles. What will it take to cause businesses and industries to not only start up here but build up here (which could also mean dreaded foreign corporations coming here)? I’m personally aware of several businesses that were invented in NZ but have never listed in the NZSX (and who can blame them) and basically keep only a small design staff here whilst the stuff is built in China or Vietnam. I’d be willing to bet there are lot more like that.
Vote:December 15th, 2010 at 7:43 pm
I can see one of two things happening. We continue down the path to oblivion and the only way out is the total nationalisation of the country, communism, many of the noddy’s here would just love this. Or total collapse and everyone for themselves. I have no faith that any NZ government can save us now. The peasants have been breast fed on the state tit and can’t stomach the thought of been weaned off. Also our political system, MMP has so fucked up the ability of the government to govern that basically our futures are in the hands of fruitcakes.
Vote:December 15th, 2010 at 7:49 pm
New Zealand politicians of every team are despicable parasites.
Vote:FFS it’s been more than painful to watch for the last few decades.
This country is fucked.
December 15th, 2010 at 7:50 pm
“Also our political system, MMP has so fucked up the ability of the government to govern that basically our futures are in the hands of fruitcakes.”
You have said it all in one SSB.
Of course the futures of the fruitcakes are also in the hands of the peasants sucking off the state tit as well.
A mutually satisfying symbiotic relationship.
Our last real hope is to arsehole MMP—IF—Johnny and his acolytes really do give us the chance to do so in the upcoming referendum.
Vote:December 15th, 2010 at 7:52 pm
“DPF – why don’t you post something a bit more realistic about National? ”
Vote:It will be 10 degrees under zero in Hell before that happens.
December 15th, 2010 at 7:59 pm
Oh – and this standard crap has to be tackled too – from Joe90′s link:
Uh huh. I wonder if the idiot actually ever saw the following chart – Reality Isn’t Negotiable. Which shows that the total US Federal tax take has averaged about 16.5% over the last 80 years, irrespective of the marginal income tax rate
If the top marginal tax rate has not even lifted the overall Federal tax take, something it should be directly linked to, then how could it actually be a causative link to greater economic growth?
The answer is that, at minimum, we don’t know because nobody has actually provided a theoretical link. Instead we have left-wingers like Wikrent who pull the classic causality diagram link to justify something they want to do for other purposes: tax the rich because that will balance society out a bit and restore some of the money they either stole or just luckily fell over in the zero-sum game that is capitalism.
Of course the polemicist who wrote that hates free trade as well and bangs on for several paragraphs with the classic 80′s whinge about how the Reagan era destroyed good ‘ol American manufacturing. Of course – that’s why the USSR soared ahead of the USA in the 1960′s as it’s Five Year plans finally got it producing more steel, or why 30 years of a super-protective economy made NZ into a powerhouse by the early 1980′s. Industrial economies are set in aspic, which is at least as good a causative argument as anything else that he put forward.
Morons.
Vote:December 15th, 2010 at 9:14 pm
Tom – you were very brave to take an 80 year average, selectively apply a fluxuating variable (an income tax rate) and claim a masterful rebuttal.
Lets go crazy then and pretend that the relative size of an average tax take or GDP/Capita are not the real driver behind tax rates, and tax rates are about being a straight-up good cunt:
For example, “Tom’s” summer trip to Italy with his tax cuts, could have instead payed for a drug and alcohol de-tox bed for “Timmy”. Timmy then doesent go on to break into Tom’s bach, beat up his wife, get imprisoned etc etc.
I always thought it was that simple….
Vote:December 15th, 2010 at 9:19 pm
Uh. Duh. It was an election promise. It was a dumb unnecessary election promise NOT BECAUSE IT WAS WRONG IN PRINCIPLE but cause it was foreseeable at the time it wasn’t necessary in order to win and it was equally foreseeable this economic calamity was no ordinary calamity to your average common-or-garden political observer let alone your trained professional team of economists which presumably the Nats deployed to develop this policy. In short, it was a promise. Sure, it was mental.
However your suggestion that the lack of economic stimulation is evidence they don’t work is equally mental for the very same reason.
Vote:December 15th, 2010 at 9:45 pm
Did you actually look at the graph? There is an average yes, but I’m more interested in the line showing total Federal tax take bumping up and and down slightly, while the line denoting marginal tax rates soars and then drops. You can look at it year by year as well as decade by decade.
And unlike the causative graph bullshit from Wikrent I can actually supply you with a perfectly rational reason as to why it should be that way. Because people’s behaviour changes as the income tax rate changes. In the case of “rich pricks” with high incomes they curtail their earnings as the marginal effects kick in and it becomes pointless to earn more money. Where the “rich prick” has both huge asset and income wealth, their behaviour change includes hiring armies of accountants and lawyers to avoid the tax increases. Gareth Morgan noted something similar here with the number of people reporting their annual incomes at $59,999 exploding as the double O decade developed under Labour. Note that the latest heroes of the progressive movement in the US, Bill Gates and Warren Buffet, are both forking billions into foundations – billions that are not going to Uncle Sam and on which they will pay no tax.
Tax increases that will be mere paper cuts oozing a few drops of blood for them (and the multi millionaire Democrats Boxer, Kerry, etc) are hypodermics driven straight into the left ventricle of people like these plutocratic hairdressers in NY. $150 per haircut? Robber Barrons!
As for your other belief (echoed by several commentators here I see):
Perhaps it’s time you caught up with some more advanced left-wing thinking on the subject, courtesy of Ye Old Liberal Bleeding Heart, Richard Cohen in the WaPo – Did Liberals get it wrong on crime:
Oh no. So “Timmy” and the other thugs are not all Jean Val Jean – who knew? Why this is bad news (other than lefty embarrassment) is not explained in the article. I mean to say – surely the reality-based community is delighted to encounter reality, especially when it’s not simple…
Vote:December 15th, 2010 at 9:59 pm
Tom, being interested in the US you may find this interesting:
http://www.youtube.com/watch?v=1hhJ_49leBw&feature=player_embedded#!
Compulsory viewing for socialists.
Vote:December 15th, 2010 at 10:08 pm
k jones
More leftist bleeding heart hand wringing rubbish.
Trip to Italy lawful and perhaps even educational and cultural (there is culture other than kapa haka).Maybe entirely hedonistic,Tom’s money,Toms choice.Join Berlusconi for a pool side party with some girls even.So what.
Timmy’s activities are unlawful,he will know this ,especially after 13 years of tax payer funded education. And too bad if he decided to take drugs and alcohol,his choice to ruin his own life. It’s already been pointed out today that your type of comment amounts to blackmail ;ie if you don’t pay for these fucken losers,you lose. No,the fact is these cretins lose through cretinous choices.
Vote:December 15th, 2010 at 10:13 pm
Speaking of economic theories, anyone else read this? (Found on Arts & Letters daily):
http://www.nationalreview.com/articles/print/253676
Vote:December 15th, 2010 at 10:19 pm
Nickb
Thanks. Crowder’s good at putting his points across with humour and this sort of history is valuable.
Sadly it’s also not learnt. I can’t think of a single friend of mine in Chicago in the last 20 years who has not made eye-rolling remarks about Detroit, together with fearful remarks about what might happen to Chi-town if we don’t steer away from a similar path.
All to no effect. The pull of the need for government to “do something”, allied with the black hole behaviour of the programmes they create, has led my second home down the same rathole. About the only piece of good luck is the fact that Chicago is not a single industry city – yet.
Vote:December 15th, 2010 at 10:33 pm
adze, thanks for that.
Vote:December 15th, 2010 at 10:43 pm
Are you from Chicago?
I am just downloading “Requiem for Detroit” now. I find it fascinating how the once wealthiest city in the US has fallen to what it is today. There are wild BEARS running the streets!
Vote:December 15th, 2010 at 10:54 pm
No. Kiwi by birth. I wound up in Chicago back in the mid-80′s by sheer fluke. Stayed pretty much (a couple of years in the late 80′s back in NZ) until the end of the 90′s when I returned to NZ. The Windy City is very much my second home: just a shame it’s been so screwed over by politicians.
Since both “homes” appear to be on the downhill I guess I’ll have to start picking somewhere else: Texas perhaps (I jest, my Chicago-born wife would have a heart attack).
Vote:December 15th, 2010 at 10:59 pm
I reckon make for some tax haven like Switzerland or the Bahamas as soon as you have enough to retire
Vote:December 16th, 2010 at 12:34 am
If the Crowder piece was not sad enough take a look at this analysis of Detroit in the Business Insider magazine:
- the latest plan to stave off bankruptcy is to effectively abandon 20% of the city (no cops, no road repair, no garbage pickup).
- In 2003, under pressure from the teachers unions, the Detroit Schools turned down a gift from a private business man to develop 15 charter schools. The gift was worth $200 million then. The School system has a graduation rate of 25%.
That last one is a classic example of how, even when the system is so obviously broken, one of the spokes of leftism, the unions, would not change.
When you read things like that it puts into perspective the idea that some commentators have put forward that tough times will force a re-assessment by the left. It won’t. Even bankruptcy won’t do that – but it will at least break their control.
Is Detroit our future too? How many “industries” do we have left?
Vote:December 16th, 2010 at 7:17 am
Thank you for the link, nickb.
A toxic mix of left-wing ideas, an endless source of “free” government money, and a lazy population did the trick. The Motor City is finished.
Vote:December 16th, 2010 at 7:41 am
Tom
Yes I looked – noticed she was a cato inst lady…
so, are saying tax avoidance is the issue?
and…..
do i really have to try and explain a relationship between poverty and crime with you?
(apologies for the truncated reponse – pre cofee state)
Vote:December 16th, 2010 at 7:56 am
David Parker is correct that the government is blaming all and sundry for its position and doesn’t want to take any personal responsibility. At the same time, the Retirement Commissioner has called for superannuation to be restructured. John Key’s response is to do nothing for fear of losing votes. Being a Prime Minister is not at all like being a currency trader…
Vote:December 16th, 2010 at 3:56 pm
Why don’t we just stop borrowing the $300 million a week and see what happens, it will all work out, the overseas banks can’t come and take the country.
Just declare bankruptcy and after 3 years everything is okay, everyone else does it.
Look how these finance company executives got away with it, key and English should learn some of their tricks.
Vote: