Colin James on strategy
February 8th, 2011 at 10:00 am by David FarrarColin James writes:
Several one-off factors will conspire to make this year feel OK, if there is no new international shock. But getting the economy solidly based will take a decade.
This is not an argument about the budget, though it shows up there. It is about how to earn our way. For 40 years we did not, culminating in a bubble economy from 2002 – what Bill English has taken to calling “pinko- economics”. We still don’t.
Getting to equilibrium requires a massive shift from consumption to exports: start with a $5 billion lift in savings just to hold net liabilities at 85 per cent. That requires both a mindset shift and an interlocking set of policies: tax (more to do yet), savings (some initial ideas from the working group), more rigorous asset funding and management (the December investment statement and the SOE selldowns), tighter management and trimming of welfare rolls (the working group reports in two weeks) and maybe a bit more support for innovation.
I think James is right on the time–frame – it probably will take a decade.
AT LEAST that is the Government’s current strategic mix. A major challenge will land soon in the form of the much-delayed report by Chief Scientific Adviser Sir Peter Gluckman’s group of social scientists, fresh off the back of high-level international academic backing for the Dunedin longitudinal study’s findings that much teenage failure and crime stems from fixable bad starts to life.
The Gluckman report will make 10 or 12 major and many detailed recommendations: an expensive programme but ultimately a strategic economic investment.
That report will be fascinating.
Mr Key can’t stretch that far yet. But that he, with Mr English pushing, has taken on the SOE selldown bogey to get a longer- term return suggests he intends his second term to have purpose and he figures that purpose requires strategy, not ad hoc tactics, and longer-sighted policy, not myopic poll-watching. In fact, to look purposeful, strategic and a capable economic manager is shaping as his election campaign theme.
It is too early to tell if Mr Key really has gone strategic. But the past few months look like a turning point. Look again this time next year.
Key steps on the way will be what gets announced today by the PM, the 2011 budget and then finally the election manfesto.
February 8th, 2011 at 10:19 am
It may be a lesson to the extreme right (as if they ever listen) that politicians need to win the confidence of the electorate before they promote reform. Douglas forced reform on an unsuspecting public, they were effectively blindsided; and the reforms did not carry through (Lange, who, unlike Douglas, the idealogue, was in touch with the public mood, took fright) and there is still resentment and blame. Key, who is less inclined to be poll driven, may be just the strategist that NZ needs.
Vote:February 8th, 2011 at 10:21 am
“It’ll take a decade …”
Assuming it does – (a) Labour will just about have their act together, and (b) Key and National will be nearing the end of their sell-ability.
The electorate will have completely forgotten the mess and empty bank accounts left after Labour’s 1999-2008 term and will decide to give them another go.
Same old – same old story. Get things headed in the right (as in correct) direction – then put Labour in again and blow every single advantage.
Vote:February 8th, 2011 at 10:37 am
The easy money is running out yet the Labour Party wants to spend most of it being borrowed. In an interesting twist the Labour Party sneered at the $10pw rise in the minimum wage yet that is the size of their miserable tax cut which costs over $1b. They still dodge the question – where is the money coming from. Even journalists are asking this question.
Vote:February 8th, 2011 at 10:45 am
The reason it may take a decade is simply that the gummint doesn’t have the gonads to do the right thing. It only took the Gipper a year to start turning things around and after 3-4 years the economy was humming along to such an extent that he won a second term in a landslide election. And even the Gipper was in fact pretty modest in what he achieved in turning the economy around (e.g. government kept growing, didn’t return to sound monetary policy, didn’t structurally change the welfare system).
Vote:In short, I Key c.s. would have pushed through some serious reforms when the iron was hot (immediately upon being elected), there would now be sure signs of recovery and a solid basis for a political campaign, instead of the politicking and backstabbing that we are too accustomed to.
February 8th, 2011 at 10:49 am
trout
“(Lange, who, unlike Douglas, the idealogue, was in touch with the public mood, took fright)”
With respect trout that is simply untrue, the public only lost faith with the Lange government toward the end when they went all socialist.
The public mood at the time was actually one of “yes this hurts, but let’s get it done once and done properly”
Sadly Lange decided that his own domestic circumstances were more important than doing what was best for the country.
The public of NZ then voted for Richardson to finish the job that Douglas started, it is to Bolger’s eternal shame that he did not let her do so.
Vote:February 8th, 2011 at 10:51 am
Oh come on, Gluckman is a yes man. I sure Shonkey set the agenda before the report was even written, that’s why it’s taking so long, the right answers don’t yet match the politics. Gluckman was quick to fall in line behind the global warming zealots in the National Socialists and I suspect he will push for greater participation for NZ in saving the fucking world. What’s the bet the Gluckman report is heralded as a vision forward, meanwhile the numerous reports by Don Brash’s working croup, not politically palatable, are holding up the wobbly tables in the basement gym. A decade to recovery?, not likely, try a century.
Vote:February 8th, 2011 at 10:51 am
The reason that the government doesn’t “have the gonads to do the right thing” is simply down to the fact that the right thing, done in the politically wrong way, will have the effect of pissing off enough of the electorate to effect a change in government, which would bring us back to square one.
Unfortunately too many voters don’t have the nous to understand what is needed to achieve real, sustainable growth in a short time so the only way these things can be completed is to take it slow, and prepare the country to take advantage of the recovery.
As it is we are, for the first time in nearly a decade, exporting more in value than we are importing. The parts of the economy that need to grow first, are actually doing so.
Vote:February 8th, 2011 at 10:59 am
So what does this all mean for an average, hard working NZer like me? What does the next 10 years hold in store? What have I got too look forward/dread in terms of quality of life and wages?
Vote:February 8th, 2011 at 11:01 am
Exactly. Trout and slightlyrighty hit the nail on the hard.
I don’t think John Key has suddenly discovered strategy. He has been pursuing it all along. And just like any good general you prepare the ground very carefully first so that your thrust is successful when it comes instead of turning into a morass.
Positan,
Vote:I understand your cynicism about Labour, but a decade on this will have such momentum that Labour won’t be able to ruin it. It will have become the accepted wisdom to which Labour will have to adapt to get elected, just as National had to swallow dead rats itself to win in 2008.
February 8th, 2011 at 11:15 am
@slightyrightly: Doing the right thing in a politically right way is simply called “leadership”. Accepting that it may be politically inconvenient to do the right thing, and therefore pandering to cheap popularism is a sure sign of a lack of true leadership combined with a lacking ability to explain to the public at large what is necessary. Personally I am quit sick of the assertion that is always made that the public is too stupid to understand things that are actually not more complicated than what everybody is dealing with every day. It appears that there is just one driving force behind every NZ politician, and that is hanging on to the baubles of office, in their pecuniary or other manifestations. Term limits are probably the only solution to that problem.
Vote:February 8th, 2011 at 11:24 am
This seems somewhat like deja vu to me. Who else is reminded of how Douglas and Richardson did all the gardening and then their tree bore fruit just in time for Helen Clark to be elected?
Vote:February 8th, 2011 at 12:51 pm
So what does this all mean for an average, hard working NZer like me? What does the next 10 years hold in store? What have I got too look forward/dread in terms of quality of life and wages?
Well, you can keep holding your hand out and grant yourself a few more years feeling like your keeping your head above water – that is until the country can no longer afford to fund the hand outs.
Or.
You could look to how you could better you own lot, you could either work a little harder and aim from that promotion and hopefully pay rise. Or you could look at re-training in your spare time and move into a higher paying profession. Or something out of left field and more risky: you could look into starting your own business – thats the real way to get ahead.
You are your own man, the ability to improve your lot in life for you and your family rests on your own shoulders – let yourself control your destiny, not the government.
Vote:February 8th, 2011 at 1:47 pm
re S.Russell – “I understand your cynicism about Labour, but a decade on this will have such momentum that Labour won’t be able to ruin it … ”
Well, I wish I could share your confidence. Labour is a party, in the main, run by losers for losers. It’s riddled with envy-driven, impractical dreamers so obsessed with what others possess, they’ve become self-convinced of “entitlement” to share them.
Labour administrations aren’t remotely concerned with sundry essentials like affordability or sustainability of policies. Their only objective is to try and buy-off the electorate so that they can attain the Treasury benches and the rewards they believe will ease the heavy complexes wrought by personal knowledge of their elemental inadequacy. Few Labour MPs possess business backgrounds. In consequence Labour caucuses have not the slightest understanding of market forces or what impacts upon them.
All I can say is that, no matter how well our economy might be doing or how well-established are the policies driving the “momentum” of which you speak, the stupidly spendthrift ideas that have always personified Labour shortsightedness will continue to dominate Labour thinking – and wreak ruination yet again.
I really do hope I’m wrong – I just can’t shake the feeling.
Vote: