The manufactured crisis gets worse

June 11th, 2014 at 10:00 am by David Farrar

Stats NZ had the latest data yesterday.

Seasonally adjusted manufacturing value for the 1st quarter of 2014 was $25.3 billion. A year ago in the same quarter it was $22.8 billion. That’s an 11% increase in the last year.

This of course is what Labour, Mana, Greens and NZ First call a manufacturing crisis.

 

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31 Responses to “The manufactured crisis gets worse”

  1. EAD (579 comments) says:

    Never in my lifetime as a market observer and political junkie have I seen such a disconnect between reality and politically manipulated stats. Those who live within the matrix are fully loaded for a recovery which is not and will not appear. Nominally the Main stream media and Stats NZ can proclaim ECONOMIC recovery has arrived, point to the rising developed world stock markets, low interest rates, “low” infl.ation and record exports and say all is well. Very rarely do they examine why such stats might point the way they do.

    Here however is reality in one (albeit long) article: http://www.zerohedge.com/news/2014-06-10/chinas-evaporated-collateral-scandal-spreads-second-port

    In short – China have been busy blowing the mother of all credit bubbles which has been sucking up imports which is why in nominal terms the reported value of “trade” is rising. $30 trillion dollars ($30 million million dollars printed out of THIN air) of new debt which has been created since the nadir of the Global Financial Crisis in late 2008 of which by far the largest share is from China which has created the greatest fire hose of HOT money zooming around the world in history.

    This global orgy of debt has been disguised as GDP by Governments and is reflected in stats like the above. If the only way to get growth in our from our “debt as money” system is to go deeper into debt (Governments, individuals), do we really have growth or just the illusion of growth which will all disappear when the credit bubble goes “pop” which the laws of mathematics says it must??

    http://dollarvigilante.com/blog/2014/5/30/the-truman-show-us-economy-real-gdp-numbers-show-9-annualize.html

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  2. RightNow (6,646 comments) says:

    It’s analogous to the Al Gore effect.

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  3. peterwn (3,146 comments) says:

    But to Labour, ‘manufacturing’ means large plants with semi-skilled workers who are easy for unions to organise. Much modern manufacturing (and one could call Weta manufacturing) is diverse and is a logistics nightmare for unions to organise.

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  4. mikemikemikemike (301 comments) says:

    Do you think maybe they are referring to the manufacturing crisis as one where people are being replaced by machines (more efficient processes) so while the sector is doing very well, It is as the expense of people jobs…(which is what they are call a crisis)

    This has very real impacts particularly for the regions. On the one hand we complain about people being bludgers and not doing their bit, and then we advocate for taking away the often limited opportunities for those people to make money anyway…Then we say those people should move to where the work is, and then we make those places so expensive to live in that they need more money to actually live. Then those companies automate their jobs away because they have to maintain some kind of bottom line – and so the cycle continues.

    Yes we could argue that those people should up-skill themselves, but their will always be those that can’t just simply do that.

    Rather than constantly run yourself on spin cycle, maybe consider the people that are being impacted by changes in manufacturing….so while the sector itself might not be in crisis those who traditionally have made those employers (lots) of money are now being cast aside with little opportunity to do anything else…that is the crisis (as I see it)

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  5. queenstfarmer (742 comments) says:

    But some sectors fell, so it is a crisis DPF.

    You see, under a Labour-led Govt, all sectors would be growing all the time. Likewise, not a single job will be lost.

    The immigration crisis will be “managed”, without reducing any migrant category except, maybe, the skilled and/or financially sufficient ones.

    Heavy rains will be prevented (unless needed to avert a drought crisis), and low-lying land will be raised.

    The earthquake claims crisis will be fixed by bringing pensioned judges out of retirement to hear cases in the Earthquake Court brought by taxpayer-sponsored litigants.

    And the crisis in the nation’s fastlanes (at least 20km of them) will be solved by banning trucks to lanes one and two.

    Your constant undermining of the permananent state of crisis that we have been in for over 8 years now is unhelpful, to say the least.

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  6. dime (9,368 comments) says:

    “Do you think maybe they are referring to the manufacturing crisis as one where people are being replaced by machines (more efficient processes) so while the sector is doing very well, It is as the expense of people jobs…(which is what they are call a crisis)”

    thats not how they frame their argument.

    what year is this anyway? 1780?

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  7. wreck1080 (3,725 comments) says:

    @ead:::
    “Never in my lifetime as a market observer and political junkie”

    ie, you are an armchair critic.

    Every week someone announces a scare story of one sort or another.

    How do we sort out the noise and the reality?

    Really it is impossible.

    Inevitably someone will be eventually be proved right and receive global accolades for years to come. Seems more like a lottery to me with respect to the accuracy of gloom and doom predictions.

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  8. flipper (3,537 comments) says:

    QueenStreet….

    A delightful summation :-)

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  9. Ed Snack (1,733 comments) says:

    Zerohedge is, well, interesting for a different viewpoint. However I suggest that one invests in NaCl futures before reading it, given the number of pinches needed. Worth a read often, just I wouldn’t always take what is said at face value. And at least some of those who comment on it meet the definition of “wooboy…crazy”.

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  10. mandk (818 comments) says:

    Exactly peterwn,
    If you are an antediluvian leftie a job is not even a real job unless it is manual, noisy, dirty and dangerous.

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  11. OneTrack (2,578 comments) says:

    mikemikemikemike – so manufacturers should not be allowed to use new technology because it puts unskilled people out of work. What’s labours plan then , that we have to live in 1950?

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  12. EAD (579 comments) says:

    @wreck1080:

    let me finish that sentence – “lifetime as a market observer and political junkie AND BUSINESS OWNER AND HAVING WORKED FOR SEVERAL LARGE COMPANIES”

    as to how I make calls – I am a follower of the Austrian school of economics for whom one of their central beliefs is that economies work best on sound money – i.e. money can’t be created out of thin air as it doesn’t grow an economy (well maybe nominally), it merely redistributes wealth, distorts and ultimately destroys an economy.

    My views are on business cycles are also from the Austrian school whose work has shown that fiscal stimulus can give the appearance of growth, which ultimately most result in a bust as the money used to create “growth” was not real capital saved but merely the illusion of capital being available through stimulus. The great Austrian Economist Von Mises described it as such:

    “True, governments can reduce the rate of interest in the short run. They can issue additional paper money. They can open the way to credit expansion by the banks. They can thus create an artificial boom and the appearance of prosperity. But such a boom is bound to collapse soon or late and to bring about a depression.”

    We are getting nearer the stage where interest rates can’t be lowered to produce another illusory boom – for crying out loud the EU central bank last week declared negative interest rates!! This debt as money system is on it’s last legs, for that I am sure.

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  13. Peter (1,577 comments) says:

    mikemikemikemike – so manufacturers should not be allowed to use new technology because it puts unskilled people out of work. What’s labours plan then , that we have to live in 1950?

    Well, it beats the Greens. Their plan is we live in 1850.

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  14. dime (9,368 comments) says:

    EAD – what the hell is going to happen when Obama turns the tap off after the mid terms?

    The DOW is about to go through 17000 FFS. From memory it peaked about 14000 in 08?

    All from printed casssshhhhhhhhhh

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  15. greenjacket (415 comments) says:

    Mikemikemike: “Do you think maybe they are referring to the manufacturing crisis as one where people are being replaced by machines (more efficient processes) so while the sector is doing very well, It is as the expense of people jobs…(which is what they are call a crisis). This has very real impacts particularly for the regions.”

    Are you seriously saying that businesses should not automate because it will result in jobs being lost?

    As someone who works in a manufacturing business based in the regions, the crisis is a shortage of labour.
    And while the manufacturing has become more automated, it actually employs more people at higher wages, because automation has allowed the business to put more value into product.

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  16. EAD (579 comments) says:

    @ Dime

    it will be a “bonfire of the vanities” the likes of which the world has never seen….

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  17. Jack5 (4,569 comments) says:

    Most non-dairy export manufacturers have been having a hard time because of the high kiwi dollar.

    That’s begun to fall, but not before many have gone to the wall.

    Our high technology export successes are trumpeted, but for every Xero there are many more that are squeezed by the high dollar, like Rakon and the Dunedin robotics and automation exporter Scott Technology.

    I don’t think there’s any NZ political party that has much intelligence when it comes to creating the environment for technology exporting though all endlessly blather about it and shell out cash for talkfests on technology.

    IMHO, our failure is apparent when you compare NZ with Israel. A decade or so ago, we were swapping stories and tips with Israel economists and commentators. They have soared ahead and now, per capita, must be among the world’s top few technology manufacturers.

    One of their advantages was large State money input through the Army and Air Force, which are interested in nothing but results, and the other, even bigger advantage was attracting scores of thousands (perhaps hundreds of thousands) of Russian engineers and technicians, many but not all Jewish.

    Our politicians, bureaucrats, and media are fucking thicko’s. IMHO, that’s the ultimate reason why despite the milk powder bubble, which seems to be bursting, we have not been able to break 40 years of current account deficits.

    We are still patting ourselves on the back over terms of trade from three to six months ago when dairy and log prices have begun their slide. Fasten seat belts!

    The losers of the coming election, might be the luckier parties.

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  18. mikemikemikemike (301 comments) says:

    Hi – I don’t for a second think creating smarter workforces through investment of any sort is bad or wrong (in fact very much the opposite). My point is that the cost of living is increasing, the way the world is going with it’s use of technology (and rightly so) has created a group of people who for various reasons are disconnected and unable to participate or contribute with their current skill set.

    As an example, a forestry worker who is great with a chainsaw, is hardly likely to come home and study how to operate a machine that is likely to replace him after an xx hour working week. There are also those that simply don’t want to. While we can have the adapt or die mentality we need to appreciate that what we are doing is taking previously useful and contributing members of society and casting them aside. The crisis part of this is when an entire town is effectively cast aside because the bulk of their working populous is made up of people I described above.

    Again, I really am all for workforce automation – I am just more acutely aware of its impact. It might be better for a company and profits but it really isn’t so flash on society.

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  19. wreck1080 (3,725 comments) says:

    @EAD….thanks that clears it up a little better :)

    Question is, how long is ‘last legs’ ?

    I thought the whole system would have crashed 3 years back , but i was proven wrong. Don’t like to bet on that anymore.

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  20. Cunningham (811 comments) says:

    mikemikemikemike you do make a good point. However progress is going to happen and there is nothing the Labour or Greens can do about it. they can go on and on about trying to turn back time but it is nothing but a dishonest argument designed to get them into power. Sadly people believe them.

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  21. burt (7,793 comments) says:

    The crisis is falling union membership numbers – no more no less.

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  22. burt (7,793 comments) says:

    mikemikemikemike

    My point is that the cost of living is increasing, the way the world is going with it’s use of technology (and rightly so) has created a group of people who for various reasons are disconnected and unable to participate or contribute with their current skill set.

    This is not a new situation. Blacksmith’s kind of whet out of fashion – do you suggest we establish some form of government ‘blacksmith’ workshop so they can keep doing what they trained to do 70 years ago ?

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  23. mikemikemikemike (301 comments) says:

    @burt – you’re being a dick. All I am pointing out, is that we where you make 400 people redundant out of a town of 2000 you are killing an entire economy. In 6 months you will be the first to line up to call them all sorts of names to do with being useless completely disregarding the fact that this was not their choice.

    You will then say, ‘They should move to where the work is’ and that’s fine, but if they are early to late 40′s still with 25 odd years to of working life left, with only one skill they have grown up with. Having very nearly paid off their home. You are now asking that they move to a town with house values at 20x that and without the chance of getting a job to pay for it.

    What I’m suggesting, is that benefits of automation, and the increased efficiency that it brings. Is coming at a direct social cost to (once productive) human beings. I’m not saying we should not do it, but we should at least consider its impacts and work to come up with a solution surely?

    To the person who said that those regions employ higher waged staff to man these machines, that’s great for the person who is earning what 3 people were. But while that one person (who I would imagine has been transferred in from out of town for the most part) and his family is fine….spare a thought for those who are no longer working and are now on the dole – or do we just say fuck them?

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  24. georgebolwing (602 comments) says:

    EAD

    The Austrian business cycle model is completely discredited, and except for a small group of fringe adherents of Mises, is not taken seriously by professional economists. Mainstream economists of all stripes who have looked at the theory, from Tyler Cowen , Bryan Caplan and Gordon Tullock at the libertarian/Chicago end of the spectrum to Keynesians like Paul Krugman and Brad DeLong have come to the simple conclusion that the theory is not useful.

    As John Quiggen puts it: “[A]lthough the Austrian School was at the forefront of business cycle theory in the 1920s, it hasn’t developed in any positive way since then. … The result (like orthodox Marxism) is a research program that was active and progressive a century or so ago but has now become an ossified dogma. Like all such dogmatic orthodoxies, it provides believers with the illusion of a complete explanation but cease to respond in a progressive way to empirical violations of its predictions or to theoretical objections.” http://johnquiggin.com/2009/05/03/austrian-business-cycle-theory/

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  25. ShawnLH (3,213 comments) says:

    “Those who live within the matrix are fully loaded for a recovery which is not and will not appear.”

    I want to propose a ban on Matrix film references on KB. It’s a lazy way to argue a point. “Oh you just don’t agree with me because your still in the Matrix!”

    CRAP. The is NO Matrix, just a mess of opinions and views that we all have to wade through (to some extent) and make our own minds up about.

    I used to be a fan of Austrian School theory, and it still has some legitimate ideas, but at some point you gotta ask yourself why, after over a hundred years, it still is not taken seriously by mainstream economists, Left or Right. If it was a solid theory that could improve economies, at some point it would have taken on somewhere, and produced results.

    The fact that it has not does not of course prove it is wrong, but it does suggest that large numbers of qualified, serious economists, again on both the Right and the Left, are not convinced. Why? (No conspiracy theories allowed to try and answer that!)

    Why I Am Not an Austrian Economist. By Bryan Caplan, Assistant Professor, Department of Economics, George Mason University.

    http://econfaculty.gmu.edu/bcaplan/whyaust.htm

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  26. burt (7,793 comments) says:

    mikemikemikemike

    I never knew it was the governments job to insulate workers from a changing world by applying tax payers money to keep their jobs going – but I guess in a world where you have a sense of entitlement to other peoples money because your ideology says it’s valid to social engineer – anything goes.

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  27. burt (7,793 comments) says:

    mikemikemikemike

    You will then say, ‘They should move to where the work is’ and that’s fine, but if they are early to late 40′s still with 25 odd years to of working life left, with only one skill they have grown up with. Having very nearly paid off their home. You are now asking that they move to a town with house values at 20x that and without the chance of getting a job to pay for it.

    I guess if the state owned all production and distribution of both good and services this wouldn’t be a problem. We could just lock the gate on change and keep everything ticking along like it is today. Imagine if we had blocked the import of motor vehicles because horse drawn wagon wheel makers were starting to loose their jobs… We could still have thousands of wagon wheel makers and blacksmiths making and fitting horse shoes and those people would never have had to face the hard cold unfair world where things change.

    FFS mikemikemikemike, so you think people are incapable of change ? Do you think it’s right to protect industries which are threatened by change ?

    Nobody is guaranteed a job for life except in socialist la la la land – and that’s never worked anywhere ever !

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  28. ross411 (220 comments) says:

    mikemikemikemike (262 comments) says:
    June 11th, 2014 at 1:47 pm
    What I’m suggesting, is that benefits of automation, and the increased efficiency that it brings. Is coming at a direct social cost to (once productive) human beings. I’m not saying we should not do it, but we should at least consider its impacts and work to come up with a solution surely?

    To the person who said that those regions employ higher waged staff to man these machines, that’s great for the person who is earning what 3 people were. But while that one person (who I would imagine has been transferred in from out of town for the most part) and his family is fine….spare a thought for those who are no longer working and are now on the dole – or do we just say fuck them?

    You’re looking at the worst case scenario. Let’s say the factory is upgraded, and the owners now make more money. They can look for more investment opportunities and create more business and hire more people.

    Conversely, they can stick with what they have, then lose their business to a factory that got with the times and upgraded. They all their employees lose their jobs, those that don’t get poached by the new factory.

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  29. burt (7,793 comments) says:

    ross411

    It seems mikemikemikemike lives in a socialist land where people train in a job when young [ IE: Get a union card ] then keep doing exactly that job forever. No change or ongoing training, no chance to move with the times…. why … because it’s a state provided job and it’s for life.

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  30. JamesBlake (54 comments) says:

    Burt that is not what I read at all. What he has said is progress is good and should happen. However when there are casualties as a result of those changes there should be safety nets in place for them. That may be better access to training to help upskill or greater access to support should they have to relocate. To not do this has negative consiquences for the whole community and not just those who end up unemployed.

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  31. lprent (102 comments) says:

    I found it curious that David Farrar managed to put a post up on statistics without bothering to even link to the stats source. So I dug around the missing link a bit to find out what the 9th floor didn’t want us to look at.

    Turns out that over the last year we have apparently had a 11% increase in “manufacturing” without any increase in manufacturing jobs. Curious eh? I guess that really does show who is making money in the “manufacturing”, National’s donors, MPs, and the banks.

    The reason of course is because most of the jobs went into processing plants that do minimal processing on commodity products extracted from NZ unsustainably. Mostly of course from dairy milk powder. But virtually all from industries that don’t employ many people and don’t circulate money inside our economy to cause growth.

    Even there, the 1.5 billion dollar increase in dairy and meat stocks points to that milk powder boom being well and truly over.

    I guess that is why “National’s mouthpiece on manufacturing doesn’t like details

    BTW: I wouldn’t bother with too much of the usual sewer schoolkid chanting about my name in unison. I’ve managed to kick myself back into coding again. So I’m not touring the blogs as much as earlier in the week.

    If you don’t have a current ban, you can comment of the details that David rather selectively left out at that post on The Standard and I might answer. Just follow the policy. And remember that you must leave an *intelligent and on-topic* comment before a new pseudonym is passed through moderation. Many of people from here and Whaleoil had a problem with that earlier in the week.

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