The still after the storm (3 Sep, 2020)

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The still after the storm (3 Sep, 2020)

Postby aardvark_admin » Thu Sep 03, 2020 7:06 am

This column is archived at: https://aardvark.co.nz/daily/2020/0903.shtml

What will the next few years hold for the fortunes of NZers and indeed, the fortunes of the entire planet?

Will the level of debt incurred by government place a huge, almost unbearable burden on those who are lucky enough to still hold a job?

Will we see a massive surge in unemployment as retail and export industries are hugely restructured or perhaps collapse completely?

Given that many of the jobs that are for the chop are low-paid and unskilled, what are the prospects for those who find themselves hurled onto the dole queue in a time of deep recession?

And how will the "earners" cope with not just the debt of CV19 subsidies but also the burden of that mass of unemployed and the benefits they'll need to be paid in order to surivive?

Could the wake of the storm be worse than the actual storm itself?

Or is this storm simply the "teacup" variety and we'll be back to normal before you know it?
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Re: The still after the storm (3 Sep, 2020)

Postby Perry » Thu Sep 03, 2020 7:52 am

Bruce wrote:Or am I just being excessively pessimistic? Will all of this be forgotten in a year or so and NZ will be back to full strength with low unemployment, high wages and an enviable standard of living by Western standards?

Where'd the "high wages" bit come from? Especially relative to living costs. And housing costs.

In the absence of increased productivity and no matter how often and how much the minimum wage is increased, all that does is fuel inflation and unemployment.

Back in the days of my parents and grand parents, dad's wage was enough for each household. These days, I wonder how many households have to have mum and dad earning wages and yet still struggle?

You made reference to WINZ. I wonder how much of each tax dollar they get is soaked up by their bureaucracy and administration?

Dollar in - fifty cents out, perhaps?

Worse?
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Re: The still after the storm (3 Sep, 2020)

Postby aardvark_admin » Thu Sep 03, 2020 8:03 am

Yes, I often look back at how, just 50 years ago, mum stayed at home and cleaned, cooked and brought up the kids -- while dad did his 40 hours a week to earn the money.

Of course it was much easier to survive on a single wage back then because households only had one car (if that), there was no SkyTV, Netflix, Internet, gaming and other calls on one's finances. People often grew some of their own vegies and food tastes were much simpler (no humus, cuscus, or other "foreign stuff"), chicken was a delicacy not a staple, we repaired our clothes, shoes, radios, TVs, toasters, electric jugs, etc rather than replacing them -- etc, etc, etc.

In short, a lot of today's "essentials" would have been seen as outrageous luxuries back then, affordable by only the "very rich".

The truth is that most families need at least two incomes because they are now spending money on lots of stuff we either couldn't afford or simply didn't have available back in the 1960s.

You are correct about productivity though. The mistake our political overlords seem to make is that they believe that by careful slicing of a pie you can end up with *more* pie than you started with. Sorry, that's just not the way it works. If you want *everyone* to have a bigger slice then you need a bigger pie -- and that means more productivity and more export dollars.

No matter how much work is done creating new jobs and industry to service domestic consumption, NZ won't get *any* richer. The only way for *all* Kiwis to get richer is to get money from other countries by way of exports.

When you sell a domestically produced product or service to another NZer, the Net worth of the country remains unchanged.

When you sell a domestically produced product or service to someone overseas, the money they pay *increases* the net worth of the country.

For this reason, I'm a strong believer that profits earned by way of exports should be taxed at a lower rate than profits earned through domestic sales -- for it is the export earnings that make us all richer and leave the country as a whole, better off.
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Re: The still after the storm (3 Sep, 2020)

Postby goosemoose » Thu Sep 03, 2020 8:39 am

aardvark_admin wrote:Of course it was much easier to survive on a single wage back then because households only had one car (if that), there was no SkyTV, Netflix, Internet, gaming and other calls on one's finances.

Also back then when paying your utility bills you could pay with cash or cheque. Now, increasingly, you can ONLY pay online,. Oh, you can still pay by cash somewhere (if you can find out where) but they'll charge you for the privilege of doing that. So, internet now a necessity not a luxury.

I'd get rid of all wage subsidies for tourism and retail and put that money into dole payments as sooner or later they're all going end up there anyway. We could now be seeing "trickle up" economics where all failings trickle upwards - bloke loses his job, can't pay the rent/bills, landlord, mortgaged to hilt defaults because he's got no income, utility loses out, managers lose jobs, have to pick fruit but can't do that as management are generally useless etc etc.
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Re: The still after the storm (3 Sep, 2020)

Postby Malcolm » Thu Sep 03, 2020 9:01 am

aardvark_admin wrote:Yes, I often look back at how, just 50 years ago, mum stayed at home and cleaned, cooked and brought up the kids -- while dad did his 40 hours a week to earn the money.

Of course it was much easier to survive on a single wage back then because households only had one car (if that), there was no SkyTV, Netflix, Internet, gaming and other calls on one's finances. People often grew some of their own vegies and food tastes were much simpler (no humus, cuscus, or other "foreign stuff"), chicken was a delicacy not a staple, we repaired our clothes, shoes, radios, TVs, toasters, electric jugs, etc rather than replacing them -- etc, etc, etc.
The truth is that most families need at least two incomes because they are now spending money on lots of stuff we either couldn't afford or simply didn't have available back in the 1960s.

The old avocado toast argument. The fact is that these luxuries cost very little comparatively, e.g Netflix is only $15-20 a month depending on your plan, so if you gave up Netflix for 1000 months you would have $20k for a house deposit, except that you probably need closer to $50k in the current market. Chicken is probably one of the cheapest meats to currently buy. Also have you tried to get something repaired since the 1980s? Assuming you can find a service tech willing to do it, the cost will be significantly more than a replacement item and you will still be left with an older item which could fail again soon.


When you sell a domestically produced product or service to someone overseas, the money they pay *increases* the net worth of the country.

For this reason, I'm a strong believer that profits earned by way of exports should be taxed at a lower rate than profits earned through domestic sales -- for it is the export earnings that make us all richer and leave the country as a whole, better off.

I am pretty sure they can't do that thanks to the free-trade deals inked in the 1980s and since then. You can't give subsidies or other inducements to your own businesses to compete with the businesses in the other countries you are exporting to.
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Re: The still after the storm (3 Sep, 2020)

Postby GSVNoFixedAbode » Thu Sep 03, 2020 9:10 am

What was previously known as the Middle Class is now rapidly shrinking to those struggling to get by and the very rich. Those to the left of the curve are being hit now by lack of jobs - and many more once the subsidies come off. Those at the other end have yet to accept that they too will be hit: their investment returns, corporate obscene profits (and corresponding management rewards), share returns. All these are n-step removed income generators for those people who are still expecting money to come in, so need to reduce costs. The fastest way to do that? Reduce staff costs by lower wages/hours/people.

Many of the corporates don't understand the basics that even Henry Ford understood: you need to employ people and pay them enough to be able to buy your product!

Meanwhile tourism needs a magnitude price reset to be affordable to the local economy now that the international economy is in hiatus.
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Re: The still after the storm (3 Sep, 2020)

Postby hagfish » Thu Sep 03, 2020 10:20 am

It's hard to get excited about an 'economic' crisis. A self-made crisis of faith. We could sort it out by lunchtime if we wanted to. A bit of legislation here, a few keystrokes there. Done.

I'm saving my adrenals for the real crises that are lining up ahead of us. Covid is real. So is the fact that 2020 is shaping up to be the coldest year of the coming century.

I think a '1950s' level of consumption is about right. Granted, we'll have to reorganise our society a bit, but the current system is working out that great for most people. Soon it'll be completely untenable. I'd like to hang onto my dentist and my Netflix, if possible.
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Re: The still after the storm (3 Sep, 2020)

Postby Kiwiiano » Thu Sep 03, 2020 11:01 am

My query is has anyone seen an analysis of how long it takes money doled out by the Gummint to spiral through the economy and return to their coffers?
Beneficiaries are not noted for their purchases of Italian sports cars or marble bath tubs with solid gold taps. They tend to fritter the money away at Pak&Slave or The Warehouse, which will see 15% GST going back to Wellington within a month or so, plus excise tax on any grog or petrol. Then there’s the income tax from the shop & food factory staff wages, round & round it goes, with the taxman clipping the ticket each time. We have more to worry about if there is no money in circulation and no taxes being paid.
I’ll concede that some money leaks overseas, that Vietnamese T shirt, the packet of Dutch frozen potato chips, a boat-load of 2nd-hand Jap cars but hopefully sales of our butter and kiwi-fruit covers those. We just have to keep the money moving, not being locked away in ever-more-expensive houses in Auckland.
~ Kiwiiano
“Nothing will make any sense until you realise that nothing makes any sense!”
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Re: The still after the storm (3 Sep, 2020)

Postby phord » Thu Sep 03, 2020 11:09 am

When you sell a domestically produced product or service to someone overseas, the money they pay *increases* the net worth of the country.

So this means that the net worth of whatever Country pays us is decreased.
If we think of our planet as a whole, it's net worth will only be increased if we export to planets from other solar systems. :?
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Re: The still after the storm (3 Sep, 2020)

Postby paulw » Thu Sep 03, 2020 1:32 pm

If things get really bad here is a bit of light relief to take our minds off Covid 19 with an Asteroid due about November 02. https://www.stuff.co.nz/science/1225507 ... d-to-worry
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