Entry 1300, on 2011-05-24 at 22:03:08 (Rating 3, Politics)
The New Zealand government's budget is still in the news here and more recently the opposition have offered some alternative policies. So how do the two approaches compare?
Basically the National government has taken the path of cutting spending and selling assets. Whether this is a good idea or not is open to debate but one thing is clear: it's exactly what you expect from a conservative government and no one should be surprised they have done it.
On the surface it seems reasonable that if you are borrowing to balance the budget then reducing spending is the obvious solution. But I would say let's go back a step and see why all that borrowing is necessary. Is it because there is too much spending or is it because there is not enough income? Of course, it's probably both.
A significant contributing factor to the current deficit must be the income lost through the tax cuts to the rich the government introduced shortly after coming into power. They said we would all be better off because reducing taxes leads to greater investment and productivity. Apparently not.
So what have we gained? The rich have even more than they did in the past and are making even less contribution to society than they ever did, while the low to middle income groups are increasingly compensating for those losses and are still being told they must be more frugal and more productive in the future.
Why? So that the rich can get even richer while contributing nothing? Seems fair.
The opposition have released some policy details and two ideas have got particular attention. The first is giving tax credits for research and development, and the second is increasing the minimum wage. Do these ideas have merit?
Of course they do. The government disputes the figures and predicts all sorts of dire consequences of course, but that means nothing. It's their job to criticise any alternative policies and their credibility is low. So let's look at these ideas without a prior political perspective (well maybe that's unrealistic but let's try anyway!).
What's wrong with taxing the rich a bit more, making farmers who pollute our environment pay their fair share, and offering tax incentives for any individual or company which invests in research and development? It seems fair to me. The idea of cutting tax to the rich is to improve our economy but why not do that more directly through tax breaks for R&D. If the rich are really making contributions to society in that area they can get their tax back through the refunds instead of just getting it as a right.
And what about the minimum wage? Some people say increasing it from $13 to $15 per hour will cause massive unemployment because employers won't be able to afford the extra. Any employer who can't afford the cost of a couple of cups of coffee per day probably won't survive long anyway so what's the problem? Thirteen dollars per hour equates to $27,000 per year. No one should be asked to survive on that in a modern, rich western nation like New Zealand.
And if companies are hiring people they are presumably doing it because they need them. Won't they still need them after this very moderate increase? So why would they suddenly be unemployed? Also, the argument that more experienced people will be hired instead doesn't make sense. Either way it's one person employed. What exactly is the problem here?
The fact is the employers are just greedy. Economies benefit from a slave labour force which will work for next to nothing and many employers and many in this conservative government want exactly that, despite their propaganda to the contrary.
To be fair there probably would be a few situations where companies are just on the border of survival and might need to reduce their staff if the minimum wage was increased but I think the effect would be far less than what the government claims. And common human decency dictates we should provide everyone with an income that allows them to live with some dignity.
If lower minimum wages are so good why not reduce them even more? Would that not inspire the economic miracle of capitalism and the free market to make us all richer? What a joke. That little fairy tale should be well and truly discredited by now.
Finally there is the argument I heard this morning that people shouldn't get higher wages unless they "increase productivity". This seems to be a catch phrase parroted by employers and conservatives but none of them seem to be able to say exactly what it means. How can a teenager serving at McDonalds increase their productivity? How can someone caring for the elderly get more productive? It's just another pathetic excuse offered by the greedies to excuse their lack of generosity to the people who actually do the work.
So the government's budget wasn't actually that bad. It totally lacked any positive ideas, it was a poor attempt at improving our economy, but it's what we expect from a government with no worthwhile policies at all. But it could be a lot worse. Often the best thing a bad government can do is nothing, or nothing significant, and that's what seems to have happened here.
Comment 1 by Jim on 2011-05-26 at 13:10:01:
Here we go again with OJB's irresponsible leftist ideas becoming apparent. If you are in financial difficulties you spend less. It's as simple as that and any other approach is irresponsible. Why can't the left understand something so simple?
Comment 2 by OJB on 2011-05-28 at 13:58:54:
Maybe we don't understand this alleged simple solution because it actually isn't as simple as you think it is. Spending less is an obvious solution I agree, but what about the unwanted side effects? And getting some quick cash by selling assets might seem OK in the short term but how much more might that asset be worth long term? I don't think it's simple at all and it's this dogmatic "one size fits all" solution that I object to.
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