Is the underlying problem a lack of productivity growth? or there a more fundamental issue with the economic system we are operating under? - that has resulted in a global environmental and social polycrisis - climate breakdown, biodiversity crisis, exceeding at least 6 of 9 planetary thresholds, planetary resource use overshoot, increasing inequality, and such like. All of which requires an economy of enough, not more growth for developed nations. This coalition government is heading down the wrong path, following false economic theories.
(Following on from her statements about public finances being like household finances, this magic money tree statement from the Minster of Finance just confirms that she has no idea how a sovereign currency issuing economy works.)
However I believe the world economies will never be the same again. Any government still hoping to replicate the false, tired old economic theories of yesterday are sure to fail.
Our planet warming issues will no doubt ensure a more simplistic outlook.
There's a very real risk that if wealth gaps in the Anglosphere can't be closed democratically, they'll be closed, to put it mildly, in a blaze of glory. FDR warned in 1938 that:
"Democracy has disappeared in several other great nations--not because the people of those nations disliked democracy, but because they had grown tired of unemployment and insecurity, of seeing their children hungry while they sat helpless in the face of government confusion and government weakness through lack of leadership in government. Finally, in desperation, they chose to sacrifice liberty in the hope of getting something to eat."
To an American now living as essentially a refugee here in NZ, this style of governance seems way, WAY too familiar.
I told my NAT-loyal neighbor in July of 2023, before the election, that their math was BS and they would end-up solving it with yet only MORE debt regardless of the way they tarred and feathered Labour over their’s. And then they’d count on his continued loyalty and wilful blindness to stay in office.
I predicted they were NZ’s equivalent of Liz Truss. The markets called her out within just 60 days. I suppose we are so small that the markets don’t pay us quite that much attention down here but they appear to be leaning that way now. Just take a look at what the $NZD has done the last three months. The austerity should have come once we were solidly IN recovery.
An American contextual reference: they seem to be from the Grover Nordquist school of desiring to “shrink it until it is small enough to drown in the bathtub.” They APPEAR to be magical free market believers just as divorced from reason as in the other belief-based portion of their lives. That’s how this has rolled in the States. Belief based governance.
You are the PhD but in a couple of Econ classes at Uni I thought I learned that you don’t run fiscal policy in synchronicity with your central bank’s monetary policy. Prescribing austerity of this size at the end of the RBNZ running this rate policy for a couple years seemed a pretty sure-fire way to get these results. To me at least.
This emperor wears no clothes. If he was serious about growth and productivity he’d maybe be talking about how we shouldn’t all be off work for so long each year at this time. But instead we get silliness like raising speed limits 10 kph will makes us all more productive. Yeah, so we can race off to the bach faster and longer!
If the same phenomenon from whence I’ve taken refuge here has only now expanded here too (and it does appear to be going global, just look at the nations now going illiberal), we’ll know it come the next election. Will voters here punish those who lie to them? They don’t in the USA…
Great comments, thanks Mark! It may turn out that you're right if voters don't blanch at the Nats accumulating debt after having sacked public servants. And a tax-break for landlords was hardly an investment in productivity. Cheers. Grant
Economies are spontaneous emerging systems resulting from billions of decisions made by human beings. As Hayek notes, catallaxy is probably a better word than economy.
The sheer arrogance of any politician or other State agent claiming the ability to "build" an economy is laughable.
Moreover, Mr Luxon is economically illiterate at the very basic level - for example, he has no idea that forcibly lowering interest rates is inherently inflationary. This is not to mention the fact that Keynesianism (and all its offshoots) has not worked to build real wealth, does not work to build real wealth and will not work to build real wealth.
With respect Grant - stop debating politics like it’s going to change anything—it won’t. The system is broken, and it’s designed to stay that way. No meaningful mechanism exists to hold leaders accountable. The same people in power are trusted to self-regulate—a catastrophic flaw that keeps corruption, inefficiency, and ethical breaches alive.
The destruction of small businesses, skyrocketing living costs, corporate profits driving inflation, soaring state debt, defunded health and education, and foreign-controlled banks draining billions from our economy—these aren’t accidents. Add human rights abuses, media manipulation, unlawful wars, and policies sold to corrupt donors, and it’s obvious: this is a system without accountability. Leaders act with impunity, and things will only get worse unless we demand real change.
Enter the Leadership Accountability Court (LAC): an independent, citizen-driven body that empowers everyday people to hold leaders directly accountable. The LAC gives power back to the public, ensuring decisions serve society—not self-interest.
Stop blaming politicians or parties. Stop pretending debate will fix this. Without the LAC, nothing changes. It’s not just a good idea—it’s the only solution. Face it: without accountability, you’re endorsing failure. Everything else is noise.
Is the underlying problem a lack of productivity growth? or there a more fundamental issue with the economic system we are operating under? - that has resulted in a global environmental and social polycrisis - climate breakdown, biodiversity crisis, exceeding at least 6 of 9 planetary thresholds, planetary resource use overshoot, increasing inequality, and such like. All of which requires an economy of enough, not more growth for developed nations. This coalition government is heading down the wrong path, following false economic theories.
(Following on from her statements about public finances being like household finances, this magic money tree statement from the Minster of Finance just confirms that she has no idea how a sovereign currency issuing economy works.)
Yes, good point, thanks Andrew. I confined myself there to conventional thinking about growth, but it is physically unsustainable, I agree.
Spot-on Andrew.
Austerity will continue until morale improves
We already know who Luxon's growing the economy for. It's for those who have Swiss accounts or superyachts. Or both.
Another timely, thoughtful post Grant.
However I believe the world economies will never be the same again. Any government still hoping to replicate the false, tired old economic theories of yesterday are sure to fail.
Our planet warming issues will no doubt ensure a more simplistic outlook.
Fair point, thanks Jim. I agree that a fundamental rethink is warranted.
There's a very real risk that if wealth gaps in the Anglosphere can't be closed democratically, they'll be closed, to put it mildly, in a blaze of glory. FDR warned in 1938 that:
"Democracy has disappeared in several other great nations--not because the people of those nations disliked democracy, but because they had grown tired of unemployment and insecurity, of seeing their children hungry while they sat helpless in the face of government confusion and government weakness through lack of leadership in government. Finally, in desperation, they chose to sacrifice liberty in the hope of getting something to eat."
To an American now living as essentially a refugee here in NZ, this style of governance seems way, WAY too familiar.
I told my NAT-loyal neighbor in July of 2023, before the election, that their math was BS and they would end-up solving it with yet only MORE debt regardless of the way they tarred and feathered Labour over their’s. And then they’d count on his continued loyalty and wilful blindness to stay in office.
I predicted they were NZ’s equivalent of Liz Truss. The markets called her out within just 60 days. I suppose we are so small that the markets don’t pay us quite that much attention down here but they appear to be leaning that way now. Just take a look at what the $NZD has done the last three months. The austerity should have come once we were solidly IN recovery.
An American contextual reference: they seem to be from the Grover Nordquist school of desiring to “shrink it until it is small enough to drown in the bathtub.” They APPEAR to be magical free market believers just as divorced from reason as in the other belief-based portion of their lives. That’s how this has rolled in the States. Belief based governance.
You are the PhD but in a couple of Econ classes at Uni I thought I learned that you don’t run fiscal policy in synchronicity with your central bank’s monetary policy. Prescribing austerity of this size at the end of the RBNZ running this rate policy for a couple years seemed a pretty sure-fire way to get these results. To me at least.
This emperor wears no clothes. If he was serious about growth and productivity he’d maybe be talking about how we shouldn’t all be off work for so long each year at this time. But instead we get silliness like raising speed limits 10 kph will makes us all more productive. Yeah, so we can race off to the bach faster and longer!
If the same phenomenon from whence I’ve taken refuge here has only now expanded here too (and it does appear to be going global, just look at the nations now going illiberal), we’ll know it come the next election. Will voters here punish those who lie to them? They don’t in the USA…
Great comments, thanks Mark! It may turn out that you're right if voters don't blanch at the Nats accumulating debt after having sacked public servants. And a tax-break for landlords was hardly an investment in productivity. Cheers. Grant
Economies are spontaneous emerging systems resulting from billions of decisions made by human beings. As Hayek notes, catallaxy is probably a better word than economy.
The sheer arrogance of any politician or other State agent claiming the ability to "build" an economy is laughable.
Moreover, Mr Luxon is economically illiterate at the very basic level - for example, he has no idea that forcibly lowering interest rates is inherently inflationary. This is not to mention the fact that Keynesianism (and all its offshoots) has not worked to build real wealth, does not work to build real wealth and will not work to build real wealth.
Fair point, thanks Andrew. Your comment nicely contrasts with others. What force was used to lower interest rates though?
Anything that the State does is done by forrce. Should I gave ssid by fiat? Or maybe by decree?
I don’t think they know how?
With respect Grant - stop debating politics like it’s going to change anything—it won’t. The system is broken, and it’s designed to stay that way. No meaningful mechanism exists to hold leaders accountable. The same people in power are trusted to self-regulate—a catastrophic flaw that keeps corruption, inefficiency, and ethical breaches alive.
The destruction of small businesses, skyrocketing living costs, corporate profits driving inflation, soaring state debt, defunded health and education, and foreign-controlled banks draining billions from our economy—these aren’t accidents. Add human rights abuses, media manipulation, unlawful wars, and policies sold to corrupt donors, and it’s obvious: this is a system without accountability. Leaders act with impunity, and things will only get worse unless we demand real change.
Enter the Leadership Accountability Court (LAC): an independent, citizen-driven body that empowers everyday people to hold leaders directly accountable. The LAC gives power back to the public, ensuring decisions serve society—not self-interest.
Stop blaming politicians or parties. Stop pretending debate will fix this. Without the LAC, nothing changes. It’s not just a good idea—it’s the only solution. Face it: without accountability, you’re endorsing failure. Everything else is noise.
Hi Christopher. What does 'accountability' mean in this context?