Paul Conway, the BNZ’s new chief economist, he reminds me of the Australian Reserve Bank’s deputy governor a number of years back who famously said, upon the country entering a recession, that recessions can be good because it shakes out the shonky companies that weren’t up to much any way.
And in the two stories is the collision of theory vs reality.
Conway is right on several fronts: it’s always darkest before the dawn. And this country is in real trouble right now and too many don’t see it yet because of the Ardern fawning that’s gone on due to the singular trick that was pulled off a year back of locking the country up.
By the time they did that and then instilled enough fear in enough people, some tragically genuinely believed the fact they weren’t dead is the entire prize they needed.
The fact that tens of thousands were having their lives tipped upside down was secondary to the fear ridden pedalling the mantra that lives were saved.
The cost of the health obsession is now being played out economically, and this crunch time that Conway talks of will be seen in the GDP figures in at least two quarters to come.
We are stuck; we are treading water at best, slowly sinking more likely. It’s quite possibly a recession.
But - big but - the creative destruction Conway talks of is not shabby businesses that never really should have existed, it’s not fringe traders barely getting by.
Its guys like the brewery owner that - here’s the key - through no fault of their own got destroyed. Borders aren’t their fault; their predicament has been foisted upon them.
These weren’t all touch and go operations; these were viable successful growing businesses with bright futures. There is never any good reason to see good businesses go down.
There is nothing creative about their destruction in this case, especially as time goes on and things like bubbles don’t get under way, and we are still yo-yoing in and out of lockdown having not changed our Covid procedures one jot.
You could argue it political mismanagement; it’s an incompetence wrecking ball that’s doing them in.
The grit of structural change, as Conway puts it, is way worse because of the people who made the decisions were not being up for it, and as a result, some poor bloke on the West Coast is done for and he is part of a very long and growing line.
Mike Hosking is a New Zealand television and radio broadcaster. He currently hosts The Mike Hosking Breakfast show on NewstalkZB on weekday mornings.
We are witnessing a remarkable turnaround in New Zealand politics. The Coalition agreement entered into by National, ACT and New Zealand Fi...
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