Wednesday, June 28, 2023

Mike Hosking: The Government don't understand basic economics

If you want a good example of simple economics, we are living through a doozy.

It's only Wednesday but already this week we have millions promised by people who have less than no money to solve the problems they created.

$5 million for ski fields, piles of millions for universities, millions more for food banks. Then there's the welfare stats that show, on average, main beneficiaries have been getting, through a variety of mechanisms, a 9.6 percent rise in income each and every year for the term of this Government.

Economic lesson number one is you shouldn’t be spending money you don’t have, because that is debt. Our debt levels are troublesome and getting worse as interest rates rise.

The universities are short of students and they are short because of the border closures. Now they are open again we don’t appeal the way we used to and crime is part of that equation.

The Government argue it's also because there is low unemployment so we don’t go to university. But we have low unemployment because the borders were closed, and now they're open we don’t have the same appeal. Are you seeing a trend here?

The skiing should have been solved, because we have interested parties. But the process has been a mess and the Government has decided to step in twice, even though they said they wouldn't. A new party, a Māori party, has shown interest.

This will most likely prove a game changer, hence the Government has bought time with more money.

There is more demand for food banks because we have a cost-of-living crisis. We have a cost-of-living crisis because the Government fire hosed the economy with money it didn’t have.

Too much money chased too few goods, so the price of everything went up. We then asked for pay rises to cover the price rises, we got them and then spent it, hence the prices went up some more because the cost of labour went up.

The welfare recipients who get a pay rise based on inflation got stonking amounts, for no other reason than inflation was through the roof because we had buggered the economy.

And round and round and round we go.

And you wonder why we are in a recession. Well, you don’t wonder because we have already worked it out.

The question is this - do those who have made this mess not get the basic economics?

Or worse - do they get them and they just don’t care? And are literally happy to take the country down with them?

Mike Hosking is a New Zealand television and radio broadcaster. He currently hosts The Mike Hosking Breakfast show on NewstalkZB on weekday mornings.


Anonymous said...

Evidence of the government not understanding ANY economics is ALL around us. We live and breath their incompetence.

Robert Arthur said...

All the old time conventions and ethics around money seem to be obsolete. Faded with the christian ethic, and Rogernomics delivered the coup de gras. Saving was the path to purchase. Now everything is borrowed, starting with student loans. Inflation which robbed savers of their money more effectively than a holdup was seen as a serious moral wrong. 1920s Germany was held up as the classic failure. Argentina and Venezuela with runaway inflation were deplored, but dismissed as characteristic for a merged population. In more successful countries like wartime USA the mechanisms were recognised and drastic measures like wage and price controls applied to steady. But now whilst pretending disapproval the govt embraces wholeheartedly. Everything is indexed so it chases its own tale. Beneficiaries are fully compensated whilst savers, who worked and were taxed for their money, are robbed. The Nationl debt is effectively whittled. Getting re elected is the only goal of govts. Although the inflationary effect is taught at the most basic level, money was and is sprayed about with abandon. The DPBs were rubbished because of their debts. But the shortfalls were small by current spending standards. The maori vote in particular is being chased with vast millions.