Why acquire skills and work experience when there is little in it for you? Why bother?
So it is now in New Zealand. We are in the midst not of a temporary downturn, but of a longer-lasting loss of living standards; stagnation unlike we’ve ever experienced.
The cause is clear cut. It is not the one being sold by the upper echelons of our political and business classes to the media. It is not due to a lack of foreign investment. It is not due to hairdressers being too regulated. It is not due to the tax code needing re-working.
It is because the upper echelons of insiders are favouring mates, blocking the path of deserving, but non-connected, Kiwis, thereby destroying their incentives to better themselves, and the country, in the process.
After the 2023 election, legions of John Key-era politicians were given high-ranking jobs. Former Ministers included Simon Bridges, returning as Transport Agency Chair; Paula Bennett as Pharmac Chair; Steven Joyce as Infrastructure Advisory Chair; Bill English as State Housing Review Chief. Upon appointing Murray McCully to head an Education Inquiry, Minister Stanford said, "He is my old boss. I couldn't think of a better person".
Hiring the best is no longer the NZ way. It’s a schmoozing game.
Non-politician VIPs brought back include Graham Scott who Finance Minister Willis made Chair of her Social Investment Agency. He was Treasury Secretary 40 years ago. Matt Burgess, English’s adviser in the Key years, returned to advise PM Luxon. Lester Levy, appointed by Key to Chair the Auckland District Health Boards, returned as Chair of Health NZ. Peter Gluckman, Key’s Science Adviser, returned to head the Science and Universities Advisory Groups. We could fill the page.
The connections game in NZ is not limited to National, nor to our public sector. Labour is equally guilty. Many of those in the private boardrooms of our biggest corporates also count other board members as personal friends.
Willis’ former boss was Chair of ANZ Bank. She sat on the NZ Initiative Board, on which the Chair of Foodstuffs sits. Most of our oligopolies are members of it. She used to be a Fonterra lobbyist.
The connected ones would say that they fully deserve their hiring and re-hiring by chums, based on their own qualifications and experience. They would, wouldn’t they?
But there are now so many egregious examples of inbreeding that perceptions of connections mattering more than merit in NZ cannot but be heightened.
The skills required for most of these top jobs have also changed to such a degree since the Key-era, due to more tech, that few of this bunch can claim to be up to date anyhow.
Doesn't it happen elsewhere? Yes, but it used to happen far less in NZ. It was once our comparative advantage. We are no longer top of the world in transparency.
Our way has become, “You scratch my back. I scratch yours”.
When connections matter, we become distrustful of the decisions made by the inner circle. Are they in the public interest, based on the merits of the winning argument, or are they based on satisfying the special interests of a friend, or an industry?
Why is the government ramming through a highly unusual back-dated law, wiping legal claims of customers suing ANZ and ASB for disclosure breaches, retrospectively smashing their property rights?
How can helping banks by letting them off law-breaking and clobbering the little guy be in the public interest?
Why has the government still not taken on the supermarkets, power companies, banks and big construction firms with a big stick?
Why has it not properly addressed the lack of competition that has caused the cost-of-living crisis?
None of it adds up, unless one realizes that few of the top decision-makers in NZ are any longer making the best decisions for us all, because they don't know how to, and should not be there themselves. They live in a world of who-you-know, not what-you-know.
Why did National revert to Key-era thinking even after he called New Zealand a smug hermit kingdom in 2021? Because a connected group of insiders returned with their same way of doing things.
Key’s social investment approach was photo-shopped by Willis. The well-being aim of the Ardern-era was dumped by Luxon because English loathed it. The old single mandate of the Reserve Bank, liked by English, returned.
The three drivers of economic growth during the Key-era, namely immigration, tourism and construction, have all now evaporated. Yet they were bet upon by the government’s group think, Key-era insiders to again lift us out of stagnation.
Beehive sources tell me Willis has been frantically asking those same insiders, “What will be the new drivers of growth?”
Former Reserve Bank Governor, Graeme Wheeler, wrote during the Key years that none of the old drivers were sustainable. He was right.
Why has Willis not solved the funding crisis due to the ageing population by designing Australian-style savings accounts for all?
Because doing so was rejected in the Key-era a decade ago and the same connected insiders are still running the show. The upshot? Australians will now retire with 10 times the financial savings of Kiwis.
So is there a plan? Only to continue the unproductive schmoozing of the connected chums who are running this country and have carved it up between themselves.
The
nicely-spun word-craft of our debating champion Finance Minister do not match
the reality of the low upward mobility of our deserving achievers who she has
locked out of the cupboard.
Professor Robert MacCulloch holds the Matthew S. Abel Chair of Macroeconomics at Auckland University. He has previously worked at the Reserve Bank, Oxford University, and the London School of Economics.
15 comments:
Jacinda Ardern's Government put their own crony's in the top jobs aimed at radical change of the country. I don't think the Coalition had a choice but to put their own people in. We are past the point of no return. We are looking at an extreme Marxist Government coming to power next year who will really change this country.
Eeeek !....... Well observed and explains a lot. What to do??
I acknowledge the expertise of Robert McCulloch relating the shenanigans in the higher echelons of NZ. However the CEO level in NZ is also distinguished by greed and malpractice . Alliance , the meat works is on its knees awaiting buyout by the Irish for half price because of the dollar value difference . Sawmills throughout the country ae being throttled by electricity prices and their CEO's are not financially desperate as they mumble their focus is on the company not the shareholders . The MACA , Seabed and Foreshore debacle has just stated in Court documents they will be hearing cases of stealing the NZ coastline from Kiwis to 2046, all funded by taxpayers.
The banks and electricity companies, words cannot express the fundamental damage they cause hourly to the majority of NZ customers . Japan is lending huge funding to USA at interest rates that would break the heart of businss in NZ. Why not the Japanese Yen for NZ business capital @ 0.5%? They are a pacific neighbour.
It is despicable that National have NOT even started to reduce the Government workforce , not even started to reduce spending because the NZ debt figures are now greater than when Arderns mob left .
NZ needs a new direction and PM Luxon is not the leader.
Nice to see you posting again, Prof. I've got post graduate qualifications and professional memberships coming out the wazoo, but I can't get a job because I'm the wrong demographic and, like you, a little bit too direct for the 'elites' liking..
What to do is a great question Glan.
Thank goodness you're back Robert. FEW QUESTIONS FOR YOU...
How do we get an investigation of the $74.4b covid spend to find out who got our money?
How do we expose the dishonesty and incompetence of our minister of finance in such a way as we get a new finance minister and not a new Labour government?
How do we find politicians who can implement the right mixture of housing inflation, immigration, cartel eradication, cheap energy (3 more hydro dams?), government downsizing, minimization of councils, and infrastructure building?
How do we demand the investigation/prosecution of anyone found to have stolen public money, or taken payments from gangs; to thereby prevent a Clark advised McAnulty government REPEAT?
You've covered the what Robert. Now please tell us how?
I can just picture this govt clinking glasses behind closed doors congratulating each other for coming up with their latest goal, “Growth”. Pissed with excitement but devoid of roadmap, strategies or timelines. Say it often enough and the back slapping will mask the fact that nothing has changed.
A key ingredient to a successful economy is cheap electricity. It lowers the cost of production and enables businesses to be more profitable, reducing the cost of goods for consumers and encouraging innovation and “Growth”.
In their excitement, I don’t think that our current power impediment has been given a second thought in their pursuit of hugely expensive and highly unreliable green energy projects.
Good to have you back Professor.
Wonderful to have you back Professor.
The chumocrasy is the logical result of the increasing lack of accountability that spread throughout our societies in the last 20 something years. And it has been thriving in some governmental circles long before John Key’ time.
The idiotic machinations of our political classes is not the only issue, it is simply an irritant compared to what is going on - the Limits to Growth have not gone away and the Greens' solutions won't cut it either. Just looked at what AI has to say and it is this:
"Key Findings from Updates to the LTG scenarios
Imminent Collapse:
The recalibrated models suggest that the exponential growth curve has reached its limit, and the system is nearing collapse between 2024 and 2030 due to resource depletion.
Resource Limits:
The primary driver of this impending collapse is the depletion of non-renewable resources and the unsustainable use of renewable resources, despite technological advances.
Business as Usual is Not Viable:
Even scenarios incorporating technological advancements indicate that the current trajectory of continuous growth (Business as Usual) is no longer possible and will lead to decline in industrial output and welfare. "
This is what we are up against and all the apartheid-like goings on in NZ are just making things so much worse. We need leadership that will see what is coming our way and deal with the crap summarily. Clear the BS away and let NZ use its resources for itself!
The controlling upper echelons now include iwi and their dynastic families. They have enormous influence on who gets promoted or appointed, thus ensuring that ancestral-based ideology pervades all institutions and organisations (public and private).
Persons do not socialise as in the past. And with recording devices everywhere all very cicumspect about what they say. Pro maori 5th colummnists everywhere. Does all that restrict selection?
Let’s put it this way: chumocracy would still finish second to ethnic grifting by a country mile in a race to collapse the little that’s left of New Zealand’s economic potential and international reputation.
Massive vote for ACT and NZF is the only hope.
Thanks Rob, clearly much truth in your commentary. I believe you are entirely correct that we're not facing just a temporary downturn. Unclear though is whether the "chums" thing is the driver, a toxic side effect or one of several related causes. Certainly the who you know rather than the what you know is itself debilitating. An enormous damper on change and innovation. My biggest disappointment was around 15 or 20 years ago now, when we seemed to suddenly ditch any interest in becoming a global technology leader. About the time that the several technology pages of the Dominion post were dropped. I think perhaps we would be less concerned about "chums" if the majority of those were looking to achieve some kind of ambitious strategic economic plan for the nation, that moved us away from just low value added, farming and agriculture commodity exports. That was capable of sustaining highly productive jobs and industries in far flung little towns. I fear though that there is not just no ambition in that regard but no understanding of the need and certainly not the determined wherwithal to implement. Wish I had an answer.
Write on , it’s called ruthless capitalism where the ruling elite resist change and competition . Its true politicians of all stripes , they lack the ability both intellectual and personal to see anything but what makes them feel good , they are driving in reverse and feeling safe
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