Friday, August 11, 2017

The rising tide sucks us down

National is trying to talk up its supposed "economic growth" for the election. But the Herald's Brian Fallow points out the truth: the economy may be growing on paper, but its not making us better off:

The average wage (average ordinary-time hourly earnings from Statistics New Zealand's quarterly employment survey) rose 1.6 per cent in the year to June. But that was boosted by some pay increases in the public sector that had been a long time coming.

In the private sector, the average wage rose 1.2 per cent, in a year when consumer prices rose 1.7 per cent. In other words, it fell 0.5 per cent in real terms. That was still better than the March report, when annual wage growth was 1.1 per cent and inflation 2.2 per cent.


Interest rates are historically low. The terms of trade (the mix of export and import prices) are the most favourable they have been for 44 years, boosting national income. The demand pulse from the need to rebuild our second largest city has been followed by the need to respond to the largest city bursting at the seams. Tourism is booming.

In these circumstances, are declining real wages the best we can do?

And that's a good question. Economic growth is supposed to make us better off - "a rising tide lifts all boats" as the rich love to say. Except it turns out that its all a lie, and the rich's rising tide in fact sucks the rest of us down.

It doesn't have to be this way. The reason growth doesn't benefit ordinary kiwis is a matter of policy choices made by the government to favour the rich over the rest of us. Those choices can be made differently, as they were in the 2000's. All we need is a government which works for us, not foreign billionaires...