The Occupy Wall Street movement has some momentum and there are people—Dr Ravi Batra for instance—with a good track record of predictions who believe that the time has come for such a movement to change the world. The non-productive money manipulators have broken the free market capitalist model and pay-back time could be nigh if the protesters can get their act together.
Where I part company with the Occupy Wall Street folk is that I don’t believe that capitalism is the problem. Capitalism works extremely well when adequately contained. It’s the failure of governments to regulate the money-go-round that’s the problem.
Here’s one of the ways the fat cats are creaming the system and destroying the world’s economy for the rest of us.
The Dim-Post blog drew my attention to this excellent resource on Wikipedia. It aggregates all New Zealand political polls and is kept up-to-date by willing volunteers.
You can see the current graphical renditions of their findings below, and you can keep up to date by visiting this Wikipedia page. Before you ask, it isn’t ethical for me to “hot-link” to Wikipedia to keep the image updated with newer renditions.
This story has been sent to me by several different people in recent weeks and seems to have persuaded some that this is a real world scenario.
Would that it were so.
How the Greek economy bailout works
It is a slow day in a little Greek Village. The rain is beating down and the streets are deserted. Times are tough, everybody is in debt, and everybody lives on credit.
On this particular day a rich German tourist is driving through the village, stops at the local hotel and lays a €100 note on the desk, telling the hotel owner he wants to inspect the rooms upstairs in order to pick one to spend the night. The owner gives him some keys and, as soon as the visitor has walked upstairs, the hotelier grabs the €100 note and runs next door to pay his debt to the butcher.
The butcher takes the €100 note and runs down the street to repay his debt to the pig farmer. The pig farmer takes the €100 note and heads off to pay his bill at the supplier of feed and fuel.
The guy at the Farmers’ Co-op takes the €100 note and runs to pay his drinks bill at the taverna. The tavern owner slips the money along to the local prostitute drinking at the bar, who has also been facing hard times and has had to offer him “services” on credit.
The hooker then rushes to the hotel and pays off her room bill to the hotel owner with the €100 note.
The hotel proprietor then places the €100 note back on the counter so the rich traveller won’t suspect anything. At that moment the traveller comes down the stairs, picks up the €100 note, states that the rooms are not satisfactory, pockets the money, and leaves town.
No one produced anything. No one earned anything. However, the whole village is now out of debt and looking to the future with a lot more optimism.
And that, Ladies and Gentlemen, is how the bailout package works.
Unfortunately, as you’ll have figured out if you thought about it, there is no analogy with the Greek bailout. In this village there is no net debt. It’s all internal within the village and it balances out to a zero sum game. And nobody’s paying interest.
In the case of Greece (and New Zealand) the debt is external and there’s nobody to pass the parcel to.
In the real world, the hotel owner, the butcher, the pig farmer, the feed supplier, the tavern owner, and the local prostitute, each owe their €100 to the Chinese laundry in the next town. The village is in the red for €600 and the only way the villagers can reduce the debt is by creating more economic activity or by blackmailing the ECB into devaluing the Euro.
John Key, Bill English, Phil Goff, et al are all in similar dream worlds. Or they’re liars. Take your pick. Treasury’s economic forecasts are complete rubbish (just as they’ve proven to be for the last umpteen years) and the forecast growth upon which our self-serving politicians are predicating their rosy outlook will not happen. Our saviour China is in deep trouble. Our other saviour, Australia, will inherit that trouble.
Yeah, I know they’ve given up on the promise. The disgusting thing is they shouldn’t have. We can catch Australia. But the longer we leave it the more difficult it becomes – the people we need to do it will all be in Australia.
Since I last investigated our dreadful economic performance the plot’s thickened. The table below is the most current comparison of GDP per capita for the richest 51 countries in the world, click on it to see it full-size. The figures in the table are taken from the CIA’s World Factbook. You may not be enamoured of the CIA, but they do their homework.
You can find us quite easily. The reason I’ve made it so long is that we’re at the very bottom.
With a bit of Googling you’ll find figures from other organisations showing us at a higher position than 51st. It depends upon several things including how GDP is defined, how recent the figures are, and whom they include in the stats. Nevertheless, the trend is the same. Steadily downward and with no sign of relief.
Most often our position is quoted as in the 20s. That’s because they usually only include OECD countries. We’ve been overtaken by a whole gaggle of countries which aren’t even in the OECD.
Mr Bollard and Mr Key please note
Since the 2007 update Australia has moved up 5 places, New Zealand have moved down 5 places.
Before leaping to the conclusion that the Aussies are just digging dollars out of the ground bear in mind that minerals (including oil & gas) comprised only 8% of their GDP in 2007. 7% according to some.
But GDP isn’t everything
Yes, I hear your cry. There are more important things than GDP. I’d rather live in New Zealand than in wealthy Qatar or Hong Kong. I’ve been to both those places and they’re not my cup of tea. Nevertheless, although the best things in life aren’t things, there comes a point where relative wealth becomes important. When a country can no longer afford the level of health care, policing, educational resources, defence and welfare its people expect, then per capita GDP becomes a very big issue.
When the outflow of our most valuable people becomes a steady torrent our collective future well-being is at risk. We need these people creating wealth for New Zealand so that we can repay our rapidly rising debt. I need my grandchildren to live in my country.
We need these people to continue the precious New Zealand can-do, string-and-barbed-wire, punch-above-our-weight culture built up over a dozen decades and more.
We’re paying for our education system to churn out people to build Australia; the medical and dental professions are becoming dominated by people for whom English is a second language; soon we’ll fall behind Botswana and Khazakstan economically.
It matters alright.
To re-iterate, if you wish to find New Zealand in a hurry on this chart, we’re at the bottom of the table at #51.
When I was very young we were #2.
Pray tell me:
What resources do Liechtenstein, Luxembourg, Jersey, Singapore, Hong Kong, Switzerland and Iceland have that New Zealand can’t match or exceed?
Why can’t we compete, for instance, with the Danes? The Swede’s say about Denmark “Stand on a box and you can see their whole damn country.” Like many other economies on this list they have very few natural resources: just good people.
Greenland! Before the crash were they selling ice as well as fish? They’re down now but watch them rebound.
If you want answers to these questions, check my links below.
We need action
A few hints:
More research and development.
Proactive mentoring in entrepreneurial skills for small and medium sized businesses.
Sort out our education services. Less technology, more 3 Rs. Get people with real work experience onto the education coalface.
Jobs, jobs, jobs.
What happened to the war on bureaucracy? Bring the public sector into the real world.
In case it’s escaped notice, the much-maligned employers are the people who create jobs and wealth.
Less arts and law degrees, more science and engineering.
Less time wasters in the student body.
Less welfare, more work.
Less borrowing for hire purchase, more for investment.