Posts by Angus Robertson
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With one small statement you wipe out a generation or two of economic wisdom?
A stimulus package according to economists (and so eloquently expressed by yourself) does stimulate, which is a great and simple piece of wisdom with which I do tend to agree. If this were an economics blog my apologies and back-tracking would be endless.
Unfortunately this is a political blog.
That several $trillion the developed world spent on bailing out failled property investors, mortgage brokers, multi-nationals, towns, cities and small states, as well as building a few bridges. That was a stimulus package to stave of economic collapse, as expressed politically.
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OnPoint: Spending "Cap" is Fiscal Anorexia, in reply to Keir Leslie,
A stimulus is a massive desperate gamble. If it works yippee, but we don't do it again and again in the expectation that it will always work, because it won't. Right now no one elsewhere in the developed world is prepared to take that gamble, we should probably pay attention to that sort of thing.
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OnPoint: Spending "Cap" is Fiscal Anorexia, in reply to Keith Ng,
First, eating less when times are lean is intuitive but wrong. The whole point of countercyclical fiscal management is that you *save* when times are good, so that you're able to spend when times are bad. The government should act as a counterbalance to the rest of the economy by doing the opposite thing.
Back in 2008 when this all kicked off the USA and EU went into stimulus mode and we joined them (big tax cuts and roads for everyone). But that time is over and we are either in the midst of pulling out of the crisis (the stimulus worked and we don't need any more) or we aren't (the stimulus didn't work). Either way we don't need more stimulus.
If as you seem to be suggesting the stimulus didn't work, we can't "counterbalance" a developed world economic slowdown that has proven to be beyond the scope of the combined stimulus packages of the USA, Japan and Europe by ourselves. NZ cannot act alone here and hope to be effective, because we are too small. We can only act in concert with the rest of the developed world.
If OTOH the stimulus did work we are in a slow recovery mode. A fragile recovery vulnerable to increased inflation or costs of overseas borrowings, anything other than an austere approach risks "counterbalancing" the recovery.
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Never have I seen an example of Govt. actually saving money by reducing spending, please provide me with one.
Greece, Ireland, Iceland, Portugal, Spain.
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OnPoint: Spending "Cap" is Fiscal Anorexia, in reply to Sacha,
If they insist on 'austerity' it should be for everyone, not just those most reliant on state services and least able to shelter their wealth from taxation.
Well yeah, but the right are the only lot offering austerity so they get to offer their stylings without any competition. If the left had an austerity program of substantial increases in top rate taxation and a steady spending regime, they'd be a choice.
Instead Labour decided to offer borrow&spend as the preferred alternative.
NZ chose austerity and it comes with a rightwing government.
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but are there other examples of legislated `tax and spend' limits?
Merkel/Sarkozy are proposing some for the eurozone.
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OnPoint: Spending "Cap" is Fiscal Anorexia, in reply to Tom Semmens,
Way to do it? Day one of parliament the first day a new Labour led government is sworn in, repeal it by ramming it through under urgency.
The Nats got elected with a program of austerity and this is an austerity measure. Since Labour run on an anti-austerity platform when they get back in the restriction will obviously be lifted, but until then the Nats have a mandate to practice austerity.
Keith claims it is "fiscal anorexia" which in good times if the Nats/ACT were offering tax cuts would be a good call. But it is not good times and the Nats/ACT aren't offering tax cuts - its just austerity.
When times are lean and there is less food to eat, some choose to eat less and live a more austere life. This is not a sign they have an eating disorder.
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It is a concession to the sensibilities of some ratings agency, a determined statement that the borrow/spend death spirals of parts of the Eurozone are not going to be repeated here.
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OnPoint: Spending "Cap" is Fiscal Anorexia, in reply to merc,
indeed, good work
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OnPoint: Spending "Cap" is Fiscal Anorexia, in reply to HenryB,
<cough>asset testing</cough>
Runs away quickly.