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  • rmacculloch

The leader of the National Party, Judith Collins made a speech in Lower Hutt yesterday during which she was reported as saying "No Government ever creates jobs ... You, the business owners and entrepreneurs of New Zealand, do that".

But is it true? The role of the government in job creation is part of a furious debate, particularly in the United States. At some level, it would seem absurd to argue that no government has ever created a job. For example, to the best of my knowledge, the three biggest employers in Auckland are the Auckland District Health Board, Auckland City Council and the University of Auckland. They all fall under the umbrella of "government".

To be fair to Judith Collins, my impression is that she would argue that the District Health Board, the Council and our Universities are all funded out of taxes and rates, which come from income and wealth created in the private sector, by business owners and entrepreneurs.

For the report on Judith Collins' speech, see:

Several years ago an influential article was published in one of the world's leading economics journal called "Growing up in a Recession". The main finding was "that individuals who experienced a recession when young believe that success in life depends more on luck than effort, support more government redistribution, and tend to vote for left-wing parties. The effect of recessions on beliefs is long-lasting".

Coronavirus is a world event completely outside the control of young people who are entering the work-force for the first time. Many will find that the hard work and effort they exerted to gain skills is not rewarded as firms cut back on hiring. Finding a job will be harder and their entire life-time earnings are likely to be affected. As a consequence, young people will be more supportive of the idea that success is not dependent on merit and that luck plays a big role. This belief is also associated with more support for left-wing parties, since it leads to a view that government should play an important role in helping those who have been left behind through no fault of their own.

Amazingly, this belief can have an effect on how a young person votes for many years into the future. It may even play a role in increasing the support for left-wing parties in our upcoming election. Here is a discussion of the article, but in the context of the "Great Recession" of 2008:

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Robert MacCulloch

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