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  • Robert MacCulloch

More business subsidy schemes are being rolled out in the lead-up to the election. No wonder public debt is on the cards to rise by nearly $100 billion. Given current policy settings, it will most likely be paid back out of higher taxes.


A Bungy Jump company has just got a $10 million funding package courtesy of the government's "Strategic Tourism Assets Protection Program". According to the Ministry of Business, Innovation and Employment, even firms benefiting from other subsidy schemes, like the Provincial Growth Fund, "are eligible" to apply for this new program. Given that it is for firms deemed "essential" to New Zealand's tourism strategy, then why aren't we, the people, receiving share-holdings in exchange for our money? In other words, why are these firms not being nationalized?


On a related note, back in early May, I wrote an article for the NZ Herald, arguing that the government's business wage subsidy scheme should not have been extended to large firms (like publicly listed companies, which are able to raise capital privately). Aside from the notable exception of Air New Zealand, which IS a strategically important national asset, big business is mostly doing fine. The NZX 50 is 6% higher than it was one year ago.


In the days subsequent to my NZ Herald article shining a light on the wage subsidy scheme, several big law firms in Auckland began returning their multi-million dollar wage subsidies. Why should this issue concern us greatly? Because when big business privatizes profits during boom years, but goes cap-in-hand to government during bust years, then free markets lose their legitimacy.


For the NZ Herald article written by a DownToEarth Kiwi, see:

https://www.downtoearth.kiwi/post/op-ed-a-time-for-trickle-up-economics




  • Robert MacCulloch

Two Princeton University economists, Nobel Laureate Angus Deaton, and his wife and co-author, Anne Case, report some grim statistics (in Project Syndicate):


"Well before COVID-19 struck there was another epidemic running rampant in the US, killing more Americans in 2018 than coronavirus has killed so far. What we call "deaths of despair" - deaths by suicide, alcohol-related liver disease, and drug overdose - have risen rapidly since the mid-1990s, increasing from 65,000 per year in 1995 to 158,000 in 2018.


The increase in deaths from this other epidemic is almost entirely confined to Americans without a four-year college degree. While overall mortality rates have fallen for those with a four-year degree, they have risen for less-educated Americans. Life expectancy at birth for all Americans fell between 2014 and 2017. That was the first three-year drop in life expectancy since the Spanish flu pandemic of 1918-19; with two epidemics now raging at once, life expectancy is set to fall again".


... Life expectancy was rising, by comparison, in New Zealand between 2014 and 2017 and now stands at 81.7 years, compared with 78.5 years in the US.

 

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