The "Depression Election" of 2023: a Comment
The Labour Party plans on fighting a 1930s-style election campaign in 2023, hoping to pull off a Michael J. Savage-style victory. The opening shot was the Finance Minister’s evocation of the Great Depression as a comparable shock to the pandemic in his Budget Speech (below):
"We can draw on the lessons of the past as to how to deal with them. The answers lie in the great traditions of the First Labour Government who rebuilt NZ after the Great Depression", Robertson stated.
It's a cunning plan since after the Great Depression in 1929 people were wracked by fear & insecurity. It was that state of affairs which helped Roosevelt’s Democrats in the US & Savage’s Labour Party in NZ gain power on platforms based around providing more social security to workers. The parties of the right failed dismally by raising the objection that higher taxes would follow.
However, arguing that the post-1929 Great Depression period offers a road-map to mitigating the effect of the supply-side shocks we are currently experiencing in 2022 (to labour, oil & other inputs) is misleading, confused and wrong.
The 1930s were years of record high unemployment and deflation due to plummeting demand. Today we are experiencing the diametric, reverse opposite: record low unemployment, severe labour shortages and high inflation.
New Zealand now needs a sweeping set of supply-side reforms. The last time those kinds of reforms were enacted was from 1984 to 1989 by the Fourth Labour government, following the OPEC oil production cuts. National was booted out of office in 1984 due to its failed attempt to soften the blow with subsidies & loose monetary policy - the same policies Labour is doing right now.
The greatest irony of Election 2023 will be that the very issue which motivated the PM & Finance Minister to get into politics, namely their complete & utter contempt for the Fourth Labour government’s market reforms, has come back to bite them.
Our country’s two most senior politicians have spent their entire careers attacking those reforms. They’ve had 30 years to come up with their own solutions to avert a cost-of-living crisis caused by supply-side problems.
We’ve found out they have none.