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  • rmacculloch

National and Labour Economic Policy summed up in a few lines

A row has blown up between our two major parties, with Labour accusing the Nats of proposing similar policies to the Tories in the UK, like a cut to the top tax rate, which has brought on economic turbulence. Kiwi PM Ardern attacked the National Party's tax policy, saying it would lead to more inflation, higher interest rates, and potentially British-style market chaos that would erode people's savings.

So is she right? Well, it turns our her own party is completely unable, intellectually and psychologically, to get its head around the kinds of policies required to lower the cost of living in NZ and solve the looming health crisis, driven by our ageing population. Those policies are called "supply-side" reforms, to which PM Ardern is implacably opposed. Not for her, cutting regulations that do not pass cost-benefit tests. Not for her, more private involvement in health-care provision. As such, her own polices will also lead to market chaos.

As for the Nats, their "ideas" are indistinguishable from Labour's, and, like Labour, they have also rejected supply-side reforms. Identically to Labour, they have no proposals to make health-care work more efficiently. The Nats main contribution to economic policy these past years was to urge the wage-subsidy scheme to be rolled out to big companies, not just small and medium firms as was initially done, which blew out the cost of the scheme by billions and simply amounted to a bail-out of big business.

My overall impression from what both parties have said and done on matters to do with economics is that they currently suffer from intellectually bankruptcy. Both parties - as well as the Kiwi media - should be careful before they put down the British too strongly. NZ did not invent a Covid vaccine - the British did (led by Dame Sarah Gilbert at Oxford University). NZ is not leading the way, not one little bit, in terms of new technologies that could realistically & sustainably prevent global warming - the British are currently doing so (by building potentially the world's first prototype commercial nuclear fusion reactor). The UK has won the second largest number of Nobel Prizes of any country in the world. Meanwhile, Kiwi education and universities are languishing.

The British are in the process of cutting large volumes of regulations (many that had been created due to their EU membership).

So get over it, Opposition Leader Luxon and PM Ardern. Stop pretending either of you are offering anything new, other than trying to make a big thing out of the minor differences that exist between your two parties. Both your song books have become a broken record in economics. Top economists in the world are largely refusing to accept my invitations to visit NZ. Why? They tell me nothing interesting is happening here that arouses their interest.

We all know that long-run prosperity is driven by productivity improvements, which neither Labour nor National have a clue how to address.



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