Mike's Minute: Economic expertise needs to come to the fore

Author
Newstalk ZB,
Publish Date
Thu, 2 Apr 2020, 10:35AM

Mike's Minute: Economic expertise needs to come to the fore

Author
Newstalk ZB,
Publish Date
Thu, 2 Apr 2020, 10:35AM

Economic pragmatism, not to mention economic expertise, is required to work and pay our way out of this mess.

We are more than entitled to question whether the people right now in charge of this country's economic future are up to it. This week's minimum wage increase is a sign of no pragmatism, and a rose tinted view of economic reality. Not to mention a flagrant adherence to the union movement and its economically destructive beliefs.

It's true low wage earners spend their money. But that’s true of most people, low wage or not. All money actually gets spent, unless you literally have cash under a mattress, all money is active in the economy.

What also isn't in dispute and yet the government chose to ignore it, is the simple fact, you only have what you have to pay wages. And you either split $100 five ways at $20 an hour, or four ways at $25. The person who just lost that fifth job is now being paid for by us on the jobseeker benefit. So are we any better off? If you need the answer, then you need to study basic economics.

The things we all agree on are we don’t have money to spare, all money being used is borrowed. We all want money to go most to those who need it, either individually, by sector, business, or industry.

Given that, why was the wage subsidy only $5 billion when it could've been $8 billion, given $3 billion went to welfare increases not affected by the virus? Why is a universal income being looked at, which gives money to people whether they need it or not? Why was the Winter Warmer Payment made available to anyone who wants it, regardless of means? Why is all that money not targeted?

The Reserve Bank, to their credit, parked their idea of banks and capital reserves. That was Adrian Orr's baby. It must have been a tough pill to swallow, but he did it. It was the right thing to do and it gave the economy $47 billion dollars.  

Sir John Key gave the clue this week. In getting people together to sort this, they’ll need to park their ideology at the door. Has the government done that with the minimum wage or welfare? Not even close.

Key also said governments need to be nimble. If an idea doesn’t work, ditch it, drop it, and move on.

No shortage of employers, the real heroes of this economy, were screaming that the minimum wage couldn't be afforded. The only voices against that were the unions, and Labour. Join the dots.

Don't forget this was a government prior to the virus that already had economic trouble. Growth in the one percent range, a borrowing programme already underway, a growing welfare base through jobseeker benefit, record queues to social housing. They had a serious question mark already over their economic credentials.

Yes, they’ve written cheques and moved fast so far, and that’s good.

But it's barely the start, do they have the experience? The where with all? The ideological dexterity to be up for the really hard work? Or is borrowing about where the skillset stops?