Friday, 7 October 2011

You Can’t Run the Economy on BMW’s

“You can’t run the economy on BMW’s alone” according to respected US investor Jeremy Grantham. “If the average person is in a pickle, how do you have a healthy economy?” he asks.
Time and time again my encounters with the people of the Wairarapa while out door-knocking brings home to me that many, many of you are struggling to make ends meet. I’m not ashamed to admit that some of the stories I have heard on the door-step have left me appalled.
Take the story of Victoria and Troy of Dannevirke. Troy has been unemployed for three years, and has applied for a massive 200 jobs, without success. This winter they couldn’t even afford to buy firewood. It wrenches at my heart to think that as a society we can turn away from these folk, and blindly follow a political leader who has about as much depth as a caravan site. I believe a Government focused on beneficiary bashing and public service cut backs in these difficult times is greedy, arrogant and out of touch.
My deep concern for folks like Victoria and Troy fuels my passion to be selected as your next Member of Parliament. I will devote myself to making the Wairarapa a better place for everyone – from hard working families, young people, to businesses and pensioners alike. I believe Labour’s policies strike a balance between caring for folks like Victoria and Troy, and putting policies in place that will help the economy to prosper.
The US investor’s comments were made in the context of looking at the soaring gap between rich and poor. The top 10% of U.S. workers currently receive about half of the nation’s total income, with half of that going to the top 1%. Grantham is shocked, noting that the last time the US had a wage gap so extreme was just before the 1930’s Depression. He says that income inequality at these levels takes a real toll on ordinary workers and society as a whole, and I totally agree. To narrow the gap and improve the lot of ordinary workers, Grantham suggests investing in education, training, and changing the US tax structure to make it fairer – ring any bells anyone??
Ideas like these are at the heart of Labour’s policy. The trouble we face under a National government is that they have put extra money in the hands of the people at the top of the heap, but they are either saving it or, as Grantham says, “buying BMW’s”, which does nothing for the economy. I firmly believe that we would all be much better off by putting more cash in the hands of those who will spend it – and this would benefit the whole economy, promoting economic growth instead of choking it off.
We are constantly reassured by National that the economy is doing well – this may be true compared to the basket case countries of Europe, but NZ’s rate of economic growth nose-dived to 0.1% in the June quarter – it’s great to have the Rugby World Cup to enjoy at the moment, but the news that the economy has choked got buried.
Fortunately the gap between the incomes of the rich and poor in New Zealand is not as extreme as the US, in no small part due to schemes Labour introduced like Working For Families. This was brought in after the gap between incomes blew out during the 1990’s.

The amount of our wealth held by the top 10% in NZ is very similar to the US, at around 50%. Grantham is appalled that in the US the top 1% hold 25% of the wealth. In NZ the Department of Statistics puts the figure held by the top 1% at 16%, not so very far behind. The NZ data available is very old though, (from a survey done in 2003/4) – heaven knows what it would be now. I can say however that the richest people in NZ increased their wealth by 20% over the past year, to $45.2 billion. That translates to an amazing 35% of NZ’s yearly GDP owned by 150 people. But we didn’t have 20% economic growth in 2010. We didn’t even have 2% growth. So where did all their extra wealth come from?

With 8 weeks to go until the election on 26 November, I am determined to put in the hard yards on the campaign trail. I am burning up the shoe leather in my determination to meet as many of you as I can. You can look me in the eye and see my resolve to work tirelessly on your behalf to make the Wairarapa a better place for everybody.

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