Learn from EU and do the opposite
Can you fix the economy?
I am a Spaniard living in New Zealand, so my opinion is based on my knowledge and experience from overseas.
The economy is not what it used to be, especially in Europe, and that should not surprise anybody as it was only a matter of time before the system began to show weakness.
Since the Bretton Woods agreement was undermined, the financial economy and real economy began to disconnect. The papers traded in global markets began not to reflect the real value underneath.
Eventually, people got worried about this gap and started losing confidence. They thought twice before investing in anything, unless the investment was a short-term sperculation which, by the way, is poorly regulated.
The other side of this is that relocation becomes attractive. Businessmen asked themselves: "why would we keep our industry here if we could move overseas and take advantage of lower salaries and lesser worker rights?"
That would have worked out if the financial system hadn't been such a flexible non-regulated plot.
People in developed countries had the feeling they had more money and more service-oriented jobs. They could import cheaper, they could consume cheaper with money that, in occasions, was just borrowed. You all know the story about how economic growth was intimately related to debt.
As a result we find out the highest growth in the US and many developed countries was not really based on what it should have been. A few financial scandals later, banks don't trust each other as they all know the traded papers had not the value they thought, investment stops, people start losing jobs, credit stops flowing, and everything is trapped in a cycle that only tons of public money and resources could mitigate.
It does not matter that we were talking about the free market years ago and even creating international conflicts in order to introduce free market to emerging economies.
Without everybody's help, in the form of public resources aiming to rescue something that should not be rescued but transformed, the private business, therefore the global economic capitalist system, would not continue working.
In the US this bail out seems to be working a bit. In Europe, however, there is not enough money to cure balances. Will there be enough money if we ever have to rescue the system? Will there be enough real work to back up the worthless traded papers? Will there be enough patient people willing to work more for less and for those who control their lives?
Now that the context has been created, let's focus on New Zealand, a young country with relatively clean system in absence of corruption (I wish I could say the same about my beloved Spain where the politics are swimming in a corruption swamp, so far, allowed by the people).
New Zealand has a huge external debt of around 126 per cent of the GDP. Fortunately the public debt is still low. The country exports goods and to keep on doing so is important for the local economy.
However, I don't agree with this obsession of lowering the value of the NZD in order to export cheaper. Do we forget that we also need to import goods too, like cars or technology in general, and they would be more expensive? Do we forget we live in a quite isolated island and people enjoy having holidays overseas which could be cheaper with a strong currency? I guess the opinion varies depending on what are the personal interests. But we should remember with the economy it is difficult to pull a string without affecting something else. Inflation would rise, and external debt would be more difficult to pay, and it needs to be paid if we don't want our companies to start solving their debts at the worker's expenses.
I am highly surprised by the Green party's push to print more money, meaning that the NZD would be lowered, inflation created and therefore consumption and jobs creation encouraged. However, should not a Green party try to avoid further consumption in order to destroy our resources?
If we don't have enough jobs, let's share them (as I mentioned I am not surprised as it is a global system crisis). Let's cut the worked hours per week to 30 or 35 and make laws to encourage private business to hire more. I would gladly work less hours per week and earn less if that guarantees that everybody is going to have a chance. If everybody works, we would not need to spend so much money in keeping those without a job. We would earn less, yes, but we would save more too. We would have more off time to spend with family and friends, to dedicate to culture, to personal projects, to enjoy life and the beautiful outdoors. Hopefully that contributes to less crime too, but that is too much hoping I guess.
Let's encourage business that promote self-sufficiency. New Zealand needs more high technology industry, not only farms.
Let's drop GST for healthy products so population becomes healthier, money is saved in healthcare, and the consumption rises around good things encouraging farmers to grow different kind of veggies as the demand would grow.
Let's keep public the assets, protect them and make them available for all New Zealand citizens and our future generations. Not everything should be for sale.
In summary, let's encourage development rather than growth. Let's encourage a better society based in solidarity and quality of life.
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