Financial Traps

I’m sleeping well right now. The move is over. We have projects, we are busy. But the bubble which is the protery market is continuing to inflate.

In the main centres, average values in the Auckland region increased by 6.7% over the three months to March to 1,219,183, in the Wellington region they were up 8.6% to 935,575, in Christchurch they rose 6.7% to 575,721 and in Dunedin it was up 6.6% to 620,990.
The most expensive district for housing in the country was Auckland’s central-eastern district, which includes suburbs such as St Heliers and Mission Bay, where the average value was $1,807,348, up 7.9% over the three months to March (see the table below for the average values in all districts).

This is why we now have a de facto capital gains tax on investiment properties, ranned down under urgency by Parlaiment. We don’t really have a constutition and we don’t have a second legislative chamber in NZ. When the government chooses to act like a bulldozer, there is nothing much than can be done to stop them.,

It’s Alive!

There is a legend in Auckland. When Rob Muldoon, the last socialist Prime Minister of the National Party died, the great and the good turned up at his funeral.

Not to mourn him. But to make sure Muldoon was in his tomb, encased in lead, and buried good and proper under a few tons of Concrete. Since my early 20s we have been run by bureaucrats using neoliberal, market force economics. The left did not interfere: the agreement was that they could be culture warriors to their heart’s content if they stayed away from business and housing.

Which, in the new secular religion of that time, now shopworn, would increase, generation by generation. You were told to get on the property market because, as my Dad was told, they are not making any more land.

But the woke are now running things, and they want to run everything. This is Chris Trotter, who is older than me, and fought Muldoon by using the other tool of that time: the Christmas strike. But he misses the solidarity and the robust working class we had then. So do I.

While the detail of the Labour Government’s Housing Package has been sufficient to unleash the very worst impulses of New Zealand’s landlord class – whose screams of rage and wild threats of social vengeance have pretty much confirmed the rest of New Zealand society’s worst fears concerning “property investors” – it is the rank insubordination of the nation’s elected leaders which most rankles Neo-liberalism’s true believers.
The level of official paranoia was admirably reflected in Jack Tame’s dogged insistence that Grant Robertson disclose the identity of his advisers. Tame, perhaps revealing the views of the “experts” briefing him, seemed convinced that the Cabinet had somehow latched on to an alternate (and worryingly heterodox) set of advisers, who were now driving Government policy. The notion that, as Robertson rather testily pointed out, he and his colleagues were democratically elected to lead the country, appeared to cut little ice with the Q+A host.
Had Tame bothered to register the large portrait of Prime Minister Peter Fraser hanging on the wall of Robertson’s office, he might have had less difficulty in believing that a Cabinet made up of MPs elected to drive through transformational change have always possessed the latent executive power to do exactly that.
Those who are now quaking in their shiny leather shoes at the spectacle of a cabinet flexing muscles made weak through years of underuse, should be grateful that this Labour Government did not take advantage of the Covid-19 emergency to do what Peter Fraser did to ensure his government had the powers necessary to manage New Zealand’s fragile post-war economy. The Economic Stabilisation Act 1948 gave Cabinet the power to control wages, prices and rents by means of Parliament-circumventing Orders-in-Council. Without it, “Muldoonism” would not have been possible. The repeal of the Act in 1987 thus constituted one of the neo-liberal revolutionaries’ most symbolic victories.
What the boys and girls at the New Zealand Initiative have failed to understand, however, is that the world of 2021 is a very different place from the world of 1984. A country grown impatient with Rob Muldoon’s idiosyncratic and high-handed management of the New Zealand economy was more than ready for a few years of bridled executive power. Three decades on, however, swapping politicians subject to a triennial electors’ veto, for “market forces” seemingly answerable to nobody, no longer has the feel of a game-winning substitution.
The worldwide populist surge suggests that strong executive powers, harnessed in the people’s interest, are no longer regarded as unequivocal evils. Only the most hardened veterans of the Rogernomics Revolution continue to insist that New Zealanders should trust “the market” to resolve a housing crisis ripping apart their country’s weakest and most vulnerable communities. With the polling resources at their disposable, it is inconceivable that the Labour Party and the Labour Cabinet have not detected a sizeable groundswell of voter opinion that “something must be done” about housing. And, if what we have witnessed over the past week is any guide, they are going to do it.

The policies that the Labour government have bought in are misguided. No argument. Increasing wages when the country is in a depression destroys businesses. Over regulation of said businesses remaining — Landlords included — drives more to the wall. There will be equity. Most people will be deeply poor. This is the tawdry playbook of socialism, seen currently from Venezuela to Portland.

What happens when you start micromanaging is that you can’t stop. It ended up, at the final stage of Muldoon, That did not end well. We had to get approval from Wellington to do anything. We had carless days. All prices and wages were regulated.

When Labour won and deregulated, they let a thousand flowers bloom.

But the regulators are now back with a veangenace, and they are running not merely the captal, but all the cities and towns.

It ended badly the last time. We had more social capital then. It will end worse now.