Friday, July 20, 2007

"Spare capacity"

This week's Listener leads with a piece based on interviews of both major party leaders (offline), which has a revealing little snippet from National Party leader John Key. After making the usual complaints about the economy "treading water" during Labour's tenure - demonstrably false, as a perusal of GDP growth statistics will show - he then goes on to hint at his preferred solution:

Well, what's he going to do about it? Stand by for a lecture in Economics 101 as he flies into the theory that our economy is unable to grow on a non-inflationary basis because we have no spare capacity. "It's got so bad that if we get any growth in the economy beyond about two percent, the Reserve Bank has got to increase interest rates!" he exclaims. "Now that's not going to make New Zealanders wealthy, because there is no capacity there."

So what is this "spare capacity"? Unemployment. Key is complaining that too many New Zealanders have jobs, meaning employers have to compete for labour, and they can't just expand production by hiring another warm body at the minimum wage like they did in the 90's. To the rest of us, of course, this is a Good Thing, and one of the government's greatest succes stories. But to Key and his big-business backers, it's a disaster which cuts into their profits. So they propose throwing people out of work, or running welfare policy as labour market policy to conscript our shrinking number of beneficiaries (more and more of them seriously ill rather than jobless) into a "reserve army of labour" to reduce wage pressure - in the process reducing the wages, conditions, and living standards of ordinary New Zealanders.

This is the real John Key. Like Don Brash before him, he stands for increasing the wealth of the few by deliberately inflicting suffering on the many - just as National did in the 90's.