Foundation for Economic Growth - Newsletter

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Last Updated: Aug 15th, 2008 - 11:26:43

Newsletters : 2007 Newsletters : 8 June 2007
Thought for the Day

In 2003 a small group of us formed this organisation because we were worried that Labour's policies would stop our high rate of economic growth and send us back down the slippery slope to serfdom.

We visited Dr. Cullen but unfortunately we were unable to convince him of the truth. Now, four years later, the truth is becoming more and more obvious to us all. We have dropped another two places down the list of wealthy OECD countries. Remember also that the OECD countries themselves are being overtaken by non-OECD countries and so our decline accelerates.

Our growth rate is now more like 1% instead of 5% and our rate of productivity growth is a paltry 0.4%. The only reason our citizens feel comfortable is that the government is expanding our money supply by 16% and this "free" money is sloshing around the economy and being spent on mortgages and property - thus driving up the price of houses.

Dr. Bollard is pulling hard on the only lever he has available and the interest rates go up again. So more money arrives on the "carry trade" from Japan and getting a mortgage has never been easier. Demand for our dollar goes up and so the price, relative to the US dollar, et al, goes up and our exporters and manufacturers fire their staff and/or shift operations off-shore.

Meanwhile the coffee-shop business is booming. How many outlets selling coffee have opened up in Wellington in the last 5 years? Just down the Terrace there must be upwards of 10 new ones in about 200 metres.

We have exchanged 300 manufacturing jobs making stuff for export for 50 jobs making coffee and wiping tables.

Labours ambition of moving us into the top half of the OECD is but a distant dream - never mentioned. Labour's "economic transformation" to a high waged economy is instead producing an underclass that cannot afford electricity. The very people that Labour purports to help are now suffering the most.

We know from many examples around the world that small governments and maximum freedom for the individual are the necessary ingredients for high economic growth. Hiring 10,000 bureaucrats into government is not only producing low growth and low productivity but it is also making government services less effective, as the 10,000 sick people dumped form the waiting list for an operation will attest.

The truth is that governments cannot improve economies of nation states. It is private enterprise and the entrepreneurs which generate the wealth and the government that expropriates it. More government - less wealth per citizen. The pressure is mounting and it is inevitable that as the government interferes more and more to fix the problems of its own making so it will exacerbate the problem.

We are having the boom - the bust must surely follow.


Jun 8, 2007, 14:48

 Newsletters : 2007 Newsletters : 8 June 2007
The Subprime Mortgage "Crisis" Will Fix Itself.

The sub-prime mortgage in America is a mortgage where money is lent to someone who does not meet the previously normal lending criteria. In order to sell houses these types of loans were made in large numbers over the past three years.

Now the borrowers can't meet the payments and around 50 mortgage providing companies have gone into bankruptcy in the USA in the last 6 months.

The politicians are now proposing ways and means of solving the problem. Steve does not think that this will help . . .


May 31, 2007, 12:38

 Newsletters : 2007 Newsletters : 8 June 2007
Voucher Lessons from Sweden

And I have only just discovered that Sweden, that epitome of socialist Nanny State political correctness, has a voucher system for education.

Anyone can open a school and parents can send their kids to any school they like.

A Socialist embrace of the free market brings positive outcomes.


May 29, 2007, 18:42

Can we fix it?