Blunt good sense from Bob Jones

The coming economic crisis and its political consequences

by Sir Bob Jones • reblogged from Sir Bob’s blog • originally published 13 April, 2020

Have an election today and the government would bolt in, primarily because of Jacinda’s star power induced by the media’s obsession with her. But the election is six months away and then, I’m picking a change of government.

First, to clear the air, I like Jacinda and don’t wish the government’s demise. Long before there was any thought of her rise I admired her and Julie Anne Genter more than any other MPs. That’s because when I occasionally tuned into Parliament and they were speaking they did so enthusiastically, arguing for initiatives they thought beneficial, without ever resorting to the customary and tiresome abuse of the other side. This I found refreshing.

Second, perhaps surprising imagery-wise, I’ve voted National once in the last 40 years, that in 2014 as I was alarmed at the prospect of a Cunliffe Prime Ministership, so don’t assume I’m writing this as a closet Nat.

The single issue facing the world currently, and I emphasise currently as it won’t be in a year or so, is the coronavirus crisis. Seemingly overnight it went from a detached China event to a dominant global one. All governments should have anticipated that possibility. After two months our death statistics are a standout low in the world but our hopeless media, who if they did their homework should not have been surprised. Instead they ludicrously attribute this to Jacinda’s leadership. In fact, as I shall show, she’s made some awful blunders.

Why have we performed so well?

Over the last six weeks I’ve read three similar articles in the serious European press, the latest, in the world’s best newspaper, namely The Financial Times about 3 weeks back. All predicted an easy ride for New Zealand. If you want to dodge the virus and remain in a modern developed nation then shift now to New Zealand it advised, pointing out that New Zealand, has stand-out virus-combatting advantages. It’s the world’s most remote nation, an island country, thus easy to monitor visitors and a small population. Our only city of size (the virus primarily hits elderly city crowded environment dwellers) is substantially suburban without intensive occupation.

Italy and Spain

The focus of media attention has been on Italy’s and Spain’s high death rates. That’s easily explained, namely cultural factors.

First, as is often a source of teasing, Italians and to a lesser extent Spaniards remain at home until marriage, often into their 30s.

In New Zealand, Australia, Britain, etc., our 20-year-olds are off flatting, to the mutual delight of them and their parents. Thus Italian and Spanish households frequently comprise three generations, an alien proposition in New Zealand.

As said, victims are the elderly and specially those with health conditions such as a weak heart, etc. That’s a fairly common state of affairs for folk in their seventies onwards.

Furthermore in the big Spanish and Italian cities most folk live in intensive occupation high-rises, which is where the deaths have occurred.

It was world news last week when a purportedly healthy 15-year-old French girl succumbed. I’d wager an autopsy shows an underlying condition such as a weak heart that would otherwise only be revealed should she have taken up, say, squash. That’s not an uncommon phenomenon, specially with vigorous sports.

But there’s another critical difference between New Zealand and Italy and Spain. The latter two countries are not reproducing themselves, thus their average age is significantly higher than here with a much greater proportion of vulnerable elderly folk.

That collapsing population is true of other European countries, such as Germany for example. But they’ve compensated through large-scale migration. Germany has 4 million citizens of Turkish ethnicity plus many others.

A further factor distinguishing these two heavily hit countries from ours is they’re host to millions of northern European retirees, that is elderly sun-seeking folk who have opted to live there, albeit not in the vulnerable cities, but nevertheless may well be contributing to their hosts’ fatality figures.

Japan and Korea are also not breeding replacement numbers but again a cultural factor may apply. While both nations enjoy longevity, indeed Japan has the world’s longest life expectation, thus a high ratio of elderly, they customarily don face masks in winter to avoid colds and the flu and are also highly disciplined people.

In New Zealand, Australia and Britain, having shed their offspring off flatting, our older folk willingly see out their years together. As said, that’s not the way in southern Europe, thus their elderly are exposed to the virus to an immensely greater degree.

Our population of 5 million is spread over the size of Great Britain with its nearly 70 million people. Again, another huge advantage when it comes to infection contagion.

With our major export earner of tourism now history for some years to come, the balance of our trade involves bulk goods such as dairy, meat, wool and timber.

With, say, Britain, it involves intangible things to a much higher degree, such as insurance and finance, these causing a heavy interchange of people travelling. Consider the current Brexit negotiations with the European Union. The major issue is how to treat the millions of Brits living either temporarily or permanently on the continent and conversely the millions of continentals living in Britain. So with tourism gone plus our remoteness, we have comparatively little people traffic, a greatly reduced contagion risk.

Conclusion

While so sudden was the virus arrival, we now know dealing with it for us was a cakewalk compared with most other nations. Mind you, if European journalists could write that about us as much as three months ago, then we should have known. But seemingly we didn’t. Six weeks ago at a small dinner party I remarked to three of our most senior government figures, “get ready to write a huge cheque for Air NZ”; the response – puzzlement.

How have we done?

Contrary to some of our Jacinda-obsessed non-analytical media, not very well.

We’ve wrongly followed overseas practices to the letter, indeed mostly to a more extreme degree. The advantages we started with meant we need not have gone that far and the economic cost will be enormous.

When the lock-down ends our major employer category, namely small and medium-sized businesses, will not simply start up again. Instead, a high percentage will have gone broke.

For example, a Dominion-Post investigation revealed 400 Wellington restaurants are pulling stumps. They’re broke.

But economically it’s far wider than cafés. Everyone other than company receivers will suffer. The tourist-related businesses; hotels, flights, travel agents, motels, etc., etc., employing circa 300,000 people are gone. That’s not the government’s fault but all the more reason for some common sense with the balance of our economy, which was sadly lacking.

Some economists are talking 10% unemployment. I hope that’s true but will be very happy if it’s only 25%, although I expect for a time an even higher figure.

Confidence and morale will be terrible. For example, how many architects do you suppose will be busy and therefore the construction industry? People build in good times not during, as the IMF have claimed is about to occur, a depression worse than the 1930s. People will hoard their money, driven by fear. A new car, normally an indulgence, will be put aside. The car sales industry is in big trouble, so too for similar reasons the house sales business. New shoes, clothes, furniture? You’re kidding, and so it goes. Employment agencies will have no employer customers but a huge number of job seekers on their books, a complete reversal of six months ago.

There was never the need for such a severe approach in New Zealand, rather we just needed to propagate the hand-washing and maintain distance measures. As for the elderly living at home, a volunteer scheme to do their shopping and take them for outings in a bubble situation with their carers would have been enough. The goal should have been to get everyone back to work as soon as possible. Now thousands of jobs have gone needlessly.

The four weeks lock-down

I fit the danger category with my age and a medical condition that would see me a goner in days if I got the virus, which of course could still happen. I’m supposed to be in Paris now, furnishing a luxury apartment and discussing a library with an architect, then on to Scotland golfing, but I didn’t have to be ordered to instead go into isolation. Common sense dictated that. Furthermore I’m thoroughly enjoying it with just my partner and me in 50 acres. But what of the low-income punter with three kids in a state house? Is it any surprise to hear of the avalanche of family violence, of the women’s refuge overflowing, etc?

The government seemingly gave no thought to that but instead mindlessly aping Britain and Australia’s quite different situations created a ridiculous array of totally unnecessary busy-body rules as never before in this country’s history.  Let’s examine some.

LOCATION

You must lock-down in your home but not a holiday home. Why on earth does it make any difference? It certainly does for the occupants as a change helps tolerating it. Instead the police inspected cars over Easter, turning back those with suitcases.

EXERCISE

1) You may go for a walk but only in the vicinity of your home. What bloody difference does it make if you walk for an hour round and round the neighbourhood or a more interesting one of changing scenery. So too with cycling.

2) You cannot go swimming in beaches. Why? Because you’ll tie up police resources if you drown. Someone drowns roughly once a week in New Zealand, mostly in summer and in boating mishaps or rivers. So dozens of policemen have roamed our beaches to watch out for sinners. Madness! In the hugely improbably event someone drowned in Mission or Oriental Bay it’s an ambulance issue.

PURCHASING

You may buy food but only in supermarkets. The result: all-day queues. Obviously the more food outlets the better but the half-witted government had butchers, corner grocers and the like closed. In the process they’ve destroyed numerous small businesses.

DRIVING

You must only drive for an approved purpose, i.e., food or pharmacy purchasing. What nonsense! Thus slowly going mad, confined in a small house, families were denied the relief, while still maintaining their bubbles, of an outing in a car.

FISHING

Banned. Why? We’re not told. So a bloke surf-casting alone on a beach, apart from the mental relief of escape, and the possibility of fresh food, constituted a massive health threat to the community. It should have been encouraged.

GOLF

Ban the groundsmen working despite them sitting alone on tractors in a massive expanse of land. That was ludicrously deemed a health threat to everyone. Golf courses already struggling now faced ruination.

Playing golf alone or in pairs should have been encouraged. Simply close the pro-shop, café and bar.  Two days ago this absurdity re the employees, was lifted but playing is still prohibited.

All of these lunatic rules were mindlessly copied from the Brits whose 70 million people in a land the size of New Zealand raised hugely different contagion issues.

Nevertheless, in Britain they’ve now been relaxed after a series of mad Police boss declarations.

The British Police commanders (not the policemen) have featured in a series of shocking judgement scandals in recent years. Their reputation is deservedly appalling.

Last week the North Hampshire Police boss, a blowhard called Nick Adderley, announced they’d be raiding supermarkets and inspecting shoppers’ trollies to see if they’d bought any non-essential items with their groceries.

That was enough for the aptly named, no-nonsense Home Secretary Priti Patel (why can’t we have Ministers who look like her?).

Priti has form in putting bighead public employees in their place.  She not only kicked this idiot’s head in but the following day extended shopping to all food outlets, newsagents, corner stores, hardware shops, hairdressers (one customer at a time) and many other activities and told the public they can buy what they want in the supermarkets. Here, purchasing magazines was declared a danger.

We seemingly have no grown-ups in charge.

DOCTORS

Visiting GPs was banned. How much suffering has that caused to people with medical problems? GPs earn middle class incomes, those not high in New Zealand thus they’re all now surviving on welfare to exist, this in a health crisis for God’s sake. It’s Kafkaesque.

Conclusion

The government lost all sense of proportion in their handling of this crisis. For example, the World Health Organisation advise that up to 600,000 people annually die of the flu, most I suspect in the 3^rd world.

The government should have recognised early that the problem was one primarily affecting the aged and infirm. A lock-down for a fortnight points the finger at the government’s naivety.

I like Labour politicians. As I’ve always said, you want a Labour politician as a dinner guest and a Nat as a neighbour, (assuming you have a high boredom threshold).

But in fairness, the Nats do understand small business; Labour don’t.

Roger Douglas made this observation about post-war incoming Labour governments. He wrote that their unawareness of practical life and governing experience made them too reliant on advice from senior public servants and academics. Instead, he claimed, they should follow their own intuition.

There’s a world-wide political swing to the right to an extent that has alarming dimensions. But it’s understandable in times of crisis. By election time the Jacinda aura will be dead in the water as she learns the truth of another famous political adage, namely Enoch Powell’s correct but sad assertion that all political careers end in failure.

THE FUTURE

The IMF say the world is heading into a 1930s depression. I believe them.

By the time the election arises we’ll be wallowing in despair with numerous small and medium-sized businesses (our major employers) destroyed and unemployment levels that don’t bear thinking about.

Borrowing billions to dish out is no substitute for people working.

The government should end the lock-down forthwith, stress the social distancing and hand-washing rules and try to minimise the damage. Then concentrate their protection efforts on the vulnerable, namely the elderly.

THE ELECTION

As Clinton famously remarked, “It’s the economy stupid” and so it’s always been.

The well-proven adage that oppositions don’t win elections, rather governments lose them, will come into play in the pervading gloom.

THE GREENS

In a climate of deep economic despair the Greens’ message will seem irrelevant and their concerns esoteric. That’s another nail in Labour’s coffin should they lose their coalition partner, as I believe they will. There’s an irony to that as with the global shutdown and little vehicle activity, reports elsewhere talk of the new-found clean air and visibility.

My hill-top home has views of the entire Wellington harbour and Hutt Valley. Despite fading eye-sight, for the first time in the 51 years since I built it, I can now clearly pick out the individual buildings on the Wellington waterfront and Oriental Bay, 20 km away.

NEW ZEALAND FIRST

I won’t be surprised should New Zealand First survive but that won’t be enough to save the government. I say that as Winston and some of his hitherto self-employed MPs understand the realities of life and will begin speaking out.

By contrast, Labour politicians, typically of academic, union or public service-type backgrounds who view the world in idealistic ways, are frequently ignorant of the realities. That has merit when changes are needed but is hopeless in earthy situations such as we now face.

To at least reduce the harm being done the government should drop to stage 2 immediately and a week later, with heavy propaganda about hand-washing, maintaining distance, etc., get those still with jobs back to work.

This will result in more virus outbreaks but people get over it. It’s the vulnerable elderly who need the close attention. With every nation planning to borrow billions of dollars, once again the printing presses will be busy. But it won’t be inflationary. The Chicago monetarist theory was always silly. Inflation is solely caused by demand exceeding supply and in a shell-shocked world with mass unemployment, demand will be minuscule. In the space of a few months all the certainties of everyday life have been turned on their head.

Make no mistake; politics will not be an exception. I’ll be abused for this but come back in six months and tell me I’m wrong.

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