Wise Words: “To retain its taxpayer-guaranteed revenue, RNZ must also retain its most precious commodity: public respect and support. That can be imperilled by poorly thought out judgements, including assuming that it should set the political climate.” - Pamela Stirling, Editor, NZ Listener.
THE LISTENER LONG AGO ceased to be a cultural talisman for progressive New Zealanders. Ever since the apparently indestructible Pamela Stirling took charge and transformed the magazine she’d once denounced as “the house journal of the Alliance” into the house journal of the National Party. Recently, however, a couple of sentences from “The sound and the fury”, the Listener editorial team’s assessment of the RNZ Concert debacle (22 February 2020) struck me as unusually perceptive.
“To retain its taxpayer-guaranteed revenue, RNZ must also retain its most precious commodity: public respect and support. That can be imperilled by poorly thought out judgements, including assuming that it should set the political climate.”
That climate-setting quip should have prompted a double-take from RNZ’s bosses. Its clear intention was to alert them (gently) to the fact that some of its key producers’ and editors’ more recent judgements have raised a few important eyebrows – and not in a good way. There is a growing feeling among those whose education was vouchsafed to them in the years before our universities became customer-driven businesses, that RNZ has taken up an ideological position at some distance beyond either its listeners’, or the general public’s, comfort zones.
A telling example of RNZ’s determination to set the political climate was broadcast on the public broadcaster’s Checkpoint programme of Wednesday, 26 February 2020, in which RNZ reporter, Nita Blake-Persen, secured prime placement for her story “NZ Super costs up as NZ retirees on $100k passes 30,000”.
It is difficult to assign any other motive for producing this sort of story than a desire to fan the flames of intergenerational warfare. Singling out high income-earners over 65 (whose annual contribution to the IRD, based on a minimum salary of $100,000 is a bracing $23,920!) was certainly inflammatory. Ms Blake-Persen’s analysis also hints strongly that the abandonment of the universalist principles underpinning NZ Superannuation may have to be accepted as unavoidable collateral damage in the aforesaid war between the generations.
More disconcerting, is what appears to be a lack of sensible editorial oversight of Ms Blake-Persen’s story. Having read her copy, did Checkpoint’s editors, Pip Keane and Catherine Walbridge, not warn Ms Blake-Persen to calculate the total tax contribution of the 31,048 New Zealand superannuitants earning more than $100,000, and then compare that figure to the $608 million paid out to them by way of NZ Superannuation? A pretty sensible precaution, I would have thought, given that if the 31,048 older Kiwis so provocatively singled-out by Ms Blake-Persen proved to be net contributors to the state’s coffers, then her whole story falls flat on its face.
Which is exactly what we discover when we subtract NZ Super payments totalling $608,000,000 from Income Tax payments of $717,600,000 (31,048 x $23,920). Far from being greedy Boomer leeches bleeding their hapless GenX offspring dry, these workers are contributing a net $134,668,160 annually to the public purse!
All of which raises some disconcerting questions about RNZ’s overall ideological agenda, and on whose behalf it is being run? Did Ms Blake-Persen’s highly tendentious story make it on to the airwaves simply because nobody thought to check it? Or, is it evidence of a broader RNZ agenda to shame and blame the older generation for having the temerity to be born a couple of decades before its younger reporters and presenters? It would be tempting to dismiss this suggestion as Boomer paranoia had the RNZ Board and its CEO not demonstrated so unequivocally their readiness to sacrifice older listeners for a “younger demographic” in relation to RNZ Concert.
One of the economists quoted in Ms Blake-Persen’s story is Shamubeel Eaqub. According to this participant in the management consultancy firm Sense.Partners:
“The reality is that we don’t want to penalise people for working into old age and neither do we want to penalise people for accumulating wealth, but we have to be consistent in our understanding that actually when we look out to the next 20 to 30 years, our system of taxation and our systems of supporting old age and superannuitants probably isn’t sustainable.”
Oh, what a multitude of sins can be concealed beneath a little qualifier like “probably”! Even Ms Blake-Persen felt obliged (maybe there was a smidgen of editorial input after all?) to mention the apple-cart-upsetting finding of the Interim Retirement Commissioner, Peter Cordtz, that “the current cost [of NZ Superannuation] was sustainable for the next 30 years”. You pays your money and you makes your choice, apparently: the management consultant who has a problem with our current tax and pension systems; or, the guy who told us the former is more than equal to supporting the latter.
It will be interesting, BTW, to see whether the newly appointed Retirement Commissioner, Jane Wrightson, upholds Cordtz’s finding on the sustainability of NZ Superannuation. It is to be hoped that his pronouncements weren’t inspired by the, sadly, not unreasonable fear, that the new boss would soon be touting the same “we can’t afford it” nonsense as the old boss.
In the meantime we can only sit back and admire Ms Blake-Persen’s propaganda skills. Imagine the outrage among that “younger demographic” when they discover that a body of overpaid Boomers, equal in number to the entire city of Blenheim, is living high on the hog while they sweat away in the salt mines of Neoliberalism! Imagine their fear and loathing when presented with such doom-laden factoids as: “Last year, NZ Super cost $14.5 billion and that cost is increasing by more than $1b each year. By 2024 it's predicted to cost the country nearly $20b a year.” (A figure, BTW, that places us well below the current pension costs of many European states when measured as a percentage of GDP.) Or that – Quelle horreur! – “Inland Revenue figures showed 2500 people were getting Super payments while on incomes of more than $300,000”.
Just imagine it! $300K a year!
Once again, however, there is no mention of the Income Tax paid annually on that sum to the IRD: a trifling $89,920! Which is more than four times the $21,380 paid annually to an individual New Zealander aged 65+ and living alone.
What a pity Ms Blake-Persen didn’t round out her story by seeking comment from an old-fashioned democratic-socialist who has campaigned for years to see those earning $300K p.a. socked with a much more progressive rate of income tax. He or she could have explained how steepening the progressivity of New Zealand’s Income Tax would once again make possible all the things the members of Ms Blake-Persen’s generation missed out on.
Then we could all have agreed that it’s not the year you were born in that counts, but the responsibility of every generation to so organise society that young and old, alike, are able to receive their fair share of its bounty. That would be a political climate worth setting – and definitely preferable to the ideological climate RNZ’s bosses seem hell-bent on heating-up.
This essay was originally posted on The Daily Blog of Friday, 28 February 2020.
I am actually amazed you think it necessary too defend people over 65 earning $300,000 should get super, at least on the terms you have (they already pay enough tax). I would have thought the better way to defend it was the principle of universalism, which you sort of do so.
There is an existing political settlements on this principle, but like such settlements it could be undone once people now aged 20 to 40 make up the majority of parliamentarians, probably only 10 years away. The easiest part of the settlement to unwind is lifting the age. National already wants to do this, on a very slow track. More difficult will means testing. Even if parliament is younger, voters wont be. Those currently over 40 will be majority of voters for at least two more decades.
As a final point, the least represented age cohort in parliament are those over 70. Many other democracies have quite a substantial number of political representatives over 70, the US being a prime example! in New Zealand there is just one. And of course he is the very one who is the author of the Gold Card.
So why do all these NZ Super sustainability discussions ignore or evade mentioning the economic reality, that NZ retirement wealth ownership creation through adequate universal and permanent contributions to the NZ Super Fund - invested in tangible wealth and productivity assets -
not in financing welfare consumption as was done with our original Universal Super Fund -
will help to keep our PAYGO financing of our Super entitlement age at 65 sustainable also for the increasing ratio of longer living descendants of us, exactly as it is being done for our baby boomer bulge generation already ?
Is not wealth ownership creation a more reliable and sustainable way towards universal prosperity for all than wealth redistribution as a priority ?
Oh so true Chris. When KiwiSaver was brought in I thought this is the neoliberal way to get rid of Universal Super. When the baby boomers were born the government of the day built, maternity hospitals, kindergartens, schools, secondary schools and universities. There was full male employment. For those who think taxes paid for it all, it was done on a very small tax base because, in those days, very few married women worked. The taxation system was very very progressive. Men with a wife, paid less tax than the single man and the tax base was reduced yet again when children were born. In those days Government recognised its obligations to its people. Yes, there were lots of “buts’ but they reflected the views of those days. And many of those views were so wrong.
New Zealand is a sovereign country. It issues its own currency which floats and is not pegged to another currency. Therefore it can buy or pay for ANYTHING that is for sale in its own currency.. That includes Universal superannuation.
She also hasn't factored in the amount of taxation on the superannuation.
If they're earning more than 70k from their primary income and therefore on a ST code, then their super gets taxed at 33%.
You have to wonder what kinds of morons they're letting be journos these days. Too stupid to read a website?
"RNZ", not "Radio New Zealand". That says it all for me really. As far as news and information go they are a woke waste of space. The intoxicating ignorance and cheap politicking you describe over reporting on superannuation are par for the course. Why are we paying for this?
A great article. If all political parties would aspire to have everyone earning more than super in retirement what a great outcome. Redistribution is great for those who suffer all manner of misfortune, but the aspiration should be to make all wealthier.
It's not called Red Radio for nothing.
Unfortunately, Chris, much of what passes as journalism today is from a partisan position, somewhat perversely it appears to be worse, not better, in public service broadcasting.
For example, analysis of the BBC's coverage of Brexit shows an overwhelming anti stance; discussion stacked with remainers, open hostility to leavers and blatantly partisan editorials. The RNZ interview with Nigel Farage when he was here couldn't have been more rude. Perhaps they have absorbed the Beeb culture by osmosis. There is strong criticism on similar grounds from analysis of the $billion a year (Aussie) ABC. As Odysseus says; why are we paying for this?
Unsurprisingly there are efforts underway to de-fund the whole reeking edifice; the UK government look set to remove the compulsion to pay the BBC licence fee - to widespread approval.
Perhaps they're so blinded by certainty of their own rectitude they can't understand they're sowing the seeds for their destruction. Perhaps they're so convinced they're are on the side of the angels that balance, Truth itself can be dispensed with.
Patricia: "it can buy or pay for ANYTHING that is for sale in its own currency"
While it can come in handy short term that aspect of modern monetary theory (AKA Magic Money Tree) has been thoroughly debunked.
Implementation of what you suggest on a significant scale would be catastrophic - particularly for a small, high trading nation.
Not the least of the problems is that a large proportion of what we consume is not bought with our own currency. It doesn't take a genius to work out the consequences of that or of money supply exceeding supply of goods and services within the country.
If anything it's a commentary on the half-educated kids passing themselves off as journalists.
And their producers and editors believing and pushing the bullshit.
Grief that there's only 2500 people drawing Super that earn over $300k per annum.
The Listener as arm of the National Party? RNZ too possibly.
You really should warn people before saying such things. I might have lost the coffee and the keyboard.
I stopped buying or reading the Listener twenty years ago after one of its writers decided the 30th anniversary of the Moon landing was just the occasion to slam the whole exercise using all the carefully crafted Left criticisms of it from 1969.
I hung on to RNZ through the double 00's and the Nouties, even as it set itself up as the Official Left that criticised Helen's mob when they were not Left enough, and had an endless list of guests who slammed National as losers and then sniped at John Key.
A fave memory comes from a January in the early "oughts" when some host - presumably young, excited and having the place all to herself with the adults on holiday - played a one hour Chomsky diatribe.
Aside from the occasional guest who argued the toss on some Right-wing ideas - like ROger Douglas and man, was that a hostile interview - I can't recall a single occasion when the hosts of other guests ever put forward a Right-Wing idea on anything, whether it was AGW, economics (natch), social welfare, etc, etc. Around 2016 I gave up on them.
But sure - with an attack on Universal Superannuation you've finally found an RNZ/Listener piece that aligns with Right-Wing criticisms of such schemes.
But here's the really bad news. You know all those young people, Millennials and Gen Z's, who are slowly trending towards Socialism? The sort who are powering Bernie to victory (supposedly)? Well it's not so much that they're angry with capitalism for screwing them; they're angry with Baby Boomers who they think got the long straw when it comes to wages vs. house prices and single-income families vs. the almost absolute need for double-incomes and even having a family of more than one kid.
I have teenage children and to listen in/watch their online forums is to find that they hate Baby Boomers. I mean they really loath them. "OK Booomer" is merely the politist dismissal.
Here's a blog article from the US that captures this pretty well, <a href="https://jackbaruth.com/?p=17765>Boomer-Os Killed The Summer Job Star</a href>, where the writer takes on the complaints about the young folk made by a Boomer. I'll quote just one piece from it where he talks about buying property and stock market index funds in 1987:
<i>In other words, if you were “holding” in 1987, when the oldest Boomers were forty and the youngest were twenty-five, you’re golden now. If you were just starting your career in 1987, you were racing against time. If you’re starting today, the deck has been stacked against you higher than you’ll ever clear. Want to live the middle-class life of 1975? Better hope your IPO nets you ten million bucks. The wealthiest of the Baby Boomers deliberately created a world in which they’d pay less for the things they wanted (employees, labor, televisions) while being paid more for the things they owned (real estate, index funds, 1959 Les Pauls, 1985 Porsche 911s). It was a hell of a trick, wasn’t it?</i>
That generation simply does not believe that US society will be there for them in their old age with the Medicare and Social Security and much the same thinking os happening here in NZ. They know that "universalism" does not beat actuarial tables and declining worker/retiree ratios. They also know they can't win politically at the moment.
But as Wayne says, in ten years, let alone twenty?
Wayne. The conclusion of the raise the age of retirement community seems to be bad rest of New Zealand = bad economics = raise the retirement age;-
* In a Zero Nominal and Negative Interest Rate environment the old adage "money has to go somewhere" could not be more true.
* Retirement settlements are not corrections and retirement settlements is future consumption.
So nominal interest rates are near zero and if you adjust for inflation interest rates are zero and pretty much across the whole world interest rates are negative. So in this environment where are you going to put your money if not I to consumption?
So this assertion that raising the age of retirement is good for the economy is absolute garbage because of you hold onto those policies then where are you going to keep all that money? Not that I'v tried but it's pretty tough to hold 40-80 billion in Super savings in New Zealand.
Seriously ask yourself. Super contributions is set to increase by a billion a year over the next 5 years. So ask yourself, where is that money going to go? We can't put it in a mattress. Super funds can't invent in kiwi products, stocks are cheaper than bonds. We'd have to reverse the whole neoliberal show and raise interest rates if you want good solid long term returns.
Now some people might say put it in gold or treasury bonds (great! You can have an allocation of that) but a 100%? Obviously not.
So what we are seeing from these fake economic indication community commentators is sound economics = bad economics = raise retirement age and what we end up with when ever bad economic data comes out is and we get an example with the Wuhan virus, bad economic data comes out and we get a correction = there for raise the retirement age. So the NZX is down a bit then the following week it's back to flat. And this is people just realising there's nothing else to buy so this fake news indicator that Super is unsustainable is just garbage fake news.
Kiwidave, I think you should do a lot lot more reading of MMT and say after two years you may have a better understanding of how our monetary system actually works
Thanks for the advice Patricia, I had no idea MMT was so complicated, but then, if it wasn't everybody would be doing it. right?
Two years just to get an understanding; I feel like the alchemist's apprentice.
Patricia - if you start financing universal superannuation and welfare benefits with printing money for it, you will end up with destroying the value of money.
Our relatively generous welfare of 70 years ago moved towards becoming unsustainable when our governments began borrowing money (from our Universal Super Fund savings) for consumption on welfare, and people began to organize their lives increasingly on on qualifying for benefits instead of their own efforts.
While our governments thankfully did not resort to excessive money printing, borrowing became too expensive after our Universal Super Fund was consumed and our continuing payments into it were not enough to meet all our welfare commitments after the savings in the Fund were gone.
What does MMT stand for ? Is it a kind of Theory ?
A number of economists have been thinking about how money really works and a good number of those economists are concentrated in Missouri University which is where I first encountered Modern Monetary Theory (MMT) and Iv been reading about it ever since.
Money has always been a problem for right wing ninjas (RWNJ) because reality is a mystery to them. Money doesn't often work in the way RWNJ's think it does. And so a lot of RWNJ avoid talking about reality in the hopes that by some how talking about personal responsibility and trade offs and good old common sense that concentrates just among them then we don't have to worry about money. There's even a phrase in economics that "money is just a vail." But the reality of the economy is what RWNJ's want normies to see through the vail or around the vail. So don't get caught up in the vail, Jens Meder. There is a person behind the vail, it's the economy stupid.
Slowly over time normal people have come to realize that money is as real as any other commodity just like anything else and what happens in monetary exchanges effects the world of goods and services and you have to take money very seriously.
So how Jens Meder has explained how he thinks money works which is simply not correct. There's traditional forms of money like gold and paper money but the vail that Jens Meder ignores and that Modern Monetary Theorists illustrate is "digital money." Digital money interact with the economy in different ways that RWNJ's would rather normies not know about.
What RWNJ's are being deceptive about is when normal people borrow from a bank they simply open up an account. Bank clerks simply hit a few buttons and suddenly a mortgage payment appears for mortgage holders to play with because it's a loan and so the whole thing just becomes an accounting mechanism.
Probably the most important lesson Modern Monetary Theorists have learnt from observing how money interacts with the economy in digital form is that we the people are dependant on running full employment economies, and are NOT dependant on running deficits or running austerity budgets the way fake RWNJ indication community members hope and prey the vail works.
And so the government can just create digital accounts that set aside the loans in government accounts and the government can have as much money as it needs so the people do not have to suffer through economic down turns or suffer through rescissions and depressions and when there is to much money in the economy then the government can pull that money out of the economy through taxes effectively putting a cap on obscene wealth.
And so this whole trope and lies about the economy needing billionaires is a total fabrication invented by RWNJ's like The Chicago Boys Economics club and there Neoliberal theories. Once normal people understand that money is a commodity like any other commodity then they'll understand how fluid digital money is and how easy it is to input money into and take money out of the economy after watching the way banks have done it for 40 years.
So Modern Monetary Theorists kiwi style have managed to convince Grant Robertson a little bit that the Labour Party with its post Keynesian stimulus policies can reach the conclusion that Jacinda is much better able to manage the ups and downs of the economy than The National Party could ever hope to by understanding how money really works and the excuse of RWNJs not to use money to keep the economy at full employment is given a heavy blow to there ego when The Labour Party's better management approach to keep the economy below 4% unemployment has been given a big assist by Modern Monetary Theorists on how money actually works.
So Patricia and SAm - the MMT is actually theoretical nonsense!
Neither "Digital money", nor "Social...", "Keynesian.." nor common Bank overdraft
credit money can act beyond the laws of physics, according to which you cannot create anything out of nothing,
In other words - economics on the measurable, material level is ultimately still limited by by what can be extracted from one form of energy and material for transferring into another form of energy and material.
That means - regardless of what kind of currency - or no currency (money) at all - there still have to be savings for reserves and for creating anything more lasting than hand-to-mouth consumption only.
Patricia , Sam - can you please explain how building a house or paying for wages in a sustainable way is financed differently through "Digital Money" than through an ordinary bank mortgage or an adequate flow of earned income or saved reserves for paying wages ?
Okay Jens so first of all there is 2 problems with what you just said so all of what you just said is false. Banks don't lend reserves, they are mandated to hold 10% cash in reserve and Quantitative Easing doesn't increase lending.
Second is the government isn't borrowing for no reason. Did you catch any of what I said? Because what you are addressing isn't associated with money.
So I'll just reiterate two points for you because I'm not wanting to debate your fantasies so the first point again is since the invention of the Internet money can be transmitted digitally, there's the $5 trillion Forex Market, $70 trillion stock exchange markets and the $4 quadrillion derivatives markets. And there's 4 electronic exchanges that Handel 80% of all settlements. This is something commerce degree students learn in there first semester. The point is money is literally energy. Commercial and Retail traders haven't had to deal in physical cash for decades. So just lay back and treat this as your introduction into the 21sy century but you're not going to find any reason to disqualify digital money with explanations that don't even fit the definition of a retail bank.
My second point is you're just muddying the waters with semantics so instead of saying digital money let's just use the words Internet banking because you make applied finance even more dull and boring than it already is.
So I think that Jens is not able to address my critique. Jens is just trying to red pill by getting his point across and I'm saying that physics class Jens is trying to fit into his limited vocabulary is not the definition of money, applied finance is the definition. But even if Jens does not like what I am saying then he can just assume that what I mean is disruption of goods and services on a mass scale due to an over or under supply of money.
And again the second point is Jens is incapable of addressing my points because he's saying money is theoretical physics. In physics there's the General Theory and then there's Quantum Theory which is more specific so Jens doesn't even get those definition correct.
So Jens, you are red pilling because you don't even have level one arguments youve just got no argument. You can't address the critique! If you wish to address the critique then answer the question. Does 80% of all settlements on planet earth get cleared in physical of digital money?
Please join us in the 21st century brother.
Sam: "when there is to much money in the economy then the government can pull that money out of the economy through taxes"
That is part of straight Keynesian counter cyclical theory and is widely accepted by people of all acronyms. Of course the pulling money out part doesn't have a lot of appeal to populist politicians.
Money and debt (two sides of the same coin) are simply a promise; a bet on, and trust in, the future. So called digital money is no different. MMT (Magic Money Tree) is a solution in search of a problem.
Jana and kiwidave, I can only suggest that you start reading and listening. It will take you around two years of doing that and I am not being rude. And stop writing about something you know absolutely nothing about.
Indeed Wayne, I can't wait for my Winston!
I hope you think it unjust to deny those who paid the most tax superannuation at an equal amount. It would be doubly cruel to means test and deny.
Sam, Patricia - since according to Sam "digital money" is still only the transfer of money values by internet, I am not surprised at all if it is 80% of the value of all money value based transactions.
In other words, is not "digitizing" money just the computerization of paying by cheque, which also surpassed the value of payments by cash and bank notes many years ago already ?
And if sub-atomic quantum physics have to be resorted to for understanding MMT - the "Magic Money Tree" (?) - then no wonder it takes 2 years to get brainwashed enough to believe in that money magic.
Humans are not yet able to create anything - including food - out of nothing, so please tell us if and how digital money could have changed that ?
If you don't know, Sam - perhaps Patricia knows, if she has completed a 2 year study of it ?
At lest some clues, please ?
Come on people! I just not be nice to people who can induce mental and physical learning impediments on command. So, Jens, If the government does not run a deficit budget then the private sector has to.
Patricia and I start at different points instead of focusing on the conclusion. She claims the government is the "sovereign money creator" where as I start as the private sector is "the money creator" then add the government in.
First of all you, Jens, have to come closer to how a pure free-market economy really works because those who will tell you how wonderful raising the retirement age is, is "hypothesising" about a world in which there is no government regulation.
On the inflation side of the equation that is typical shallow reading by RWNJ's but in terms of physical nots the money does come from the government. This is the bit that you can't deny but of course it is confusing you at the same time and your vision of money is little pieces of green paper as cheques so the vast majority of money transfers has always been from one account to another. If you was to do that with physical money you would literally blow up from all the heat generated just getting from A to B in the physical science sense.
Is there anyone who can clarify the meaning of all that, Sam?
Patricia, can you explain the message of Sam as above ?
Or Sam, can you explain it in other words ?
Okay but that's not the example I was trying to give. So we can measure the ratio of debt to GDP which MMT can predict with a high level of accuracy the amount of debt weighing down national productivity which will cause a recession with a high level of accuracy with in a 99% correlation.
So MMT makes extremely accurate predictions on all kinds of things and not just recessions. MMT makes predictions about employment figures correctly which if gradually increased, the minimum wage can lower unemployment but raise the minimum wage to fast that will incentivise automation and raise unemployment states and that prediction was proven correct with the governments negative 4% employment stats.
So there is lots of predictions. That's all science does. If your theory has limited predictive powers then it would be useless. That's the problem with your quantum theories is that all of your interpretations makes no new predictions about finance or even physics so no one cares because they're useless scientific tools that don't fix problems and so there can be no consensus on which one is correct because none of your theories make any predictions.
The reason MMT is accepted is the same as Einstein's General Theory of Relativity is accepted because those make tons of predictions which get confirmed over and over and over again and those theories get things correct with a higher degree of accuracy than any other alternative.
Like the globalization model, neoliberal model, Freemarket models, they make no predictions and if they do make a prediction then none get confirmed which is the problem of why no one accepts those theories and if they did accept those theories then that would be evidence of a global society with one world government and other deep seeded flat-earth-syndromes.
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