PAUL MELVILLE: Tackling the cost-of-living crisis through comparative analysis
This election, the standout issue is the cost of living.
It’s all the focus groups want to talk about.
Petrol, food, insurance, electricity, rates. The cost of everything has gone up and something must be done.
Looking back to 1990, everything was cheaper. Something has clearly gone wrong.
The party that can do the most to bring down the price-of-life should therefore win on November 7th.
NZ First would buy back the BNZ and break up the gentailers. National wants more supermarket competition. The Greens want a government-owned supermarket and will make university fees free. Labour will make GP visits free, cap the price of public transport and make it illegal for big companies to charge too much.
These ideas all sound good to focus groups. But how do they compare to policy in a country that has truly tackled the cost of living?
Which country has done the most to tackle costly life and what can we all learn from it?
There is no clear number one, but, by some measures, the answer is Nigeria.
A haircut can cost NZ$3, a night's accommodation NZ$20 and lunch can be picked up for NZ$2.
So how can we achieve Nigeria’s cost of living?
Nigeria has privately owned supermarkets, banks and hairdressers, so perhaps public ownership may not be the secret. GP visits are not yet free.
There are, however, other policies worth investigating.
Nigeria's minimum wage is about 50 New Zealand cents an hour, much lower than ours. Nigerian employment law provides considerably fewer protections for workers. The rules that regulate the environment and housing are a far cry from New Zealand’s RMA.
A sufficiently determined government could find opportunities to tackle the cost of living by copying some of these policies.
There is just one awkward data point for this international benchmark.
More than 40 percent of Nigerians live below the World Bank's extreme-poverty line. New Zealand's GDP per person is about 45 times Nigeria's.
Having very low prices does not necessarily make things affordable.
This creates a problem for our cost-of-living strategy. A NZ$3 haircut is not cheap if you earn 50 cents an hour.
There is another way to make things more affordable, of course. We could become more productive and earn more.
Unfortunately, "productivity crisis" hasn’t yet shown up in the focus groups.
So, for now, back to the supermarkets.
Paul Melville is a Senior Fellow at the New Zealand Initiative
NZ productivity went downhill when business's sent their manufactured goods off shore for cheaper operational costs and even sold them to overseas interests. Perhaps if the then government had supported them more this wouldnt have happened and kiwis would not have lost their employment. NZ needs to reverse this to become more productive again or come up with new lines to export.
Good to see most people got the joke... The point of the article: butter, cheese, beef, computers, cars and pharmaceuticals will not be made cheaper by attacking the businesses who sell them. They will not be made cheaper by subsidising them or the government making them "free". The price of thse goods will largely remain the same, no matter what we do.
There are some things the government does to make them more expensive, things like cost of doing business from unworkable regulations on health and safety, town planning, hiring and firing, or the environment,
But actually, what you find is that, if your income is high things are more affordable.
If you live in Norway, Switzerland or USA, you can…
Perhaps we expect too much and aren't prepared to live within our means or alternatively work harder or smarter? Higher taxes and/or redistribution of wealth by inept social justice warriors is a recipe for disaster and a pathway towards eventual communist rule 🙄
THE FAILURE OF A CIVILIZATION WHOSE MONEY IS WORTHLESS FIAT CURRENCY IS INEVITABLE AND CANNIOT BE PREVENTED.
Productive workers sell their time and labour. They are paid with fiat currency tokens that are created from nothing.
The time and labout has real value. The fiat currency has no real value other than as a means of exchange for goods and services.
The purchasing power of the fiat tokens decreases as the supply increases. That decreases the purchasing power of workers time and labour and causes them to have to borrow more of the fake money to live.
Clever people understand that the fiat currency has no real enduring value so they exchange it for real assets that retain their value. They beome rich…
Economies are circular. When you allow rampant foreign ownership, mass third world immigration and importation of basics we could produce here, jobs go offshore. Foreign companies don’t reinvest, wages are suppressed and duopoly kills real competition in a market this small. Stop wasting what we earn overseas on cheap crap, and make sure the financial institutions, sellers and importers of “luxury “ goods make a contribution to our social welfare systems and infrastructure. 75% of our GDP is just us doing business with ourselves, with money that’s worth less and less because fractional banking means you can’t get growth without inflation