Bernard Hickey highlights the fierce choices facing policy makers as our population ages; shows 'productivity dreamers' can't solve the looming crisis

By Bernard Hickey

This week's conference on the long term sustainability of our government finances reinforced the immense power of ageing.

Treasury forecast the ageing of New Zealand's population would increase health and New Zealand Superannuation spending to 19.1% of GDP by 2060 from 11.3% in 2010.

More importantly, the part of the population paying for this spending with their taxes will be smaller than it is today.

Treasury estimated the number of people aged 15-65 supporting each person aged over 65 would fall from just over 5 in 2010 to just over 2 by 2060.

Without changes in our policies around taxation, the retirement age, universal access to pensions and health, the government's debt is forecast to explode towards 200% of GDP by 2060 and interest costs would rise to 11.4% of GDP by 2060 from around 1.2% in 2010.

The generations voting for and running governments of today have essentially decided they will consume the future now and pass on crushing debts to the next generation.

So why are policymakers and voters, particularly those under 30, so outwardly relaxed?

The assumption raised at this week's conference was that either voters or the financial markets would not allow this situation to develop. I'm not so sure.

This implies voters and financial markets can look over the horizon, or at least several metres beyond their noses, and see the trainwreck coming through the same excellent pair of long range binoculars this conference provided. It also assumes they will do something about it and in enough time to make a difference.

But the history of both financial markets and democracies is that they don't see trainwrecks coming or act to stop them.

Instead, they tend to park on the railway crossing and express surprise in the instant when the train explodes through the dashboard.

Prime Minister John Key remains insistent that New Zealand doesn't need to increase the retirement age in a managed, staged fashion from 65 to 67. He remains popular.

Financial markets are similarly relaxed.

New Zealand 10 year government bond yields are around record lows of 3.5%. The New Zealand dollar is near record highs. Ironically, one of the reasons financial markets are so relaxed is the very ageing of the population itself.

As the population ages, savers get more risk averse the closer they get to retirement, which means they prefer government bonds to stocks. This is one of the major drivers downwards for longer term interest rates.

So how will this story end?

Today's politicians and voters are essentially betting on a brighter future.

They are hoping and praying for a structural shift higher in productivity that will deliver the economic growth needed to dig everyone out of this hole.

The problem for the productivity dreamers is the enormous headwind that the ageing population itself actually creates.

Research presented at this conference showed that as workers age they become slightly less productive in the last 5-10 years of their working lives. Also the national workforce participation rate starts to drop off as the population ages.

So the hoped-for productivity boost to solve the ageing problem has to be even bigger.

The additional disturbing thought from this conference was Treasury is already forecasting productivity growth forecast of 1.5%/year for the next 50 years, well above the 1.1% seen in the last 40 years.

The trainwreck forecast may itself be optimistic.

So how could this trainwreck be avoided?

Increasing the birthrate and increasing migration might help, as would changing the retirement age and encouraging higher workforce participation. But what's ultimately needed is a massive increase in productivity, which have only come in the past with the invention of new technologies or ways of doing business.

The last time western governments achieved that was during the 1940s and 1950s when the threat of losing wars encouraged voters and policymakers to change their ways.

Instead of consuming the future, they chose or were forced to invest in it.


This piece was first published in the Herald on Sunday. It is used here with permission.

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Treasury estimated the number of people aged 15-65 supporting each person aged over 65 would fall from just over 5 in 2010 to just over 2 by 2060.
Where's the proof?- it better be good as recent tax take forecasts over horizons of a few months were less than adequate or accurate.

As the population ages, savers get more risk averse the closer they get to retirement, which means they prefer government bonds to stocks. This is one of the major drivers downwards for longer term interest rates.
Used to be the case - that level of return (3.5%) fails to provide an annuity return consistent with life expectations and low risk - rising costs completely consume that rate of return before tax. 
The outright government debt purchase actions of the Federal Reserve and the ECB drove term interest rates down, up until QE4EVA - not little old ladies and their annutiy purchases - they and their cohort are hunting down high yield risk just to buy the loaf of bread. The rush to lock in the yield on the Fonterra IPO confirmed as much. 

Yes...agree with this.
Annuities are for the birds these days. There is even talk of negative overnight cash rate in Europe....
This is a very difficult time for savers. 
"The outright government debt purchase actions of the Federal Reserve and the ECB drove term interest rates down,"
Does this volume drive rates down through competitive bid, or can treasury simply offer the debt at the rates they want to pay, and the federal reserve makes the purchase?

The prospect of continuing central bank purchases of government debt causes the private banks, hedge funds,etc to drive the yields down through the action of overzealous investment and hoarding for future delivery to the cental bank. Our local yields go along for the ride based on historical spread relationships.   
Central banks as a rule do not and in most cases are prohibited from buying freshly minted  debt directly from the government issuing agency, such as the US Treasury.  Hence the  banks tend to control the cost of issuance once the central bank has set out the future course of purchase action. 

"Central banks as a rule do not and in most cases are prohibited from buying freshly minted  debt directly from the government issuing agency, such as the US Treasury.  Hence the  banks tend to control the cost of issuance once the central bank has set out the future course of purchase action. "
Yeah I guess they can front run the fed.....risk free profit as rates fell for 30yrs from high's in 1980.
But is it not true the Federal Reserve is in the habit of monetizing debt, and they are the biggest global player? They are in essence group of private banks....
The BOE has also stepped up to the plate. I just wonder if the pull of "free money" will be too difficult to resist. 
Do you think the EU will also "print" in an official capacity, as it is obvious that this is what is needed in Europe at the moment?
Not to be argumentative but for something that is not supposed to happen there is an awful lot of very low priced credit being created.

Bernard Hickey says: Increasing the birthrate and increasing migration might help
Do you ever look in the rear-view mirror?
According to AndrewJ, in the 10 years of the duration of the Labour Government, 1 million migrants arrived in New Zealand, increasing the population by 33%
Posing the question.
Did it help previously? Did it really help?
Or did it compound the problems of the future as you see them today?

The simple evidence is it doesn't work.
If it had worked, you wouldn't be writing this article and proposing these solutions.

It has not worked today - it is all too easy for Treasury officials and their preferred consultants to err on the prognosis of the constitution of our social fabric in the future when there are glaring tears in today's to be attended to.

Don't forget the ability of pollies to set parameters for Treasury and their hired guns to follow leading them to exactly the conclusions that pollies want, which is of course whatever is expediant, not what is true

Those stats are false. The actual numbers for that ten year period is 800,600 longterm arrivals and 693,500 longterm departures. Over that decade, longterm migration rose 107,100, about 2.5% of population.

That maybe the case - but all I am left with is two claims by two supposedly honourable indiivuals without links to proof - could one of you cough up the requisite link to the data.

Migration. 800,600 long term arrivals. Not quite 1 million. Close. Obviously there is no data analysis on whether the LT arrivals make up a large percentage of the LT departures, ie disillusion. Could also suggest the new arrivals are pushing existing local residents out through pressures on infrastructure, health, education, opportunity etc. However the question remains .. does immigration help or hinder ? evidence so far is, it doesnt solve the problem.

Could also suggest the new arrivals are pushing existing local residents out through pressures on infrastructure, health, education, opportunity etc.
Evidenced through rising rate bills and GST on top of extraordinary house price rises at or near the arrival destination?

Increase in Population
1996-2006 = 346,401 .. 10 years (census) .. 34,000 per year
2006-2012 = 373,000 ..   6 years (stats nz estimates) .. 60,000 per year

 Where I live in rural Nz, we have lost a lot of people, Ive given up counting the numbers who have left. Often the husband goes to Australia first and gets the feel and then the rest follow. I left Napier last month to find a friend farewelling two children leaving for Perth, both clever and educated, while an incoming couple spoke to their children in Afrikaans
 On the other hand all the immigration has been centered on Auckland, so Auckland has an infrastructure cris that I am not prepared to pay for.  Look at Napier, a %40 drop in retail sales compared to last year. The towns around me are being destroyed. We now have empty houses in our main town, without tenants for a while and quite a few of them
  The other thing to remember and Im happy  to be corrected, I think that in 1996 we had 3.mill now its 4.4 million. So we are getting growth from somewhere, I was told that 1 million people now  in NZ were not born here. We have a million more people but no more production.
 I have one child out of 5 living in NZ, hoping they all decide to return sometime.

From a numbers point of view, that is broadly right. According to StatsNZ, there were 3,495,800 people in NZ in 1991. Twenty years later in 2011 there were 4,407,400. Over those 20 years, our population grew at a compound annual growth rate of 0.85% (ie 0.0085 per year - about 33,700 per year on average). In 2011 it grew by 37,500 after a net 1,855 left via longterm migration (84,200 arrived, 86,050 left permanently).

David Chaston. From a numbers point of view, the population at the 2006 census was 4,027,947 in 2011 it was 4,407,400 an increase of 379,453
Calculated from census 2006, out 5 years, that works out to 76,000 pa
Calculated from start 2006 to end 2011, ie, 6 years it becomes 63,000 pa
Compared to a 20 year average of 33,700 that is telling you something is speeding up. Very Fast.

According to this:


80% of our population growth in the last couple of decades has been the net inflow of non NZ citizens .


Is that the whole story?  There seem to be a lot of people leaking into the country, "temporary work permits", "student visas" etc, etc.  How many of them actually ever go home?  Any body heard whether they have located the 200-300 "students" who corruptly obtained student visas in China.  Last I heard they had tracked down less than ten.  Did/will they ever go back.  I very much doubt it and they are almost certainly the tip of a very large iceberg that flys below the radar, not paying tax and putting demands on our services.   I am sure that the official figures are  strongly massaged and I would have very little faith in them.  Talk to anybody in the health sector where they are now demanding proof of patients legitimate residency  and you will begin to appreciate we have a problem that we are not being told about.
Even taking the figures of 800,000 arrivals and 700,000 departures, it is clear that we are driving out NZ born residents because life in the present NZ economy is untenable.  Their replacements generally are from economies where life is very very poor, so almost anything would be better.  We are progressively driving ourselves into a low wage, low achieving, third world economy.  Incidentally, if things turned bad overseas and these 800,000 decided to come back, how would the country cope?
As I have said before, Exports are the driver of our economy and the lions share of these comes from a relatively small number of people who work in the agricultural and tourist industry and outside of Auckland.  Auckland is a very low contributor to our exports and very high importer. That is, a real drain on the economy.  The small number of manufacturing exporters is dwindling by the week, so pumping more folk into the country, particularly Auckland makes no contribution to our exports and only places an extra burden on the productive sectors of our economy.  It does however prop up the property market and the tail chasing ponzie economy that the nitwits in Wellington think constitutes sound economic management.  The proof of this is the mess that we face.

So why are policymakers and voters, particularly those under 30, so outwardly relaxed?
Well, essentially they can vote with their feet. They are already doing so in hordes, across to Oz or some other OE destination. Also,they can see the writing on the wall all across United States Municipalities where bankrupcy has protected utilities and other assets from creditors such as retirees and pensioners, whose benefits were crippling municipal finances. Default is always an option. And then there is inflation and a gammut of tricks to cheat people out of their savings and benefits acrued.
Most importantly, 'twentysomethings' do not care about retirement and fiscal balances. I know some who think fiscal balance is what us surfers are good at!
And schools these days are of little help.
Besides, who wants to be re-tired...?

Hevi, after my spiel below I have to thank you for the above surfing term "fiscal balance". Priceless, I can smile and appreciate this very much as a Mathematics teacher attempting to educate young men about their finances.

Cheers! DobryDan.
As a mathematician, I certainly admire your valor in becoming a teacher. The beauty of mathematics is certainly in the eyes of the beholder, and not many of us arround. And although a very fundamental profession, teaching that is, it is severely undervalued by our society, to a fault!
Not only are teacher poorly remunerated, but they are also severely disrespected! Especially by the students, whose contempt should be unacceptable, but is ubiquituos!
Parents are to blame... Society in general is to blame... We are to blame, for condoning it!

Hevi daughter has a math degree....she lives for math. Dreams of being a lecturer.
Math is cool. Although I hardly understand any of the higher level
Teachers are appreciated more than you may know.

Increasing the birthrate and increasing migration might help, as would changing the retirement age and encouraging higher workforce participation. But what's ultimately needed is a massive increase in productivity, which have only come in the past with the invention of new technologies or ways of doing business.
Increasing migration?   Exchanging one probem for another.... Sigh....  At some stage you have to suck the kumera and stablize the population.

Increasing migration?
A laughable solution - the near term and future costs of financing the necessary infrastructure demands of a rising population is one of the reasons the National Party wishes to throw the electricity generating plant beyond collective ownership. 
Current costs of maintaining capacity given a difficult terrain and long geographical country structure is beyond the earning power of tax payers now. And there are many competing demands for extra capital spending.
All that is happening everywhere is the PPP principle (rent today, and forever) - thus rewarding the favoured few now and bugger those picking up an impossible off balance sheet compounding interest bill in the future.

ergo, default....
JK etc just want to get [re-]elected.....simple really.....

"suck the kumera" indeed. Personally I think we'll be lucky if its only a kumera we get forced to suck.  The assumption is migrants get work, the Q has to be asked why cant NZers do that work..?  Sure there will be some skills that we are short of but secretaries/PA from SAfrica? cant see it. It must come back to no NZer will work for such a low wage or we cant or wont train them, so who's benefiting from this?
Otherwise the ones we have to take in because of the UN (political refugees) seem to be of questionable benefit and end up on WINZ for life or selling second hand cars.
In terms of stabilize, we have a lot of NZers abroad....I think things will get very dodgy as we go into a second Greater Depression and quite a few will come back adding to our already rising un-employment.  They will want jobs or WINZ, just what will we do then....cancel work permits and close the doors....we have  to.
So I think your wish could be just around the corner (before 2020).  I would think that the kickoff would be a while after the main drop aka the 1929/30 nose dive...say 2 years as the impact are really felt...and the pollies panic....who knows lucky us, it could be an election platform for 2014.....(be careful what you wishfor as the saying goes).

Why worry...worlds due to end in a few days...said so on the box....must be true.

Im on a jet to the Uk that night, so I could be amoung the handful of survivors.
Send me a thousand bucks and I will look after your pets for you in case you get taken out.
 We have snow here, so its a white Christmas in Nth California, unless it rains.
Let me know your pets names.

How is it that the Mayans could predict our demise ( 21/12/12 ) centuries into the future ..... but they didn't  feel the hot breath of the Spanish down their own necks , just moments before they got their own arses kicked into extinction .....
....... I wonder if Bernard Hickey is a descendant of the Mayans ?

Here's the Mayans busily debunking the hippies.
Apparently it's just a calendar and like any it ends then starts again. They are a tad worried about the tendancy of mankind to be terribly unkind to each other and the planet though being spritual type geezers.

The Mayan prophesy is interesting, because it provides a simple test for anyone to tell if they are retarded or not. Simply...

If you have the slightest notion that anything different will happen on December 21 because of anything to do with the Mayans - you are a retard. Seek professional help.

Here's proof, sadly.

yes I saw that. But even just generally, NASA is inundated with calls, people are buying survival shelters, groceries, and in Russia... salt. Because you know, if another planet does come careening into the earth at speed, salt is going to be the one thing you'll be missing, and I'm sure your fibreglass survival shelter will survive the gravitational and other extreme forces generated by two planets colliding... 

Perhaps someone should update the old saying to... a retard and his money are soon parted.

Stan, I think something different should happen. It's high summer, excuse for a beer, the worlds supposedly going to end, excuse for another couple of beers. Some people will be freaking out because they are very silly and I've just had a few beers, excuse to take the piss mercilessly.
I can hardly wait.

Call me a Hickey-sceptic if you will , but by 2060 the oldest of the BB's will be 115 years old ... and the median BB's , those born 1954/55 , will be aged 105 !!!
... given the current longevity for Fe-Kiwis is 80 years , and for He-Kiwis is 78 .... most of the BB's will have expired by 2060 ...... ceased to be , gone off to meet their maker .. Gummy , a 1960  BB youngster , will be a sprightly 100 .... ah fecking ha ha de haaaaaaaaaaa !!!!
So , where is this looming fiscal train wreck of which you gloomsterise , Bernard ? .... the've shuffled off and joined the holy choir !!! ..... ....
( me me me me .. ahem , " Ave Maria .... " )

"Treasury forecast the ageing of New Zealand's population would increase health and New Zealand Superannuation spending to 19.1% of GDP by 2060 from 11.3% in 2010"
Bernard, is this inflation adjusted, or just scare mongering?
Are they seeing hyperinflation from all the QE?
Has treasury been talking to god and now they no what the world will be like in 50 years time?
Just like treasury were all clued up and prepared for for the present global crisis.
"This implies voters and financial markets can look over the horizon, or at least several metres beyond their noses"
What about those tossers at the conference who claim they can see even forever?
"and see the trainwreck coming through the same excellent pair of long range binoculars this conference provided"
Hmmm, maybe they are god and all his angels. Shall we start praying now Bernard?
"As the population ages........................."
They can't take their wealth with them when they die. I wonder who is going to be first with their hand out?
"So how could this trainwreck be avoided?
Increasing the birthrate"
Better hurry and have a bonk

By 2060 , the youngest of the BB generation will be 96 ! ..... 16 to 18 years older than the average life expectancy !!!
... forget the " bonking " ... the author is bonkers enough for all of us ... we'll be dead , Bernard .... no fiscal train wreck , no looming crisis , dead ! Fatally dead . 100 % dead . Gone . Expired . Popped our clogs . Worm bait ... Dust in the wind ... Maggot candy .
And lest we forget , this is the gentleman who got his 12 month forecast on NZ house prices wrong by a factor of 30 % ...... good luck with your 48 year forecasts , big guy !

GBH I for one will be sorry to see you go.
I had a yarn to a pollie about this when he flew down south. That red duck may have recently broken a limb but he can still flap his way down here to be our 'buddy' MP.
Not many party faithful turned up to hear him quack.
It turns out many still remember just how many of tomorrow's schools were no longer open tomorrow and they kinda resent that.
Fortuantely for him it was not duck shooting season.
I asked him outright if anything could be done to remove pension entitlements from those who really just don't need it.
Those BB's who worked hard, played hard, paid taxes, saved, and got a bit lucky really too to be in the fortunate postion where retirement, and even the prospect of funding their own palliative care in a nice comfortable resthome, the kind with a regular drinks tray and all the pills you can pop, is just not a problem.
You know, sucessful people who rode that wave of Keysian spending, Government debt, free tertiary education and a world class free health system all the way to the middle class, or above, back when there still was a middle class, the kind of people we gen-xers are just a little jealous of.
Lucky sods that they are.
He pluffed up his breast and quacked the truth.
"It can't happen because they vote and there's alot of them and they like spending it at the TAB. It's just politically impossible," he said.
Okay, I made up the bit about the TAB. But the rest shocked me to silence.
A truth quacking duck! Utterly amazing.
I did try to convince him more money could be made in a freak show but he politely declined my proposition.
Basically it's a catch twenty-two Bernard.
We can't take it away from them until they stop voting and they won't stop voting until they die. Therefore there's a great big hole in the grandest of all ponzi scheme buckets and they won't let us plug it with anything at all.

"Plug it" with created cash Bruce...all the best central thieving banks are doing it...and count on a socialist greeny native stewpot govt increasing the cash payout to 'deserving' faithful et al.
No worries right.
You dream of a utopian cultural mush of equality ....where every slice is the same size....doh.

"Print & spend! Print & spend!"
Christ, makes one long for France were at least they still try tax and spend. QE is farcical and is only going to make the crash worse while erroding real incomes and real savings to make big fat fake profits for elite bankers & financials who are immune from proscution, no matter how much harm they cause, but that's okay because we'll just incorperate it into our GDP measure and it will look like the economy, that big fat cat they have somewhere in the beehive, already grown fat on milk powder, is growing even more but it will just be fur spiked up with kitty cat gel, not real BMI gain.
Actually Wolly I'm dreaming of a culture where people are not penalised for success, or the bright discouraged from trying to create wealth, except of course by risk, there still has to be risk. 
More a classical libertarian than a socailist me.
Not much of a game if you can't lose. Worse still if the winners lose, like in France.
We can't make society equal, why try? But we can look after those that truly can't look after themselves.
What makes me really mad is the certain knowledge that there are families getting buy on less than one decent wage and there are people out there on a decent wicket who are still cheating the umpire, eg benefit fraud by partners of working people on a decent wage who spend the lot on black market drugs, or pokies. As well as the oldies receiving benefits they don't need, and my personal favourite, tax payer funded 'professional sport' which is enormous.
How 'bout an article on the grand totals for public funding both centrally and by region for rugby, racing, Olympics, netball and cricket Brenard ?
I'll do it if you'll buy it. Bread & f***ing circuses; the empire never ended.

BruceH - one has to stand back far enough for all strands to come into perspective, and to divest oneself of pre-held misconceptions, and emotions. Starting from first principles, building on truths.
The other day, you failed that test:
* Dr Allison may have been a sheep expert - doesn't make him an expert in anything else. (Indeed, he may have a tendence to want to know his life's work wasn't in vain).
* Farmers applauded him - so what? They're vested-interest winners, a short-term bias you could drive a truck through. (why did you mention them, given that status - did you think it somehow added weight?)
* "He points out the likely effect of two degrees of aggregate warming and the infinitesimally small increase in atmospheric carbon dioxide which is predicted will have the effect of raising export earnings for New Zealand by increasing raw agricultural output with near no damage other than glacial melt".
You can tell him, from me, that I think he's a fool. It may well be that a 2deg average global rise, could be handled in NZ, given the capacitance of the Southern Ocean, and our relative insularity. That doesn't hold for other more equatorial countries, though; the potential for total social disruption, refugee streams, displaced activity (you tend to concentrate on food before fibre-optic cables) and fiscal chaos. Are exports a given on that basis?
(The comments on Turei are a pot calling a kettle black. Both of you are arguing on the relative benefits of a particular deckchair, big-picture the problem is the sinking). Left or Right, First Class or Steerage, you'll both soon be swimming.
Now apply that big-picture, no misconception, no emotion to your post above:
Is GDP a valid measure? No. As you correctly identify, it includes me-selling-to-you-selling-to-me, something that already existed. Chch is a classic pointer to the nonsense: after many years, they may get back to where they were - but after the expending of much in the way of resources and energy. As you correctly point out, it needs a BMI-type index.
What would that be? What is the one thing without which, nothing else happens? Is it money? No. Every other species on the planet, and ours until very recently, manage(d) without it, and if you walk into an empty supermarket, waving a fistful of dollars won't help. Look for the essential underwrite, and you end up with energy. Nothing happens without it. So we could safely use it as a BMI measure. (You'd have to include a 'degradation' factor - like the energy that went into a bridge over it's design life).
Can we do more with it? Sure. There is an obvious-and-unattainable cap of being 100% efficient in any given activity. You start from wherever you are (say 35-40% for diesel engines) and cherry-pick the best/easiest gains first. It's a predictable graph.
Now the problem: If you grow the supply of energy, you can grow the activity done, and this underwrite the proxy (money) in existence. If the supply peaks, you clearly have peaked the amount of activity you can do (up  for debate; efficiencies and triage) and therefore the amount of 'money' that can be underwritten.
In a fiat finance, 30-year mortgage, that's clearly a problem. (for the system, not for the physical world). Clearly, interest rates have to trend to zero, then below. Check. Clearly, per-head incomes (real, not via inflated house-or-whatever 'values) will decrease. Clearly, the average ability to accumulate real wealth (the ability to obtain processed parts of the planet - houses, Beamers, computers, Corollas) decreases.
If you allow a rich-poor spread, the poor will drop out of the bidding first. A some point that gets ugly, and the rich tend to lose their heads. Assuming that the electronic fiscal system tracking their 'wealth' stayed intact. A more egalitarian society may - not saying 'will' but 'may' - be less likely to disintegrate.
Clearly, if energy is a 'sinking lid', you have a valid question about what get's done (professional sport vs healthy outdoor-savvy kids, for example). The problem is that the goal-posts ae receding every time you make an adjustment - and ultimately, there are too many people wanting too much per-head, from a finite planet.

..... it keeps the memory alive , doesn't it , having Grandad's economical 60 year cycle to potter around on ....
Some things really were better in the bygone era , some , but not many ....... mostly we're improving , on the up & up , kicking the exponential function up a notch or 10 ....

Nice PDK,
At your most rational this morning I'm glad to see.
Yes, I make no applogies for focusing on food first.
NZ is an agrarian economy for the most part and people always have to eat.
Tourism, our other big earner, is a tertiary luxury product which are a class that are first to fall in a reccession, excepting elite luxury products which do very well indeed for some strange reason to do with bailouts for the elite and austerity for the middle classes - if they still exist, they should be on an endangered species list - and lower classes.
Rural New Zealand, despite being only around 14% of the population, carry this countries economy and they are starting to ask why.
PDK, I've read The Spirit Level and understand the epidemology of the inequality problem as well as any layman. (I try to make a point of reading mulitple points of veiw before expressing my own these days. I must be getting old.)
However, inequaility is a necessary part of capitalism. People have to have something to strive for or we end up where we are now, a place where decent well paying seasonal jobs are only for BB's, some of who are already millionaires, and immigrants because the youngun's just won't work, sitting on a benefit is just too easy, or have already left for greener pastures or complying with the Governments regulations takes too long and is too hard for the young-uns to do eg truck driving licenses.
This is not arguement by ideology or statistics, it is arguement by observed fact, the basis of rational discourse.
Ther will always be problems with the distribution of wealth but this are only compounded, not relieved by Government intervention such as Working for Families - in reality subsising employeers with the employees own wage- and restrictions on immigration. This just creates unnessacary taxation and petty bureau-arsey with is a waste of labour & capitail from which all wealth springs.
I'm also quite well aware of all the flase measures of the big fat cat in the beehive, or the econ-oh-me.
Energy is a better measure but it to is open to falsification and is much harder to track than a proxy such as dollars. Still better physicists, engineers and accountants on the public wicket trying to measure it than petty bueau-cats with massive amounts of delegated power telling the pollies exactly what the pollies tell them to find.
If you want to really help the poor as a pollie then do away with sales tax, give income tax a threshold, introduce a capitail tax system and progressively wean everyone off income tax completely until the command economy is a forgotten nightmare.
As a private citizen, give something to a food bank of your choice this christmass.

Sorry PDK, I forgot to add I prefer my deck chair becuse it has a big sign on the back saying freedom and her's has a Greens sticker plastered over the word fascism.
Nether a saver nor an eco-fascist be.

Bruce - then you didn't understand my post.
Or you're a fool.
I suggest you read up on 'The Tragedy of the Commons' (Gareth Morgan touched on it in his recent lecture-tour - not that I agree with all he says).
Individual freedoms lead to a common downfall, because the decisions taken individually - entirely logical to the individual - are on a 'someone else will take/trash it if I don't, so I might as well do it myself'. Collectively, that spells ecological doom. Depleted aquifers, degraded water-quality, salination-via-irrigation, erosion, reduction of finite inputs, failure to cost pollution, all are 'commons' failures.
I note you still have the 'emotion / preconception bit. Those who attempt to defend parts of the planet from modification (usually extractive, usually depletive, usially trending to monocultures, usually degrading) are merely attempting to address a problem. Ultimately, that approach will lose - for the same reason that white tends to win more than black in  chess - the defending is retroactive. The approach is also outgunned fiscally (effort available), can try again indefinitely, and tends to hog the 'expert witness' pool.
It's only valid it it buys time, and the only reason can be 'to educate the public'.
We've run out of lead-time for safeguarding ecosystems via education, so the effects of overshoot will unfold. (The process had nothing to do with 'facism', but the comment says a lot about your inability to thing ex-baggage).
You just stick to your deckchair, though.
I presume you can swim?

He's just a troll.  He doesnt want to understand  but is probably incapable of understanding anyway.
I think the term is better dead than red, fanatic to the end.

It's interesting to see how many can't manage that cranial divestment. Reminds me of that PB fellow - would come with you so far, then - ping - back into the comfort-shell.

Yep, it was like the thought thread came across a pre-positioned land mine and bam, back to the start. It must be to frightening to go somewhere and find that all your outlook, thoughts, decisions fall apart when you start to think....
However the interaction was having some effect as PB then tried to co-opt what was said from our side to push his agenda. Totally out of context but enough "evidence"  to show pb can think just that the output is discarded....many cant even get that far, most dont yet realise they have to go there.
This is might be one of your pet subjects,
Pretty much writes well on what was worrying me but I lacked any evidence/research.

"It must be to frightening to go somewhere and find that all your outlook, thoughts, decisions fall apart when you start to think...."
Yes I'm sure it would frighten both of you.

Try not to disturb the pdk/steven love in session.
All the talk of work and underwrite, of which steven does very little, - he's too busy on here to do the job he's actually paid fiat dollars to do.

" better dead than red"
Great saying. As good Marxist's we should celebrate the fear we strike into the hearts of all naked emperor's. 

LOL, except im not a marxist, though I would think most of the libertarians and right wingers in here consider themselves "middle of the road" sort of guys'n gals so Im sure Im labeled as such....and worse, Pol Pot or something...

Read Hayek. That is all.

Hey Bernard, how about sharing next weeks lotto numbers with us, you can have the other 48 years of winnings. Oh, and can you also tell us what shares to buy with our winnings.
Did they also tell you how Europe will end up and how the fiscal cliff will be resolved and who is going to win the next 16 elections.
Are you shure they wer'nt just taking the pee out of you?
Sorry Bernard, can't help myself, because i thought i heard everything, but this sure does take the cake.

It looks as though we have to start thinking sustainability rather than growth  (the human economy a subset of the worlds ecosystem)?

This population thing reminds me of Amazon in the early days. They made a loss on every book sold......more books sold bigger loss. If they sold no books no loss.
We have a deficit, which we are reminded equals x dollars for every man, woman and child, so more people, bigger deficit. No people no deficit.....

ncreasing the birthrate and increasing migration might help
So help me, we've had that debate.
The rate at which you consume finite resources (and/or deplete renewable ones) is the limiter - debt is a man-made measure.
Real wealth is more-resources-per-head. Increasing birth-rate and decreasing migration WILL help.
Come on, BH - the better global scribes are there:
Note the last sentence....

So why are policymakers and voters, particularly those under 30, so outwardly relaxed?
It might have something to do with the fact 1 in 4 of them are unemployed, don't care or are already on Jetstar to OZ.
I don't intend this to be cynical but how many people under 30 actually read this website, show an interest in politics or even vote??!!
New Zealand has changed dramatcally in the past 10 years, it helps living abroad for 8 of them to observe this, and we are now faced with a declining number of young New Zealanders who want to stay and build their futures here. Simply because they cannot afford it.
Our current government does not promote anything for this generation simply because it's not their votes that determine whether they are re-elected. 
You can talk about interest rates, the high NZD and unemployment until the next century but if we're not prepared to govern a country by providing opportunities for our young New Zealanders then our future(retirement) will be determined by how big your own wallet is - and that will be a very sad day for us all.

Actually I know quite a few under under 30's interested in politics and finance......but disgusted by short term self centered policies. And this government.
Our retirement issues are in large part the result of too rosy growth forecasts, well predicted in the 90's. Result was massive under funding of pensions, especially in the US where companies were responsible.
I remember the clamour in Canada to return the Unemployment insurance surplus to businesses and workers, the arguments that we had overpaid and were being ripped off.
Almost every forecast you read these days is overly be revised down. 

Hi Splineman,
Respectfully I disagree.
Most youngun's I know are incredibly disengaged, or incredibly ignorant, or both.
Being in my early thirties I know quite a few from their late teens on up.
There are a very small minority who are not disengaged, unfortunately they are usually brainwashed by one ideology or another rather than informed and critical.
Our retirement problems are straight forward and structual in nature.
Our current socail welfare system is a gigantic ponzi scheme and needs to be reformed into a ture investment fund ; a process Dr Cullen attempted to start when he was sitting on those big fat surpluses back in the boom years before the 2008 CDS trainwreck and Kiwisaver will also help with.
Want a realistic forecast?
Try the Soc' Gen' market reader who was asked what she would buy other than gold about a year ago.
"Well there are other precious metals to stock up on, canned food and 9mm ammunition..."

"Well there are other precious metals to stock up on, canned food and 9mm ammunition..."
Ha Ha....Good one.....must be an American.
The under 30's I mention are 22-28yrs, Uni undergrad and post grad students, and 1 intern. Quite tuned in to modern problems and fully aware of the role of hard money. But I accept your disagreement.
Another problem today is that politicians will simply say anything and a rebuttal is all but forgotten. Debate takes too long. 


The teenagers I talk to, are actually concerned...and they actually have freedom of thought. 
They are quite upset
we are pollutung un-controlably.
we are racking up massive debts they see as being left to pay....
Your posts clearly show that a) you are actually the self-brainwashed one,  b) contemptious of others who free thoughts dont conform to how you want the world to be.
You have issues if you believe in "SHTF" scenerios but many Republicans (all the right wing nut jobs, funny that) do it seems.  9mm ammo, check the price 70cents+, but it would be useless to hunt with and highly illegal (Pistols can only be used at a police approved pistol range and you need a B endorsed firearms licence). Rifle ammo on the other hand, 22LR is <7cents, 7.62x39mm (AK47) 49cents each...everything else is $1~2 and up.
So a lifetime supply, say 20,000 rounds will set you back a small fortune....probably hold its value better than gold mind.
"realistic forecast"
Easy, its going to be hard graft but stocking up on ammo isnt the solution.  The solution is local community aka "village" like and minimalising your energy need/use.

Yeah mate and the the bond market isn't broken, the rosey forecasts of 2007 came true and you can endlessly increase the supply of money without encountering hyperinflation.
Learn to laugh at a gaff when you see one.

All this "doomsday prepper" talk is not going to get anyone anywhere....let the US crazies shoot each other ad absurdem.
New Zealand is a (relatively) safe, energetic, young country struggling with our large trading partners throwing their (financial) weight around.
Kids are not dumb...many know exactly what the score is. Modern politics will follow the money....mainly held by older folks, as you would expect. 
Instead of holding out our international begging bowl (investment) we need to build up the country's assets, not sell them off. The young really understant that when you sell an asset you have paper.....worthless paper....easily printed paper. 

Indeed Splineman, indeed! I would have closed NZ borders long ago, had I the power! Our biggest asset are young minds and we are loosing them fast to other nations, television, and senseless drinking! I worry they will soon follow the latest practice in the Good Ol' USA of bud-jugging! Using a funnel and gravity to consume beer just as they have since the movie Animal House, with the added advantage of being able to smoke at the same time!
Absolute tastelessness glorified by cheap propaganda.
My two boys were home-schooled until they decided to attend regular school in their last few years. The older boy has finished school this year, and unfortunately he un-learned more than he learned, these past few years. The younger one is doing better, he always applied himself better to every task. But he has also gone a bit astray, mind you. 
When my boys were pre-school age, I worked at the University of Waikato and my experience there was a sad one. Grant you not all of the students were insolent and full of contempt, but he mayority were. When I was a student that kind of attitude would have warranted dismissal.
I heard some teacher complain about being afraid to reprimand and chastise students. I was willing and fit enough to smack them, but unable to do so, and that was before the anti-smacking law was passed.
'Cause Times..., they're achanging!
Bob Dylan, 1971.
Best regards,