Opinion: John Pagani asks what's going on with those numbers about who is best at handling the economy

By John Pagani*

Stuff reports

When asked which party had a better plan to fix the economy, only 17 per cent of those surveyed nominated Labour - and even among its own supporters, just 48 per cent were convinced.

National was rated by 49 per cent of voters as having the better plan, with the number of its own supporters convinced by National's plan coming in significantly higher at 81 per cent.

There's a number that Labour has to overturn. The numbers won't come as a huge surprise to Labour insiders, but what is interesting is what's behind the numbers.

Probably not this:

 ''The people polled have no grip on reality at all.''

- National Distribution Union president Robert Reid 

Ai yi yi.

Yet people objectively don't support asset sales or the GST - income tax changes, and they prefer capital gains tax to the alternative. What's going on? 

Predictable commentary has piled on Phil Goff. These economy numbers are possibly even more awkward for David Cunliffe. I don't believe it's about personalities.

To put it another way, if you shuffled people around, would voters suddenly decide Labour was ahead at fixing the economy? No.

Four factors are contributing, in descending order of importance:

1. People fundamentally accept the narrative about John Key's rags to riches story, and impute if he can do it for himself he might do it for the country somehow.

2. Expectations for what a government can do in the prevailing global conditions are exceptionally low, and the priority is not to muck things up. National hasn't run amock in the economy - a relief heightened by Labour's previous warnings. 

3. Voters perceive competence managing crises, including Christchurch and the Pike River mine; and suppose that if they can do that, they can do the economy.

4. Labour's positioning is all mostly policy, not about narrative. Therefore its story is not really answering a question on voters' minds. Take the capital gains tax - it answers questions a lot of analysts have about what they're going to do to change the economy's structure, and about the credibility of spending promises. Those aren't quite the same questions voters are asking.

Only one of these factors is under Labour's control. That's why the common commentary that it's about personalities or competence doesn't stack up. The hard part is that the party has to overcome the perceptions in 1-3 without telling people they're wrong.

====================
 
*John Pagani is an independent political consultant and writer who has worked as an adviser to Labour Leader Phil Goff. He writes his own blog at Posterous.

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55 Comments

"The hard part is that the party has to overcome the perceptions in 1-3 without telling people they're wrong."

What happens if they are not wrong?  Labour failed in the HC and Cullen years to keep a tight grip on spending, they spent the gains on social engineering, they didnt correct the imbalances to housing...really tehy lived off the boom, result way more spending....National step in and are careful but have not cut drastically....so why do the voters have a problem with National? experiece ahs so far shown its doing OK.  Now look at the pressure sfrom the unions such as firefighters with silly 8.9% increases...how many voters who work in provate industry are looking at any increase let alone one that big?  How many other public service workers are wanting to do the same?   Who has the best chance of keeping a lid on it? labour? yeah right.

regards

Correct me if I'm wrong, but National seem to spending more than Labour ever did?

The difference now is that Labour spent when times were good, the problem with National is as times got bad, they didn't stop spending when they needed too.

And to top it off, tax cuts for John Key's mates, so income reduced too.

Say what you like about Cullen, but he was actually a tight-fisted miser. Shame he didn't stop the Japanese house wife money coming in, that was his crime.

Who has the best chance of keeping a lid on it? labour? yeah right. National? yeah right.

Face it, we're screwed, and the smart amongst us have already crossed the ditch.

Spending, have you correctly for inflation?

You cant stop spending when the times are bad, really in the good times you shoul dbe frugal and not only that save into a rainy day fund for the bad....then spend in the bad "reasonably" to do some support while the downturn lasts IMHO.

National, tax cuts, yes a big mistake....but Brash started the lolly scramble in 2005, Cullen countered and its been downhill ever since.

Cullen, I dont agree, he was fairly careful I will accept, and yes his biggest mistake was allowing the housing boom to continue without doing something, but then he/labour got to enjoy the income.

Lid on?  I have  to say i think its National, better the devil you know in this case.

Smart to across the ditch, uh no i dont agree....crossing makes snse for some, not for others...one I know has actually come back. Persoanlly I accept the lesser income for the quality of life....

"We're screwed"....with Peak oil porobably past or upon us we indeed are, jumping over to OZ makes no difference and is probably worse.

regards

You can compare the spending of the last two governments here »
http://www.interest.co.nz/news/53499/budget-2011-summary-all-spending-plans

National in the nineties increased public debt by 50% (to around $30 billion) and so far the Key National Govenrment has almost doubled public debt (to around $60 billion).  The odd thing is that the over the Cullen years public debt reduced by a couple of billion by 2007. 

Probabaly quite few people would like pay rises, after 3 years of real pay cuts under National.  And didn't John Key say earlier this year that workers could expect 4% real pay increases?  Or was he just lying yet again?  

 In the current worldwide circumstances certainly not politicians, policymakers, banksters and economists. Time for change in societies - philosophers presenting new, revolutionary frameworks based on ethics and morality.

Labour - they sent manufacturing into recession in 2005 during the world boom and GDP was positive only due to handouts and increases in Govt spending. And to top it all off Kullen even said he wanted the cupboard bare for National, so we became the proud owbner of a defunct train set.

At least Nats are seemingly got exports going up in a much more challenging enviroment than 2005 with higher NZD and patcht demand.

All in all, NZ is better placed than it was in 2008 in light of what has happened in the GFC.

You must be one of the rich-listers with nothing better to do with your time:

http://www.nzherald.co.nz/politics/news/article.cfm?c_id=280&objectid=10...

This is the difference between National and Labour. The same amount of money, the only difference being how it's spread around.

Has your wealth increased 20% in the last year? If not, why are you supporting the fellow who is actually holding you back, while propelling his mates forward? The answer, of course, comes from your masters on the right.

Better yourself and your lot by keeping an open mind I say.

I've edited your comment. You know why. We don't allow abusive language that plays the man rather than the ball here. John's political connections are disclosed. Let's have a debate where we make points rather than just throw invective.

cheers

Bernard

uh no.

regards

Are you talking about New Zealand?

Because it was the paydown of public debt under Cullen that mant New Zealand was strong enough to not suffer as abdly as it could havesince the satrt of the global financial crisis.

 

But then they gave Cullen the top job at NZ Post and helped HC get the UN job - all a bit strange really

Well they got HC out of NZ, isnt that a win?

regards

sort of - but shes keeping an eye on things via Helens Little Helpers

You missed one important point John

5. The voters are a bit sharper than Labour gives them credit for. They can see quite clearly that Labour has learned nothing from being booted out 3 years ago.

Hmm not so, they are going for a CGT....also they way I read it was they wanted a change of face in Govn....and not much else...considering how simialr National's policies have been to Labour's there is hardly a difference.

regards

Steven they are still nanny state-ist social engineers practicing the politics of envy.

A political party is no different to a business or a sports team in that they all need a certain amount of new blood coming through, with new ideas. Labour still have most of the tired old faces they had 3 years ago

If a CGT with enough exemptions to drive a truck through is the best they can do they deserve their 28% support or whatever it is.

"The voters are a bit sharper than Labour gives them credit for" - you sure about that? Reading this, I'm kinda wondering... http://www.stuff.co.nz/dominion-post/news/politics/5357601/Key-has-a-way-with-the-ladies (not that I have a problem with a sexy PM, mind you but  voting for someone based on his relative, hmmm, hotness doesn't seem particularly smart to me :)).

A man with good business experience is standing in the midst of a very tough business environment.

That he sounds like he knows what he is doing isn't really surprising.

To be frank, it's fresh air to hear about issues and less about politics.

JK does not have good business experience, my understanding is that he was not even an actual  banker, he had a job in a bank as a currency speculator and then as a manager of other currency speculators. Nothing particuarly right or wrong with any of that but  that is what he did for most of his working life excluding politics. The bank where he made a vast amount of money as an employee failed completely due to its own poor management and had to be saved basically by the US government - not syaing that this had anythingto do with JK either as the collapse happened after he had left but it had probably been "picking up pennies in front of a steamroller" for some considerable time before it fell to bits.

Labour are being stupid, they have a lot of has-been MP's  intent to stay for another term, someone needs to wisper in the ear of the likes of, Barker, Dyson,King and so on, give them the bad news get them out, get some new blood in so in 3 years time they have a dynamic young party, not a lot of tired old cronies. I talked to a friend in the National party today he said what a useless bunch , and that was National, he was without words to descibe Labour. If Labour wish I would be more than happy to be their hatchet man.

Now now AJ...give them some more rope...look what they achieved with their CGT fluff policy...3 years!..you mean thirty years surely.

"Four factors are contributing"......only four!...Pagani forgot to list Labour's failure over 9 awful years of govt mismanagement..when he was a Labour senior stragegist!....they failed...he failed.

Philus Goofus is irrelevant. He is a career politician who has being in Parliament since the 1980s. He has no real world contemporary life/business/ work experience that informs his views. In this day and age it is simply not good enough to have someone so out of touch with what the world is like. The Labour Party will never get any traction with the electorate while he remains as its leader. The same can also be said for Annette King. Both are also instantly associated with and tainted by the wasted years of the failed Clark-Cullen-Braford Labour-Green Government. They are the baby boomer hippy’s from old, still fighting yester years battles.

Even David Cunliffe’s background is pretty short on real world work experience. It’s all very well spending years studying politics and how Government should work at University, but that is no substitute in getting your hands dirty for several decades of day –to-day working life, and then bringing the benefits of that experience into Parliament.

Labour is full of too many wealth counters/consumers and people with ‘social values’, and not enough with wealth makers and innovators. What the labour party needs is a dose of New Labour policy making and economic pragmatism, and it should dump its harmful alliance with the toxic organic fruitcakes, the greens.

Perhaps Queen Helen will give Philus Goofus a job beneath her!

Lol. Does the UN need a new tea-lady?

I know people like to re-write history to suit their fantasies but when was this Labour-Green Government in power?  I can't remember one.

Who cares what Labour needs to overcome? The longer they stay out of power the better for the country. And it is not about the ability or competence of their individuals. It is about the fundamental philosophy of "taking it off the rich and re-distributing among the poor". Such philosophy is the opposite to what the country needs in order to reverse the sliding into a 3rd world country of low productivity, low wages, low efficiency, low initiative and high dominance of parasitic attitudes.

Actually the way the world works at the moment is that the rich are taking off the poor, have you not noticed. The number are all there a very small number of people around the world own and controll most resources in the world. You are talking about welfare in formally first world countries, Welfare is probably nearly all over, once it has gone look out. The very rich will be flying over you in their helicoptors and if you are not in one you will be in the shit with the rest of us, good luck.

Actually the third world is where we are all heading, a few extremely rich and everyone else fighting it out or emplyed as butlers ( lawyers accounts doctors etc) to the rich.

The parasites really are the super rich of course but they are hidden from view so we can all blame the poor for being poor, brilliant.

Jk effectively had a Lotto win, New Zealanders like and respect Lotto wins. He did not risk capital, he did not invent something, he got a job, at a very good time in a great place for him.  good on him, but it really has nothing to do with allowing him to sell off our dams just because he has no better ideas.

And what does this topic have to do with the declared "helping you make financial decisions" purpose of this site? Or has this purpose declaration been superseded now by something like "providing you with a space for amateur economic and political discussions"?

You seem to enjoy providing your amateur economic and political opinion though.

I'm pretty sure the political and economic environment is one of many factors that would affect any financial decisions.

Have to agree with you on the latter, meh.

But it appears that "helping with making financial decisions" was not at all the main purpose of the above article. The article appears to be all about how Labour could improve their perceived image…

True.  But it is linked (very tenuously) to politics.

I still don't understand how the guy is "independent" when he's still advising Labour albeit indirectly.  Still, makes a change from the regular drivel being spouted by bank economists and politicians.

found this transcript on ABC site from comedian John Clarke.. changed the names to suit NZ's future political scene once comes Nov 2011...

 

[Scene: A car yard. BRYAN is perusing the stock. He is approached by JOHN]

John: Morning! Looking for a new car?
Bryan: Nope. Prime Minister, actually.
John: You’re the third one this morning. Anything in mind?
Bryan: You know....... nothing fancy, reliable, economical family model. Something to get the country from A to B.
John: You mean like a Key?
Bryan: Yeah....a little Johnny. Nothing flash, does the job. Low maintenance, economical, sensible. Runs for years, no troubles.
John: So.... you used to have one?
Bryan: Yeah. About 10 years. Great little model – don’t know why I got rid of him --biggest mistake I’ve ever made…
John: What happened?
Bryan: Traded him in for a Goff 11.
John: Big mistake…
Bryan: Lot of people bought it. Good political mileage.
John: How was the Goff 11?
Bryan: Came with a $50 factory rebate and CGT – that was good.
John: Anything else?
Bryan: Not much. Sounded nice but nothing under the bonnet. It was a lemon.
John: Didn’t stick around for long did it?
Bryan: Nah – had a factory recall. Shipped overseas and was never seen again.
John: What was the problem?
Bryan: Lots. But the final straw was the navigation system. Plug it in and it automatically loses its own way.
John: Whatcha got now?
Bryan: It’s a Goff-Norman.
John: The hybrid?
Bryan: Yeah. The Eco-drive system – not a good idea. An engine that can’t deliver hooked up to a transmission stuck in permanent reverse…
John: Green paintwork with a red interior. And steering that always lurches to the left for no apparent reason – that’s the one?
Bryan: The Clusterfxxk model.
John: The only one they made, Bryan. Not the vehicle of choice for the road to recovery – but did they finish up fixing the navigation system?
Bryan: Made it worse. Turn it on and it does a press release, heads off in all directions and goes nowhere.
John: So that’s why you’re here?
Bryan: That’s right. I’m stuck with a government that's wasteful, expensive, ineffective and past its use by date. I don’t suppose you’ve heard of the “Cash for Clunkers” scheme?
John: Join the queue brother.

At best JK's 'rags to riches'  story is irrelevant to running a business let alone a country.

At worst the type of decision making of a currency dealer is one of the most dangerous in relation to New Zealand.

The only attraction of JK is that he literally has NIL competition.

I may yet go and put my next Super payment on a horse. It could pay off better than any other use

Boom, Boom!

Basel

Until they all start counting reality:

http://www.eoearth.org/article/Macroeconomics_and_the_environment

They're all wasting their time.

Whether the public swallows their false prognostications, or not.

'The Economy', currently fails the test of 'properly accounting'.

Iain, you are back on deck!

Hope you had a good holiday, see you have updated your blog.

You were going to have a cup of coffee and get back to us.  

I was really keen to hear your idea on restraining the government of the day on creating too much public credit.  Obviously you cant give the buggers an open cheque book, we would have rampent inflation in two minutes flat.

regards -bb

New Zealand has rampant inflation, National has done nothing  to get it under control. They do not even know what they are measuring.

Anticipation of your reply is whats giving my life meaning at the moment.

Do you have any connections to the Social Credit Party?  Or are your views aligned with their princibles?

I am looking forward to your response!

Iain - exactly. The 7 billionth homo sapiens will appear about October.

At which time the Bluefin Tuna population will be below 20% of it's 1900 stock, and dropping rapidly. Phil Heatley decided, though, that because we;ve been so good, we can 'up' our catch.

These folk are not just stupid - they're criminally so.

We won't get there Iain. The third world will continue to multiply, to deplete resources in the daily quest for life. The western world may have an epithany, but Jevons was right - the slack will be taken up, indeed there won't be much slack anyway.  It will be ugly, and will onset rapidly: hope for a war somewhere else, or a pendemic you are magically immune from. Sad epitaph for a species which had the ability to know better, really. The only chance at this point is inspired leadership - but as you can see, there are a lot of spin-doctors paid to muddy the waters and ridicule anyone who tries.

http://www.ecofuture.org/pop/facts/exponential70.html

This sums it up as well as anything:

"Anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist" --Kenneth Boulding

Have a good weekend.        :)

It's like being asked what's worse , a kick in the head or the guts. Let's just keep buying into the belief that it means something who we vote for shall we, that way we don't have to do anything to try & change it.
Amazed at the seeming lack of memory longer than 10 years , as if here were not rotating blue, red govts following the same script decades prior to 1999.
What part of it makes no difference who you vote for do people not understand. Of it's like that on these boards then the public are clueless. That is painfully obvious!

Iain you overestimate the followers here. There are a small handful who understand, and the rest who either don't, or won't get it.
I sometimes wonder if I would be impressed with the blogs of it were my site, and I usually think , no!
So far as having no hope , it is almost at that point it not passed. Coming back on the site for research as i said a few weeks back , has shown a number of hurdles to nz having any future. Basic general knowledge and current affairs around the globe are glaringly absent.
What it shows is that Nz was the original experiment , and understandably given how easy a target it was. The decrease in sheep has been balanced by the increase in sheeple.
Please keep it up , although I wonder why PWilkie & Muzza seem to have disappeared lately, I wonder why.

"at least a shot"....oh well with such a guarantee what can go wrong...right?...wrong!

Under the current interest bearing credit system within which you Parky, borrowed a bundle to buy property instead of saving up the amount needed....!......the control amounts to something called 'market forces'....ie you will stop borrowing when you begin to realise you cannot pay back the bloody credit and the interest...get the message Parky....you are in charge.

Recognising that most Kiwi are too bloody stupid to be able to work out what they can afford to pay in interest given their potential for unemployment etc, means govt and the RBNZ, if they were independent of the banks, would apply measures to give said idiots a jolt in the arse.

However, NZ is awash with stupid incompetent politicians who once in govt actually see a personal benefit from pumping the credit market to fake happy times and get themselves re elected...ie Labour.

Now we have Parky on a personal crusade to hand the same sort of politicians control over the money supply....as if making a botch of being govt was not enough...now you want to hand them the printing press..go figure.

hello Iain - just wanna make sure you are up with the whole story -pls see below

http://mises.org/daily/661

Here's the article

Environmentalism Refuted

That post is idiotic.. If you want to post something refuting environmentalism, why on earth would you post a dated rant by an economist!?  Where are all the scientists refuting this claim, oh wait... They're the ones who are actually concerned...

Oh well... an economist has spoken, time to pillage the environment as it appears we can do no wrong. Talk about crapping in the nest.

 

Not even an economist really....some "economists" start from a political view point and "construct" an economic policy based on their politics and resulting voodoo economics, the Ryan plan for instance shows this. Here we see libertarians in the guise of austrians who dont want any regualtion or centralised control or any sort denying AGW.....hence its total crap.

Being peddled by "goNZ" who has an equally fundimentalist, biased, libertarian point of view and the IQ to match.

regards

 goNZ – How does your idyllic view of laissez- faire economics fit into today’s reality, where on many fronts among the powerful in societies ethic and moral requirements and standards don’t prevail ?

Iain – that Reisman stuff isn’t even worth reading - just Hamster time.

It is really hard to believe someone like Reisman who doesn't even know the difference between weather and climate.    

He could benefit from looking at Steven Keen's proofs that neo-classical economics (including the power of the free market to achieve the optimal result) is based on fundamentally flawed mathematical propositions.

I think the guy who setup weather.com (?) is also it seems as ignorant which is really funny, at least an economist has an excuse for being stupid its isnt his area of expertese. last I heard he was undertaking a court case in the US to refute AGW? its gone silent? Then we had the Republicans holding hearings this year on AGW and guess what virtually no scientists or deniers attended its gone silent? Of course these are legal events and there are laws you can break in opening your mouth and you can be asked awkward qs on the record (like lets see your funding for the last 5 years) and I think lying and hiding is the equiv of contempt of court, fines and jail time can result.

regards

You get that a lot with weather-related things. Just look at "Weather Watch". The front guy for that outfit is a former part time NZ Herald journo and is wholly backed by News Corp, which is why you see them and their idiotic "forecasts" being spammed all over the Herald and Yahoo! NZ (whose news section is owned by News Corp). Not a meteorologist in sight, and every forecast is a psychotically amped up shrieking rollercoaster ride of hyperventilation: every cloud becomes a storm, every breeze a hurricane, and there's no such thing as a dusting of snow as far as "Weather Watch" and News Corp are concerned. Dustings don't sell papers or drive weblink clicks.

goNZ - thank you for your response.

Some polls paint a dire picture for Labour and Cullen while others are less bleak. The interesting thing is that the worst are always the polls conducted by NewsCorp who own the New Zealand Herald and other prominent sites. NewsCorp and Granny Herald aren't known for their love of the Labour party, but they have been known to throw their weight behind National.

Roy Morgan paints a slightly better picture 33%?.....it still doesnt look good.  I think its very shallow that the JK front man will probably win the election single handedly.  Lets face it the rest of National are like Goff in terms of charisma, none.  National policies?  SOE sales not liked.  A battle of personalities? seems so.  National also it seems recognise this, JK came from nowhere as did Brash before him....so you have to give them credit for picking a "winner".

Lets look at what Labour has said, CGT, seems pretty popular....not sell SOEs is likewise preferred....so the Q is just why is Labour not connecting?   Goff is pretty centralist so its basically the same party positioning as HC before....

So whats Labour's obvious policy difference to HC era tahts turning ppl off?  cant see much.  

So economy? The economy has gone toes up and Im certianly wary of Labour getting in and giving into the unions on pay enmass. Labour also did nothing for 9 years, they could have fixed CGT a decade ago and didnt....is this credible?  No.   I guess their own failures have stacked up and are not yet cleared,  by 2014 maybe.

regards

 The power of mother earth and the general ignorance of people to accept it are visible all the time.

Residential, commercial and infrastructure are still planned and constructed on “Ground 0” – ignoring climate change and other possible natural events.

Costs of damage in the billions – please pass on to insurance companies, which cannot pay of course and then to the taxpayers of the next generation…………. Genau.

 Amazing video - http://sg.news.yahoo.com/dramatic-video-japan-tsunami-viral-video-201104...