Economists have earned their reputation for jargon and tunnel vision, but sometimes, it takes an someone as perceptive as Simplicity economist Shamubeel Eaqub to identify something simple and devastating. As he pointed out recently, the coalition government is trying to attract foreign investment here to generate economic growth, while – simultaneously – cutting back drastically on its own investment in our economy.

Why should foreigners be willing and able to invest and grow our economy when our own elected government is giving every sign of walking away from the challenge? Here’s how Eaqub put in his LinkedIn post, which contains the statistical evidence for the trends he is talking about:

Next week NZ will pitch to foreign investors to help fill our infrastructure deficit. It may help, but we must get our house in order first. A lot of this deficit is due to political inconsistency and outright under-investment for many decades. Foreign (or indeed local) investors cannot solve that...

Case in point: fiscal austerity so far has been reduced investment and not much else, because red projects were turned off by the blue team....In the 7 months to Jan-25, government net cash spend (opex+capex-revenue) into the economy was down 41% from the previous year....Rising tax revenue may surprise; they would have increased more without income tax cuts. Operating spending is still growing (1/4 from NZ Super!), despite announced cuts. So, tax cuts have not been offset by spending cuts and efficiencies. NZ is borrowing money to fund operations not investment, as a prudent country does.

Moreover, Eaqub says, the coalition government has been backing away from spending for investment:

The biggest slashing has been in investment spending, which slowed sharply in the 2024 calendar year, down $2.3b or 14% from 2023.... It's a shame, because in a recession speeding up infrastructure investment moderates the economic pain, and delivers much needed infrastructure, typically under budget and on time. (It's also one part of unlocking NZ's stagnant productivity.) It also has the happy benefit of not losing skilled workers in the infrastructure space... Once lost, it takes years to rebuild the lost capacity and capability (it's more than qualifications, you also need experience, understand local context, etc), leading to delays and additional costs. Stop-start of long-term investment projects reliant on scarce skilled workers is self-sabotage.

Having a New Zealand government wishing and hoping that foreign investment will come to the rescue – while actively backing away from tackling the job itself – should be a matter of particular concern to Winston Peters, given that he happens to lead a party that calls itself New Zealand First.

Genuflecting to the Bully

Last week though, Peters seemed more intent on genuflecting to US President Donald Trump by firing Phil Goff, our High Commissioner in London. Goff had hinted publicly that perhaps the abandonment of Czechoslovakia in 1938 to appease Adolf Hitler (in the hope of avoiding a wider war in Europe) might bear some comparison to the abandonment of Ukraine to Vladimir Putin, in the hope that this might be enough to satisfy Putin’s imperial ambitions.

The offence of querying Trump's grasp of history was the reason given for Goff’s sacking. The implied insult was indeed the sort of elitist mockery that Trump would hate, if he ever noticed it. Yet Goff’s sacking looked a lot more like MFAT grasping at the chance to demonstrate to the White House just how abjectly supine our “independent” foreign policy stance can be, even before it is put to the test.

That’s a problem. New Zealand was fairly racing to the surrender table before a shot has been fired in our direction by the White House. Firing Goff It was a pre-emptive display of acquiescence. See? No point in punishing us, because we’ve already punished ourselves before anyone had shown any sign of feeling affronted.

Unfortunately, New Zealand has a tendency to do this sort of thing. In the mid-1980s, foreign observers noted with astonishment that we were the only country to ever voluntarily subject itself to the Washington Consensus, a harsh neo-liberal privatisation programme that the IMF usually had to force upon Third World countries in crisis.

Then in the early 1990s – and again to the incredulity of foreign observers – we stripped away all of our tariff protections and trade barriers without being asked, in order to prove our “free trade” credentials. As a result, we had no bargaining chips left to play when seeking access to foreign markets. Oh, other nations praised us for our “courage” and for our “commitment” to free trade, while pointedly declining to commit similar acts of self-sabotage.

With Trump, MFAT appears to be at it again. We’re trying to earn imaginary brownie points with the bully, before he even turns in our direction.

Trump style capitalism

Systematically, Elon Musk and his DOGE stormtroopers are stripping away from the US federal government all members of the managerial class who formerly had the power to regulate (in the public interest) the business affairs of the tech oligarchs now clustered around Trump’s throne. Surprise, surprise: Musk stands to benefit personally from the de-regulation he has set in train.

However, this may not just be a case of naked self-interest. Trump is leading a revolt of the Americans left behind by neo-liberal economic policies that have largely served the interests of the moneyed elite. Yet there’s even more to it. Trump and the self-made barons of Silicon Valley do genuinely hate and despise not only the best and brightest who work in the federal bureaucracy, but also the graduates of Yale and Harvard who work in US corporates and in America’s financial institutions.

What’s this hostility about? As Bloomberg News perceptively noted last week, a battle is currently being waged in the US by what it calls family capitalism, against corporate capitalism:

Donald Trump is a representative of a significant section of the business class: people who inherited their companies from their fathers, felt no need to apologize for their wealth, loathed MBA fads like DEI [diversity, equity and inclusion] and ESG [environmental social and governance criteria] and want to wrest back control of the capitalist system from people they regard as no more than hired hands, the managerial elite. And this portion of the business class is arguably now in the ascendant as dynastic wealth surges, Silicon Valley mints founder-billionaires and companies abandon public for private markets.

To the people born into wealth and/or to those who think they made it themselves, the whole apparatus of federal regulation and welfare safety nets are a moral outrage. Who are these managerial hired hands who now think they have the right to tell us how to run our business, and decide how our taxes be spent, if we be taxed at all? To those now in power in Washington, the creation of the welfare state by Franklin Roosevelt in the mid-1930s was the point where America lost its way.

That may be one reason why this week, America’s main public health programmes aka Medicaid and Medicare – on which hundreds of millions of poor, elderly and disabled Americans depend - are in the firing line for $880 million in cuts. The US and its new class of robber barons, seem intent on returning American capitalism to the jungle ethics of the late 19th century.

Days Like These

I’ve featured Low before, notably around the time in late 2022 when Mimi Parker died. Yet this song – and the way its dissonance resolves into uneasy ambience – keeps sounding timely. The video frames the song in religious terms, but the lyrics make it clear that this is a state of affairs without resolution:

No, you’re never going to feel complete

No, you’re never going to be released

Maybe never even see, believe

That’s why we’re living in days like these again

Again, again, again...\

And from Low in the mid-1990s, here’s Mimi Parker to the fore, with the gentlest of torch songs:

© Scoop Media