New Zealand Engineering 1998 June

Editorial

Lose / lose

Peter King
Managing Editor

Over the past few months I have been developing a general theory of fiscal pneumatics. From it I have reached one simple conclusion: Government sucks. Moreover, this is not accidental. Government sucks on purpose. It is policy to suck.

The mechanism, which has been applied successfully to education, health, police and numerous other areas of government expenditure, is simple. Slowly but steadily withdraw the piston of expenditure from the chamber of demand. Just as nature abhors a vacuum so demand abhors underfunding. The result is that borrowed private capital rushes in to fill the gap.

In education the Government has even gone to the remarkable lengths of providing a taxpayer subsidised debt collection agency with enormous powers over citizens (the IRD) to help private interests collect their debts. Surely there can be no better business to be in today than lending money to students. Students may have lots of cash today but young engineers paying 40 cents tax in the dollar tomorrow would be pretty silly to stay in New Zealand.

Part of the interesting physics of fiscal pneumatics is its ability to defeat basic laws of energy conservation and achieve George Orwell's notion of doublethink (as introduced in 1984). Doublethink means believing two contradictory things at the same time. On the one hand Government reduces expenditure on what are seen as necessities: education, health, police etc and on the other hand it gives us reduced taxes. So far so good. That equilibrium might balance out. But the doublethink occurs when Government then berates us for not saving on top of that. Even more remarkably it berates us for saving money by investing in property (which it doesn't tax) instead of putting money in the bank (which it does tax).

Doublethink is also applied to spending a few million on television ads blaming the unemployed for not having jobs. When I was born (in 1961) the New Zealand currency was worth double the US dollar and the number of unemployed people was about a hundred or so. Apparently since then New Zealanders have got so lazy that 7.1 percent of working New Zealanders or 129,000 Kiwis would rather live on an average unemployment benefit of $210 per week than work. No wonder the currency is today worth half the US dollar!

Fiscal pneumatics can also be seen at work as a simple pump as when the Government raised the price of its lowest cost housing to "market rents" and paid a supplementary benefit to people who needed low cost housing to balance out the difference. This meant beneficiaries could then become a conduit for pumping government money to private sector landlords who also charged "market rents".

This process of "reform" has stopped being "economic rationalism". I am no Marxist but this is starting to look suspiciously like a nasty kind of class warfare, with the middle classes increasingly in the trenches. I fear it is a war which, ultimately, no-one will win.