The abolition of scarcity – the 2020 Speech from the Throne

Dr Bryce Wilkinson
Insights Newsletter
11 December, 2020

There are those who say that government can only give away the produce of the productive. There are those who say that government can spend up to national income, but not beyond.  There are those who say that a focus on wellbeing should mean balancing benefits against costs.

Such people are fossils. They do not understand “Modern Economics” or the 2020 Speech from the Throne.

Modern Economics knows that paying people to dig holes and fill them up again can be a great use of their time. It increases national income through a marvellous Keynesian multiplier. Create even more jobs by replacing shovels by toothpicks.

Modern Economics knows that money need not be scarce when the central bank owns the ATM. Even cash helicopter drops should be good.

Consequently, the fossils have not drawn the right lesson from last week’s semi-philanthropic debacle at Aotea Square in Auckland. Give-aways excite people. They raise expectations. They foster a sense of entitlement. The lesson is “do not disappoint”.

Politicians are give-away doyens. General elections are now a lolly scramble for other people’s money. The political version of a helicopter drop.

Speeches from the Throne are where the victors confirm their bountiful benevolence. Done well, they inspire people to: “ask not what you can do for your country, ask what your country can do for you”.

The 2020 Speech from the Throne handsomely answered that question. It will spend $42 billion on government infrastructure to ‘future proof the economy’. How could that be bad? It will pump up labour costs by raising the minimum wage, increasing sick leave and expanding living wage guarantees and fair pay agreements. It will assist first home buyers to pay more for our houses and expand free lunches to 200,000.

Fossils ask, “But at whose expense?”. Silly question. No one worth mentioning in the Speech. When there is no scarcity, there is no cost. Hoped-for benefits alone justify any government spending. Its all about well-being, government wellbeing.

For a shorter answer, ask “What can’t my country do for me?”


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