Lower dollar good news and bad news

August 12, 2008

The good news about the falling dollar, down to an 11 month low of US69.84c this morning, is that we get more for our exports.

However, the lower value of our currency also increases the price of imports which is particularly bad news for farmers when two of our biggest budget items – fertiliser and fuel – are already highly priced.

One reason for the dollar’s fall is the Reserve Bank’s decision to relax its guard against inflation by lowering the official cash rate.

Several commentators said this would be good for exporters, but I’m not sure how much better off we are if the gains on the swings of increased returns for our produce is countered on the roundabout of increased prices for inputs.

Nor do I think that a weak currency is a good recipe for a strong economy.

And I am definitely not relaxed about a little bit more inflation. The memory of the economic disaster which resulted when all the little bits more became a lot and led to inflation rates of more than 20% in the 1980s, and the painful process of bringing it down again, are still too fresh.

I’m with Don Brash who, when he was governor of the Reserve Bank, told a public meeting that a little bit of inflation was like being a little bit pregnant, it doesn’t stop at a little bit.

The B- I got for stage one Economics, as it was then known, doesn’t qualify me to debate this issue. But The Visible Hand in Economics and Show Me The Money  and Brian Fallow  are qualified and they all warn about the dangers of going soft on inflation too.

The falling dollar is a good news-bad news story for exporters and if it contributes to higher inflation the bad will more than outweigh the good.


The fashion of politics

August 12, 2008

Fashion journalist Sylvia Giles is taking the triumph of image over substance seriously by looking at politics and its practitioners through designer glasses.

In her first post  she dressed down National’s Auckland Central candidate, Nikki Kaye, over her photo.

Then she took a critical look at John Key’s  image.

And now she’s annointed Winston Peters  as our best dressed politician and has run her eye (though thankfully not literally) over his underpants.

She can only go up from there.

Update: The Hand Mirror  is less than impressed too.


It’s not just about the money

August 12, 2008

She became the primary caregiver of her two school-age children after her marriage collapsed.

She was skilled but the job she was trained to do had irregular hours and required being on-call so it wasn’t possible to juggle it with child care.

She’d worked part-time but her benefit was rebated and she ended up with about the same amount of money as she’d got when she wasn’t working so she gave up the job.

She was studying 20 hours a week, though not in a course which would lead to paid employment. She also did a lot of voluntary community work.

She said that because part-time work didn’t pay enough to justify the effort and she was contributing her volunatary labour she didn’t feel any need to move from a benefit.

She didn’t understand that benefits ought to provide for those who can’t help themselves, not subsidise study and voluntary work for those who can.

Rebating benefits when people start earning can be a disincentive to seeking paid work, but the alternative would enable people subsidising their benefits with part-time jobs to earn more than those working fulltime. 

Most people on Domestic Purposes Benefits are not on it for long so critics of Naitonal’s policy to require solo parents to seek part time work or undertake training are right it will only apply to a small minority of beneficiaries who may be only a little or no better off financially for doing it.

But getting back to work, even if it is part time, is not just about the money earned. It’s about the skills gained and becoming more employable for fulltime work when circumstances allow it; it’s about not spending taxpayers money on those who can help themselves; it’s about gaining work ethics and providing role models for children to break the cycle of inter-generational welfare dependency.

It’s also about fairness for other workers, especially those on low incomes. Welfare for Families has helped those with childen under 18; but it’s done nothing for people who don’t have dependent children and whose fulltime work pays only a little more than a benefit.

And it’s about national productivity. Money earned through work is much better for the economy than money churned through the tax system and paid out in benefits.


Can spring be far behind?

August 12, 2008

The first blossom tree to bloom in our garden (I think it’s a prunus)  is covered in flowers and the daffodils though not yet in bud are well through the ground.

I’d hopes these were harbingers of spring, but winter has returned with a vengance.

There was fresh snow on the Kakanui mountains at the weekend and Sunday’s frost was still lying in the shade by late afternoon.

We woke to one of the hardest frosts of the year yesterday morning and ice on some puddles I tested on my morning walk was too thick for me to break (yes, I’m not yet old enough to resist the temptation of jumping on it).

Normally when we get a hard frost we also get a sunny day but by lunchtime clouds appeared so it wasn’t just cold it was dull and this morning we’ve got up to rain.

If I’m not enjoying it those who had to get up for milking at 5am and will be out working in the paddocks for msot of the day will be even less enthusiastic.


Wordsworth’s words for non-voters

August 12, 2008

The Listener’s Wordsworth column search for words to describe people who choose not to vote elicited some gems:

Neglectors and poll faulters were suggested to describe the unmotivoted and unballotable.

Then there was non compos electis and dyselectic.

One of the people who came up with non voters were suffering from electile dysfunction suggested it could be treated with Keyallis.

The prize went to ballot-proof and electshuneers.


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