Capitalism vs Socialism

This could also be used as evidence that economic freedom is more important than oil which would confound red greens who want more regulation but less oil.

Hat tip: Capitalism

18 Responses to Capitalism vs Socialism

  1. Andrei says:

    While I am a small Government, free enterprise, let people get on with their lives sort of guy the use of selected facts and imagery in the manner of this post to make the point is unwise.

    The capital of the most economically free nation on the planet – Mogadishu


  2. Andrei says:

    To continue on that theme, I cannot resist

    Komsomolskaya Metro Station built by the Communists of course and something that puts the London Tube or the New York Subway to shame


  3. Brown says:

    Mogadishu – the pic shows what our roads would look like if Russell Norman gets control.


  4. Dave Kennedy says:

    I agree with Andrei, you have presented a very simplistic economic argument, Ele. The most successful and sustainable economic model we have is the Nordic model or the Social Market Economy. While no system is perfect, Scandinavian countries have maintained high standards of living (and quality of life) and more equitable growth for longer than most. Remember to that Norway nationalised their oil industry, which allowed for greater environmental controls and channelled profits back into the the public sector:

    France’s nationalised power company is one of the most profitable and successful in the world:

    You would be advised to check your data regarding Chile’s poverty levels, they use an outdated 1987 measure and if they used a common European measure the level of poverty is actually around 27%, not much different from Venezuela.

    This Government has a very simplistic approach to economic management. In a country with a small population, an abundance of cheap power, a moderate climate and an educated labour force we should be doing much better than we are. We have one of the fastest growing income inequity in the OECD, the second worst levels of child health and safety, the highest levels of youth suicide and one of the poorest levels of housing.

    At the same time the houses we are building (for our upper income earners) are the third largest on average in the world and our growing market for luxury cars have allowed us to support a Rolls Royce dealer for the first time.

    A well run economy, I think not!


  5. Dave Kennedy says:

    I think you would find that a Green Government would have a more balanced and regionally focussed system of funding roads. Southland produces 11% of our country’s export income, has one of the biggest road networks in the country but receives about 2% of road funding. We have milk tankers rolling on poorly maintained roads and we have a rickety one lane bridge and hour long delays to travel south from Queenstown, our biggest tourist hub. Instead we are spending billions on motorways that have failed cost benefit analysis. Remember that one of the economic factors that destroyed the Greek economy was their over investment in motorways.


  6. Richard says:

    Ele, where does Argentina appear on the rankings? It is not clear from your source.
    David Kennedy: Are taking over as the reasonable contributor to this blog from Robert Guyton?


  7. homepaddock says:

    I don’t know which ranking it referred to. This one has Chile 7th, Argentina 160th and Venezuela 174th.


  8. Dave Kennedy says:

    Richard, very flattering, I have moments when I have time to comment and like to think my comments are reasonable and rational. I am concerned that the next election could be a nasty one in terms of National’s campaign and I would rather we could have debates on fact and evidence. Ele is one of the more reasonable National supporting bloggers but even she repeats the scuttlebutt used by the Government’s spin doctors that attacks the messengers not the message.


  9. Dave Kennedy says:

    Russel Norman’s latest comment on our economy reveals depth of understanding of what makes a resilient economy and it certainly isn’t what the current Government is pursuing:
    The Socialist vs Capitalist stuff we have to quickly move from, it was extreme uncontrolled capitalism that caused the economic recession. We need a balance of the two where individual freedoms are balanced by social responsibility and an economy is competitive where it needs to be and core infrastructure is consistently provided while considering social and environmental sustainability. This isn’t just ideology it’s pragmatism and ensuring a future for our kids.


  10. Mr E says:

    You agree with Andrei’s criticism that Ele has presented simplistic facts. Then you turn around and justify your point of view with statements about house sizes and Rolls Royce dealers. I am afraid that presents to me as a hypocritical argument. I would go as far to say I believe Ele’s argument is less simplistic than yours.
    That aside I tend to agree that the post is simplistic, and a bit emotive with the picture. But how far do we go with facts. Should Ele present a PhD on the issue? There must be some middle ground. I hope it can be found in the future.


  11. Dave Kennedy says:

    We have around 270,000 children living in poverty (25%) and currently have a housing crisis for low income families. The fact that most houses being built are for those in the top quintile of earners and the the luxury car market has never been stronger means that we are seeing a concentration of money in one sector of society. The median household income has actually dropped over the last four years while our wealthiest New Zealanders have seen their incomes increase by a whopping 20%—NZs-wealthy-doing-just-fine/tabid/423/articleID/220356/Default.aspx
    My point was that New Zealand has growing inequities of income and the management of our economy is contributing to that. As a country we are spending more on luxury cars than on affordable housing and around 40-50% of our state housing stock are still the ones Savage built 80 years ago. We no longer have a balanced economy where all benefit from an upturn.


  12. TraceyS says:

    Dave, why do you insist on broad-brushing this income issue?

    “The median household income has actually dropped over the last four years”.

    So in real terms it has dropped overall, but not for all household groups. The discussion is not really useful without a look at which groups were affected the most (in either direction).

    For example; in households with a couple plus dependent children and others, the median income has increased by 18% from 2009-2012.

    For households consisting of one parent with adult and dependent children, it rose 27% from 2009-2012.

    For couples only, the median didn’t change much, but for households with couples and others it rose 24% over the period.

    Clearly it is of great help to have an extra room on the house.

    Apparently the worst groups to be in would be a couple with adult children and others (dropped 11% from 2011-12), or one parent with dependent children, or one parent with adult children (little change).

    The median incomes for couples with children have increased from 2009 to 2012 including increasing by around 3% from 2011-12. Overall, an equal improvement in that one year compared to the preceding three years.

    Unfortunately the three groups that have grown (in membership) the most since 2009 are all single-parent household groups. It is not a good situation to have growing numbers within groups that do poorest in the income improvement stakes. But I fear that throwing money at the problem (by evening things up with taxpayer funds) will only incentivise further growth.

    I wish you understood that groups which rely on state benefits the most are not going to fare as well during difficult economic times. That’s to be expected. How can you logically expect to extract more from those paying the taxes to pay the benefits when businesses are at the same time cutting costs and struggling to survive?

    I know you will say that the problem is caused by the rich getting richer. But are you so sure that taking more money off them in taxes will fix the problem? One question to ask might be did they create the problem in the first place?


  13. Dave Kennedy says:

    Tracey, all I am wanting to show is that there are growing disparities of income and some groups in society are doing very well and others are not. Surely it is an indication of a balanced economy when most groups gain when there is a recovery. Productivity increases have not been reflected in an increase in wages for example. I did not really suggest any solutions but wanted to prove that there is an imbalance in the approaches currently used.


  14. TraceyS says:

    If you want to prove something, use data, not a Green Party press release.

    Metiria Turei apparently doesn’t even know the difference between a “poll” and a “pole” (12 May).

    The Green Party seems to be so much more concerned with politics now than core principles. The above Freudian slip proves my point.


  15. TraceyS says:

    Also Dave, property has increased faster than wages for decades.

    Why is anyone surprised at a growing disparity between household debt and wages levels? Where have they been? Asleep?

    Solution. While still young, buy two modest houses, even if it hurts. Work hard and smart, pay down the mortgages as fast as possible. That is still an achievable goal down here in the South.

    My sister is doing this and on a below-median income. They rent one house to friends (for modest rental) and will sell it when they are ready to use the money for something else. Retire their remaining debt, start a business, who knows what?

    The first home is to live in and the second is for insulating against the growing disparity. Can’t do that with one house.

    Alternative? Wait for a white knight.

    Another alternative would be kids learning financial literacy from those who are truly financially literate. Too many young people rack up big debts studying and travelling overseas, with no sense of tomorrow.


  16. Dave Kennedy says:

    I agree with much that you say, Tracey, but I do believe banks cause many of the problems through giving loans too freely. Private debt has risen from 93% of disposable income per household to 153% over the last 15 years. The debts young people stack up before they even get a full-time job is frightening, it just wasn’t possible in my day.

    I recently spoke to someone who worked for a credit union bank and they told me that they don’t earn as much as they would if they worked for an Australian Bank, but they can sleep at night. They promote banking solutions that meet peoples needs not commit people to something that will just profit the bank.

    It is a pity that we also have to use property investment to to get ahead rather than investing in productive businesses.


  17. Dave Kennedy says:

    My comment above should be here, I didn’t actually agree with your previous comment 😛


  18. TraceyS says:

    Ha! I didn’t think for a minute that you did 🙂


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