Unfortunately, sometimes his arguments blow up in his face. Like this post:
Labour are campaigning against the GST increase (yet being careful not to promise to reverse it), saying it will hit households hard. Well Stats NZ have calculated that the impact of GST going to 15% will be a one off increase of 2.0% in the CPI.[the bold font is DPF's addition, not mine]
Now let’s see how that compares to the CPI increases under the last two Government’s.
In December 1990 the CPI was 731 and in December 1999 it hit 837. That was an increase of 14.5% over nine years – an average of 1.5% a year,
From December 1999 to December 2008 the CPI went from 837 to 1072 – an increase of 28.1%, and an average of 2.8% a year.
The difference between inflation under Labour and under National is around 14% – or seven times greater than the one off 2% increase caused by a GST increase.
Now if one takes just food prices, it is even worse. The food price index increased only 9.9% under nine years of National. Under nine years of Labour it shot up a massive 37.1%.
So if you hear a Labour MP talking about the impact increased prices will have on families, remind them of the 37% increase in food prices and the 28% increase in all prices that occurred under Labour.
Very good, David. So Labour's to blame for high inflation. And what is the main cause of high inflation?
Answer - economic growth. For several years (until the recession hit - wait, was the global downturn Labour's fault too?), the economy was in danger of overheating. This in turn led to inflationary pressure, and led the Reserve Bank Governor to raise interest rates.
So if Labour is to blame for inflation, it must also be responsible for the economic growth that caused it.
And if National is responsible for the low inflation of the '90s, it must likewise be responsible for the tepid growth of our economy during that time.
So David Farrar has effectively argued that Labour is the party of economic growth.
Farrar is a shameless National Party propagandist - his site ignores the bad news stories, and focuses on attacking Labour. But some of his attack posts are sounding increasingly desperate And if you fire off enough wild shots, eventually you're bound to have a misfire.
I'm sorry but that is a tad bollocks. While there is a slight connection between economic growth and inflation it is far mor complicated than what you make out. Your argument reads like a Social Credit argument from the 1970's.
ReplyDeleteSlight? I don't think so.
ReplyDeleteOne of the main drivers of inflation during the first part of this century was our overheating economy. It forced the RB Governor to increase interest rates in order to stifle growth and thus reduce inflationary pressure.
Inflation is caused by a number of factors but normally it is too much money chasing too few goods. This tends to be because the money supply is increased by the State and the economy is not open enough to supply goods and services from other sources. Hence if inflation is increasing in an 'overheated' economy it is still the responsibility of the Government of the day. You can have strong growth rates and low rates of inflation if you follow sensible and prudent fiscal and monetary policies.
ReplyDelete