Step one: push people out of work and onto the streets. Step two: get mad at people being out of work or on the streets.
In 2022, Reserve Bank governor Adrian Orr sat in front of a parliamentary select committee and admitted he was trying to kick the economy in the goolies. “I think that’s correct,” he said, in response to questions on whether he was deliberately engineering a recession. Economists agreed the swift nut strike was necessary, telling the media 50,000 jobs would need to be liquidated to bring inflation under control. They got backup from politicians, including up-and-coming young National Party leader Chris Luxon, who told Q&A the economy was overheating. One of the first things Luxon did after gaining power was remove the Reserve Bank’s jobs mandate, ensuring it was, in his words, “ruthlessly focused on price stability”, while at the same time cutting back on government construction.
Fast forward a few years. New Zealand’s annual inflation rate is down to 2.7% in the country’s June figures, sneaking into the Reserve Bank’s target band. It got there thanks to the steaming plate of economic rootedness ordered up by authorities. Though our cohort of economists and politicians doesn’t seem to have thinned out, thousands more workers are on the dole than when the Reserve Bank started hiking interest rates. As per usual in recessions, young people have been hit hardest, with unemployment among those aged 15 to 19 reaching 23% earlier this year – more than quadruple the national average and the highest figure in more than a decade.
In other words, we did it, folks. Joblessness is up. Inflation is down. Mince is admittedly four trillion dollars. But overall, success! Surely our government should be pulling a George W Bush and unfurling a mission accomplished banner above the rusted deck of the HMNZS Canterbury.
Instead, it called a press conference to say, in essence, wtf. Luxon and social development minister Louise Upston gathered reporters on Sunday to announce too many 18- and 19-year-olds were claiming the benefit, and they’ll be cutting them off if their parents earn more than the princely sum of $65,529 combined. Asked where young people should get a job in a recession, which, again, we deliberately engineered, Luxon pointed to kūmara harvesting in Dargaville or seasonal work in orchards. Orchardists promptly responded that they didn’t need more staff right now.
Similarly, the Herald splashed its front page on Monday with a survey of downtown Auckland businesses complaining, to paraphrase, that their area had become a lawless hellscape straight out of Mad Max. The survey, put out by city centre business association Heart of the City, said Queen Street’s homeless population had ballooned, along with anti-social behaviour.
Things are apparently very bad.
There are likely many reasons for rising poverty and crime in the city centre, but one of the main ones is almost certainly that no one has any money due to the crushing recession we’ve created on purpose. Another might be the government tightening its eligibility criteria for emergency housing, which the council has blamed in large part for a 90% rise in homelessness.
Instead businesses have complained that police and the council aren’t doing enough to crack down on the people living on the streets outside their shops. On Monday, Luxon deflected questions on the issue, criticising Labour and the Greens over their “abject failure“ on housing and talking up the government’s success in bringing down rents and stabilising property prices.
Economist Shamubeel Eaqub gets frustrated seeing these stories. “This was an entirely predictable consequence of the actions that we took, and the inability to take responsibility for the consequences of our own actions is extraordinary,” he says. “When I look at, for example, the homeless situation, it goes, ‘there are lots of homeless people. It’s gross’. But then we don’t ask ‘why did it happen? And what can we do?’ That narrative structure has fallen apart.”
Eaqub wants us to go beyond a “vacuous, empty” conversation about moral failings when it comes to the less well-off, and contemplate the structural factors that shape people’s lives. “We need to ask ‘could we do something that goes beyond easy platitudes that roll off the tongue?’”
Fat chance, economan. Why acknowledge the wider policy decisions that fed into people’s circumstances when you could just tell them to buck up their ideas and move to Dargaville? Why rethink economic orthodoxy when you could ask people to consider not being poor?
It’s unlikely we’ll get a nuanced conversation any time soon about how government and bank decisions set the boundaries of our individual autonomy. But Eaqub does have a point. For the most part, people aren’t lining up for the benefit or living on the Queen Street cobblestones by choice. Their troubles were forecast by bankers on the Terrace working to cool a thermonuclear economy, or MPs in the Beehive trying to balance the books. They should be thanked for services to inflation reduction. But even if they don’t receive any official recognition for going down to lift up the economy, the least we could do is stop targeting them with our kicks.