The Kiwi Dream and the End of Economic Growth

Freezing cold across most of New Zealand this week and Auckland electricity spikes upwards of 94% odd utilisation. Move demand beyond the available supply and who knows what happens - perhaps substations trip and then how do you bring them back on line. Maybe you get brown-outs? I'm not sure, no one has really talked about that.

You'd think this kind of usage information would be a wake-up call but instead we get the usual suspects ranting and raving turning the situation into a political wank-fest. Everyone wants their drive-in recreational shopping lifestyles to continue but no one wants 90 metre pylons or wind turbines obscuring their view of gorse covered hills. The rampant desire for continued economic growth is pushing infrastructure and resources to the limit - something will break sooner rather than later.

We are a country living beyond it's means. As people cash up the fake wealth in their properties in the form of revolving credit deals, personal loans and credit cards to rush off to Noel Leeming to get the latest LCD flat screen TV's we end up posting the largest annual trade deficit since the mid 1970's - and we all know what followed that period.

Our greed for more consumer products the democritisation of shopping is reinforced with National's poll surge. John Key (national) (multimillionaire) promises to let the good times roll - massive tax cuts - so we'll all have an extra 5 pints worth of coinage in the pocket ultimately at the expense of services, health and education. Consumption is good. Buy more stuff, throw more stuff away, just spend, consume and waste more - it's what keeps us all in jobs, and it keeps the country growing. A few more hundred thousand immigrants will also ensure that the Capital Valuation on your home will continue to increase - thus, you can up the limit on your gold card to get that new 3G mobile blackberry or that winter trip to Fiji you wanted.

The oil price continues to creep endlessly upwards, beyond $60 per barrel this week, meanwhile the Government assures us it will at some point settle back at around 20-30 a barrel. Of course the high price in oil has seen the emergence of all manner of viable alternatives just as the economists assured us. (yeah right)
I guess in the absense of food in supermarkets cannabilism will emerge as an economic substitute proving that the market truely does work.

The election this year I suppose will at least provide some cynical entertainment. Both sides desparate to peddle a business as usual picture. Go get a bucket of hot and spicy, you have everything to be fat and happy about. The good times are expected to roll for at least another 12 months, by which time oil could be out towards $100 a barrel, United (NO) Future and ACT will both be political and historical curiosities, and as it stands there is a good chance that Labour and the Greens will be in opposition.

Meanwhile the love-hate relationship between National and NZ First will be busily building an infrastructure that looked good in the 1990's. Roads, more roads and a few more roads, with increasingly dimishing numbers of people able to use them.

You can't expect our politicians to be aware or prepared for the troubles ahead. They are seduced and blinded by the dogma that economic growth is the solution to everything. Whereas, any voice of reason will indicate that their solution is precisely the problem.

Economic growth will halt once oil reaches some magic figure. ($120.00 barrel??). At that certain point those living in xurbia, the far flung reaches of our suburban dream, will no longer be able to afford to travel to work. At this point or very near to, general societal structure will collapse. Xurbian property prices will plummet taking with it large sectors of the real estate market and mums and dads geared to the limit on their revolving credit accounts. Inner city shoebox property will skyrocket causing something of a hyperinflationary effect, the resulting lahar will plough through the mortgage industry. Stock market melt-down will cascade into retirement funds, managed portfolios and hedge accounts - watch the fallen brokers fly from multistory building windows as they did in 87.

All this plunging NZ into an economic recession from which we will never emerge.

Enjoy your day.

Steve McKinlay