National praised for economic pragmatism

The Wall Street Journal has given low-key John Key the thumbs up for his handling of the economy in the recession, and from what I've seen so far I think their assessment is pretty reasonable.

National's decision to trim non-essential spending and refrain from introducing an ambitious stimulus package makes sense in a recession which has largely been caused by over-liberal lending to consumers rather than speculation in the sharemarket (which in N.Z has been in the doldrums for decades).

As I mentioned in a previous post, ambitious Keynesian-style stimulus programmes only really work in industrialising economies where there are sunrise industries which can substantially benefit from increased government spending and where the government has surplus funds which it can afford to invest.

After nine years of growth in government bureaucracy it's refreshing to see National introducing cut-backs in non-essential staff and considering changes to the notoriously bloated ACC system.

Similarly, it's welcome to see restrictions on housing development being eased as these have been a significant factor in the lack of affordable housing for young couples wanting to start a family.

Reducing taxes for higher income earners, probably won't do any harm either, for as Steve Sailer points out, it makes sense to tax them less when they are doing poorly, and if needs be, tax them more when they are doing well.

What does worry me though is whether National will resort to its 1990's policy of using wealth-based immigration to artificially kick-start the economy rather than taking the more sustainable route of growing the economy through increased productivity and investment.

One of the reasons why National was out of office for so long was because the rising cost of housing, in large part due to National's support for East Asian immigration, was discouraging family formation and therefore providing a high number of Labour-voting unmarried females.

At this stage though, National's likely policy on immigration is difficult to predict.

National has said very little on immigration, since self-styled "conservative" Bill English criticised the banking sector (yes the banking sector) for suggesting a year or so ago that immigration was fueling inflation and perhaps should be reduced.

The Maori party's immigration stance is even more difficult to determine. Prior to the election, it seemed to vacillate between a general limited immigration position, similar to New Zealand First's, and a pro-Asian/ Polynesian policy aimed at encouraging the "browning" of New Zealand.

At no stage, as far as I know, has it clarified where it stands on immigration, and nor does it have to, given the media's conspicuous lack of interest in taking it to task over its ambiguity on such an important issue.