David Cormack: The depression of recession

Recessions are seen as an inevitable part of the business "cycle" but it's not the Wall St traders who really feel the pinch. Photo / AP

COMMENT

We live in a cycle. We're told that every 100 months or so the worldwide economy goes through recession. A recession is technically defined as the economy shrinking for two quarters in a row. We blindly accept this

The last time we fell into recession was in 2008. That was when everything went kaput based on a whole bunch of shonky mortgages being bundled up and made to look good then sold to people that deal in these sorts of things.

This done by high-powered bankers all over the United States. Deliberate screwing of the system so they could benefit themselves. People defaulted on mortgages all over the US, leaving homes they could no longer afford, jobs were lost and worldwide panic set in. Economies shrunk. Shrunk! Can you believe it? Those poor economies.

Of course, as you'd expect, the big-time bankers were imprisoned for such flagrant acts of economic vandalism. Sorry, one person was imprisoned. Kareem Serageldin. People with far less foreign sounding names who did far worse things got off.

When it comes to financial matters the wealthy get a better deal than the less-wealthy. And so it is with recessions. Poorer people have the tightest budgets, most susceptible to shocks like recessions. Rich people are . . . well, rich. In the 2008 crash, people in the bottom 10 per cent of earners in the US suffered a relative loss of income two-and-a-half times more than the top 10 per cent.

Jacinda Ardern and Winston Peters have made plenty of noise about tackling the inequalities of capitalism but the status quo remains. Photo / Audrey Young

So once more in the world of high finance, rich people act like jerks, maybe lose a yacht or two, while poor people lose their jobs, their houses, their livelihoods.

And now we are told we're due another global recession.

What sort of stupid system is this where we're "due" an event that causes poor people to get hurt? I mean I know what sort of system it is. It's one that rigged against poor people so that rich people can get richer, but why do we accept this?

Sven Henrich, a big time trader, even argues that we need recessions to "refresh the business cycle" and "wring out excess".

What is this mythological "economy" that we're convinced acts outside of our control and foments situations where these recessions just happen? The economy is us. We are the economy. The 2008 crash was almost entirely down to human greed. Nobody except Kareem faced real punishment because greed isn't a crime. But many poorer people's lives were completely ruined. Which should be a crime.

How is it that the vast majority has been tricked into believing that the economy is some magical thing that happens around us and we just watch it? We're in it. We have a say. We can have more of a say. But we keep being hoodwinked and falling for the same crap over and over again.

Jacinda Ardern said that capitalism was a "blatant failure" when it came to housing the poor. Winston Peters said "far too many New Zealanders have come to view today's capitalism not as their friend but as their foe."

With rhetoric like that you'd think that a government that had those two as Prime Minister and Deputy Prime Minister respectively would do something dramatic about it. But nope! In fact Labour has leaned into the status quo even more.

Just last week Labour announced, in conjunction with the Greens, a Policy Costing Unit to work out the cost of each party's policies in the lead-up to an election. Full disclosure: I worked on this in 2015.

:"Great," you might think. "That will provide me with information that can inform my vote!" This 2019 version was pretty much done so that Steven Joyce's hole does not rear up again.

But by proposing the Policies Costing Unit we're buying into the idea that policies boiled down to their crucial elements are nothing but monetary cost. That this dollar figure is somehow the most important thing when it comes to policy setting, instead of whether that child gets fed, educated and kept healthy. Instead of whether we work on climate change. Instead of creating societies where wealth is shared equitably and structural issues that face Māori, and Pasifika, and poorer people are torn down. No it is the cost that is the most important!

Governments do not run like the family budget. There is not a fixed amount of money that must be worked within in order to enact policies. The Government should be here for its people. And its policies should be for the people's benefits. And then we work out the most cost effective way to do the best.

Start at good, work out cost later.

So as the world stares down the barrel of another recession, and as economists shrug and say "this is the way it has always been and this is the way it must go", ask yourself if you're actually ok with that. Ask yourself if your politicians are actually working for you so that your world is better or if they're just letting bad things happen to people who can't afford it.

Then ask yourself if you own a pitchfork and if it's time to use it.