Taking our medicine
25/05/2012 § 4 Comments
Another budget, eh? Two surprises for me (but maybe I wasn’t paying attention):
- the increase in RS&T spending
- Kiwisaver information provisions.
I support both of these, although the devil will be in the detail. The first one is generally a public good (non-exclusive, non-rival), and the other overcomes an information asymmetry.
But what I really want to talk about is this: it’s another take-your-medicine-like-a-good-kid sort of budget. Haven’t we had this before? Over and over again? When does this prescription run out?
To show what I mean, here’s a timeline. This is the approximate mental model I carry around in my head of the economy over the last forty years:
- 1970s – stagflation and oil shocks
- early 1980s – recession
- mid 1980s – not bad
- late 1980s – stock market drop, Savings and Loan scandal
- early 1990s – recession
- mid to late 1990s – tech boom
- early 2000s – tech bust
- mid 2000s – not bad
- late 2000s to now – recession, turmoil
(I did a graphic of this, but can’t get it out of Word into this post.)
Yeah, it’s totally non-scientific, just my personal perspective. It reflects where I’ve lived and what I’ve been doing. But other people look at the economy with their mental models – vague personal recollections connected in some sort of narrative. And what’s the story? About 5 to 10 good years when the economy was humming, maybe 10 to 15 years of moving sideways, and lots of difficult years.
So, when do we get to stop taking all this economic medicine?
When is the patient going to be healthy?