Keith Rankin, 26 August 2026

The above chart shows average weekly hours worked over the last 40 years. It’s calculated by taking total hours worked – according to the Household Labour Force Survey – divided by the population aged 15-69. Triennial elections are depicted in red.

The data series commences in 1986, in the year after the very neoliberal Rogernomics economic policy regime was implemented. Employment in the 1980s peaked in 1986. New Zealand’s long recession cycle began that year, interrupted by a brief ‘sugar hit’ before the August 1987 election and by a partial recovery in 1989/90.

Overall, this data is as accurate a picture attainable of the busts and growth phases of the New Zealand economy. This series – of hours worked – does not show the cyclical lag generally associated with unemployment data. Based on the latest data shown here, the cycle would appear to have turned down again, after a mini-boost in the summer of 2025/26. (There was a similar upturn in 2011.)

The chart also shows, in a stylised way, the relationship in post-1984 New Zealand between labour supply and hours worked. While the fluctuation in hours worked is a direct function of the demand for labour – which in turn is a function of aggregate demand in the national economy – the state of the labour market feeds back into labour supply. Labour supply can be understood as the total number of hours offered to employers.

The clear increase in labour supply over the period as a whole is known as the added-worker effect; refer my Retirement Age Labour in New Zealand, Scoop, 16 July 2026.

Wikipedia is too restrictive of its definition of this effect. In the 1980s the main demographic of additional workers was ‘married women’. In the 21st century the main demographic of additional workers is older people who would otherwise be categorised as retired.

In the 2020s another important demographic is young people (15-24) who would otherwise have been in fulltime education. In the Great Depression of the early 1930s, the biggest group of additional workers was single young women; though all demographics other than males aged 20-64 did show up as additional workers.

It is important to note that to be an additional worker you do not have to be employed. You only have to be in the labour force, meaning that you prioritise income earning over some other activities such as education or care-giving or voluntary work or leisure. And additional workers include people who hug their jobs; such as people who might otherwise have retired, had a child, or taken a gap year.

Then there is ‘additional work’, mainly characterised by existing workers seeking a second or third job, which is part of the added-worker effect. Strictly, labour supply is measured in hours, not people.

Unemployment of ‘primary breadwinners’ was generally regarded as the prime inducer of additional workers. Thus, if ‘Dad’ became unemployed or was obliged to work fewer hours in his main job, then so also ‘Mum’ became unemployed; meaning that ‘wives’ entered the labour force when their husbands became unemployed or underemployed. But rising housing costs – especially rents and mortgage interest – are also important drivers of people over 15 seeking additional work. Also falling wages relative to consumer prices drive people to seek more hours.

The added-worker effect is an income-effect, whereas the mainstream economists’ narrative emphasises the price (ie substitution) effect. Under the income effect, a household suffering from a rising ‘cost of living’ will seek more hours of work to compensate. Under the price effect, households facing lower hourly real wages (eg because of unanticipated CPI-inflation) will reduce the number of hours they want to work (or quit their jobs, or not look for replacement jobs); choosing more leisure instead, or maybe ‘choosing’ to become a beneficiary or a discouraged worker. This mainstream view emphasises the concepts of voluntary and involuntary unemployment, and has inspired the definitions used internationally for counting and calculating unemployment.

Thus it is hard to get a firm measure of true unemployment; of the gap between labour supply and labour demand. A measure of untapped labour.

Conceptually, the best measure of unemployment is to subtract hours worked from hours offered, and then to get a percentage by dividing by hours offered. The problem is that we have no reliable data for hours offered. What we can say is that more hours are offered when material living standards decline, and that this effect of ‘seeking more hours’ is revealed when the economy subsequently recovers; when the economy subsequently settles into a growth phase. This means that the unemployment undercount is proportionately higher during an economic crisis than during economic good times.

My ‘labour supply’ plot above is estimated, showing significant increases in labour supply with each economic crisis, and small reductions in labour supply at times when official unemployment falls to the (‘normal’) 3% to 4% range. (There is a delay in the reductions of labour supply, because there is typically a substantial debt accumulated in the critical years.)

Thus, in 1992, true unemployment in Aotearoa New Zealand was about 22% (still less than in the early 1930s), double the official 11%. True unemployment in 2006 was about 5.8%. At the end of 2009, true unemployment was 16%. True unemployment in 2019 was about 5.2%. In 2026, true unemployment is 11%, double the official rate.

Note on Net Immigration

My analysis here does not take any account of immigration. The data is adjusted for population, so when immigration is rapid, population growth is also rapid. I would note, however, that we would expect that the labour supply – hours offered per person – is generally higher for immigrants; reflecting the circumstances which led to them being accepted as immigrants.

Finally

The biggest driver of increased labour supply this century has been additional work offered by people aged over 65. And the highest level of underemployment occurs at present among people aged 15-24. Thus, increasingly, younger people are being supported by older people.

So far, this is the exact opposite of what the ‘financial literacy’ advocates – pension fund lobbyists – keep telling us. Those advocates claim that younger people from now onwards will be overemployed supporting retired and unwell older people; eg streaming into our aged-care and health-care facilities as needed care workers. We can afford more aged-care services – despite what the bean-counters tell us – precisely because we have a substantially underemployed cohort of young working-age people. Young people seeking paid work are not scarce; and the scarcity of money to pay them is a scarcity of choice.

Today we see neither overemployed young people nor any serious effort to invest in the productivity of our young labour force. Our polytechnics are focussed primarily on profiteering from international students; they are businesses first and educators second.

About the writer:

Keith Rankin (keith at rankin dot nz), trained as an economic historian, is a retired lecturer in Economics and Statistics. He lives in Auckland, New Zealand.

Keith Rankin, 14 August 2026 – As I see it, the Opportunity Party represents the ‘radical centre’ of politics; distinct from the stale ‘establishment centre’. Indeed the true and original meaning of ‘radical’ was ‘innovative’, and not extreme. Thus the Liberal Party of Balance, Seddon, Reeves and Ward was understood in its time – in the 1890s – as a radical political movement.

In its American adoption – much of it inspired by New Zealand – 1890s’ liberal radicalism became 1900s’ progressivism. The word ‘progressive’, these days has been adopted by the ‘establishment Left’, which is importantly different from the radical centre. So ‘radical centrism’ is the phrase which best fits the new conceptualisation.

Universal Income

The important departure from establishment politics – a departure, embraced by Opportunity, whose time is overdue – is the Universal Income. In embracing this departure, Opportunity have created an unnecessarily fearful response within the halls of establishment politics.

My suggestion is for Opportunity to acknowledge this fear, and to present twenty-first century radicalism in a cautious way. In the mid-1960s, young men wearing long hair created a fearful response in post-war society. By the early 1970s, such hair was normalised, and had become largely non-threatening.

Universal Basic Income

In this regard, Opportunity presents its particular policy for a universal basic income (UBI, or ‘Citizens Income’ as they call it) as an aspiration; as a basis for public discussion and not as a scheme to be imposed on those people who push-back from engagement with the concept.

We may not have many available years for this discussion, because if AI (artificial intelligence) achieves anything like that anticipated by its backers, our liberal economies will collapse under the strain of so much income being redistributed from the owners of labour (the majority; the 75 percenters) to owners of new capital (presently, the minority five percenters already at the steepening apex of the wealth distribution). As with any prospective tsunami, we should at least make an effort to be prepared.

‘We are all Beneficiaries’; the basis for a bottom-line policy

Prime Minister Christopher Luxon – an intellectual barnacle impeding social and economic progress – expresses the fear of the people he represents as ‘Opportunity wants to make us all beneficiaries’.

Opportunity’s approach should be to emphasise that we are already ‘all beneficiaries’; in part by pointing out the obvious, and in part by some judicious, sensible, and inexpensive reframing.

And to note that receiving a benefit is literally a ‘good’ thing, not a bad thing. The essential meaning of the word ‘beneficiary’ is a recipient of financial benefits deriving from ownership of shares or membership of a trust or a Friendly Society or a Building Society, and the like. The use of the word ‘beneficiary’ – over the word ‘pension’ still widely used in Australia – resulted from a deliberate modernisation of thinking in New Zealand in the late 1930s, making social financial benefits a simple extension of private financial benefits.

Almost everybody with an active KiwiSaver account receives an annual benefit of $260 from the government. That’s enough to sustain the claim that ‘we are already all beneficiaries’.

New Zealanders aged over 65 receive a universal basic income as a social financial benefit (New Zealand Superannuation, formerly National Superannuation); from 1940 to 1974, in the time of its predecessor, a basic universal retirement income was known as Universal Superannuation. US, NS, and NZS have been a core part of the centre-right political programme in New Zealand since the first National government in 1949. They are present and longstanding benefits, payable to poor and rich alike; though those rich people who disagree with the idea of universal benefitdom are free to opt out.

A specific ‘bottom-line’ suggestion

Opportunity could propose, as an interim measure pending a wider societal discussion (comparable to the recent discussion about the Treaty of Waitangi), that the government replaces the present 10.5% and 17.5% concessionary tax rates with a ‘personal tax credit’ which for everyone receiving more than $53,500 of annual taxable income would be $150 per week. The tax credit payable for people receiving less than $53,500 of annual taxable income would be less than $150 per week.

The net ‘dollars-in the-pocket’ effect would be a 39 cents per year gain for people receiving more than $53,500 per year, and a zero gain/loss for everybody else. The total annual fiscal cost would be about one million dollars.

Why do it if there is no significant change in after-tax incomes?

The important change is conceptual; and the power of conceptual changes should never be underestimated. The personal tax credit would be fully understood as a ‘benefit’ – in the very best sense of that word – and there would be no doubting the truth that every taxpayer is also a beneficiary. So this policy would lay to rest Luxon’s rhetorical bogey.

Next, this reconceptualisation of what we have at present does two other important things.

First, it would give governments a new policy lever; and we sure are short of policy levers at present. The $150 personal tax credit could be raised (or lowered) in future Budgets. (I heard the statement “there are limited levers that governments can pull” 11 minutes into last night’s TVNZ’s One News.)

Second, the policy would beg the question: Why deny people receiving less than $53,500 the full personal tax credit? Thus Opportunity could offer an interim non-bottom-line policy – interim relative to its Citizens Income policy which depends on the separate matter of new forms of taxation – to extend the $150 personal tax credit from higher-earning adults to all adults, whatever their levels of annual taxable income.

Thus, the $150 personal tax credit would become a Basic Universal Income (BUI).

If properly understood, such a BUI would not be expensive to implement. For people already receiving Jobseeker Benefits, Assisted Living Benefits, New Zealand Superannuation, Student Allowance, there would be no change in ‘disposable income’; no change in the amount of money in those peoples pockets, wallets, or bank accounts.

There would be a little more disposable income for adults – other than the above-mentioned beneficiaries – on lowannual wages; and for adults (such as many students presently not receiving Allowances) on no annual wages. (Such a BUI would have zero impact on the present Working for Families programme of benefits/credits.)

The extension of the $150 personal tax credit – the present status quo, albeit re-imagined – to a $150 basic universal income would target extra social spending to where it is most needed; to young people and to caregivers.

(The mantra of economic liberalism since 1984 – known as neoconservatism in the United States – is that all benefits should be bureaucratically targeted; indeed Roger Douglas did in the 1980s convert Superannuation into a ‘clawed-back’ benefit called Guaranteed Retirement Income, reversed by Winston Peters as Treasurer in 1997.)

There is one other important favourable consequence of extending the present effective personal tax credit (PTC) to a BUI; that is that, for people who lose some or all of their current incomes, the core payment (currently $150 per week; strictly $149.61 per week) is retained. That money becomes a reliable provision which can at least put food on the table for persons in transition, or in distress arising from a sudden change of circumstances. A basic universal income, while far from generous, serves as an immediate bridging payment receivable as of right, and not granted through a successful application to a government or charitable bureaucracy.

2027

The PTC could be legislated for early in 2027, soon after the next government is formed. (In 2020, acting quickly, the Labour Government removed the entitlement of [mainly] women to gain a superannuation benefit as a ‘non-qualifying spouse’ [ie a partner aged under 65 of a superannuitant aged over 65], in a matter of weeks after the formation of the new government.)

The suggested PTC is just a rebranding of what we already have in 2026. And the BUI as suggested could easily be implemented in the 2027 Budget; it’s a matter of political will and imagination, not at all a fiscal risk to the nation. We are, already, all beneficiaries.

Then, from later in 2027, we could have a sensible discussion about having a universal basic income – and new taxes – in line with or alternative to Opportunity’s present fiscal philosophy.

If there is anything wrong with my suggestions, please tell me.

About the writer:

Keith Rankin (keith at rankin dot nz), trained as an economic historian, is a retired lecturer in Economics and Statistics. He lives in Auckland, New Zealand.

Keith Rankin, 13 July 2026 – I saw and heard this from Stuff reporter Molly Swift on Three News yesterday (12 August 2026):

“History shows that replacing a sitting prime minister in an election year doesn’t end well. The only time it has worked was in 1943 after Michael Joseph Savage died in office, and Peter Fraser took over.”

Michael Joseph Savage actually died in March 1940, not 1943. Peter Fraser – Savage’s deputy – subsequently became Prime Minister. Hardly a coup, though technically there was a contest for the party leadership. Fraser ran against two inconsequential backbenchers. There was never any doubt that Fraser would succeed Savage. Wikipedia, for Savage, simply says: “He was succeeded as head of government by his deputy Peter Fraser”.

Events in more Recent History, unmentioned yesterday

In August 1974 there was an event much like that of 1940. Norman Kirk died in office, New Zealand’s last PM to do so. There was a subsequent contest for the party leadership, and hence to become Prime Minister. Kirk’s deputy was Hugh Watt. There was a contest, however, between Watt and Kirk’s Minister of Finance Bill Rowling. Rowling defeated Watt; thus it could be said that Rowling ousted Watt. Rowling was defeated ignominiously in 1975 (and despite winning the popular vote in 1978 and 1981); but Watt would probably have suffered an even bigger defeat.

We should note that neither this event, nor the Savage-Fraser succession, took place in an election year. In one short sentence, Molly Swift got it thoroughly wrong, by saying both “the only time it has worked” and “in 1943”; and of course in implying that Savage could have remained prime minister despite his having passed away.

Not the “only time”: 1990, Geoff Palmer and Mike Moore

To my great surprise, as the failed coup unfolded yesterday, I did not see, hear or read any reference to the events of 1990. 1990 most certainly was an election year.

In that year sitting (Labour) Prime Minister Geoffrey Palmer (still alive and, I understand, well) was ousted just seven weeks before the election. His replacement was the late Mike Moore (who would only be 77 years-old if still alive).

While Labour was never going to win the 1990 election, the leadership switcheroo was an undoubted success. Before the Moore coup, Labour – crushed by the failure of Rogernomics – was projected to win just 7 electorates out of 97; four of these seats were the Māori electorates. At the time, Labour governed with 57 out of 97 seats, and 43% of the votes.

(In the 1987 election, Labour was unusually popular with people who normally vote National. Left-wing voters had nowhere to go. Subsequently, New Labour broke away from Labour, becoming the core of the Alliance Party in 1993.)

In the end, Labour won 29 seats in 1990; Labour, and their senior MPs, lived to fight another day. Indeed, in 1993, the combined Left vote was a landslide. Mike Moore nearly regained his position as Prime Minister. He might even have become one of our most warmly remembered Prime Ministers, and he certainly would have saved us from Ruth Richardson’s deeply problematic ‘Fiscal Responsibility Act 1994’.

As it was though, after the 1990 election, a group of right-wing Labour MPs broke-away to form the Act Party (Association of Consumers and Taxpayers). And after the 1993 election, another group of rightish MPs (including Peter Dunne) broke-away from Labour, joining some National MPs, to form the United Party. The United Party, in its various forms, went on to become powerbroker in three different Parliaments: 2002 to 2005; 2011 to 2024; 2015-2017.

1957, Sid Holland and Keith Holyoake; and 2017

In 1957, a very unwell Sidney Holland resigned as Prime Minister and National Party leader, just 12 weeks before the election. Holyoake, Holland’s deputy, replaced Holland without fuss. National only just lost the election; with Holland at the helm the defeat would have been much larger. The replacement of the leader, at late notice, boosted National’s vote.

Events which were mentioned yesterday

In 2017, when Jacinda Ardern replaced Andrew Little late in election year (this time while in Opposition), like Holyoake she boosted her party vote compared to what it would otherwise have been. Nevertheless, under a First-past-the-Post election, Ardern’s Labour (29 electorate seats, 38% of vote) was soundly beaten by Bill English’s National (41 electorate seats, 44% of vote). This result, however, was like 1993. The support for anti-National parties was significantly more than the support for pro-National parties; so, under proportional representation, the larger bloc of parties defeated the largest party. Labour proved to be much more popular after 2017 than it was when it ruled unchecked after 2020.

And of course there was 2020, when National replaced their leader twice, though while in Opposition, not in Government. Yes, National was substantially beaten that year. The only possibility of National not having been soundly beaten in Covid Year 2020 would have been if English had stayed on as party leader after his 2017 victory cum defeat. But that damage was done early in 2018, not in election year.

Have we finished yet this year with party leadership switcheroos?

Maybe not. There’s still time for a Palmer/Moore scenario, if National’s polls take a dive. And then there’s Labour’s Chris Hipkins. It’s not too late to replace him also, as Andrew Little was replaced, to give his party a boost.

Conclusion and Warning

Going into elections with very new leaders has generally given a positive boost to the Labour or National party. The warning however is Canada in 1993. My sense is that, as Nicola Grigg said, Erica Stanford is not “capable of leading the National Party or being prime minister”. Stanford is a competent micro-manager; but, I sense, that’s it.

In Canada in 1993, the fading Brian Mulroney stepped down in favour of the 46-year-old Kim Campbell. Campbell remains Canada’s only ever female prime minister; surprising in a country with outstanding feminist credentials.

In the previous Canadian election (1988), the Progressive Conservatives won 169 seats with 43% of the vote. In 1993, their vote plummeted to 16% and they only won two seats! (Eventually that party did revive, under Stephen Harper; but, like the Australian Liberal Party, it may now be in another morbidity crisis.)

That’s the ‘political death’ scenario Labour avoided in 1990 by replacing Geoff Palmer with Mike Moore. Under MMP, the death may be less spectacular, but also more fatal as other parties bed-in. My sense is that Erica Stanford would have been a Kim Campbell. The more pertinent question today is whether Christopher Luxon will be a Geoffrey Palmer, either by being replaced or by losing to the extent in the popular vote that Palmer would have lost in 1990. In 1990, New Zealand Labour avoided its Kim Campbell moment.

In the short meantime, our political commentators could do well to learn a bit more of our country’s political history. The deceased Michael Joseph Savage was not ousted by his deputy in the 1943 election year. And 1990 is not ancient history.

About the writer:

Keith Rankin (keith at rankin dot nz), trained as an economic historian, is a retired lecturer in Economics and Statistics. He lives in Auckland, New Zealand.

Keith Rankin, 10 July 2026 – National currently has 43 electorates seats, which represents 36% of all seats in a 120-seat Parliament. If National was to get 30% of the party vote and to retain all its electorates, it would be entitled to 36 seats in total (37 seats in practice, given some ‘wasted’ votes); although if Opportunity were to just miss out, that number would probably rise to 39 seats.

With 37 entitled seats, and all electorates retained, there would be a National overhang of six seats. Such an overhang could help the National-led coalition to retain power; albeit without Nicola Willis and Paul Goldsmith.

(In 1993, National got 35% of the vote, entitling it to 35 seats in a 99-seat Parliament. It won 50 seats, meaning that if that election was held under MMP, National would have had a substantial overhang. But it still would have lost that election, because there would have been fewer bigger electorates; only FPP – First Past the Post – saved National’s bacon in 1993.)

Labour presently has 17 electorate seats. Other parties have 11. The distribution of electorate seats may well not change very much in 2026.

The Arithmetic

Total seats are determined by party vote percentages. But electorate seats are determined, in New Zealand’s experience, mainly by the two-party National-Labour swing. (New Zealand voters are generally encouraged to consider the MMP electorate vote as a party vote, even though technically it’s a personal vote. Journalists tend to say things like ‘voting for National in the Tukituki candidate vote’, rather than ‘voting for Wedd in the Tukituki candidate vote’.)

What is new this time is that the two-party National-Labour swing is looking more muted than usual when one of those is struggling. Both parties’ polled percentages are in the doldrums. This means that, while National may lose a small number of electorates, it probably won’t lose many.

So, if National gets 30% of the vote, it may well be the least unpopular party in the new Parliament. But it will need to lose seven electorate seats in order to get Willis back into parliament; and eight to save Goldsmith.

Given that National will almost certainly lose some of its electorates – including my own of Waitakere (formerly New Lynn) – National will be unwise to pursue an overhang strategy. National may lose six electorates, just enough to lose its overhang but not enough to gain any list MPs.

Clearly National’s best strategy is to try to get its party vote up to 36%, which should gain National two list MPs. But 36% seems like a tall order. National only got 38% in 2023, when it easily outpolled the next largest party.

(And what if National’s Melissa Lee wins Mt Albert from Labour? The winner in Mt Albert – a four-cornered contest this year – may only need to get 30% of the electorate vote. Lee got 33.5% in 2023, and nearly won.)

Another trick might be, in electorates where current MPs have retired, for the new candidate to ‘have a cup of tea’ with the Labour candidate Gary Payinda, and campaign for the party vote only. For example, Lloyd Budd in Whangarei; though such a budding politician would probably be reluctant. Further, there are only four electorates in this situation.

(Though if Christopher Luxon is pushed, I suspect that he would be a late withdrawal as a candidate; National could then choose to not contest Botany. Then Melissa Lee could ‘fall on her sword’, and endorse Labour’s Helen White to win Mt Albert. Maybe not. Another issue; I see that Labour are running medical doctors in at least two electorates, Whangarei and Napier. These men, I presume, are desperately needed in their communities as doctors.)

A further trick might be to put pressure on an electorate MP to resign soon after the election – maybe Penny Simmonds who is now a superannuitant – so that Nicola Willis could take her place. While the by-election strategy worked for Andy Burnham in the United Kingdom, I can think of only one similar case in New Zealand; Robert Stout.

(Sir Joseph Ward – Prime Minister 1906-1912 and MP for Awarua, south of Invercargill, from 1887 to 1919 – did try to win the Tauranga seat in a 1923 by-election, but failed; and his Party was then in Opposition. But Robert Stout – another former Prime Minister [NZ’s youngest before Jacinda Ardern] – did shift from Dunedin to Inangahua to win the 1893 by-election; but he was too late to push Richard Seddon out of the Premier’s job. Having challenged Seddon, he was not invited into Seddon’s Cabinet. Inangahua was not to the urbane Stout’s liking; he became MP for City of Wellington in the 1893 general election.)

My guess is that, if National does get to form a government (after the 2026 election) despite having no list MPs, then David Seymour will be insisting on becoming Minister of Finance. Or Shane Jones? New Zealand First might have more leverage than Act. Jones would at least move the government away from stultifying neoliberalism, much as Bill Birch eased the pain in 1994.

Re Nicola Willis, it is interesting that the electorate of Wellington North looks like being a three-cornered contest. Jonathan Pitts might just win for National. He could then be asked to stand-down in favour of Nicola Willis; for him, that would be the pits, and Willis might not win the subsequent by-election. Should she fail to get back into Parliament, Nicola Willis could succeed Ruth Richardson at the New Zealand Taxpayers Union; as soon as Ms Richardson retires, that is. In that role, Willis might have more influence and less responsibility than she has at present.

About the writer:

Keith Rankin (keith at rankin dot nz), trained as an economic historian, is a retired lecturer in Economics and Statistics. He lives in Auckland, New Zealand.

Keith Rankin, 10 July 2026 – I note that the New Zealand ambulance service (Hato Hone St John), has experienced four days this last week of all-time record callouts. The reason is a mix of increasing numbers of middle-aged and older people, spikes in certain winter illnesses, and a possible increased incidence of chronic illnesses. (See One call every 20 seconds: Current demand for ambulances ‘unsustainable’ – St John, RNZ 10 August 2026.)

These ambulance callout data will be strongly correlated to mortality data.

I have produced these charts of the New Zealand population organised by generation (aka birth cohort). I have labelled these generations B (boomer, born around 1950), J (Jones, born around 1960), X (born around 1970), Y (born around 1980), M (millennial, born around 1990), Z (born around 2000), and Α (alpha, born around 2010).

In a ‘global North’ country with minimal international migration, the population of a generation remains essentially the same until people are in their forties, and then we see a contraction – a ‘die off’ – as mortality makes discernible inroads into that population. Where international migration is significant, it is populations aged between 20 and 45 whose cohorts are expanding.

Chart 1 looks at older generations, from B to M; Chart 2 looks at younger generations from X to Α.

Chart 1

The first thing to note in Chart 1 is the ‘baseline’ of people aged 35-to-39. This is in solid blue, and reflects substantial amounts of immigration and emigration of people aged under 35. Nevertheless, the outlines of birth numbers are clear. New Zealand’s birth peaks were in the early 1960s (late Gen J) and early 1970s (late Gen X). Then there was a substantial ‘baby bust’ (Gen Y) followed by a ‘baby blip’ (Gen M). We note that the principal reason for the excess numbers of Gen M people aged 35-to-39 is immigration, not a domestic baby boom; and it may well be that many of these people do not have ‘permanent residence’ status, so may be subject to forced emigration in the next five years.

We also note that current (ie June 2026) populations for each age group and birth-cohort (from Gen J) are marked by a big orange dot. These dots tell us that the numbers of younger Gen Js, Gen Xs and Gen Ys are fairly similar to each other, thanks to some evening out resulting from net immigration. But their numbers are much higher than the numbers of ‘boomers’ (Gen B).

The next thing to note is that, for the most part, generations reach their maximum size when aged 45-to-49. Net immigration to New Zealand increases these cohorts when they are younger adults; then generational die-off becomes the principal demographic dynamic after age 50. In the case of Gen X, the immigration effect predominated until ages 50-to-54. And then we see what looks like a discernible Gen X die-off from age 50-54 to age 55-59.

The working-age die-off of Gen-B is quite small, from about 245,000 people at age 45-49 to about 230,000 people at age 65-69 (a die-off of 15,000). The comparable die-off for Gen J looks to be somewhat greater: 25,000 (from 305,000 to 280,000). We also note that, for the span of Gen X, there is a worrying level of mortality as they reach their late fifties and early sixties.

It would appear that we may attribute to Gen J and Gen X – rather than Gen B – much of the present increase of chronic illness noted by Hato Hone.

Chart 2

This chart looks at younger generations. The ‘baseline’ given here – in solid red this time – reflects mostly births, though many of the births for Gen Α in particular will be births to parents born outside of New Zealand. Immigrants generally have relatively high birth rates.

Looking at that baseline, of greatest significance is a dramatically higher number of teenagers in the mid-2020s compared to what we were used to over the previous two decades. This looming labour supply bulge will compound the labour market difficulties currently being faced by 20-to-24 year-olds.

Next we look at the big orange dots, and note that there is a huge present population bulge for Gen M; the ‘baby blip’ generation has been substantially augmented by immigration. Given the state of the New Zealand economy, it’s unlikely that Gen Z will see a boost of immigrants aged 30-to-40, which is what Gen M experienced. Indeed, Gen Z may well shrink in New Zealand over the next five years; net emigration. So the Gen M bulge will remain.

New Zealand had 300,000 Gen M people born around 1990 when they were aged 20-to-24, and now has 410,000 people born around 1990. Given that we know a lot of millennials have emigrated, it would seem that as many as 40% or 45% of this birth cohort in New Zealand were born overseas. Is New Zealand the country in the world with the greatest churn of peak-working-age population, with more immigrants coming as many emigrants go?

Conclusion

New Zealand’s working-age population is in flux. Good for the international airlines which fly to Aotearoa, but potentially very difficult for the making of social policy. Mind you, if the policymakers don’t really know about these dramatically fluctuating demographics, then they will be blissfully unaware of the difficulties which they face.

About the writer:

Keith Rankin (keith at rankin dot nz), trained as an economic historian, is a retired lecturer in Economics and Statistics. He lives in Auckland, New Zealand.

Keith Rankin, 6 August 2026 – Yesterday, the latest round of ever-worsening labour force data was released. As usual, the Prime Minister and Minister of Finance are baffled and seeking scapegoats. They will never accept that their narrative, about how a nation’s capitalist economy actually works, is false. They have invested too much in that narrative.

And the mainstream media thrashes around as well, not knowing what questions to ask, and moving on when interrupted by interesting answers.

I listened to John Campbell’s tone-deaf interview (RNZ, Morning Report) with journalist-economist Bernard Hickey this morning. (This is not my first case of criticising Campbell’s style, where he tries to put words into his interviewees’ mouths; and when he gets answers that don’t fit his conceptualisations, he either pivots away from those answers or closes the interview. See my Modern Media as Unintended Propaganda, Scoop 17 June 2026.)

Twice, Hickey mentioned that many if not most of the few ‘new jobs’ are going to people aged over 65. (I did a recent analysis of the rising employment of people aged over 65. Mostly of course they are not taking new jobs from young people. Rather, they are hanging on to their existing jobs, often for many years after they reach the age in which they are entitled to both a universal pension and to withdraw money from their KiwiSaver accounts. See my Retirement Age Labour in New Zealand, Scoop 16 July 2026.)

Twice Campbell simply ignored this central and very interesting point that Hickey was trying to make.

Further into the interview, Hickey mentioned that New Zealand was in a “balance-sheet recession”. The interview immediately ended at that point. Campbell showed no curiosity as to what a ‘balance-sheet recession’ was; he had heard enough to sense that it was something he didn’t want to know about.

On the matter of the jobs going to over-65-year-olds and not going to under-30-year-olds, Hickey was trying to make a point which needed further examination. I sensed that Hickey was arguing against the universal pension, because the pension (New Zealand Superannuation) does not give older people enough incentive to get out of the way. Thus Hickey’s apparent argument was diametrically opposed to the more common argument that we have to raise the age of entitlement to the universal pension as a way of making sure that older people continue to work and don’t retire at age 65.

A very interesting discussion could have been had, about whether it is good or bad for people aged over 65 to be in paid work. The opportunity was lost, and I don’t expect to hear this discussion any time soon.

On the matter of the balance-sheet recession, this is a mildly heterodox concept which neither our mainstream economists, mainstream politicians, nor most mainstream journalists will touch; it is a concept which hints at a solution which is diametrically opposed to the principal point of principle – fiscal probity above all else, except when war beckons – that this government stands for.

A balance-sheet recession is a recession where the principal modus operandi of businesses is survival from actual or imminent debt insolvency. Under these conditions monetary policy – whether tight or loose – makes almost zero difference to what businesses do. It means that, in the absence of a very large external stimulus or debt write-off, the economy can only be restarted through an aggressively expansionist fiscal policy. The Aotearoa New Zealand government of course is doing the exact opposite; it’s pursuing an aggressively contractionist fiscal policy.

Businesses do not hire inexperienced workers when they are in debt-survival mode. We note that New Zealand businesses took on huge amounts of debt in the years after the Covid19 pandemic. Much of that debt was contracted in 2022 and 2023 when the Reserve Bank’s interest rate settings were high. There is a very high level of actual or imminent debt insolvency

Economists have had the full opportunity to learn about balance-sheet recessions, firstly from Japan’s experiences in the 1990s, secondly from the Global Financial Crisis of 2007 to 2010, and thirdly from the Eurozone Crisis of 2020 to 2014. But, for the most part, they have reneged on that opportunity; in favour of repeating, parrot-like, narratives about monetary and fiscal policy which they learned – uncritically – in the 1990s and 2000s.

Whenever circumstances or information change, parrots and too many economists are unable to make the appropriate intellectual adjustments. Economic hawks, by and large, double-down. They remain hawks until death. They are more like clerics than academics.

Indeed Queen Elizabeth noted this inadequacy when she asked a group of economists why they had not seen the Global Financial Crisis coming. (Re the Queens Question, see Letter to the Queen 10 August 2009, and The Queen’s question returns with a vengeance Reuters 7 October 2023.)

Comparative Economic Growth

The chart below compares the economic growth over the last three years, with a number of other comparable countries.

The chart is very generous to New Zealand. It measures GDP in March 2024 and March 2026 with that of March 2023. If it had done whole-year comparisons, the growth for New Zealand over the last two years was actually zero. (See my NZ Economic Growth Over the Medium Term, Scoop 2 July 2026.)  Further, New Zealand has had a larger increase in its working-age-population than almost all of the comparator countries; this was not factored into the chart. And finally, New Zealand had such weak growth in the last two years despite receiving a record-high stimulus from export prices; almost certainly a bigger stimulus from this source than any of the other countries in the chart.

The chart measures three year-growth by reading the numbers which match the tip of the solid black bars. Thus Australia’s three-year growth was 5-percent, New Zealand’s was 2.3 percent, and Austria’s was minus 0.8 percent.

The solid black bars show the growth in the two years from March 2024 to March 2026. New Zealand’s is the smallest of all for that period; and, as noted above, a whole-year measurement would have been zero growth for the March 2026 year compared to the March 2024 year.

The hollow black-edged bars represent growth from March 2023 to March 2024. New Zealand was about average in 2023. A number of countries were in recession then, but all of them except Austria have fully bounced back; Austria’s bounce back remains partial. It is not my place here to comment about those countries’ problems, of which there are many. (‘Euro’ represents the Euro-zone within the European Union.)

I’ll note however that both the United States and United Kingdom have much stronger recent growth than New Zealand, essentially due to policies of military Keynesianism, which means that public-sector spending is playing an essential role; albeit a destructive role, given what the public money is being spent on.

Conclusion

New Zealand’s policy elites – including certain journalists at RNZ – have been responding to what is happening in the economy like possums struck by the glare of SUV headlights in full beam. And New Zealand’s non-policy non-elites have little response other than to go – quietly (in most cases) –  mad.

Some of the policy elites are going mad too, as well as dumbstruck by circumstances or intellectual rigidity. Just listen to this excellent interview from RNZ today: Tech: What’s the problem with data centres?. If these are the answer, then what is the question?

About the writer:

Keith Rankin (keith at rankin dot nz), trained as an economic historian, is a retired lecturer in Economics and Statistics. He lives in Auckland, New Zealand.

Keith Rankin, 8 July 2026 – Hiroshima Day passed yesterday almost unnoticed. (See this – Make anniversary of Hiroshima bombing ‘Disarmament Day’ – from Japan Times, and this and my this on Scoop.)

I have been pessimistic that the Russia-Ukraine War cannot end without it becoming a limited nuclear war (or worse). (See my Reckless Complacency Meaning the end of Nuclear Deterrence, Scoop, 24 July 2026.) But I’m now seeing Nato as an empty threat, and that some degree of my first scenario (non-nuclear) – “Moscow simply trying to pummel [or actually pummelling] Kyiv into submission” – may be what does achieve an end to the war. Not nice; just realism.

The reason I now see this as a realistic outcome is the substantial draw-down of Ukraine’s capacity to defend itself from aerial attack. Ukraine still has a spectacular offensive capability, which is proving more than an irritant to Moscow, and which can only make it more urgent in Moscow’s eyes to take timely advantage of Ukraine’s lack of defensive stamina. (Like Egypt in its World Cup match against New Zealand.)

World War Two analogy

I draw an analogy with the last year of World War Two (WW2) in Europe. Though, like all analogies, this is inciteful but not definitive.

In my analogy, Germany then is like Ukraine today. And United Kingdom then is like Russia today.

From June 1944 until March 1945 German V1 flying bombs and V2 ballistic missiles were launched at the United Kingdom and liberated Belgium. The principal target was London.

These missile attacks were far more than an irritant to Londoners. About 8,000 of them died; many more were injured. (Note, I am not referring to the London Blitz, which happened mostly in the latter part of 1940.) The worst attack in the last year of that war took place on 25 November 1944, destroying a Woolworths department store in southeast London; 168 were killed “outright”. Another very serious attack, early in 1945, was on London’s Smithfield meat market.

The military outcome of the European war – at least the defeat of Germany – was already certain at the date of the first V1 attack, which came after the success of the D-Day landings. In June 1944, the question was already whenGermany would surrender, and who they would surrender to. These attacks on London were acts of high-tech defiance and hubris; not a realistic attempt to reverse the outcome of the war.

From the British side, most of its carpet bombing (aka ‘morale bombing’) of German cities, and occupied Allied cities such as Le Havre took place in the months after June 1944. This may be compared to the present Russian bombardment of Ukrainian cities.

Thus the analogy is an enthusiastic but forlorn high-tech attack by the losing side against its winning rival; countered by a more lethal and more systematic bombardment by the Allied side. (The good news is that the numbers of civilian casualties by both Ukrainian drones and Russian missiles is less than the analogous numbers in 1944 and 1945. The British attacks on Germany were unnecessarily brutal.)

The analogy doesn’t fully work, in that in 1944 it was the winning side (United Kingdom) which was the proxy of a bigger power. Whereas today it’s the losing side, Ukraine, which is the proxy (of Nato). Essentially from the time of the 1943 Tehran Conference, the United Kingdom served as an American proxy; the American high command relieved the unfocussed and at times reckless Winston Churchill of any real strategic influence over the further conduct of the war.

No 2026 or 2027 analogy with Japan

Neither Moscow nor Kyiv is in a situation like Japan was in July 1945; though Kyiv may yet end up in such a situation. I can see no scenario in which Moscow would ever surrender to either Kyiv, Berlin, Brussels, or Washington.

My sense now, is, that the Ukrainian drone attacks on civilian and industrial attacks in Russia – the attacks on Wildberries are analogous to the rocket attacks in 1944 on Woolworths – will peter out as Russia, at a gathering pace, tightens the noose on Ukraine. Ukraine’s losses will be the greater the longer it takes to accept the motivation and greater strength of Russia. Russia could never accept German ‘peace-keeping’ troops in Kharkiv; or Odessa for that matter.

West Europe has only been a fair-weather friend to Ukraine, seeking unity amidst its own discord by rousing itself against a named enemy; but neither having the means nor the will to take its posturing to the next step.

Some say that Europe or Nato will ‘fight Russia to the last Ukrainian’. Economist Richard Wolff has concluded that Europe, coveting Russia and its lands which are looking better with global warming, is on a new quest for lebensraumin the East; lebensraum was Germany’s principal motive in WW1 and WW2.

I am coming to the view that western geopolitics nowadays is more a tragic case of imperial delusion obfuscated by unsustainable virtue-signalling and by smoke and mirror misinformation. Hopefully it will be all over by Hiroshima Day 2027.

About the writer:

Keith Rankin (keith at rankin dot nz), trained as an economic historian, is a retired lecturer in Economics and Statistics. He lives in Auckland, New Zealand.

Keith Rankin, 5 July 2026 – World War Two (WW2) was always a conflation of two wars, with three of the protagonists – United Kingdom, United States, Soviet Russia – playing significant roles in both wars.

Today I write on the eve of the 81st anniversary of the successful nuclear strike on the hapless Japanese city of Hiroshima. That targeted atrocity was committed by the United States military, under conditions of total secrecy, on the civilians of Hiroshima; it took place on 6 August 1945. It was a test-run, using an untested uranium explosive device. The main event was to be the aerial assault on the city of Kokura, scheduled for 9 August 1945; the dropping of duplicate of the already-tested plutonium bomb, as featured in the movie Oppenheimer.

My assessment is that WW2 ended on 30 July 1945, with the final acts of kamikaze resistance by Japan on the United States, and with the sinking of the USS Indianapolis in Philippine waters. There were no more Japanese attacks on the United States military.

After that, there was a round of gratuitous United States aggression on Japan’s mainland and a fully tightened noose. (Wikipedia August 1945: “In the heaviest raid of the war, on 2 August 1945, 800 B-29s dropped more than 6,000 tons of incendiary bombs on Japanese cities and killed 80,000 people.” and “The American government announced that every Japanese and Korean harbor of consequence had been mined, leaving Japan totally blockaded.” Checkmate.) It was now just a matter of creating a bit of ‘carrot’ to persuade Japan to sign the necessary paperwork. No more ‘stick’ could make a difference. (80,000 was the approximate toll of the subsequent Hiroshima bomb.)

Cold? War

Both the German and Japanese wars ushered in, not peace, but a new war in which the victorious western Allies turned against their two victorious eastern Allies. The effective declaration of war against Soviet Russia was immediate, and that against China was four years subsequent. Further, of the five ‘victorious’ Allies, two were not victorious at all. In no way was the position in the world of United Kingdom and France strengthened. Indeed we can say their positions in the world were substantially weakened; we can however say that these two former great powers were undefeated in any formal sense.

At the Potsdam Conference of late July 1945 – where Churchill was replaced by Attlee mid conference – US President Truman informed Stalin on 24 July of the threat of their decisive new weapon. (“He casually told Stalin that the US had a new weapon of unusual and destructive force” [Google AI].) That was an implicit declaration of ‘cold war’.

The Cold War rapidly heated at Hiroshima on 6 August. Russia’s near-immediate response was to declare war on Japan on 8 August, indicating a resolve to defend their interests in far-eastern Asia. Soviet Union forces entered Korea – notionally still a Japanese possession – on 10 August 1945. In the meantime, the United States dropped a duplicate of their tested plutonium bomb, on 9 August on the return journey from cloudy Kokura; on Japan’s city most connected with western culture, Nagasaki.

Under pressure from Soviet Russia’s advances, and still not fully understanding what had hit them – given that, by the beginning of August 1945, Japan had already been bombed, in five months, more than Germany had been bombed in three years – Japan and the United States were both under pressure to sign a quick peace deal with each other. The United States finally agreed to make an all important concession, and retain the role and status of the Imperial Emperor; these formalities were signed on 15 August.

Technically, based on paperwork, the Pacific War did not end until 2 September 1945, with the initial agreement between the United States and Soviet Russia to partition Korea. But that is best understood as a part the setting of the battle-lines for the Cold War, as were the partition of Germany and the ethnic cleanings of Eastern Europe

So I would date the end of World War Two to 30 July 1945, with the end of Japan’s offensive resistance (ie Japan’s final military action on foreign territory or international waters). And the beginning of the Cold War was 24 July 1945, when President Truman first used nuclear weapons to threaten Joseph Stalin. There was an overlap of about a week.

This means that, the atomic explosion over Hiroshima on 6 August 1945 was the first and most dramatic of many hot incidents in the Cold War. World War Two – or at least the war between The West and The Axis – was already over except for the paperwork.

Note that the Cold War was a mix of hot proxy wars and nuclear brinkmanship

The Cold War started as an asymmetric war in Japan and Korea, and it continued to be a war fought almost entirely in locations other than the home territories of the protagonist and antagonist countries. (We may say that in 1949 China changed sides in the Cold War, and that there was overt civil war and US covert action in the islands – Kinmen and Matsu – just off China’s Fujian coast in the 1950s. Those islands are Chinese sovereign territory, but have never been subject to the control of the administration of the Peoples Republic of China. The United States did incur fatalities in 1954; and, that year, the then Secretary of State [John Foster Dulles] had advocated the use of “massive retaliatory power” against the Soviet Union, not appreciating the significance of Stalin’s death the year before, or the Peoples Republic of China.)

https://www.washingtonpost.com/world/asia_pacific/china-taiwan-us-military-cold-war-kinmen/2020/09/09/c2a5caa6-e6bc-11ea-bf44-0d31c85838a5_story.html

https://www.hudson.org/security-alliances/breaking-seven-decade-taboo-deployment-us-special-forces-kinmen-miles-yu

https://www.politico.com/story/2016/01/this-day-in-politics-state-department-nuclear-retaliation-1954-217456

And from Google AI (link effective for seven days):

March 1955: “During the First Taiwan Strait Crisis, Dulles publicly advocated for treating tactical nuclear weapons as conventional ordnance, stating that the US would likely use small atomic weapons in a general Far East conflict.”

January 1956: “In a famous interview with Life magazine, Dulles formalized his philosophy of ‘Brinkmanship’, boasting that intentionally pushing the Soviet Union and China to the very verge of nuclear war was a ‘necessary art’ to secure peace.”

Is such Dulles-style brinkmanship Nato’s present doctrine against Russia? Are we now in a new hot Cold War in which only one side is fighting through a proxy? Are we on the brink?

And/or maybe we are in the latest hot phase of a cold Anglo-American war against Russia which began in Crimea on 28 March 1854? Or which began in 1839, as a Great Game fought for the most part through proxies in central Asia?

Geopolitics is still largely treated as a game by its more entitled protagonists, despite all having changed for the world to see on 6 August 1945. Nuclear civilian collateral damage dates back 81 years.

Mass civilian damage precedes Hiroshima, of course.

Q. Which ship sinking, in world history, had the most ever fatalities?

A. The Sinking of the Wilhelm Gustloff in the Baltic Sea in January 1945, by a torpedo from a Soviet Russian submarine S-13, killed 9,000 German refugees, mostly jam-packed women and children. (Story from the National WWII Museum, New Orleans, 30 January 2020.) Lest we forget. Or maybe this is one of so many stories we were never told? Anyone who flirts with the idea of world war needs to be aware of such tragedies.

About the writer:

Keith Rankin (keith at rankin dot nz), trained as an economic historian, is a retired lecturer in Economics and Statistics. He lives in Auckland, New Zealand.

Keith Rankin, 31 July 2026

With the movie The Odyssey now in our cinemas, I decided to dip into Eric Cline’s book 1177BC; the Year Civilization Collapsed. While not specifically about the Greco-Trojan War, the book focuses on that period bordering on prehistory as one of a few major pivot points of the human experience on Earth.

In referencing 2020, however, Cline displayed a not uncommon naivete among historians in relation to a non-specialist (for them) topic or period. In the forward to the 2021 edition of 1177BC, Cline says in relation to an article he saw in The Guardian of 6 Feb 2020 (Humanity under threat from perfect storm of crises – study) by Fiona Harvey. The article begins: “The world is facing a series of interlinked emergencies that are threatening the existence of humans”.

We note that the date of the article, 6 Feb 2020, was in the week that Covid19 was first becoming a known problem in Europe. The article didn’t mention the new coronavirus, though; in large part because it referred to a study undertaken in 2019.

Referring to Harvey’s short article, Cline noted that the referenced study “had concluded that there are a number of principal emergencies facing us today: climate change with weather extremes; species loss; water scarcity; and a food production crisis. What was particularly worrisome, she said, is that “the combination of all … is amplifying the risks of each, creating a perfect storm that threatens to engulf humanity”.

This summary seems remarkably tame to us today, just seven years later. From a 2026 perspective, the 2019 metaphorical weather bomb was at most a ‘perfect storm in a teacup’. Indeed, 2019 was the least problematic year this century for the global economy. Even the terrorist attacks in Christchurch and Colombo – with Muslims being either victims or perpetrators – were in 2019 mere echoes of the tensions mid-decade, focussed on Syria and Iraq. The world was essentially at peace in 2019 (Afghanistan notwithstanding); people were confidently making expansive plans about their futures, and quietly making progress on decarbonisation.

Cline, writing in 2021 during the Delta wave of Covid19, concurred with Harvey, only adding the overblown Covid19 pandemic into the mix. Thus 2020 was his candidate to rival 1177BC.

Nowadays we can look back and see that the Covid19 pandemic was – in the sweep of human history – relatively tame in both its demographic and economic impact. And that countries like Sweden which argued against overhyping that event were broadly correct. The important but still understated story was the role of immunity, in both its initial absence and in the eventual global immunisation (largely through Omicron) which put an end to that fear episode.

A similar novel coronavirus pandemic had ravaged the world in the early 1890s, when the world economy was also highly globalised, but not even many epidemiologists know or knew much about it. That ‘Russian Flu’ was not as bad an event as the later ‘Spanish Flu’. And the Spanish Flu has rarely been cited as a turning event in human history; even though it probably was, given its likely contribution to the outcome of World War One. The numbers of people whose deaths were attributable to the global influenza epidemic of 2016-2018 was close enough to those attributed in 2020-2022 to Covid19; at least in the ‘Global North’.

2026 a Storm an Order of Magnitude more ‘Perfect’ than 2019

This year’s ‘perfect storm’ is, I would argue, at least ten times stormier than that of 2019. But I wouldn’t use that hackneyed storm metaphor to describe this year, because we can easily imagine 2027 to be worse. And 2028 or 2029 or 2030 to be worse again, especially given the hype coming out of Europe about an existential war taking place in or around those years.

As well as today’s obvious threats which did not feature in Harvey’s report, the four which were mentioned – climate extremes, species loss, water scarcity, food security – are all substantially aggravated in 2026, though generally less remarked upon (except in the immediate throes of the news cycle, as in the Spanish fires). Today’s bigger threats – including but not only these four – have largely become normalised, including the biggest threat of all, the threat of nuclear war. (See my Reckless Complacency meaning the End of Nuclear Deterrence, Evening Report and Scoop, 25 July 2026.)

In 2026 we chatter more about interest rates and government debt, and talk as if misframed ‘inflation’ is the biggest threat of all. Such macroeconomist micro-doom chatter is largely an aggravating displacement activity, prose we can cite if or when we – rich as well as poor – go down with our own Homeric Titanic (see the connection to Greek mythology here in Dark Titanic Powers and the Origins of Humanity); or, perhaps more aptly, the Lusitania.

In 2019, interest rates and inflation and inflationary expectations were all very low. Indeed, those were the days, Fiona Harvey’s article notwithstanding. We should learn the lesson about what was right with our world in 2019, rather than what was wrong with it.

Today’s escalated threat to humanity of geopolitical war is greater than the threats to humanity arising from failure to defeat and unseat adversaries such as Vladimir Putin and Masoud Pezeshkian. Rather the conduct of military stalemates – forever wars – is more than undoing the efforts of many of the rest of us to preserve the world and to secure food and water supplies.

Mars, seemingly, is trying to turn Earth into Venus. The angry western Gods of 1177BC remain part of the western mindset. The present efforts of those entitled humans with access to more dollars than sense, even if unsuccessful, may well result in a historical turning point to rival 1177BC. Cline was correct to note that “the combination of all [threats] … is amplifying the risks of each”. So much more so today than in distant 2019 or 2020.

And I haven’t mentioned AI once! Until now. That’s the other – other than the ‘cost of living’ – obsessive point of chatter today. How could the cost-of-living be anything but high when so many of our resources are being deployed to gaslight our planet and all its species? And when such trumped-up stupidity is being amplified by our software.

About the writer:

Keith Rankin (keith at rankin dot nz), trained as an economic historian, is a retired lecturer in Economics and Statistics. He lives in Auckland, New Zealand.

Keith Rankin, 29 July 2026 – Which has been the most nuked region in the world? It’s the Pacific. The first three nuclear weapons to be exploded were in New Mexico, Hiroshima, and Nagasaki. Two (in Japan) with Pacific Ocean shorelines; and the New Mexico Trinity site is the same distance to the nearest Pacific shore as Chatham Island is from Aotearoa’s North Island.

Despite those three early examples, the most nuked part of the world is not the North Pacific.

If we think of actual nuclear explosions – especially atmospheric ones – they have predominantly been in Oceania; in four sites which form something of a spoke-wheel around Auckland, as the map below (from Google Maps) shows. These sites of British, American and French explosions in the 1950s and 1960s – including the biggest atmospheric explosions, ever – are: Maralinga (Australia), Bikini Atoll (Marshall Islands), Christmas Island (the world’s biggest atoll, now in Kiribati), and Mururoa Atoll (French Polynesia).

Future nuclear war(s) – there may only be one – will be fought far from the decision centres of the belligerents. Just as Hiroshima was far from Washington and Moscow, and – as with the explosions of the 1950s and 1960s – the damage to life of the indigenous people at or near the nuclear explosions was not a major consideration.

The next nuclear war will be an asymmetric war, and Iran has just written the textbook of how-to-do asymmetric war.

Modern asymmetric war is all about the powerful belligerent(s) with lesser deterrence capability attacking the allies of the belligerent(s) with more layers of deterrence; especially allies which have on their territories poorly defended (physical or human capital) assets which contribute to the war effort of the more powerful belligerent. (See my Reckless Complacency Meaning the End of Nuclear Deterrence, Scoop 24 July 2026.)

Eight of the nine nuclear armed nation-states have capacity to launch weapons from submarines. Nowhere is out of nuclear range.

We, here, are on Russia’s radar. We have imposed various sanctions on Russian personal, and trade with Russia. (Though we have been quite happy to consume Russian fuel-oil that may have been laundered through Korean or Chinese refineries.) Yesterday, our lead story was about a man arrested in Russia for treason; allegedly spying for the SIS. Rhetoric in Wellington towards Moscow is as belligerent as it is anywhere.

Mordor was not always Mordor. Back in the good old Soviet Union days Aotearoa had a strong economic relationship with Russia (as with Iran, too), especially through the dairy industry; the relationship manifested then, in part, through cow for car swap deals. Remember the Lada cars which were not uncommon here in the 1980s? Some were refitted and re-exported to other parts of Oceania. Those cosy days of the Cold War are now long gone. (The downward slide possibly started in 1986 when a risk-taking local sea-pilot – inadvertently, or semi-advertently – sank a Russian cruise-ship full with Australian tourists.)

Russia is aware of the Five-Eyes ‘intelligence’ network. And will also be aware that Central Otago and Auckland are bolt-holes for some of the oligarchs whose intellectual property underpins America’s present global belligerence. And that companies like Rocket Lab are contributing to the activities of the United States’ Department of War, indeed launching satellites from Launch Complex 1. Russia may be aware that the local manufacturing industry has pivoted towards the supply-chain of the United States’ war industry, benefitting from United States’ military Keynesianism.

Should I be concerned, given that I live in Auckland?

About the writer:

Keith Rankin (keith at rankin dot nz), trained as an economic historian, is a retired lecturer in Economics and Statistics. He lives in Auckland, New Zealand.

Keith Rankin, 24 July 2026 – Ever since the Soviet Union gained the ‘atomic bomb’ in 1949, the argument among geopoliticians has been that an edgy global ‘peace’ has been maintained by virtue of the principle of deterrence.

Nuclear Complacency

That principle has broken down, at least with respect to nuclear weapons. Nuclear-armed Russia is being attacked, in 2026, with seeming impunity by NATO-backed Ukraine. And the principal news media outlets look away.

From 1949 to 1990 (most of the Cold War) – especially after 1955, following the frozen settlements in Taiwan and Korea – there was a clear almost unanimous understanding among political establishments that the presence of nuclear weapons in any country would deter any other country (including the United States) from mounting a ‘kinetic attack’. And that the absence of nuclear weapons made a country vulnerable to attack.

North Korea and Libya have been cited, quite recently, as proof of the principle; North Korea having nuclear weapons and being left relatively alone, and Libya not having nuclear weapons and as a result becoming a victim of one of Barrack Obama’s ‘wars of liberation’.

The received view is that deterrence kept the world from nuclear warfare in the second half of last century; with the Cuban Missile Crisis as an example of a settlement made possible by deterrence.

Iran wanted to have an ambiguous nuclear program, as a deterrent. It has had a long twentieth century history of invasions, occupations, foreign-backed coups, and post-revolutionary belligerence from two nuclear-armed countries (the United States, and Israel). Belligerent geopolitics and geo-economics maintain animosities between countries; states of enmity which might otherwise diffuse and eventually disappear.

Evidence from the Ukraine War in particular shows that the principle of nuclear deterrence has been replaced by a new narrative which can best be described as ‘playing chicken’; games of chicken with existential risks.

Other forms of deterrence – for third parties, non-existential deterrence – may still have effect; Iran is testing out one of those, the time-worn strategy of blockade, which the British applied successfully (though not without cost) to defeat both Napoleon in the early nineteenth century and the Second Reich in World War One. Hence, the greater threat associated with the Ukraine-Russia conflict.

This century the principle of nuclear deterrence has been forgotten, and not only with respect to Russia. Iran has directly attacked Israel, a nuclear power, in three recent wars; albeit in response to attacks by Israel. And, last year India and Pakistan waged a short war against each other; both are nuclear armed.

The proof that the era of nuclear deterrence has come to an end is most visible with respect to the former Soviet Union. Ukraine, a country with a GDP smaller than New Zealand, routinely strikes at the infrastructure of Russia, a former superpower and the nation state on this planet with the most nuclear weapons.

Ukraine’s behaviour can only be described as ‘baiting the bear’, and has clearly been backed by Nato, especially the E3nations of Germany, France and the United Kingdom. It is clear that, whatever else Ukrainians wish their country to be, Ukraine is serving as a proxy for a wider ‘western’ agenda. When Ukrainian defence minister Mykhailo Fedorovwas reputedly sacked, recent news footage on Al Jazeera showed him on a podium with Palantir’s Alex Karp, on a podium with Mark Rutte, and also on a podium with Germany’s hawkish defence minister Boris Pistorius.

(It seems that Fedorov has now been reinstated in some form, and his rival Oleksandr Syrskyi has since been dismissed. See, Volodymyr Zelenskyy’s removal of two top defence officials highlights the role of morale in long wars, James Horncastle for The Conversation, 23 July 2026.)

With the help of Palantir and Germany this year, Ukraine’s strikes have caused serious damage as far east as Siberia, and as far north as the former imperial capital, St. Petersburg. These strikes are hurting Russia, much as German air-strikes hurt the United Kingdom in 1940 and 1945; and as the German U-Boat submarines severely hurt the United Kingdom in WW1 and WW2. Nothing yet has had as much of an impact on Russia as the sinking of the Lusitania had on the United Kingdom (and also on the United States; Churchill hoped that the sinking of that ocean liner would bring the United States into that war). But it may only be a matter of time.

We also should note that war brought regime change to the United Kingdom in both 1916 and 1940. In both cases, the new regimes were significantly more belligerent towards Germany. If the West seeks regime change in Moscow in 2026, the West should be more careful about what it wishes for.

Russians do have a more strongly felt sense of history than most westerners do. They know that it was Germany’s foolish decision (even more egregious than that of Donald Trump on 28 February 2026 re Israel and Iran) to wage war on the Russian Empire in August 1914 that set of a set of geopolitical forces still in place today. And they also know that the Russian generals, in 1812, burnt down Moscow in order to save Russia from Napoleon’s invasion force. And many Russians know that the United States and United Kingdom invaded Russia in 1918 in an attempt to reverse the Bolshevik Revolution of October/November 1917; a failed military venture comparable with (though bigger than!) the 1961 Bay of Pigs invasion of Cuba. And Russians know that it was they who liberated Europe from Nazi Germany in May 1945, and that in August 1945 Soviet Russia’s former allies turned on them just months later.

The ‘Cold’ War began with two demonstrative nuclear explosions over an already-pulverised Japan. After that, a number of fearful westerners – called ‘traitors’ by many, the Rosenbergs went to the electric chair – acted to ensure that, by 1949, Soviet Russia also had nuclear weapons. That is when the principle of deterrence was established, and since then no nuclear weapons have been deployed against a foreign power (though many nuclear tests have had severe adverse consequences for colonised populations in the Pacific and elsewhere).

Today Russia’s GDP is significantly smaller than that of France, the smallest of the E3 nations; Russia’s GDP is the same as that of Italy. Post-Soviet Russia now finds itself in another asymmetric fight for its survival as an independent geopolity. (And I say ‘geopolity’ not because there is any evidence that Russia wants to conquer its western adversaries, but because Russia’s territory is a vast and strategic landmass in a world that is warming, meaning that Russia is becoming more liveable at a time that West Europe is becoming less liveable.) Russians remember Germany’s lebensraum project in both its WW2 and WW1 guises.

Of course no country with such a small GDP as Russia can credibly sustain an attack on any much larger country, let alone a nuclear ‘power’ such as France. Ukraine is openly attacking a large nuclear power in its role as a non-nuclear proxy of the nuclear-armed NATO alliance of 32 countries. Russia clearly sees itself as being under attack from northwest Europe; and, if Russia strikes back against Ukraine’s backers, northwest Europe is a likely target.

My sense is that, in Ukraine, where the dominant politics is projected by young elites (millennials and Generation Y), and also in West Europe – where people born after 1970 increasingly hold sway – there is little practical understanding of what nuclear weapons actually are. People born before 1953 fully understood nuclear weapons because of post-war (1945 to 1962) geopolitics. The deterrence principle worked in the 1960s in part through mass protests; the ban the bomb movement, the Campaign for Nuclear Disarmament.

That geopolitics that was superseded by the Vietnam War which defused the nuclear issue while upping the ante on United States imperialism. Leftists, in becoming more anti-war, became less anti-nuclear.

Then Generation Jones (actually people born around 1958 to 1969) became sensitised to the dangers of nuclear war when the Cold War was restoked in the late 1970s (think the Olympic Games’ boycotts of 1980 and 1984). Many will remember the early-1980s’ protests in New Zealand led by Australian activist Dr Helen Caldicott; this wave of protests was much more connected to left-wing politics than the earlier wave, and also was somewhat marginalised as a mass movement through its associations with radical feminism. In the United Kingdom in the 1980s, that protest was epitomised by the Greenham Common Women’s Peace Camp.

We may note that the anti-Vietnam generation is conspicuously absent today in calling-out the present danger of nuclear war. We also note that people born in the mid-1950s (eg Germany’s Friedrich Merz) were too young for the first wave of anti-nuclear activism, and a bit too old for the second (more partisan) wave.

Has deterrence gone asymmetric?

We have to suppose that many influential people within NATO are discounting Russian nuclear deterrence, and are therefore comfortable playing ‘chicken’ or ‘Russian roulette’ with Russia. (We note that John Foster Dulles, US Secretary of State 1953 to 1959, was perfectly comfortable advocating nuclear strikes in the years 1953 to 1955, but essentially with China as adversary; China’s lesson from that episode was to become a nuclear power.)

As I see it, the NATO cocksureness arises from what it sees as three-trick deterrence trumping Russia’s one-trick deterrence. The United States can use Europe as a giant human shield. Nato’s Article Five is projected as a form of Western deterrence at least as much as is the United States’ nuclear capability. While France and the United Kingdom have nuclear weapons, it is generally understood that they would only be deployed in the name of national rather than regional ‘defence’.

But Germany (and I understand at least some other NATO countries) has United States’ nuclear weapons on site, and full capability to deploy them, only subject to the nod of the United States president. Russia of course knows this, and believes that Donald Trump is much less likely to authorise German use of nuclear weapons than an easily-played Joe Biden might have been.

Google AI ‘thinks’ that, if or when backed into a corner, Russia will “escalate”, with the possibility of going nuclear being present but, as yet, unlikely. Google AI is of course not intelligent, in the sense that it does not think for itself; Google AI cannot overcome the framing which is ubiquitous in the western literature. Google gave no basis for the suggested “low probability” of a nuclear escalation by Russia; rather Google merely did an undergraduate-level literature review. Project Syndicate writers underplay the risk as they alert readers to it; see my Can Andy Burnham Overcome the War and Debt Bogeys? Scoop 20 July 2026.

NATO’s third trick is its anti-missile defence. Certainly the most strategic locations within NATO will be very well defended by Patriot missiles and the like; and of course Russia knows that. So Russia, if it does escalate, will almost certainly take its cue from Iran, and go asymmetric. There is of course a nuclear precedent; the nuclear war of the West against Russia began in 1945 with asymmetric strikes (from a Russian viewpoint) on Japan. The subsequent ‘Cold’ War was mostly but not entirely a ‘cold nuclear war’, a nuclear war of the imagination.

How might Russia escalate?

Those paying attention will be aware that there is a growing opinion among Russian elites and military types that Russia should escalate, and sooner rather than later, to restore nuclear deterrence. That includes a view that Russia should have done so two or three years ago; that President Putin was too liberal in holding out for a Trump-led negotiated settlement which would end the European threat to Russia, and that maybe Russia would need to perform a bigger shock today than it would have then. There is now a sense that Trump is no longer on that wavelength, so there is really no reason for Russia to keep waiting. The forces directed against Russia are, at present severe, and only becoming more severe.

Germany attacked Russia in 1914 because it calculated that an earlier attack would meet less opposition than a later attack. Will Russia attack Europe sooner rather than later, by the same logic?

For a sense of discussion by academics in both the west and Russia, a good place to turn to is Glenn Diesen’s Greater Eurasia podcasts. Diesen, a Norwegian political scientist, wrote Russophobia: Propaganda in International Politics. He was on Al Jazeera’s Inside Story this week, alongside two advocates for belligerence, from Ukraine and from London.

Given the three-prong deterrence that NATO holds (compared to Russia’s one-prong deterrence), if Russia strikes NATO, advocates of such a strike would like the action to be more performative than lethal, though sufficient to address the West’s complacency.

I see six options for a Russian escalation out of the present intensifying stalemate. The first option is already happening, with Moscow simply trying to pummel Kyiv into submission. But we already know that there has been too much tit for Russia’s tat. There are five other genuine escalatory options, any of which may or may not “restore deterrence” as the Russian proponents put it.

The first two would be either a determined non-nuclear strike on a Ukrainian nuclear power station, or a nuclear strike on some target in western Ukraine. (We commonly think of ‘plants’ – including nuclear ‘factories’ – as targets for conventional weapons; and cities as targets for nuclear weapons.)

The remaining three options would be asymmetric attacks on a likely-minimally-defended NATO target. The first anti-NATO option would be a conventional attack, comparable with the most severe Iranian strikes on UAE, Bahrain or Kuwait. The second would be an attack on a nuclear power station within Nato (probably not on a southern European nation, not on a nation bordering Russia, and almost certainly not on Türkiye). The third of these options would be a performative single nuclear strike on a target within NATO. (It is unlikely but not impossible that Russia would choose, for its first strike to restore deterrence, a non-Nato non-Ukraine ally of NATO.)

So the question then becomes, what would NATO do in response to such an attack? We already know what NATO is doing in response to the Russian attempts to pummel Kyiv; the response is escalatory in nature, not at all respecting Russia’s once much-vaunted nuclear deterrence. So, what about the other five escalation scenarios?

It is clearly not-rational to escalate a single asymmetric nuclear strike into an all-out nuclear war; but casual observers tend to presume that such a non-rational response is also a very likely response. The most likely NATO response, in my view, would be a proportional counter-attack on Russia. One tit for one tat, and hoping that it ends there, with both sides having a clearer understanding about what is at stake. Indeed Russia would be gambling on a response that was no more than proportional.

But we are already seeing the United States versus Iran war escalating, after much tit-for-tat, and with highly disproportional threats from the American president. My sense is that, in the NATO versus Russia conflict (confined to Ukraine, at least so far), in the event of a counter-escalation it is more likely to be NATO than Russia that responds disproportionately. And not least because NATO has, within its ranks, more people with ‘bring it on’ messianic attitudes towards an apocalypse. I would include the Palantir pair – Alex Karp and Peter Thiel – as such new age messianics; believers in the Dark Enlightenment who believe that some relatively small group of people and animals (as per Noah, in Genesis, and his extended family) are fated to survive a nuclear tragedy. (We note that ‘Kiwi’ Peter Thiel has opted for Argentina as a better bet than Aotearoa as a site to sit-out the ‘downside risk’ implicit in his worldview.)

Missing Empathy for Russia

There seems to be no empathy at all for Russia. First, we must note that ’empathy’ is not ‘sympathy’. Empathy towards an adversary is an understanding of what motivates that adversary, and what that adversary is likely to do in response to provocation. It is about statistical expectations rather than moral expectations: compare ‘what we expect Russia will do’ with ‘what we expect Russia to do’; the latter is what ‘we’ want ‘them’ to do. It is not good policy to label an armed foe as ‘Evil’ and to then expect it to respond to attacks in a mild-mannered way.

It has to be an example of clinical insanity for an entity calling itself ‘Good’ to do offensive (ie attacking) things to an adversary it frames as ‘Evil’, and to expect that adversary to respond in a benign manner; especially if that adversary is armed to the teeth, and had hitherto believed that those arms would deter us from attacking it.

In messianic western framing, ‘our’ adoption of the label Good gives ‘us’ (in our own minds) licence to behave in a fully evil manner in order to effectively combat the entity or entities which we have labelled ‘Evil’. And the expectation – as noted, an ambiguous word – that Evil will respond in a non-evil [indeed submissive] manner. In such an unhinged world, if the gamble pays off, it is Good that does evil things and Evil that does good things.

By looking at informed commentary based on reality – on realpolitik – rather than the kind of ‘holier-than-thou’ stuff coming out of Ukraine and Nato-in-Wonderland (an intellectual rabbit-hole if ever there was one), it’s only a matter of time as to when Russia either loses its patience and strikes a significant target within NATO, or perpetrates a nuclear strike on some target in Western Ukraine. (If you are in a rabbit-hole, stop burrowing.)

The Ukraine/Nato-in-Wonderland narrative, like the initial Cold War narrative, claims (without bothering to ask Russia) that Russia plans to conquer and occupy Europe, and maybe the United Kingdom, Canada, and the United States as well. NATO even proposes a date; 2030. Russia has a GDP no larger than that of Italy. There is no way in the world that it could ever occupy or otherwise dominate the sub-continent of Europe, even if it wanted to.

What Russia clearly doesn’t want is NATO weapons of or near mass-destruction pointing at Russia from Russian-speaking lands that have, for most of their history, been part of the Russian Empire in one or other of its iterations.

There is a de-escalatory solution, in which both East and West survive, as they were in say 2019. As I understand it, Russia wants that solution and NATO doesn’t. And Russia believes that, with increasing surety, that Rusia itself has to do something the re-establish a state of deterrence predicated on the mutual fear of nuclear weapons.

Meanwhile, the whole West operates in a state of reckless and mindless complacency. Don’t look up. The Russia-Ukraine-NATO war barely makes it into the West’s curated news media.

Nuclear war has a capacity to end all life on Earth – not just humans – and perhaps all life in the universe, given that we do not know for sure that there is life elsewhere. Is the desire to impose a western-style regime in Russia worth risking all life for? Playing down the risk does not remove the risk.

In traditional warfare there were two parties: ‘us’ and ‘them’; it was a two-party ‘game’. Is it in any way acceptable to hold hostage the majority of the people on Earth who are mere ‘third parties’? Nuclear war is a three-party game. If ‘we’ cannot frame it in any other way other than Good ‘we’ versus Evil ‘them’, then maybe ‘we’ do have to appease ‘them’ in order to avoid the possibility of a catastrophe that is (literally) infinitely worse than such appeasement. (We may note that ‘appeasement’ happens in all sorts of contexts as a part of life; part of the raising of children is teaching them to compromise.)

Complacency today echoes the complacency of 1914

Complacency was true, also, in June 1914. The First and Second Balkan Wars had been resolved, seemingly. Hardly anybody then expected that there would soon be a Third Balkan War, and that that war – stoked in part by the European news media – would explode into the greatest tragedy the world has faced, so far. The Judeophobic Holocaust was only a smallish part of the totality of that 1914 to 1945 tragedy. Yet, only 81 years after 1945, most of us in New Zealand only know about Anzac Day, the Holocaust, Dunkirk, and maybe D-Day and the 1940 (but not the 1945) London Blitz.

Even Christopher Nolan’s epic movie Oppenheimer only presented Japan in one brief scene; it conveyed the drama of nuclear war more than its horror. The nuclear explosions at Hiroshima and Nagasaki, widely believed to have ended the 1914 to 1945 tragedy, instead ushered in a new tragedy whereby the principal allied winners of the European War in 1945 were turned onto by the secondary winners of that war. The ‘Cold War’ is not over. Just as 1914-1945 had a military interregnum from 1919 to 1939, the Cold War enjoyed an interregnum from 1990 to 2008. The geopolitical hawks in federal capitals like Washington never stopped hawking. (The Japan tragedy was actually ended by an American concession to Japan, re the continued role of the titular Emperor.)

It was the NATO summit in Bucharest in 2008 that Jeffrey Sachs pinpoints as the redeclaration of war on Russia; noting Clausewitz’s much quoted aphorism that “war is the continuation of politics by other means”, meaning in effect that unresolved or unresolvable politics is the prequel to war.

With hindsight, we can understand Germany’s declaration of war against Russia in 1914 as not that different to today’s war against Russia; a determined effort by Europe – or at least part of Europe – to suppress and provoke a nominated adversary. Germany was complacent then, too, believing – genuinely, but unrealistically – that Russia would capitulate in a matter of months.

About the writer:

Keith Rankin (keith at rankin dot nz), trained as an economic historian, is a retired lecturer in Economics and Statistics. He lives in Auckland, New Zealand.

Keith Rankin, 23 July 2026 – Most people with a knowledge of history, ceremony, and English language idiom know that ‘bending the knee’ is an expression of fealty, of formal submission to an immediate superior in a dominance hierarchy.

When I entered “‘bending the knee’ prince william king charles” into Google, I got the response:

“Prince William knelt before King Charles III to perform the Homage of Royal Blood during the coronation on May 6, 2023, at Westminster Abbey. He was the sole royal duke required to do this, making a personal pledge of allegiance to the new monarch.”

Yet Christopher Hipkins, who should be able to speak like an educated man, said this on the 11am news (RNZ) today:

“We had Shane Jones effectively insinuating that Christopher Luxon performed an oral sex act on a visiting dignitary” [in this case, Narendra Modi].

Now we know that Shane Jones is an educated man, and a man of metaphor. Jones’ metaphor was a clear reference to ‘bending the knee’ as an expression of fealty, as the Prince of Wales did to his father.

For Hipkins to display his ignorance in this way is a worry. It is also a worry when anyone in a position of influence who is unsure about the meaning of something – or is faced with genuine ambiguity – defaults to the most extremely negative of interpretations. (That’s how wars begin!)

Shane Jones was making a serious point, and I did find Luxon’s behaviour towards Modi to be somewhat obsequious.

Hipkins would be better served to address the point actually being made by Shane Jones. Was Luxon’s behaviour sufficiently deferential to convey vassalage towards India? Was it as deferential as Mark Rutte calling Donald Trump “Daddy”?

Should New Zealand be explicitly deferential towards India? It’s a real question, especially in the context of geo-economics where certain alpha-politicians demand submission. I would like to hear Mr Hipkins’ answer, and not his crude schoolboy interpretations.

About the writer:

Keith Rankin (keith at rankin dot nz), trained as an economic historian, is a retired lecturer in Economics and Statistics. He lives in Auckland, New Zealand.

Keith Rankin – On Monday, July 20, Andy Burnham became prime minister of the United Kingdom, replacing Keir Starmer. He’ll be the second leading Commonwealth prime minister, in recent years, to have been elevated into the Prime Ministership from outside of parliament (with Mark Carney, prime minister of Canada being the first).

Keir Starmer

To many people from outside of the United Kingdom, who get their news from elite-media sources, it will be not clear why Keir Starmer became so toxic as the United Kingdom prime minister. There were two essential reasons.

The first was foreign policy. Starmer, already unpopular before his party won the 2024 election with a record-low popular vote (contrast the support that election for Jeremy Corban), ‘cooked his political goose’ early on with his unwavering support for Israel at a time when Israel was (and still is) committing live-streamed genocide. This source of unpopularity was amplified by the Starmer government’s declaration of pro-Palestinian protestors as ‘terrorists’; all at a time when the world was coming to realise that the unevidenced declaration of certain people as terrorists becomes a licence to murder or torture them.

Further, on the foreign policy front, United Kingdom elites in general – and Keir Starmer in particular – have pursued a belligerent anti-Russia foreign policy. It is not at all clear that ordinary British people are quite as animated about Vladimir Putin as Boris Johnson, Liz Truss, and Keir Starmer have been; I am sure Donald Trump animates more people than Putin.

Keir Starmer – along with Germany’s Friedrich Mertz and France’s Emmanuel Macron – is a principal foreign backer of Ukraine’s attacks deep into Russia (and attacks on oil facilities – including tankers – far more telling than anything Iran has done in the Persian Gulf), the world’s most heavily nuclear-armed nation. My sense is that ordinary British people are not so much concerned about Russia, and are much more concerned about ‘bread and butter’ economic issues; and dearly wish for a deprioritisation of foreign policy belligerence in favour of reduced domestic inequality and more domestic opportunity.

Thus, the second essential reason for Starmer’s downfall was domestic policy. Some of the concern about recent missteps in domestic policy has mis-translated into a very real ‘anti-immigrant’ narrative among England’s working class; Burnham will not try to placate that sentiment. The deeper concerns relate to the retrenchment of the British welfare state (with an increasingly punitive approach towards Britain’s huge and growing numbers of economic victims), and the retrenchment of the British fiscal state creating a series of leaderships characterised by a Pavlovian helplessness towards the injection of money into the economy.

On this last point, the United Kingdom suffered in 2010 by (as Ruth Richardson did in New Zealand in 1994) the passing of a law to render expansionary fiscal policy illegal; these now illegal policies, when adopted in the past, got the world out of the Great Depression of the 1930s and then built up the post-war prosperity.

(The New Zealand fiscal repression law was the 1994 Fiscal Responsibility Act, now incorporated into the Finance Act; and note The Fiscal Responsibility Act 1994: The astonishing success of a weak non-binding policy 2018 by Derek Gill. We may also note that Christopher Luxon follows the principles of fiscal repression as a matter of belief, and not because he is obliged to by the law.)

The British initiative, associated with George Osborne, established the Office for Budget Responsibility. This has led to a highly conservative form of technocratic governance informed by classical liberal principles (established 210 years ago by James Mill and David Ricardo) and disallowing governance informed by Keynesian principles (established 90 years ago by John Maynard Keynes). (For other references, see Can Andy Burnham rebuild Britain if the OBR says no? July 2026 by Richard J Murphy, The OBR and the unintended economic consequences of Mr Osborne 12 July 2024 by Nick O’Donovan, and The Role of the OBR 25 July 2024, New Economy Brief.)

Andy Burnham

Andy Burnham is popular because he’s seen as a plausible, indeed charismatic, political leader with sound albeit moderate social-democratic credentials. Yet almost all the television coverage I have seen about him focuses on domestic socio-economic and regional governance policy; none of that coverage has focussed on fiscal policy.

All this at a time when the world faces its most serious geo-military crisis, ever (or at least since the 1962 Cuba-USA-USSR crisis). And in which the United Kingdom is a central player; indeed the nuclear power whose decisions might – and sooner than many of us would prefer to think – swing the fate of the world between life and death.

(Note these two articles, both written by people who are not Russophiles, which contain warnings about what the Russian polity might do as its other politically-realistic options disappear: The Putin Escalation Risk 3 July 2026 by Ian Bremmer; and Letting Russia Burn 13 July 2026 by Nina L Khrushcheva, great-granddaughter of the leader of the Soviet Union in 1962 Nikita Sergeyevich Khrushchev; both articles on Project Syndicate.)

What will Burnham do if, for example, Russia strikes at a nuclear power station within a Nato country; or fires a nuclear warhead into Western Ukraine? Burnham has no track record on foreign policy, or geopolitics.

Finally, will Burnham succumb to the Office for Business Responsibility?

The Liberal Democrats succumbed in 2010 to 2015 (coalition partners in government), by going along with the damaging policies of fiscal consolidation; the policies (pursued also by Germany with its debt-brake) which delayed the European recovery by at least half a decade. The LibDems caught the wrath of the British electorate in 2015.

Brexit was an indirect result of the Office for Business Responsibility. With a referendum, the United Kingdom could not hide behind the incumbent-preservation bias of the First Past the Post electoral system (saving the Tories in 2015; this bias also preserved unpopular governments in New Zealand in 1978, 1981, 1987, and especially 1993). In the 2016 Brexit referendum, every vote counted; previously, people in the northeast of England had almost never had their votes make a jot of difference to the outcome of British elections.

Theresa May survived as prime minister for three years, benefitting from the best three years of the world economy since 2008, but being gaslit by Boris Johnson. Johnson could have been prime minister for a decade, but he undermined himself principally through issues more interesting to the media than fiscal policy. Liz Truss tried to defy the OBR (in an extreme right-wing way), and only lasted a few weeks. Rishi Sunak did his best given the political constraints he was up against, the most important having been that he was both a Conservative and a conservative.

It was Starmer who was most overtly tested by the OBR, and he failed that test spectacularly (but not as spectacularly as Christopher Luxon has failed the equivalent test in New Zealand, though Luxon may yet be saved by a number of fortuitous circumstances which are in no way attributable to him). Economic slowth in the United Kingdom has been significantly less problematic than in New Zealand.

We have no indication, yet, that Burnham has the political smarts to defeat the Treasury technocrats. But, as Richard Murphy explained, he is almost certainly Britain’s best bet at present.

Analysis of the 2024 United Kingdom election clearly suggests that Labour would have got far more than 34% of the vote had Burnham rather than Starmer been the party leader then.) Burnham does have a mandate to lead – and to change course – despite the unusual circumstances through which he has become Prime Minister.

Here’s hoping that Andy Burnham can overcome the belligerents in both the British Treasury and in Nato. Does he have the balls to be a non-belligerent on the world stage? Can he face down Mark Rutte?

About the writer:

Keith Rankin (keith at rankin dot nz), trained as an economic historian, is a retired lecturer in Economics and Statistics. He lives in Auckland, New Zealand.

Keith Rankin, 16 July 2026 – There is much loose political talk in New Zealand about the ‘retirement age’ and whether it should be raised; meaning the age of entitlement to New Zealand Superannuation which is a universal pension.

If we continue to use the term ‘retirement age’ as a fixed age set by legislation, we are perpetuating old-school assumptions around the male-breadwinner model; in particular the assumption that retirement is a life-stage (like a butterfly turning back into a dependent caterpillar). The assumption is that 64-year-old men should be fulltime paid workers and that retired men should be ‘out to pasture’. This assumption is perpetuated by Statistics New Zealand, which – in its Household Labour Force Survey – only formally publishes age-related data for age brackets from 15-19 through to 60-64 (though limited information can be found about 65-69 year olds). The presumption is that people working at post-retirement age are essentially stragglers.

Further, the idea of a retirement age at 65 is perpetuated by the whole KiwiSaver thing. KiwiSaver is at present a popular subscription-based savings scheme which levies employees today in return for a distant reward, and which taxes subscribers’ employers. (The ’employer contribution’ is levied as a tax equivalent; employers never get it back when they retire.)

Reality check

The charts below depict the growth of employment of New Zealanders aged over 65 and under 70.

The first chart uses a ‘growth scale’ which means that a steady rate of growth can be depicted by a straight line. The second chart uses an ‘arithmetic scale’ which exaggerates recent data, though shows proportions better. The first chart shows both the growth of the population in that age group, and the growth of employed people. While the numbers for the two series are on separate scales (see the colour code), a given rate of growth looks the same for both the red and the blue series. So, for the period after 1999, the steepness of the red series indicates much faster employment growth than population growth.

In the first chart, first we see that the employment of 65-69 year-olds was consistently low, indeed falling below 12,000 in early 1993. As well as reflecting retirement as having been accepted as a life-stage, this reflects the very weak labour market in the late 1980s and in the early 1990s – the Ruthanasia years – and also a depletion of jobs during the downturn instigated by the 1997/98 Asian financial crisis.

Low employment growth for ‘seniors’ in the late 1990s also reflects the very slow-then-negative population growth in that age group. (In 1998, people aged 65 were born in 1932 or 1933, the peak years of the Great Depression, when birth numbers were very low. These people, from that low birth cohort, are now aged around 92.)

The low numbers of 65-69 year-old workers in the late 1990s also reflects the fact that the age of eligibility for New Zealand Superannuation was raised from 60 to 65 during that decade. And, there was an effective means-test on New Zealand Superannuation (then called Guaranteed Retirement Income) until Treasurer Winston Peters insisted that universality was restored. (Roger Douglas, Minister of Finance from 1984 to 1988, was a big fan of the word ‘guaranteed’, which some people still confuse with the word ‘universal’.) So most people who had been aged 60-64 in the first part of the 1990s were quite insistent on enjoying a full retirement from the age of 65; and that relatively privileged generation, for the most part, were not under much economic pressure to stay in work.

All changed in the 2000s’ decade. A combination of economic revival, population growth (shown in blue; the early-war baby blip preceded the post-war baby boom), and a simple rights-based pension which was not subject to a means test together triggered a decade of exponential growth of the employment of ‘young seniors’ (a useful name for 65-69 year-olds). The numbers of employed people in this age group quadrupled during that decade.

The exponential growth rate was thirteen percent per year; a very high rate (shown by the black dashed straight line). If it had continued at that rate, the grey-dashed-line shows that the numbers of employed young-seniors would have more than doubled again, to 130,000 during 2015. Obviously such exponential growth cannot continue forever.

The second chart shows (grey-dashed-line, a curve given the arithmetic scale) that, at that exponential rate of growth, all young-seniors would have been employed by 2020. (In this chart the two scales – red and blue – are the same; the blue numbers on the right match the red numbers on the left.)

The second chart shows that the number of not-employed young seniors has stayed about the same since the beginning of the 1990s; that’s the gap between the blue and the red series. The indication is that, under normal employment conditions, the number of fully retired young-seniors is not growing, despite the doubling of the number of 65-69 year-olds in the population over the last twenty years.

Analysis of the young-senior workforce dynamic

For my purpose here, it is probably most useful to define ‘young seniors’ as people aged 55 to under 75. Young seniors have always represented a dynamic component of the labour force; as have young people (aged 15 to under 25) and as have ‘married’ (today, ‘partnered’) women.

For young-seniors, the dynamic is modified by public pension arrangements; both the age of pension entitlement and the terms and conditions associated with public pensions.

(Part of the terms and conditions of a pension scheme can alter public perceptions around the acceptance of a pension; a pension that is understood as rights-based – especially a ‘dignity-enhancing’ pension funded by collective past paid and unpaid contributions to economic prosperity – is favoured by recipients over a pension that is perceived as a ‘dignity-eroding’ transfer or ‘hand-out’.)

In modern labour economics, there are two dynamic ‘supply-side’ elements that contribute to the numbers of people in the ‘labour force’. (Note that the important ‘demand-side’ determinant of employment applies when consumer and/or government spending is weak; weak demand for goods and services means weak demand for labour. New Zealand is very much in phase of labour-demand weakness; a phase which began some time in 2023.)

Supply-side elements are the choices by people – as individuals, or as members of households – about the extent to which they want to ‘rent out’ some of their time to employers (as wage or salary workers) or directly to customers (as self-employed people). The crude version of labour supply is binary: any amount of time rented out by an individual counts a person as employed, otherwise they are not-employed. (This is of course unsatisfactory, but for simplicity I will follow this simple presumption.)

Labour economics also adopts another crude division; dividing the not-employed into two categories: ‘unemployed’ (the smaller category) and ‘not in the labour force’ (almost always the larger category). The way that this is done is – or at least should be – controversial; the result is that there are two very important dynamics in play with respect to the ‘not-employed’. These two dynamic groups – added workers and discouraged workers – often cancel each other out, which allows both groups of would-be workers to be largely ignored at times of high unemployment.

Discouraged Workers

The more recent conventions – in play internationally since the global neoliberal revolution which took place mainly in the 1980s – treat discouraged workers as vacationers, going on to presume that these people drop out of the workforce whenever wages fall below their ‘reservation wages’. The effective conclusion is that a significant number of working-age people take advantage of periods of low wages to take a holiday; for the poorest of these people, it’s an urban (or, increasingly, suburban) camping holiday. One non-neoliberal economist said that the economic liberals – neoliberals and neoconservatives – think of the Great Depression as the Great Vacation.

These economic liberals claim that such discouraged workers are ‘voluntarily unemployed’, and therefore should be categorised as neither employed nor unemployed; that is, they should be stuffed into the same statistical ‘remainder’ category otherwise allotted to retired persons, housewives, and fulltime students. This categorisation has been accepted, for many decades now, by the International Labour Organisation (based in Geneva) and so has become institutionalised in all labour-market statistics.

Unemployed workers are recategorised as discouraged workers if for any reason they are judged to be not looking assiduously enough for a job, or if they are not immediately available to start work. The ‘not immediately available’ disqualifier excludes people who, when they lost their jobs, had to withdraw children from childcare. Many unemployed older people – not required to be actively seeking work in order to receive a pension – do not easily fit the strict ILO definition of unemployment.

Recessions – especially longer or deeper ones – are characterised by large amounts of ‘discouraged workers’. It means that in periods such as the early 1990s – the deep Ruthanasia recession – true unemployment was much higher than cited unemployment. We see in the first chart that the entire fall-off in the employment of 65-69 year-olds was due to that recession and the one in the 1980s immediately before. (It was a ‘double-dip’ recession.) Very few of those ‘not-employed’ were counted then as ‘unemployed’; rather they were counted as ‘retired’, as ‘not in the labour force’.

Added Workers

The important dynamic – which should be informing ‘retirement policy’ – is the added-worker effect (and its counterpart, subtracted workers).

In studies of the Great Depression – including my own MA thesis – the principal focus was on added female workers and added young workers. During the Great Depression in New Zealand, there was actually a rise in young female employees, despite mass unemployment generally. Further, huge numbers of female non-workers became unemployed because they responded to the circumstances of unemployed (and underemployed) husbands and fathers by going out and making themselves fully available for employment.

Such women and girls may be said to be ‘distress added workers’. When conditions returned to normal, and the husbands and fathers got their jobs back, they would become subtracted workers, withdrawing from the labour force. An important feature of the subtracted-worker effect used to be a rise in the birth rate after a recession. During the recession – with the Great Depression being the template – married women were more focused on securing an income, and single women delayed marriage plans.

In the ‘breadwinner model’, when the breadwinner can no longer earn enough to support the household, then the whole household (of adults) becomes part of the labour force. We continue to acknowledge this today, because when a married sole-breadwinner becomes unemployed, the marriage partner also becomes unemployed as a condition of their receiving a ‘job-seeker’ benefit.

Retirement-age added workers were also important during the Great Depression, but less so in countries like New Zealand which had income-tested pensions. The age-benefit was easy enough to get in the Great Depression, so substantially reduced hidden elderly unemployment.

Informing ‘Retirement-Age Policy’

By ‘Retirement-Age Policy’ I mean any policy which is intended to impact the incomes and workforce choices of people in the age group 55 to under 75 (ie 55-74 year-olds; aka, young seniors, broadly defined). (I do not include the National Party’s policy on KiwiSaver contributions, even though National’s policy substantially alludes to retirement-age politics.)

New Zealand is somewhat unusual in that the centre-piece of retirement income-support is a universal opt-in schemewhich pays any New Zealander aged over 65 (except for certain categories of immigrants) a minimum of $300.26 per week and a maximum of $555.15; plus a weekly ‘winter energy payment for part of the year of $20.46.

(The variation in payments arises both because New Zealand Superannuation is formally classed as taxable income, and because there are extra payments available to people who are ‘single’ and who are ‘living-alone’. A ‘partnered’ person without employment typically gets $427.04 per week. A partnered Superannuitant in ordinary fulltime employment gets $344.54 or $329.78 per week, depending on their marginal tax rate.)

What is the added-worker dynamic in New Zealand? The usual dynamic applies whereby in tight times (such as now, see the senior-employment uptick from 2025 to 2026), more people aged over 65 wish to stay in employment for household ‘cost-of-living’ reasons (which increasingly include rent and/or debt). If they cannot find a job (ie if they are unemployed when they turn 65, or need to re-enter the labour force after turning 65) they likely will be both added-workers and discouraged-workers, meaning they will be statistically invisible. The presence in the labour market of these invisible would-be workers is only revealed when the economy recovers; in the economy’s recovery phase, they often have advantages over young unemployed workers because of their experience.

The other offsetting dynamic is the presence of restrictions or disincentives. Means-tested pensions have restrictions, by definition; so non-universal age-income-support mechanisms inhibit the seniors’ added-worker effect. So, in New Zealand (without restrictions or disincentives), a significantly larger proportion of people over 65 are employed (and counted as unemployed) than in, say, Australia.

Further, regardless of tight economic times, in both New Zealand and Australia there are many people – especially aged 65-74 – whose first preference (regardless of economic conditions) is to be in the labour force. This is both because people born from the 1930s to the 1950s are living longer than their predecessors (mostly a result of rising living standards in the second half of the twentieth century), and because there is more awareness of ‘blended’ lifestyle options (where ‘blended’ means a mix of roles, which includes some paid work). Indeed blended lifestyles increasingly characterise the whole of young-seniorhood, from age 55.

The desire for blended lifestyles – mixes of paid work and other activities – generate an added worker effect for people aged 65-74, and a subtracted-worker effect for people aged 55-64. Retirement-provision systems with restrictions inhibit both. Thus the KiwiSaver age restriction inhibits people aged 55-64 from shifting to more-favourable work-life balance.

(So does the lack of a 55-plus benefit, which used to exist for a while in the 1990s. “In the 1990s, the ’55-plus benefit’ was an emergency unemployment benefit introduced in 1992 specifically for displaced older workers. It did not require recipients to actively seek work. In October 1998, the government replaced it with the ‘Community Wage’.”)

The then unpublicised removal of the ‘non-qualifying spouse’ provision for New Zealand Superannuation in 2020 also removes socio-economic flexibility for partners under 65 years-old.

And means-tested pensions inhibit the lifestyle – work-life balance – benefits of the added-worker effect for 65-74 year-olds. With restrictive retirement-income policies, more people aged 55-64 work extra hours under sufferance. And more people aged 65-74 work fewer hours than they would prefer, again under sufferance. It is the universal approach to retirement policy that yields the greatest socio-economic efficiency.

Making way for young workers

Under a system of socio-economic efficiency – as opposed to a system where choices about retirement are largely imposed – older workers actually start to make way for younger workers sooner; and older workers are increasingly enabled to contribute to society in ways other than paid work under sufferance.

In the absence of politically-driven age restrictions and means-tests, many more older workers continue to contribute to the economy in positive ways, based on their own understandings of how they can contribute, and what work-life balance works best for all the stakeholders in seniors’ lives. One form of work that older workers can do – on a paid, unpaid (voluntary), or underpaid (ie semi-voluntary) basis – is the mentoring of younger workers into positions of responsibility and leadership.

Good or bad thing?

Higher rates of employments of people aged 65-69 may be both a good thing and a bad thing. Where it reflects the work-life balance of seniors in reasonably good health, more paid work provides benefits for older and younger people, and reduces production constraints arising from aging populations.

But when older people are (for purely economic reasons) added workers clinging onto jobs which they would rather retire from, then they are simply blocking the employment pipeline – gumming up the works – and contributing to the difficulties being faced in making young people productive. An important aspect of preventing elderly-poverty in any society is to facilitate the productiveness of the generations of their adult children and grandchildren.

1938-1940 Universal Superannuation

New Zealand’s universal system of New Zealand Superannuation had its origins in the late 1930s, after the Great Depression. Labour won the 1935 election on the back of promises to universalise and extend social security. As is common, the most vociferous opponents of universal social security were the elites of the time; the irony is that the argument most deployed against universal systems is that they provide benefits for the wealthy, yet it is the wealthy who most oppose them. (The elites do have the nous to understand that universal systems do not benefit the wealthy in the manner of that critique; rather they empower the non-wealthy into making efficient socio-economic choices, including giving non-elites bargaining power.)

Eventually, and because the 1935-1938 Labour Government was elected with a broad constituency including rural and self-employed people (the ‘petit-bourgeois’!), that government was able to put a set of universalist proposals to the electorate in 1938; and as a result they won a sweeping victory. (They avoided the economic policy timidity trap which controls politics today.)

The centrepiece of the 1938 policy was Universal Superannuation, the policy – to become operational in 1940 – was to pay a small universal benefit (the word ‘benefit’ had positive connotations then) to every ‘senior’ person, including ‘young seniors’, and including women who had contributed so much in ways other than through paid work.

The policy was popular and affordable. While that government had to constantly wrestle with the ‘where will the money come from?’ critique from the elites, it delivered, and well-under budget. (Sadly the superannuation policy’s main salesman, Michael Joseph Saveage, died before his masterwork became operational.)

It was always understood that the amount paid would be able to increase substantially over time; as indeed it did. And the New Zealand economy grew through the following decades, despite all manner of demographic and terms-of-trade constraints. The fact that the initial offering was small conferred a political advantage; the policy was both visionary and affordable, so was difficult for political opponents to undermine.

The trick was to sell a small universal benefit as a core part of a much larger vision. Many older New Zealanders continue to lead good lives today on account of the practical success of that vision. Ironically, it was the much derided Sir Robert Muldoon who was the last great proponent of Mickey Savage’s socio-economic vision. It was after the political downfall of ‘Muldoonism’ – a political style mischaracterised as a failed economic strategy – that the economic liberals (the classical liberals of early nineteenth-century policy-making) replaced socio-economic efficiency with a targeted and punitive approach to social security.

Conclusion

The labour supply of older New Zealanders is a critical but under-understood component of what makes liberal capitalist societies continue to tick. Universal pension provision has huge benefits to society, including enabling older people to stay in the paid workforce, working and living under their own terms, and mentoring the young.

Alternative policies, whether imposing means-tests, or delaying access to retirement income, create substantial socio-economic inefficiencies. Making people work under sufferance until they are 67 (or older), and then retire, does not facilitate a liberal work-life balance; does not ensure the best mix of labour market and non-labour-market activity to support the changing population age structure.

Appendix

I finish with, for interest, the growth charts for 60-64 year-olds, and 55-59 year-olds. The 60-64 chart, in particular, should be understood in the context of the increase that decade in the age of Superannuation from 60 to 65.

About the writer:

Keith Rankin (keith at rankin dot nz), trained as an economic historian, is a retired lecturer in Economics and Statistics. He lives in Auckland, New Zealand.

Keith Rankin, 13 July 2026 – One way to entrench an ideology-motivated political policy – typically a solution looking for a problem – is to get the timing right.

We know from medical science that many conditions come right – heal themselves, without treatment – after a certain amount of time. This is true for many pathogen-caused conditions, which are resolved by the immune system. Likewise, orthopaedic conditions often heal themselves; they just need a bit of time, and common-sense routines on the part of the affected persons.

Economic ailments can be similar. Indeed the social science of economics is all about self-healing through market mechanisms. Often, but not always, the best thing to do is nothing. Economics is a wonderful and insightful social science; though it has had experiences of being highjacked by groups of people promoting narratives, often self-serving narratives which are beliefs passing as truths.

Two such economic ailments are recession and inflation. Recessions – unless being aggravated by some exogenous problem – are part of a business cycle. Hence they come, and then they go. The implementation of a policy during a cyclical recession may: hasten the recovery, have no impact on the recovery, delay the recovery, prevent the recovery, or turn a recession into a depression. A pre-emptive anti-recessionary policy may: prevent a recession, hasten a recession, or have no impact on subsequent events.

My focus here is on the two italicised cases. That an implemented policy may have no (discernible) impact on what happens afterwards. The important thing is if authorities implement what they say is an anti-recessionary policy during a recession, and the recession ends some time afterwards, they cannot (on the basis of ensuing events) conclude that the policy caused or contributed to the favourable outcome.

Likewise with a pre-emptive policy. If you say that you are doing something to prevent a recession, and a recession doesn’t happen, that does not in any way prove that your action was effective in preventing the recession which didn’t happen.

Inflation

Last week I wrote Interest Rates: Is the NZ Economy Presently Overstimulated? Scoop 9 July 2026. I criticised Wednesday’s monetary policy initiative by the Reserve Bank, raising interest rates pre-emptively to prevent, they said, a renewed bout of inflation.

I have one further comment about that policy. If there is no inflation next year (outside the 1%-3% policy target band), then last week’s policy may be lauded as a success; whereas the counterfactual – what would have happened otherwise – might have been that there would also have been no inflation. Or there might have been even less inflation had there been no rise in the OCR (Official Cash Rate); say 1% instead of 3%.

Further, if CPI-inflation goes up next year – eg sits at about 4% in 2027 – then the policy may still be lauded as a success, on the basis of claims that it might otherwise have gone up to 5% or more.

The point is that the anti-inflation policy hawks knew that July 2026 was a good time to implement an anti-inflation initiative, because the likely inflation outcome – which most likely would be what would happen anyway, regardless of the monetary policy intervention – could be presented as evidence that the policy did prevent inflation; that the outcome did justify the hawkish policy. In reality, an acceptable inflation – the most probable outcome regardless – would most likely be unattributable to the policy; the ensuing acceptable inflation would be what would have happened anyway.

New Zealand’s History

The classic example of this policy malfeasance – indeed it’s entered the international literature, including American economics textbooks, as a policy success – is the New Zealand Reserve Bank Act of 1989. This legislation continues to perpetuate the activist policy approach of repeated intervention to stop inflation; intervention against inflation despite there being no evidence that the policy has done anything other than create recessions.

In New Zealand the inflation of the 1970s and very early 1980s was clearly decelerating by 1984; indeed Treasury and other forecasts offered in the second half of 1984 suggested that there would be some return to inflation after the 1982/83 price/wage freeze, but nothing like a return to the CPI-inflation levels of 1979 to 1981; price increases linked to the 1979 Iranian Revolution, and the price of oil.

In 1985, however, CPI-inflation shot up, briefly, to 1979 levels. The clear evidence is that, under the new Labour government, it was partly due to high wage increases paid to unionised workers, a political quid pro quo. Any above-forecast inflation could always be – and indeed was – attributed to the previous government. (Don’t all governments in their first year – or first two years – blame the previous government when policy initiatives have adverse consequences?) Further, the very-high interest rate monetary policies implemented early in 1985 may have aggravated the unforecast 1985 ‘cost-of-living’ problem.

Yet in 1986, inflation came down again. So there was no case for the belief of the policy hawks that employers and employees were, in 1986, anticipating accelerating inflation. The clear evidence was that inflation in 1986 was decelerating, albeit after a 1985 boost that was not anticipated in 1984.

After that, the waters got muddied. GST (goods and services tax, a value-added tax) was introduced and implemented (at 10%) in October 1986. So CPI-inflation went back up in 1987, for another one-off reason. Once again, CPI-inflation went down in 1988; but it went up in 1989 when GST was increased to 12.5%.

It was in 1989, amidst thoroughly ‘muddied waters’, that the New Zealand Reserve Bank Act was implemented, requiring the Reserve Bank to set – one way or another – interventionist interest rates as a tool to manage inflation expectations. The claim was that New Zealanders, thanks to two decades of history, had expectation that annual inflation in the 1990s would be at or close to double-digit levels, and that inflation at those high levels would inevitably create expectations of accelerating inflation (ie hinting that hyperinflation was just around the corner if the Reserve Bank did not intervene).

It was all nonsense, and easily verified as nonsense. New Zealand’s inflationary trajectory in the 1990s was almost identical to the inflation trajectories of other countries which had not yet implemented inflation-targeting monetary policies. The only evidence offered that the 1989 policy was counter-inflationary was that inflation in the 1990s was significantly lower than it had been in the 1980s.

There was no nuance in the policy hawks’ narrative. No admission that 1980s’ inflation was very much ‘yo-yo’ in nature – due to a sequence of clearly identifiable one-off circumstances – and no admission that, except in a few very extreme cases in distant history (relating to individual countries, not the whole world), inflation is a decelerating rather than an accelerating phenomenon. The theoretical case as posited by the monetary hawks – that employers and employees would have inflated expectations of inflation – remained very weak both logically and empirically.

But this kind of interventionist policy was a core part of an ideology which then captured an influential and monied constituency. And by implementing the policy at a time when inflation was coming down anyway, the policy extremists were able to get away with pointing to the low-inflation aftermath and saying that it was their policy elixir which had brought low inflation to the world.

Further, because the commentariat was intimidated by the monetary hawks – who used lots of impenetrable, inappropriate and irrelevant mathematics and jargon – too many commentators and politicians simply went along with what these experts (the ideologues) said was true. (We note that the experts on witch-burning were the witch-burners!) For academics and bureaucrats, the easier life – the successful career – is had by joining rather than opposing the groupthink; soon enough, a new generation is taught by the previous generation of groupthinkers. 2020s’ economists were taught in large part by 1980s’ groupthinkers.

Summary

Narrative-building by interested parties may be built on a tactic of repeatedly proposing a favoured policy intervention, and managing to get it implemented when what you say you want to happen is most likely to happen regardless of the policy. Generally, policies of ideology are solutions waiting for apparent problems; policies that justify themselves through certain problems (commonly overstated problems) but that really serve other undisclosed purposes.

If authorities intervene when the object of their intervention is already self-resolving, then they cannot claim to have performed an effective intervention. But they generally do make that claim! And get away with it.

About the writer:

Keith Rankin (keith at rankin dot nz), trained as an economic historian, is a retired lecturer in Economics and Statistics. He lives in Auckland, New Zealand.