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.

Keith Rankin, 9 July 2026 – The authorities’ policy of economic cruelty continues, with yesterday’s rise in the Official Cash Rate in the middle of an ongoing (and possibly deepening) economic crisis. Refer OCR Increased To 2.50% To Return Inflation To 2%, Scoop, 8 July 2026.

The argument originally presented, a few months ago, for a rate hike in July was that the Israel-US-Iran war would lead to significant cost increases which would then unleash ‘inflationary expectations’ which would need to be quelled by higher interest rates (where higher interest rates would serve as a Pavlovian signal for employers and workers to expect lower inflation).

The story we got yesterday was that, while such war-based expectations had already been quelled, nevertheless interest rates would still need to go up to some ‘neutral’ level; the storytellers (including miscellaneous bank economists) asserted that the OCR of 2.25% was ‘stimulatory’. The argument was that the New Zealand economy is now in the initial phases of an economic growth boom, is presently overstimulated, and that the inflationary expectations arising from this projected boom would need to be pre-emptively quelled! As if taking steps to aggravate a cost-of-living crisis reduces, as a matter of course, inflationary expectations.

Most people, quite rightly, think that the imposition of higher costs means higher (than otherwise) price increases. Indeed, you would have to be living in a rabbit-hole or echo-chamber or faith-based community (or all three) to believe that additional higher costs lead to lower price increases.

Nobody can tell us what the ‘neutral rate of (OCR) interest’ is; though there is a clearly claimed claim that the neutral rate is above 2.5%. (We should note that there may not even be a neutral rate. Or there may be a floating neutral rate. It’s ungrounded woohoo economics.)

The Neutral Rate of Interest (OCR)

We only have to look at the Reserve Bank’s own chart, to see that the best estimate of a neutral rate is the 1.75% which prevailed from late 2016 to mid-2019. In those years – years of stable on-target economic growth – the inflation rate was stable between 1% and 2%.

If anything the 1.75% OCR was above the neutral rate, given that the annual inflation rate stayed stubbornly below the 2% target. Further, in May 2019 the OCR was decreased from 1.75%, as evidence accrued that the 1.75% level was mildly contractionary. The 2019 cycle of OCR reductions brought that rate down to 1% by September. Inflation indeed increased to 2.5% in February 2020, just before the Covid pandemic. The clear evidence here is that neutral, if it exists at all, is about 1.25%.

We also note from the Reserve Bank’s own chart that there were two mistaken attempts in the early 2010s to raise the OCR. Both attempts were explained, effectively, as ‘stimulus reducing’ rate hikes – likened to easing the accelerator rather than deploying the brakes; thus, in both those cases, the belief was that there was a neutral OCR interest rate around 3.5%. And in both cases reality required the Bank to reverse its stance. The evidence became clear (to those willing to see it) that the neutral interest rate was no higher (and probably lower) than the then prevailing 2.5%. Hence OCR rates were brought down to 1.75% in 2016. And that 1.75% proved to be the ‘sweet spot’, at least until 2019 when it appeared to be too high.

(We note that in those years from 2014 to 2019, interest rates in Europe and Japan were set at zero percent or lower, and that those settings proved stable until the Covid19 pandemic which started in 2020. Thus, for the best part of a decade, the neutral interest rate in Europe was zero. And the neutral rates in North America and the United Kingdom were below one percent.)

What actually happens to inflation with high and rising interest rates?

We can look at New Zealand in the late 2000s, and at our ‘Anglo-Saxon cousins’ in the years after the elimination of Covid’s delta strain, meaning the years when the ‘pandemic crisis’ – as distinct from the pandemic itself – were over.

In New Zealand in late 2003, the OCR was set at 5%. Since then there was a long tightening cycle taking the OCR to 8.25% in mid-2007, and keeping the OCR there until July 2008. Interestingly this – from 2004 to 2007 – was a period of significant increases in the exchange rate of the New Zealand dollar (NZD) meaning that, on that basis alone, inflation in New Zealand should have been very low. In fact, from 2004Q3 to 2008Q3, inflation averaged 3.4%; going up to 5.1% in the year to September 2008. (In late 2008 and early 2009, the OCR interest rate was slashed within a year from 8.25% to 2.5%; those high interest rates had been an important contributing cause of the 2008 Global Financial Crisis.)

Clearly, the rises in the OCR from 2003 to 2007 were aggravating inflation, not dampening it!

In the United States, interest rates stayed at 0.25% until March 2022. They then increased to 5.5% in 2023; and started falling late in 2024, tapering off at 3.75% at the end of 2025. Annual inflation peaked four months after the rise in interest rates, and then fell over the next year. Then from mid-2023 annual inflation in the United States stayed around 3%; until, that is, inflation went up this year to 4.2%. The United States was unusual compared to Europe in keeping its interest rates high; probably as a result of this, inflation stayed high in the USA compared to Europe. (Of late, France’s interest rates have been 2.15% and inflation around 2%; and this is normal for Europe.) The evidence here points to a direct causal relationship in the United States from higher interest rates to higher inflation rates.

In Canada, interest rates followed a similar cycle to that of the United States. But the peak was lower, and the climb-down from the peak went further. Most likely as a result, the inflation rate came down more in Canada than in the United States because the interest rates also came down by more.

In the United Kingdom the raising and lowering of interest rates followed a similar cycle. The OCR-equivalent interest rate went up to 5.25% and the rate has subsequently only come down to 3.75%. Inflation in the last two years, while not as high as in the United States, has been significantly higher than in New Zealand and Canada.

Australia only raised interest rates to 4.35%, and definitely had less accumulated inflation than New Zealand in the years from 2021 to 2023. But Australia only lowered to 3.6%, and this year has pushed its interest rates back up to 4.35%, the same as the post-Covid high. With very high and now rising interest rates in 2025 and 2026, Australia has had significantly higher inflation rates than New Zealand in the last twelve months; in Australia annual inflation rose to over 4% at the beginning of this year! While the UK has had high and falling interest rates in the last year, Australia has had high and rising interest rates. In the United Kingdom, measured inflation has come down; in Australia it has gone up.

If this was a court case being put to a jury, the evidence is ‘beyond reasonable doubt’ that higher interest rates aggravate rather than ameliorate inflation. The Reserve Bank, like a crooked prosecutor, gets away with its counter-evidential claims simply because the evidence is not put to a jury of common sense lay opinion. The evidence presented here, while conclusive beyond reasonable doubt, is not at all technical; certainly much less technical than much evidence routinely put before juries in New Zealand.

The New Zealand Reserve Bank thinks of itself as a science-based organisation. But it rarely addresses the quite available historical evidence which refutes the narrative that higher interest rates are required to lower inflation.

The state of the New Zealand economy

For more evidence, to understand the state of the New Zealand economy, we only have to look at my recent article NZ Economic Growth Over The Medium Term, where I published a chart showing that for the last 12 months, New Zealand’s GDP has been lower than GDP two years earlier. In common parlance, that level of low economic growth is called a recession. And all manner of social statistics support the evidence that the New Zealand economy is in a recessionary hole; and that the last thing it needs is a counter-stimulatory monetary policy.

Below I present a new version of that chart, this time showing per-capita GDP. This shows the growth or otherwise of output per person in the New Zealand economy. (This chart is really a measure of productivity, in that it only accounts for the working-age population; not the total population.)

This chart shows that the decline of the New Zealand economy began in 2023, an election-year which in the old-days would have featured a pre-election fiscal stimulus. But the Hipkins-led Labour government, favouring austerity-mode over election-mode, preferred to concede government than to follow a stimulatory policy. Labour walked haplessly into its biggest ever defeat, having three-years earlier secured its equal-biggest-ever victory.

Matters then got worse, with the present National-led government doubling down on fiscal austerity in the hope that the Reserve Bank would continue to provide reduced monetary austerity. Now the Reserve Bank has commenced a policy of escalating monetary austerity; a policy likely to dampen down any recovery which might have been underway in 2026.

Will the present recession be more like that of 2009 or that of the early 1990s? While the jury is out, the domestic situation New Zealand faces is more like that of 1990 than that of 2009. We note that, after 1990, New Zealand moved into a severe double-dip recession.

In the meantime, a growth of annualised productivity from about minus two percent to minus one percent is hardly an indication of boom times ahead.

Employing today’s teenagers tomorrow

I note that the Reserve Bank notes that there is “spare capacity” in the economy, and that the presence of spare capacity is a counter-inflationary influence. I will finish my argument against the present counter-stimulatory stance of the Reserve Bank, by noting a particular feature of coming ‘spare capacity’. That is our teenage population cohort.

My Growth of New Zealand’s Working Age Female Population (published 8 July 2026, and with an appendix for the male population) showed that the resident New Zealand population aged 15 to under 20 (taking this as New Zealand’s present teenage population) is substantially higher than in previous years.

The New Zealand population aged 15-19 in March 2026 was 13.3% higher than it was in March 2021. (In March 2026 there were 10.6% more employed teenagers, 58.1% more unemployed teenagers, and about 7.6% more teenagers aged 15-19 in education or training or neither.) Here we have a huge potential to contribute to the New Zealand economy in the next few years. But we will need to have a strong polytechnic system – focussed on educational outcomes rather than on business profitability – if we are to make sensible use of this ‘windfall’ human resource.

The signs are that our authorities will cast this birth-cohort into the labour-market underworld (or to Australia), as they did the previous two birth-cohorts (now aged 20 to under 30).

I note that, while employment of people aged 15 to under 20 increased 10.6% in the five years to March 2026, employment of people aged 20 to under 25 increased by minus 4.2% and employment of people aged 25 to under 30 increased by minus 8.4%. One important reason for this is the huge bleed of people in their twenties to Australia.

It is our most urgent priority, over the next five years, to render our present largesse of teenagers employable and employed. This means skills, and employment opportunities. The latest policy of the Reserve Bank – a kick in the guts to their putative employers – is a big ‘damn you’ to our present large cohort of teenagers.

Why do we tolerate a monetary policy which has a repeated tendency to ‘snatch defeat from the jaws of victory’ for countries’ economies? It’s because the priests (or hawks) of money spin an incomprehensible narrative that leaves most of the rest of us disengaged. The narrative renders good people helpless. Whenever the people complain about the high cost of living, the delegated academic spin doctors translate that into a wish for a brand of ‘anti-inflation policy’ which aggravates the high cost of living; and aggravates the human redundancy which is tearing apart our communities.

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 – Earlier I published two charts showing the demographic changes, from 1986 to 2026, in the female working-age population. See my Growth of New Zealand’s Working Age Female Population. These charts were organised around different birth cohorts; meaning people born in different half-decades from 1926-1930, through to 2006-2010.

Below are the equivalent charts for the male population; generally showing, compared to women, lower numbers of older men and more younger men.

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 – The charts below look at women born from the 1920s to the 2000s. The charts show the sizes of the different generations (strictly ‘birth cohorts’), and the impacts of international migration and mortality on those populations. The focus of the first chart is on older women. (I plan to do similar charts for men, as well.)

The data source is the Household Labour Force Survey (HLFS); the data run from early 1986 to early 2026. We can start by simply look at growing sizes of each birth cohort, with the 1931-1935 birth cohort (born during the Great Depression) being the smallest; it is this small birth-cohort (now in their early 90s) which is at present dying the most. Since the early 1930s, there has been a steady and significant increase in birth numbers, up to the 1961-1965 birth group.

In the chart above we see women of older working-age age groups. So, within each group, we see attrition through mortality. We note that death-attrition is more apparent for the 1926-1930 cohort than for subsequent cohorts (or at least up to birth cohort 1951-1955). For cohorts born before 1946, we note that death-attrition begins from about age 45.

With ‘boomers’ (born between 1946 and 1955), we see people in their 30s in the 1980s; and for the first time on this chart, a greater upwards impact from net immigration than the downwards impact of attrition. The number of people born in the early 1950s living in New Zealand has been boosted by net immigration, including New Zealand born people returning from overseas. Overall, the numbers of women living in New Zealand who were born in the early 1950s has barely changed since 1986.

Based on births in New Zealand – NZ-born people substantially dominated the population aged under 25 in the previous century – the early 1960s’ birth cohort was the most populous in New Zealand in, say, the year 2000. (Gen-J means ‘Generation Jones’, reflecting television culture; a popular American moniker for those born in the late 1950s and early 1960s.)

If we look at all those born after 1955, we see something of a ‘die-off’ – still small, but nevertheless significant – for the most recent data (data for the population in March 1986). This reflects the Covid and post-Covid years, and is alarming in the sense that in this chart it is for people aged under 70. We see a general pattern of population attrition after age 50, though for Gen-X that is outweighed by the impact of immigration in the 2010s.

For Gen-X we see what looks like a substantial OE (‘overseas experience’) population-hollowing effect for people aged 20 to 34. (In the HLFS dataset, we don’t have the data to show the extent of this for earlier generations.) Though, it seems likely that the high population born 1966-1970 has been boosted by substantial immigration this century of overseas-born people. Many New Zealand born Gen-Xers continue to live overseas.

The second chart shows the younger generations, starting with Gen-X.

In this chart, the birth cohorts are of broadly similar size – or at least were of similar size as children; look at the 15-19 age group, the purple column. The exception is the baby-bust (Gen-Y) generation, born 1976 to 1985. We might note that this initially-depleted generation had been relatively favoured compared to the generation before and the generation after. (This is in line with the Easterlin hypothesis: “the size of the cohort is a critical determinant of how easy it is to get a good job; a small cohort means less competition”.) Many of the familiar faces we see in the visual media, and in Parliament, are from this ‘Jacinda’ generation, essentially now in their forties. (Nicola Willis was born in 1981, eight months after Jacinda Ardern.) We see the young-adult hollowing impact of ‘OE’ becoming substantially less for people born after 1975; typically they were having shorter overseas experiences as young adults than previous generations, and had good employment options in New Zealand in the early 2000s.

Birth rates were back up after 1985 – the ‘baby blip’, so millennials (Gen-M) could easily have been called the ‘baby-blippers’ or just ‘blippers’. Then, teenage populations in New Zealand were very stable for generations born from 1986 to 2005.

The most dramatic feature we see for cohorts born after 1980 is the impact of immigration. In particular we see the huge increases, from immigration, in the numbers of women aged 30 to 44. We can be certain that there have also been similar increases in New Zealand of overseas-born women now in their twenties; but these increases have been offset by huge numbers of young New Zealand citizens departing, ‘permanently’ at least for now.

One final quite dramatic feature in this second chart is the huge increase in the size of New Zealand’s teenage population. While this is partly a result of more immigrants in 2022 to 2024 being whole families, it is also a reflection of higher birth rates in New Zealand for overseas-born women. Thus the change in the ‘look’ of New Zealand’s youth, especially pronounced in places like West Auckland, reflects a mix of both young immigrants and higher rates of New Zealand born children to people of Pacific and Asian ethnicities; to people whose parents and grandparents were, for the most part, new New Zealanders.

A ‘Westie’ myself, I welcome these ‘multicultural’ demographic changes, though I am aware that some people do not like this browning of New Zealand. However, I do find it regretful that the influx of new New Zealanders is matched by the size of the New Zealand diaspora. And I wonder if New Zealand will in a few years become a net recipient of international remittance funds, as individual New Zealand resident families increasingly look to their foreign-employed children for financial support.

New Zealand is renewing its working-age population, and it is renewing its maternal population; this represents a browning of both workers and mothers. This ensures that demographic decline will be less than in those countries our elites like to compare New Zealand with; and much less depleted than countries such as those in Eastern Europe whose younger people are being ‘hoovered up’ by those countries further west.

Finally

The statistics collected by governments reflect the social preoccupations of the upper middle-classes; the managerial elites. These people tend to see the world with an immediate rear-view perspective. Thus, today New Zealand arguably collects too much information about ethnicity and gender; and too little information about people’s ages, birth-years, and birth-places.

(Countries also need a stocktake of where their people were living at age ten. This is a boundary age for the formation of national identity. A twenty-year-old foreign-born New Zealand resident has a more developed sense of New Zealand nationality if they arrived at age four, than at age sixteen; or even at age eight compared to age twelve.)

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, 3 July 2026 – Last week I posted these two charts (Terms of Trade and Import Volumes) which presented, for New Zealand, a long-run view of two critically important (though under-reported) economic indicators. The terms of trade chart suggests that New Zealand has enjoyed unprecedented boom-times this century. The imports chart confirms this, revealing that – for more than three decades, starting in 1986 – import volumes increased by six percent per year; that is, import volumes have grown much faster than the New Zealand economy has grown.

(For New Zealand’s economic growth since 1990, see my NZ Economic Growth over the Medium Term Scoop 2 July 2026.)

In my text (see New Zealand Economy: Boom or Bust in Early 2026? Scoop 25 June 2026) I noted that, in 1985, a year before the dramatic change in New Zealand’s terms-of-trade fortune, New Zealand’s new political class launched a financial scheme – effectively creating an entity which might have been called New Zealand Financial Incorporated 1985 Ltd. The New Zealand economy then became – at least in significant part – a successful Ponzi scheme.

As we can tell from the case of the Icelandic national Ponzi scheme (associated with the regime of Prime Minister Geir Haarde) which began in the mid-2000s and ended late in 2008, the New Zealand scheme might have been equally short-lived. New Zealand’s scheme was rescued more by good luck (a terms-of-trade turnaround, starting with the substantial 1986 fall in global oil prices) and by a suite of foreign purchases of New Zealand assets accelerating in 1989. (New Zealand import volumes were 29% higher in the year-to-June 1990 than three years earlier; and, through the following deep recession, imports held up over the next three years.)

The principal feature of a Ponzi scheme is the promise, to investors, of high interest rates.

A Ponzi scheme is a consumption mechanism which masquerades as an investment portfolio. To fully understand what a Ponzi scheme is, it is necessary to know what isn’t a Ponzi scheme. A useful metaphor for consumption is ‘putting food on the table’.

Meeting the economic challenge: ways to put ‘food on the table’

There are a surprisingly large number of ways that economic entities – households, businesses, governments, whole nations – can ‘put food on the table’; meaning to provide for themselves.

The first way is subsistence. In a pure subsistence economy, there is no marketplace nor ‘legal tender’ money. Households hunt, fish, gather, garden, and/or corral animals; they may do this on a mix of private and common ‘land’ (considering the sea as a form of ‘common land’). A subsistence country, without imports and exports, is known as an autarky.

The second way is through transfers. I identify four basic types: gifts, theft, taxes, and inheritance. Gifts are not always altruistic; for example, slaves – human livestock – are provided for by gifts (as are other prisoners). Gifts and common theft are ‘current transfers’. Inheritances are ‘capital transfers’. Taxes are legally mandated transfers to sovereigns; they put ‘food’ on governments’ ‘tables’.

The third way is through ‘paid work’; receiving remuneration for work or the sale of goods or services produced. This kind of remuneration can be summarised as labour income; wages and salaries, including the implicit salaries paid to self-employed people. (Though most executive ‘salary packages’ are not labour-income in the usual sense; they represent portions of their employers’ profits.)

The fourth way is income derived from capital; contractual remuneration paid on account of the possession of many real and financial assets. Machinery and buildings – and canals and railways and airports – are real assets which may be leased or rented out. Bonds, bank deposits, and company shares are financial assets. Intellectual property is a bit of both. Privately-owned real estate is both. Categories of capital income include dividends (from profits), rents, royalties, and interest. Income accruing to assets is called ‘yield’. (Gold is also a financial asset, though is not income-bearing; as such, it has no associated yield. Money is a financial asset. Money – unless in an interest-bearing account – does not have yield; nor does crypto-currency, which can be thought of as ‘virtual gold’.)

The above four ways of putting ‘food-on-the-table’ are essentially current methods of provision for an economic entity such as a household. The exception mentioned so far is inheritance, which is a transfer of capital. If the economic entity is a nation state, the equivalent of income is export revenues.

There are also four capital methods to put ‘food on the table’.

The fifth way of putting food on the table is through the sale of assets. In principle, anything listed above as an asset can be sold; the potential cost is the loss of income deriving from such assets. A special example of an asset sale is the withdrawal of money from a bank deposit; that is, the drawdown of savings.

The sixth way is to borrow money and to use it to buy ‘food for the table’. That creates a debt; a liability which would normally be serviced from future current income such as wages. (Though a bridging loan would be serviced by a subsequent asset sale.) Compounding economic growth, in principle, facilitates wages rising more than enough to counter the compounding interest burden of debt; that allows the debt to be serviced and eventually repaid. Historically, much debt has been deflated by inflation (or, to a lesser extent, by bankruptcy); much historical debt has thereby been converted into transfers (the second way), enabling plenty of food to have been placed on the tables of many people born in the 1930s, 1940s and 1950s.

The seventh way is capital gain. If a recently acquired asset appreciates in market value, it can be sold, and the proceeds of that sale may be used to put food on the table. Alternatively, new loans can be taken out, allowing unsold assets to accrue capital gain (as collateral). The new loans put food on the table, in the full expectation that such new debts can be retired in the future through the sale of the collateral assets. (This can of course go awry if those capital gains prove to be ephemeral, meaning that the collateral becomes insufficient to repay the compounding debt.)

The eighth way is Ponzi finance. One version is to accrue unsecured debt (and to spend some or all of it on consumables such as food on the table), and to service that debt in the future by acquiring further unsecured debt. This becomes fraud – a form of theft – if the creditors are deceived with manipulative intent by the debtor entity. If the debtor entity has ready access to borrowed money, that access to future debt serves as an alternative to collateral. (Banks, necessarily, have privileged access to future debt; especially central banks such as the Reserve Bank. Nonbanks may have to secure future debt by offering to pay above-market interest rates.)

We note that, whenever a nonbank entity borrows money – eg from banks – then, from those lenders’ points of view, they have invested in the entity.

Thus, the more general way to think of Ponzi finance is through the concept of ‘investment’, in both the economic and speculative senses of that word. The economic meaning of investment is to purchase a new asset, to purchase on a primary market. The speculative meaning is to purchase an existing asset, to purchase on the secondary market; to purchase (say) a house or company shares or bonds on the resale market, either to gain a yield or in the hope of a capital gain. A new bank deposit is not in itself an economic investment – it’s saving, not investment – but it may facilitate a loan by the bank to another customer; such a loan would be an investment by the bank.

Many economic entities, probably most, finance current spending – put food on the table – through the use of more than one of these eight methods. For example, a superannuitant may receive a transfer payment, some wages, and some provision in the form of interest or rent or capital gain; or might have a reverse mortgage, whereby food on the table is funded by secured debt.

Ponzi Schematics

We note first that the word ‘scheme’ has pejorative undertones and overtones (like the words ‘regime’, ‘proxy’ and ‘propaganda’ for example); so, having a discussion about the possible benefits of Ponzi schemes runs counter to entrenched narratives, ie before any discussion has even started. (And of course the name Ponzi is also entrenched in our cultural ‘Book of Bad’.) Nevertheless, counternarrative discussions are what the world urgently needs; and on all manner of topics. Many things that are labelled as ‘bad’ are not entirely bad.

(A scheme is simply a proposal or a program. A regime is simply a government or an administration or a constitution. A proxy is an ally, a smaller participant in an alliance; the United States has numerous proxies. Propaganda is a narrative, drawing [as narratives typically do] more heavily on normative criteria – beliefs, and managed perceptions – than on verifiable evidence. To use the regime vis-a-vis government example: when we use this example of value-loaded language, regimes ‘scheme and propagandise’, whereas governments ‘administer and inform’.)

From here on, I may use the word ‘entity’ (‘Entity’ for a formal organisation) rather than ‘scheme’. A Ponzi entity would normally have the trappings of a business, though it could be that financial mechanism adapted by a country or a government.

Investors ‘invest’ in the Ponzi entity, essentially by lending it unspent money, and securing a contract to gain a yield; and having the invested money able to be withdrawn on relatively straightforward terms. (This contrasts with retirement-pension finance in which the yield or capital gain is compounded, and the ability to withdraw each ‘investment’ is strictly limited.)

The owners – or principals – of the Ponzi entity would themselves spend on themselves (rather than ‘invest’ in the economic sense) much of the money that’s paid to them; the rest of the money paid into the scheme would be held as a ‘liquid’ cash reserve. Thus, the Ponzi entity is essentially a consumer (like a household) rather than an intermediary (a bank or a vanilla finance company) or an ordinary business (which is a producer).

Investors in the Ponzi entity will be paid out – yield and repayments – from a cash reserve which is dependent on incoming funds from new investors (or additional ‘investments’ from existing ‘investors’). Thus, the Ponzi entity is commonly understood as a kind of financial perpetual-motion machine. It is like a time machine – not a time-travel machine – which works by continually borrowing energy from the future; and, as the future is infinite, there is no necessary endpoint when the machine stops working.

A Ponzi entity is able to continue to function so long as sufficient new investments are forthcoming. That ongoing functionality is facilitated by investors who infrequently withdraw their ‘savings’ and/or who are content to let their yields – their interest – compound; miserly investors, in other words, who deposit much and withdraw little.

The Ponzi entity fails when withdrawals exceed its ability to secure ongoing investments. Unusually large numbers of withdrawals can be called ‘capital flight’.

Harms and Benefits

In itself, a Ponzi Entity is an enterprise; a fraudulent enterprise if there is deceptive intent on the part of the principals. It transfers consumption from ‘investors’ to company ‘principals’. But these businesses can only thrive if there are investors who are simultaneously frugal and greedy; people who do not want to spend their money (or at least not for a while), but who also demand returns that are both high and liquid. (By liquid, we mean able to access their ‘money’ – interest or capital – on call and with minimal risk of capital erosion.) Such investors are frequently hoarders (maybe they are ‘insurance hoarders, saving for a rainy day’) – rather than people who save for particular short-term purposes – who expect to receive high amounts of interest in return for their hoarding; noting that hoarding is, in and of itself, a deadweight cost on the economy. (Hoarding – distinct from both economic investment and short-term saving – is a circulation blockage, much as fatbergs are blockages in the sewerage system.)

Under these conditions, the Ponzi entity is able to re-inject hoarded funds into the economy, negating the deadweight cost associated with miserly hoarding. Ponzi entities act to restore the circular flow of money in the economy; effectively removing or by-passing a circulation blockage (much as a stent might do with respect to a sclerotic patient with circulatory disease). Consumer spending – food on the table, to persevere with that metaphor – facilitated by Ponzi finance acts essentially as current transfers from miserly contributors to spendthrift principals. Ponzi principals compound debts which are neither serviced nor repaid; rather they are rolled over into either perpetuity or bankruptcy.

So, the harm is the spending of invested funds as if they were gifts; and the potential for the investors to lose their money. Ponzi finance is a victimless crime, so long as the investors (whose current needs are being satisfied by other means) continue to get what they want; which is an accumulating – that is, compounding – on-call savings balance. It’s victimless theft; that is, victimless until the scheme falls over and the investors lose their money.

It’s like much ‘benefit fraud’; a kind of fraud which helps to keep the economy ticking over and thereby generates about as much public revenue as it depletes. Indeed, maybe more revenue is generated than depleted. So the benefit of Ponzi spending is its inherent counter-recessionary nature; hence Ponzi schemes are most likely to thrive in circumstances of inequality, and may indeed stave off otherwise-immanent recessions.

When the Ponzi entity is a country; a nation-state

In this case, the investors are foreign entities: households, organisations, governments. The domestic economy is the Ponzi entity; resident households, organisations and governments are together the beneficiary principals. Though some beneficiaries may be more equal than others; New Zealand’s stunning growth of imports since 1985 has been distributed far from equitably.

In this nation-state case, it is extremely unlikely that the only way a country puts imports on its table is through the Ponzi scheme. Exports always continue to play some role in funding imports. Further, a Ponzi scheme is not the only way through which debt may be used for consumption and then subsequently not repaid. Inflation is another. (Those who have historically benefited from inflation are typically the parents of those who now rail against inflation. Indeed, there are stabilising benefits to inflation not unlike those circulatory benefits arising from Ponzi finance; that’s why inflation is regarded as compulsory, noting that New Zealand and many other countries have a policy requirement that annual inflation should be between one and three percent.)

Any country which has had continuous – or near-continuous – current account deficits for forty or more years can be said to be beneficiaries of a long-running Ponzi environment. New Zealand is very definitely one such country. Australia used to be such a beneficiary, too. The United Kingdom almost certainly is, though that country’s economy is obscured by the financial roles played by its many realm countries – including the likes of Jersey, Gibraltar, Bermuda, Virgin Islands, and Cayman Islands. Canada may be undergoing relatively recent ponzification.

A special case of a Ponzi country is the United States, to which the international community has granted specific stabilising privileges. The United States’ [Ponzi] economy is comparable to the giant black hole at the centre of the Milky Way. It separately involves both its longstanding current-account deficits (funded in perpetuity by foreign investors) and its longstanding federal fiscal-deficits (funded by both those self-same investors; and, critically, by the United States Federal Reserve Bank).

New Zealand

The last year in which New Zealand – very much one of the world’s consumer nations – did not enjoy a current account deficit was 1973. The circumstances from 1974 to 1984 were non-Ponzi; they reflected both an acute and a secular decline in New Zealand’s terms-of-trade through which New Zealand had no choice but to resort to overseas-sourced credit. There was no way during the decade from 1974 that any country facing such circumstances could export enough goods and services to pay for its imports.

Nevertheless, New Zealand’s policymakers did their very best to meet the challenge of ‘putting food on the New Zealand table’ through the diversification of income and the challenge of import-substitution. That is, until 1985, under the auspices of the ‘new-broom’ Lange-Douglas government.

Roger Douglas’s pre-election devaluation policy was most probably intended as a means to meet that challenge of more exports and fewer imports; this was a key feature of Douglas’s 1981 book There has got to be a better way. Douglas was not an innate Ponzi-schemer; he was largely played, a victim of the 1970s and 1980s global resurgence of financial liberalism. His tenure as Finance Minister thus came to be characterised as a period of over-valued rather than under-valued exchange rates, despite the principal talking-point of his book. Even more than a history of perpetual current account deficits – which is also a historical feature of developing economies – a multi-decade history of an appreciating exchange rate in a country with a floating currency is also a feature of international Ponzi finance.

In the first half of 1985, a very deliberate policy of financial deregulation was implemented; and so quickly that doubters had no time to mount a defence. The expectation at the time was that New Zealand’s traditional commodity-export-based economy was in terminal decline, and indeed suggested by the Terms of Trade chart. Little attention had been paid by the new elites to the substantial and mostly market-led restructuring of the tradable sector; restructuring that had already taken place, under duress, in the years from 1974 to 1984.

The initial flagship component of the new policy was the floating of the New Zealand dollar (NZD). The exchange value of the NZD would have to be defended by a monetary policy of unprecedented high interest rates. In other words, this was a Ponzi scheme; arguably a scheme with fraudulent intent. Those interest rates were nectar to foreign speculative investors; many of those investors actually being intermediaries such as pension funds and their likes, guardians of the captive funds of foreigners saving for their retirements. The overall intent – established through the revamped 1980s’ rhetoric of economic liberalism – was to treat the tradable sector (exports, and import substitution) with almost complete contempt.

And indeed there was a substantial disintegration of the tradable sector, which had been constructed for over a century, since the days of Sir Julius Vogel. Examples which some may remember were the near-collapse of sheep-farming, with some farmers diversifying into a short-lived goat bonanza. And there was the 1980s’ ocean-fishing expansion, including the rapid exploitation and depletion of the orange roughy fishery.

New Zealand’s increasingly competitive manufacturing sector went into steep decline before recovering at a permanently lower share of GDP. One example of this was the Whangarei Engineering Company which built excellent tugboats – and the Bounty replica – but which went under because New Zealand buyers were encouraged to favour imported tugboats subsidised by foreign governments (in this case, Australia). New Zealand became religiously opposed to any kinds of subsidy or assistance to the tradable sector; almost unique in the world.

(On this matter of nation-state Ponzi schemes with arguable fraudulent intent, the classic case is that of Iceland from 2006 to 2009. Other Nordic countries – Finland and Sweden – did something similar in the late 1980s and early 1990s; and, like Iceland in the 2000s, they got caught out. Also, and again like Iceland in the 2010s, they recovered relatively quickly; though they became Ponzi investors rather than Ponzi principals, contributing to the circulatory instability which has plagued the world since the 1980s. Sweden in particular continues to amass huge and ongoing current account surpluses, the exact opposite of New Zealand. Another country – like New Zealand – which continues to have Ponzi-structured finance as part of its ‘putting bread on the table’ mix is New Zealand’s south seas’ neighbour, the Kingdom of Tonga.)

In 1986, a year after the high-interest Ponzi scheme was established, something remarkable happened. The longstanding secular decline in New Zealand’s terms of trade reversed; a circumstance of fortune which eventually (ie in the 21st century) became equivalent to Norway’s 1970s’ discovery of huge oil and gas fields in the North Sea.

So New Zealand’s Ponzi economy, established in 1985, came to be blessed with an unanticipated windfall; a windfall large enough to facilitate the building of a new export-oriented tradable sector despite the high interest rates and overvalued exchange rate. (The overvalued exchange rate probably helped; many of the costs of this new sector were internationally priced, meaning that the high exchange rate became like a subsidy; especially as the expanding pool of rich foreign buyers were themselves relatively insensitive to the prices they were paying.)

Thanks to that change of fortune – which first began in 1986, and re-began around 2001 with the growth of the China market – New Zealand was able to fund an astonishing four-decade import spree, funded this century from a mix of bonanza-like export prices and Ponzi-style investments. These ‘investments’ were in large part financial inflows, drawn-in – more than anything else – by New Zealand’s attractive-to-investors monetary policy settings from 1985 to 2023; and supplemented by booming real estate markets in the 2000s and 2010s. Despite slow income growth, New Zealand consumers have had plenty of food on their tables; though more tables than ever also went without, due to increased inequality. New Zealand now imports most of its staple granular foods; in the language of the classical economists, New Zealand – a protein-food-exporter – has become a corn-importing country.

Government Ponzi finance

New Zealand as a Ponzi entity may be called New Zealand Financial Inc. The government is not a Ponzi principal – the New Zealand government has low debt by international standards – but does whatever it can to attract ‘private investment’ to support the national Ponzi scheme. And it prioritises monetary policy (while delegating it), which means that there is an understanding that interest rates will – whenever necessary – be raised to continue to be a drawcard to attract funds from the world’s less spendthrift countries.

A country very different to New Zealand is Japan. The world’s fourth largest nation-state economy, it has a long history of high personal savings and of current account surpluses. Its people don’t like paying taxes. Japan went through a shocking decadus horribilis in the 1990s, following a brief few years in the late 1980s of a financial bonanza underpinned by massive though illusory capital gains and an overvalued exchange rate.

As a result, Japan pretty-much invented a new macroeconomics, and it works. It is a macroeconomics, pioneered without acknowledgement or recommendation by the United States as a result of its post-WW2 status as the world’s financial centre of gravity (though most Americans fail to see how global prosperity – including their own prosperity – hinges on United States debt); a macroeconomics predicated on high levels of government debt and perpetual public-sector financial deficits. (Such deficits need not all be spent on infrastructure or bureaucracy or military capacity; also, they can be recycled back to people – in a way that poor people get the same dollar or yen amounts as rich people – as a contribution to some form of universal income, resulting in more private prosperity and less inequality.)

The Japanese government operates a virtuous domestic Ponzi scheme; the Government is the principal, and the citizen taxpayers are the investors. In essence, the people lend their money to the government at zero or near-zero interest rates, as an alternative to paying more taxes to the government. Indeed the Japanese get to ‘eat their cake and have it’. The government spends the citizens’ surplus cash, which still remains there for the citizens to spend as well and at will, should they need to or wish to spend it. Japanese householders will never all want to spend all their money invested with their government all at once.

(Modern fractional banking, likewise, is based on more than one party being able to spend the same pool of funds; this is reality, not magic.)

Finally

The beneficial reality of Ponzi finance is that, so long as there are many people with money they either don’t wish to spend or (as in KiwiSaver) are not allowed to spend or have so much money that they simply cannot spend it all, then there can also should be Ponzi schemes to accommodate them. In the case of Japanese savers, they much prefer – than the alternative, which is to be taxed more – to invest their money in a safe Ponzi scheme; that scheme is their own government.

Japan runs on government deficits and current account surpluses. Japanese citizens invest in both foreign and domestic Ponzi entities without coming a cropper. Others eat their cake, while they continue to have it. The Japanese government can remain a secure Ponzi principal because it has the sovereign privilege of being able to raise taxes; a sovereign right that it is unlikely to have to effect anytime soon because it has had a well-functioning economy of circulation, low non-stimulatory interest rates, and optimal inflation.

Will the New Zealand Ponzi scheme – established 1985 – ever fold? Maybe not. New Zealand is small and the world is large. Indeed those who have invested in New Zealand, a Ponzi entity for four decades, have generally done well for themselves. So far, the only significant casualties have been lower-income New Zealanders who have been priced out of the labour market and the housing market; not the scheme’s foreign investors.

But a trend-change in the terms-of-trade – meaning persistent falling terms of trade in future decades – could certainly trigger a demise of the scheme; so could an inability to continue to attract sufficient investors for any other reason. The challenge then would be to look to the many new New Zealanders – many who are internationally well-connected – to reestablish a balanced trading economy, and for New Zealand citizens and denizens to accept significantly reduced levels of imported goods and services. And to embrace a model of public finance which works for rather than against the people.

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, 2 July 2026 – Two weeks ago I published a chart showing New Zealand’s latest economic growth, showing the whole of the last two years compared to the whole of the previous two years. This gives a better picture than the usual charts which look at simple annual growth. If an economy is barely larger in the 24 months to March 2026 compared to the previous 24 months, then it’s too early to pronounce a return to ‘economic growth as usual’, let alone the success of a ‘growth strategy’. As it turns out, while 2025 GDP (gross domestic product) may have been bigger than 2024 GDP, it was hardly bigger at all than 2023 GDP.

My new chart uses the same data, but focusses more (and differently) on the latest 12-month period and placing that in a medium-term context.

Short-Medium and Long-Medium

These days ‘short-term’ change usually means very recent change (ie within the last 12-months), or – at most – comparing the most recent 12-months with the previous 12-months.

So I call the black plotted-line ‘short-medium’; looking back from 2025 or 2026 to 2023. The most recently-plotted point represents GDP for the year-to-March 2026 compared to GDP for the year-to-March 2024. (Points have been plotted every three months, so the previous point is the year-to-December 2025 compared to the year-to-December 2023.)

The black plotted-line shows that, from the year-to-June 2025, New Zealand’s total GDP (not GDP per person) has been lower than the whole year two years earlier. (Only slightly lower, and subject to revision; but lower nevertheless. GDP under National’s political watch has been lower than it was under Labour’s watch; despite National’s claim to giving priority to economic growth as a KPI [key performance indicator].)

We note that the three previous major downturns in the black plotted-line are clearly identifiable as the Asian Financial Crisis of the late-1990s, the Global Financial Crisis of the late 2000s, and the Covid19 Crisis of the very early 2020s. (None of these were attributable to wars.) On the other hand, the current recession and the early 1990s’ recession have been clearly connected to New Zealand’s macroeconomic-policy environment.

The early 1990s’ recession followed on from a recessionary period which began in 1986. This pattern of chronic recession is rare; it is more normal – in New Zealand and especially in other countries – for a recession to be immediately followed by a period of above average growth. (This is because post-recession growth is ‘low-hanging-fruit’, driven by reducing labour and capital surpluses, rather than being dependent on productivity growth.)

So, the very-early 1990s should have been a period of high growth. Eventually that very rapid post-recession growth did take place from 1993 to 1996, in the wake of a prolonged ‘double-dip’ recession.

The experience of the early 1990s gives context to the early 2010s; under a National-led government, as is the present non-growth experience. In the early 2010s, the recovery in New Zealand from the Global Financial Crisis was surprisingly slow; was significantly slower than it should have been.

These findings – relating to the early 1990s, the early 2010s, and now the mid-2020s – suggest that there is something fundamentally anti-growth in National governments’ policy-frameworks during the post-1984 neoliberal era. Growth-prioritisation rhetoric is not enough to actually achieve economic growth.

Labour-led governments – on the other hand, and without prioritising economic growth – have consistently achieved normal levels of growth (around three percent); indeed despite the Covid19 crisis and the Ukraine-Russia war which began early in 2022. The look of this chart is that, in practice if not in rhetoric, that National is anti-growth and Labour is not anti-growth. (My suspicion is that Labour, by running a larger governmental apparatus, inadvertently facilitated the circulation of money. While productivity did not grow remarkably under Labour; at least aggregate demand held up, enabling normal growth to take place.)

Smoothed Plots

The shortcoming of the black-line plot – and just about any other published growth plot, except in academic economic history – is that the earlier period being compared to the more recent period is itself only 12-months, and may in some cases lead to misleading results. Indeed we see this for the Covid19 period; with growth for 2022, in which 2022 is being compared to 2020, showing as artificially high.

The best way to address this is to compare a more recent period of one-year with earlier data that covers much more than one year.

So, consider the grey-plotted line. For this plotted line, annual data are compared to averaged five-yearly data. We see that the growth peaks and troughs are significantly less; that’s what smoothing does, to reveal the medium-term more and the short-term less.

The grey line confirms the same stories outlined above. But it shows the early-2010s’ malaise rather better than the black plot; the black plot overstating the recovery in 2011 and 2012. And it shows that the growth experience of the mid-2000s (under Labour) was more substantial than that of the mid-1990s (under National).

Now consider the blue-and-red plotted line; this represents the longer medium term. This compares the most recent year of data with five-years of data averaging eight years prior. (Eight years represents three inventory cycles of the New Zealand economy; inventory cycles are short-term growth spurts and pauses, which average at about 32 months.)

With the blue-and-red line, the shorter term growth fluctuations are ‘ironed-out’, and we see very clearly that economic growth operated at normal levels (three percent annually) while Labour-led governments were in power. And persistent below-normal growth ‘performances’ under National-led governments. (2016 medium term growth was, for example, surprisingly low, given the fact that the Global Financial Crisis was at the centre of the period being compared to 2016.)

Finally, we note just how little the Covid19 pandemic affected New Zealand’s economic growth. The present downturn, under National’s watch, looks like its heading for eight-year lows comparable to 2013 and 2014, or less.

Do we really care about the long term?

Many policy positions these days are claims that New Zealand must make policy for the long term rather than for short-term “sugar hits”. This item – Spend Today, Save Tomorrow: Budget 2026 Promises Restraint, Eventually – was almost certainly prepared by Ruth Richardson, who was Minister of Finance in the early 1990s (the Ruthanasiaperiod; see the chart above), and who is the current ‘brains’ behind the New Zealand Taxpayers’ Union.

Indeed, the National Party has a (KiwiSaver) savings’ policy whereby the government will put money in babies’ bank accounts at birth; money which they will only be able to access in or after 2093, and even that is contingent on the government not raising the ‘retirement age’. Long-termism gone mad!?

But our governments these days almost never look back; credible long-termism means looking back, critically appraising historical narratives and omissions. Last week I posted two charts which look back to 1957, and they tell a disturbing story about the real reasons for the prosperity of a significant minority of New Zealanders today. The Government has no idea about these facts; and I do not expect that anyone close to the government will have reflected upon my charts.

(Indeed the government has never informed New Zealand citizens the realised quantity and quality of the promised – eg $10 billion suggested in 2012, John Key reveals plan for asset sales, Stuff 6 Sep 2012 – gains to education, healthcare, and infrastructure spending arising from the ringfenced half-sales of our big electricity gentailers in 2013 and 2014. Stories about the gentailers include: Profit taking as thousands sell power shares RNZ 30 Nov 2015, and Four big gentailers face new competition rules in bid to level playing field RNZ 26 May 2026.)

Whereas the present government may be more interested in the 2090s than the 1990s, there is a movement on the political right to ‘reclaim’ history. See this item about David Seymour’s new friend (refer ACT’s David Seymour on latest weather events, climate change, RNZ 27 Jan 2026) Javier Milei: Javier Milei’s far-right rewrite of the past, The Listening Post, Al Jazeera, 30 June 2026.

The takeaway from the Listening Post report is: ‘whoever holds power in the present has the opportunity to distort the narrative of the past, and whoever controls the past (to a significant extent) determines the future’. (The exact quotation is: ‘George Orwell wrote in 1984 “Who controls the present controls the past, and who controls the past controls the future”‘.) We note that such distortions are most potently done by omission rather than by commission. Thus, it is up to people like me to post reminders about forgotten facets of the medium- and long-term past.

If we are going to play the long-term game – as John Key did, cynically, in 2012; and as politicians today do, when they repeat finance-industry talking points about retirement savings – then our powerbrokers should be urgently pressed into some reflective intercourse with the past, at least over a comparable timeframe. Thus, if we are to enact policies with the 2090s in mind, we should be looking back – critically – to at least as far as the 1950s. (It’s hard to do in New Zealand, though, because the 1950s to early 1980s are the least digitised part of New Zealand’s historical record; time-pressed academics often eschew such periods to study.)

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, 25 June 2026

The standard narrative about the New Zealand economy – the narrative pushed by the Luxon-led government – is that New Zealand’s gross domestic product is ever-so slowly climbing out of a hole; a growth hole made by a mixture of New Zealand Labour, and Vladimir Putin and Donald Trump creating a difficult trading environment.

Certainly, the growth hole is there – see my New Zealand Economic Growth Update, Scoop, 18 June 2026 – but is it because of factors beyond the present government’s making, as Mr Luxon would have us believe? Or is the Luxon/Willis government itself largely to blame?

The hole does not extend back to the previous Labour-led government; rather, this is a ‘sink-hole’ which has taken place under the watch of the present National-led government. In particular, under the watch of Minister of Finance Nicola Willis. This appears reminiscent of the growth hole in the early 1990s overseen by the then National Government, and most associated with Finance Minister Ruth Richardson. The factor in common with both regimes has been fiscal austerity; austerity which undermined aggregate demand and thereby undermined these governments’ own revenue bases. Government retrenchment may have generated the very fiscal crises which the two government Ministers claimed they were fixing.

But, other than that, and considering New Zealand’s trading economy, is New Zealand suffering a short-term economic bust? Or is New Zealand enjoying a cyclical boom which will not last? Is New Zealand currently at the top or the bottom of the metaphorical cliff?

Terms of Trade and Import Volumes

The most important measure of the international trading environment for a country – especially a country which relies on importing and exporting goods – is called the merchandise terms of trade. It is a measure of the prices of exported commodities relative to the prices of imported merchandise.

Big picture first. New Zealand’s terms of trade have almost doubled over the last 40 years. That means a given quantity of exports buys nearly twice as many imports in 2025 compared to 1985. That statistic represents an incredibly prolonged period of very good luck for New Zealand and New Zealanders; access to a windfall of imports enabling New Zealand to become a truly first world consumer society.

The terms of trade chart, above, reveals a ‘game of two centuries’. In the just-over 25 years so far of this century, New Zealand’s terms of trade has improved remorselessly by seventy percent – albeit punctuated with a few brief setbacks. That places New Zealand this quarter-century in a similar fortunate place as Norway was in the last quarter of last century; Norway then exported crude and refined oil, New Zealand this century has exported regenerating wealth in the form of green (grass-fed produce), white (wine, milk, and honey), and red (meat).

In the years from 1957 to 1986, New Zealand’s story was very very different, a decline in the terms of trade of 32 percent in less than thirty years. This was the kind of challenge that led to something very close to fascism in late 1970s’ southern South America; and coincided with an elected government in Australia being ousted by a political coup led by that country’s Governor General. Further, in New Zealand it was compounded by the substantial loss, for United Kingdom political reasons, of New Zealand’s principal market country. New Zealand was more reliant on the British market in the early 1970s than was any other country.

By 1984 it had faced up to this ‘perfect storm’ of challenges, and largely met them. New Zealand was exporting meat to Iran, dairy (and dairy machinery) to the Soviet Union, and wool to China. And New Zealand had embarked on a large-scale “growth strategy” (as the then-government preferred to call it) of energy import-substitution (and indeed energy export, through the production of aluminium from renewably-generated electricity).

The first important turning point in New Zealand’s terms of trade came, unexpectedly, a year later. It was the substantial real fall in oil prices from 1986. (Another big feature of the global economy at that time – in September 1985 – was the Plaza Accord, which reversed the trading balance between the economies of the biggest players, especially United States and Japan; the core effect was to devalue the US dollar and to substantially revalue the Japanese yen.) Later, in the 1990s, New Zealand appeared to be settling into a pattern of stable commodity prices, in that post Soviet Union time of European restoration.

The biggest driver of the bountiful pattern of the last 25 years – of this century – has been China. New Zealand has been a general beneficiary of high ‘income elasticity of demand’ in the ‘Global South’, meaning especially in East Asia. The rising export prices New Zealand enjoyed resulted from rapid economic growth in Asia. That export price stimulant may not be over yet. It all depends on the continued per capita growth of the Asian economies; growth continuing to favour higher protein diets in that very large continent.

In reflecting the global economic environment, in addition to the upwards trend New Zealand’s terms-of-trade seems to reflect a global trade cycle of about three years. Look for the black circles on the chart, especially for this century. The apparent regularity of the ‘three-year cycle’ may be misleading though, in that the brief but sharp downswings can be related to particular global events: the 911 attacks on New York and Washington, the global financial crisis, the Eurozone crisis, the Syrian refugee crisis, and the early stages of the Ukraine war.

What is most apparent is that, based on both the identified trend and the apparent cycle, New Zealand as a trading nation has never been in a more fortuitous situation. With all that demand for New Zealand produce, the New Zealand economy should today be in the best state that it’s ever been in (despite, that is, the Ukraine hiccough which adversely impacted global aggregate demand in 2022 and 2023).

Regime change in New Zealand

New Zealand’s political regime-change in 1984 (much more than a mere change of government) translated into an economic regime-change in 1985. As Geoff Bertram noted in the Oxford History of New Zealand, the change was from a political economic establishment dominated by tradable sector interests – think Federated Farmers, Chambers of Commerce, Manufacturers Association – to a political economic establishment dominated by the finance sector. The new broom – which liked to ridicule the Think Big growth policies (of the early 1980s) which focussed on rebalancing the tradable sector in an ambitious and financially sustainable way – came to be called neoliberalism. Neoliberalism remains New Zealand’s reigning paradigm to the present day, and the financial services lobby remains stronger than ever (noting the extraordinary hold that KiwiSaver seems to have over us).

The red circle in the chart marks the beginning of the new economic regime – the first half of 1985 – when the New Zealand dollar was floated, the financial sector was deregulated, and monetarist ‘high interest rate’ monetary policies were adopted. The ‘current account balance’ was abandoned as the number one target of macroeconomic policy – indeed it was largely abandoned as a target at all – and ‘inflation’ became public enemy number one in the new policy narrative. The more broadly accepted economic growth and employment targets came to be regarded as consequential to getting inflation to (and keeping it at) acceptable levels; at least that was the rhetoric of neoliberal macroeconomics.

The placement of the red circle suggests that, in 1985, it was widely believed that the terms of trade would continue their steady downward path, and that New Zealand would have to reinvent itself; perhaps as a financial services centre. Relatively more money would flow into the country as ‘investment’ – as defined by financial servants, not by Keynesian economists – and relatively few tears would be shed for demotion of the tradable sector.

In practice, in 1985, New Zealand (considered as a private-public financial partnership) launched the world’s most successful Ponzi Scheme. High interest rates (needed to prop up the newly floated New Zealand dollar), and liberalisations of the financial sector, would draw in investor funds – much of it ‘hot money’, otherwise known as the ‘carry trade’ – which would be serviced (and paid out when necessary) from subsequent inflows of financial capital. New Zealand – or at least New Zealand’s more financially wealthy segment – would be able to import, with minimal constraint, the best goods and services that the world had to offer, and without being constrained by stagnant or diminishing export receipts.

Of course, neither Finance Minister Roger Douglas nor his ‘new broom’ Treasury masters consciously thought of this policy as a Ponzi scheme. Nevertheless, that’s exactly what it was; a financial scheme to access global goods and services which were in abundance thanks to miserly savings rates in especially Europe and Japan. (We also note that this was never a secret Ponzi scheme; for those who can read the financial tea leaves, this was a cunning scheme hiding in plain sight.)

We note that the big global events that turned around New Zealand’s terms of trade happened independently, a full year after the regime change in New Zealand. Nevertheless, the reversal of the terms of trade decline reinforced the new import-facilitating financial regime. The New Zealand Ponzi Scheme which was inaugurated in the first half of 1985 would be helped by fortuitous decreases in import prices – especially oil – as well as increases in the prices of New Zealand’s traditional (and later non-traditional) exports.

Demand growth – rapid demand growth – was now coming from Japan and South Korea and from other East Asian capitalist economies. That process paused in the 1990s, with Japan in particular having to deal with the consequences of its financial collapse from 1991, and especially as a result of the Asian Financial Crisis of 1997 and 1998. The process of East Asian demand growth resumed from 2000; with the added bonuses of China joining the New Zealand party and California’s discovery of New Zealand (think Americas Cup and Lord of the Rings).

New Zealand has enjoyed an import bounty

My second chart, above, shows the growth of import volumes in the same period, from 1957 to the present. The dashed line shows a trend of six-percent annual growth of import quantities from 1985 to 2008, with the six-percent trend resuming for another decade after the 2008/09 Global Financial Crisis. (We note that after 1975 – during the ‘international stormy seas’ years from 1974 to 1984, when the National government came into power – import volumes dropped in the late 1970s, and then restored in the early 1980s as the import requirements of the new import substitution growth strategy – Think Big – took precedence.)

In the years before 1973, the growth trend of imports – significantly less than six-percent per year – roughly matched the growth of export volumes and the growth of GDP; that is, imports then were not outgrowing the rest of the economy. We also note that the blip in imports in 1974 and 1975 (and the crash in 1976) largely reflected the huge increase in New Zealand’s terms of trade then known as the ‘commodity boom’. New Zealand’s exportable product prices went up first, and oil prices – oil being New Zealand’s principal importable commodity – went up dramatically at the end of the commodity boom; the main trigger – but not the only cause – of the quadrupling or crude oil prices was the October 1973 Israel war against principally Egypt and Syria.

The six percent annual growth of import volumes (from 1985 to 2008) contrasts with less than three percent annual economic growth over that same period. That’s two decades in which exponential import growth was more than twice as fast as the growth of economic output. Further, if we look at 1987 to 2018, six percent annual growth of import quantities for three decades, the average annual economic growth rate was under 2.7 percent. That’s creaming it; literally in part (from dairy exports), and (in approximately equal part) as a result of the continuance of New Zealand’s successful Ponzi scheme. That scheme began in 1985 when expectations were that the traditional New Zealand economy was fizzing out.

What about now?

The chart of import volumes shows a remarkable decline in the rate of import growth in the 2020s. This may be in part due to the short-lived decline of New Zealand’s terms of trade in 2023. With terms-of-trade reaching a record high in December 2025, however, that import growth should recover. (We note that import growth did recover after the Richardson-inspired austerity recession of 1991 and 1992.) But import growth will probably never recover to the six-percent annual growth rate that a complacent New Zealand enjoyed for three decades.

Are we reaching the denouement of the Ponzi Scheme inaugurated by Roger Douglas early in 1985? The answer, of course, is ‘maybe’. I note that it was only the recent rises in New Zealand’s terms-of-trade that have kept the exchange rate of the New Zealand dollar ‘above water’; and then, only just. This month the dollar has been falling again. On a trade-weighted basis, the New Zealand dollar in May 2026 was priced exactly the same as it was in September 1985. (It maxed in July 2014, at a time when the central banks of Denmark, Sweden, Switzerland and Japan were establishing negative wholesale interest rates; meaning at a time that New Zealand was a particularly attractive target for the international carry trade.)

As time went on, New Zealand’s Ponzi-based economy became increasingly difficult to service. Hence New Zealand has not really been able to fully capitalise on the escalating fortune it has enjoyed as this century has progressed. The lower socio-economic groups, in particular, have been missing out.

New Zealand may now be at the peak of periods of both long-term and short-term good fortune. The summer of 2025/26 may be as good as it gets. Or the long run trend may extend for another three-year cycle.

Certainly, the pursuit of anti-growth fiscal policies – policies designed to suppress aggregate demand – make it much harder for New Zealanders to service their ever-increasing global liabilities; support by the New York credit rating agencies for the Luxon/Willis policies notwithstanding. This Ponzi Scheme’s continuance relies on the performative trick of persuading foreign ‘investors’ that they will continue to receive returns from New Zealand similar to those returns they have enjoyed since 1985. The scheme’s continuance will also be facilitated by one-percenter semi-immigrants buying real-estate in New Zealand, keeping the money churning.

Foreigner faith in New Zealand – indeed in New Zealand exceptionalism – has proved reliable for forty years. As long as they continue to bring the money to New Zealand that enables the outgoing interest to be paid, then the post-1985 New Zealand economy will continue on a ‘business-as-usual’ basis. New Zealand’s stunningly favourable terms of trade – increasingly favourable over 25 years – will continue to bolster foreign perceptions that their money is safe. And expected increases in interest rates in the second half of this year will favour the continuation of the carry-trade which brings short-term money into the country.

Will New Zealand’s terms-of-trade continue its seemingly remorseless improvement? Possibly yes. Especially if the world demand for animal protein continues to rise at rates in excess of global economic growth. But also, possibly no. The sense of crisis and vulnerability in the world is now very high. Importing ever-more protein may be, for much of the rest of the world, a ‘nice-to-have’ rather than an economic priority.

In the meantime, despite near-zero economic growth (in the two years to March 2026, compared to the two years to March 2024; see chart on Scoop), the New Zealand economy is enjoying boom trade conditions (indeed as was reflected in Fieldays this month). A boom squandered.

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, 19 June 2026 – I draw attention to the role of Jeffrey Sachs as an important global public intellectual, speaking out in these dangerous times in which too many Western elected leaders – and far too many bureaucrats – have withdrawn into intellectual blinkerdom, unwilling to think or engage outside of those partisan narratives.

I refer in particular to: Jeffrey Sachs: Germany Is Leading Europe Toward World War III – YouTube [31 May 2026]

And to his two open letters to Germany’s political leader (Friedrich Merz whose party, itself a coalition, got just 28% of the vote in last year’s election):

An Open Letter to Chancellor Friedrich Merz — Jeffrey D. Sachs

An Open Letter to Chancellor Friedrich Merz Security Is Indivisible — and History Matters — Jeffrey D. Sachs

Sachs has been a world-renowned development economist for around forty years; indeed, I have, since the late 1980s, known of his work. He’s nearly my age, so he’s old enough to speak out without too many repercussions; it is too late for his career to be blighted by political spite. He continues to hold a formal position as Director of the Center for Sustainable Development at New York’s Columbia University.

The Cassandra Problem

My main issue here is that public intellectuals like Sachs can see more clearly the risks that powerful ‘players’ are taking; in particular downside risks that, if or when they eventuate, may take all of us down, and not just those risk-takers who seem to take pleasure in their global-scale recklessness. But the telephone is ‘off the hook’; just as the original Cassandra could see how events in ancient Troy were slowly unfolding, but nobody with sufficient influence would take heed of her concerns.

As it is now with, since Sachs’ more recent open letter, severe attacks by Europe-backed Ukraine on Saint Petersburg and on Moscow – the Moscow attack was just last night (Moscow residents complain of black rain after largest Ukrainian attack hits oil refinery, BBC) – the points made by Jeffrey Sachs are chillingly more real than he imagined at the end of last month.

Aside

We note that by Europe blatantly attacking the two largest cities of a former superpower – still a significant nuclear power – Europe is risking, simultaneously, three forms of global catastrophe. Not only are these Europeans actively engaging in nuclear war brinkmanship, they are accelerating global environmental catastrophe, and they are doing as much as any other nations have to create a stagflationary pinch-point in the global economy by targeting the global oil market.

Further, we should note where Russia sits in the world economy. Its GDP (Gross Domestic Product) sits somewhere in between that of Italy and that of Spain; alternatively, a bit smaller than that of Canada (in Nato) and a bit larger than that of Australia. Russia, given its history and its size, is now a poor country with many resources that certain richer countries might like to have more control over.

Germany’s GDP is significantly more than double that of Russia, while the Euro Area has a GDP seven times larger than that of Russia. We should also note that Ukraine’s GDP is significantly smaller than New Zealand’s. New Zealand’s is the same as Greece’s, and one-seventh that of Australia.

Sachs’ main warnings, and those of his interviewer Glenn Diesen

I’ll quote from the 31 May 2026 interview.

“What has occurred in the last couple of weeks is a startling escalation of rhetoric and the Ukrainian attack on the girls’ school in Starobilsk, Luhansk.”

“These are alarming days and the response in Europe has been escalatory in rhetoric … rhetoric out of the Baltic states about perhaps attacking Kaliningrad [the Russian exclave which was once the heartland of Prussia].”

“Shocking, not the kind of behaviour that we need in a nuclear age, incredibly irresponsible, incredibly neglectful of your and my life.”

“I put the principal responsibility on Europe; it has shown no capacity to engage in any kind of diplomacy except to whine when the US and Russia speak [to each other].”

“This chest-thumping about how saintly Europe is and how evil Russia is, this unending one-sided narrative … is going to get us to complete disaster.” [Sachs of course is not saying that Russia is saintly and Europe is evil, though some people do imagine that being against war is tantamount to being in favour of ‘the enemy’.]

The most serious European duplicity came when a “commitment was made at the Bucharest Summit of 2008 … the decisive event … Nato’s commitment to expand into Ukraine and Georgia”. [Noting that kinetic warfare – which may become the 2026 ‘word of the year’ – is politics by other means’, or at least ‘geopolitics by other means’; Europe’s expansive agenda is a mix of geopolitics and geoeconomics with the provocation of warfare – kinetic politics – as a subsequent option.]

“Angela Merkel hopes that the war will end within the next ten years [!?]” Given that this is, mainly, a war of attrition on the Donbas front, a military stalemate not unlike the Western Front in World War One, how many more soldiers’ lives will be lost if it goes on for another ten years? Sachs gives Merkel credit for having formerly supported a non-expansionist solution, that Ukraine could be a non-aligned nation with an autonomous eastern region (comparable to the German-speaking autonomous region of northeast Italy).

“The core issue of this conflict is [and always has been] Ukraine’s neutrality [that is, not Ukraine’s existence].” Not too many years ago, that country was set for a prosperous future whereby it could deal constructively with not only the European Union, the United States, the United Kingdom, Russia, and Türkiye; but also with the likes of India, China, the African Union, Iran and even Israel.

“The immaturity and shallowness of the people who lead us is something to behold … they are playing games in Armenia and the South Caucasus, but I digress … is something so wrong in the European mentality that war is so normalised?”

“I don’t know if Merz knows any of this, if he’s done his homework, if he’s aware of history; but he’s the Chancellor [so he has certain responsibilities].”

Glenn Diesen: “I know for a fact that something has changed now … this incremental escalation of the last four years has now crossed the line … Europeans now speak openly about war with Russia, the goal of destroying it … we are now at war, we attacked Russia, this is not a proxy war any more … we don’t have the luxury any more of just putting the Ukrainians in front of us and letting them die for us … twelve years of this nonsense sabotaging every diplomatic path, it’s beyond insane.”

On the inability of critical intellectuals to be heard and engaged with

“While I can still publish an open letter … our governments are in a bunker … they don’t talk to the public, they don’t engage in any discussion … they won’t answer … Chancellor Merz is not going to answer me, that goes without saying, but in general they have hunkered down and operate without responsibility.”

Another name for an intellectual bunker is a ‘rabbit-hole’. Essentially, our political discourse today involves a significant minority of people in various rabbit-holes – one or two much larger than the rest – sniping at each other, and otherwise accusing others of nefarious motives. I would argue that there are three kinds of people who are not in rabbit-holes: some of those who are switched off by ‘the conflict of opinions’ (that is, the genuinely apolitical), the semi-political class who want to be able to trust politicians and technocrats but generally feel they cannot (but know they must vote in general elections), and intellectuals who can be quite polemical but who are characterised by their willingness to engage constructively and creatively with others.

“We have all the trappings of democracy, the trappings of accountability, but … there simply is no response; if I call a senior official in the European Commission I don’t get an answer, I don’t get a callback, they know who I am, I’ve been dealing with them for over forty years and I know a number of them on a personal level; they simply will not speak any more … they are hunkered down, they cannot defend their position … all they can do is propagandise in one direction … and use sanctions against certain people [no doubt including Yanis Varoufakis].”

“What we don’t have, even within our own countries right now, is open discussion, and this is an explanation of how we go day-by-day with falsehoods hanging in the air unresolved. They don’t try to resolve them, there’s no independent commissions or responses or answers … it’s a very dangerous situation because of the [absence of] normal processes of truth-telling or analysis or … understanding how the other side thinks … and if there’s something wrong with how the other side thinks, discussing it openly [so as to] clarify … none of these processes happen right now.”

“The publics are disgusted by this; Merz’s popularity is essentially in complete collapse [from a low base!], Macron and Starmer too, it’s not as if these people are expressing the will of their publics, absolutely the opposite … the behaviour is so bizarre that this point, so counterproductive, so dangerous.” (Re Starmer, and his survival beyond 2026, I note that his rival Andy Burnham has just won by a massive margin, the Makerfield by-election.)

“You [Merz] said you were going to talk, to find an intermediary … for the sake of 450 million people in the European Union, find someone and get started.” (A former Chancellor, Gerhard Schröder, is deemed too ‘pro-Putin‘ by many; but it would be a waste of time putting up someone like Kaja Kallas, who Sachs noted is too inflexibly anti-Putin.)

Glenn Diesen: “It’s incredible, diplomats who don’t believe in diplomacy, leaders who ignore their basic national interests and seemingly have contempt for their own public; journalists who see it’s their job to defend narratives. We risk a legitimacy crisis, [these people] are not actually doing their jobs.”

Conclusion

Jeffrey Sachs, and others less well known, may be political intellectuals with their own foibles and biases; but they are not living in bunkers, rabbit-holes or echo-chambers. They engage; and provoke through argument rather than through a mixture of rhetorical gaslighting and military violence.

My understanding of social science is that it is a truth-seeking enterprise, undertaken in the full knowledge that truth itself is an irascible concept. I can see Russia – economically smaller than Italy and whose resources are very stretched, yet who will never surrender to western pretensions of a unipolar world – being provoked into using nuclear weapons, as soon as this year. (I would rate this conflict going nuclear this year at about a 25% chance; I would never board a train if I believed that it had a 25% chance of crashing. The problem is that humanity and all other species are already on a ‘train’ from which no creature can alight.)

Jeffrey Sachs and other intelligent and courageous people are trying to warn us. We should listen, and respond with reason rather than quasi-religious rhetoric about Good and Evil.

The world becomes a rather confusing place when we see a self-ordained ‘Good’ doing many evil things, and ‘Evil’ doing some good things. The greater evil may be to label oneself – or at least one’s own side – as Good, thereby (through presumption) casting the other side(s) as Evil.

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, 18 June 2026 – The latest quarterly economic growth data were released by Statistics today. The following chart summarises eight-quarter (ie two yearly) economic growth rates from 1990. I have colour coded the data to match the political party leading the government for each period. (Shades are lighter where the data spans a change of government.)

In the charted data, it is clearly possible to see the effects of two international financial crises, one pandemic, and two domestic fiscal crises. While both of the two fiscal crises are/were associated with National governments, the first ‘Richardson crisis’ followed on from the Labour-associated economic crisis linked to Roger Douglas. (The data series available only allowed me to go back to 1990.)

An important point to note is that, historically, there has generally been a significant ‘bounce-back’ of economic growth following a period of economic slowth. (There was an exceptionally large bounce-back in New Zealand in the 1930s after the Great Depression.)

The two exceptions to this bounce-back generalisation are the two growth phases preceding the two National-led domestic fiscal crises. The Richardson recession followed a period of flat economic growth from 1986. And the Luxon/Willis recession seems to have flattened what should have been a post-Covid19 bounce-back.

Recession? Or just slow growth?

Although the chart above doesn’t show a technical recession in 2025 or 2026, there has certainly been a recession, according to the latest figures. Real production GDP was $73,625 million (expressed in 2009/10 prices) in the December 2025 quarter, whereas it was $73,752 million two years earlier.

It’s a similar story of decline for the June and September quarters of 2025 (when National was in charge), compared to the same quarters of 2023 (when Labour was in charge). It means that the total GDP for the year ended March 2026 was $282.97 billion compared to $283,180 billion for the year ended March 2024. This is despite significant population growth in New Zealand between 2023 and 2025. And this is despite a markedly improving terms-of-trade; meaning a highly favourable global economic environment for New Zealand.

GDP lower than it was two years earlier is a recession. This latest recession seems to have been particularly unnecessary, occurring in otherwise unusually favourable times. Why is there so little criticism? Where is Labour’s evidence-based critique of National?

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, 17 June 2026 – Yesterday morning I listened to John Cambell (RNZ) interviewing an Iranian-born New Zealander, who came to Australia as a refugee 42 years ago, and subsequently moved on to New Zealand. (Refer Iranian-born Kiwi hopeful following deal signing, RNZ 16 June 2026.)

Iran was in the news that day both because of the previous day’s US-Iran armistice ‘deal’ and because New Zealand was scheduled to play Iran in the FIFA Football World Cup in Los Angeles yesterday afternoon (NZ-time).

Campbell (asking about the deal): “I suspect you have thoroughly mixed feelings this morning, do you?”

Kiwi-Iranian (who I will not name here, because he is not a public person): “Yes we do, and hopeful that peace is finally there. Talking to my family they still can’t believe that peace will be achieved there because the third party in that war has not fully committed themselves to that peace, and that’s Israel.”

Campbell: “And of course, sorry to interrupt but … [as Cambell shuts off the Israel talk with a few platitudes]. Can you describe what your family in Iran have been living through during this period?”

Kiwi-Iranian: “Two of my cousins got injured but they couldn’t go to the hospital because of the fear of America brutally attacking Iran; the hospital, the university, the infrastructure, the ping-pong execution of the regime [ie the assassinations of some of Iran’s leaders] … imagine living in there and when the bomb comes and thinking the next one is for me. On top of that the regime has expanded their executions …”. The interviewee finally said something in relation to what Campbell was probing for, evidence of governmental violence notwithstanding the fact that the nation of Iran may have been experiencing attack in early March from within as well as from without; given that such attacks from within – immediately after the start of the war – were the full expectation of the “brutal” American and Israeli aggressors.

Campbell: [more pushing for statements about whether the regime is more or less evil than before]

Kiwi-Iranian after giving answers to these questions as quickly as he could, resumed his own voice [which Campbell had being trying to hijack]: “John, one thing we’ve got to realise as Kiwis is that this war break the international law, the Article 51 of the United Nations – they violated that law – and New Zealand said nothing. New Zealand Kiwis give a lot in World War One and World War Two; a lot of Kiwis die to create an international law to protect human beings. If we don’t respect that, if we don’t follow that, if we don’t honour those laws, what do we expect tomorrow if they attack New Zealand; if somebody attack New Zealand, which law will protect us? We have got to point out that the New Zealand government failed to acknowledge this.”

Campbell [ignoring everything unprompted that the interviewee had said, from his own voice]: “I want to ask you about the failure of the justification of the war … [not at all acknowledging that the interviewee had clearly said that there was no justification for the war, and that the interviewee was speaking on behalf of the attacked party], so the regime [a loaded word, Campbell could have said ‘government’] – and you are not alone in saying this [and the interviewee said this only after having been earlier prompted by Campbell] is now tougher more hardline and less sentimental than it was before [failing to acknowledge that there has been no ‘regime change’, and that no nation or government under attack can ever act in exactly the same manner while defending themselves from multiple strikes than they were before hostilities commenced] and further emboldened by their leverage over the Strait of Hormuz, right [interviewee tried to get a word in edgeways], so in real terms what has this conflict achieved? What has President Trump achieved?” [The interviewee has already answered that, ‘mass destruction of civilian infrastructure’ and ‘ping-pong executions’ of political and military leaders; but Campbell is trying to extract a political comment from this guy as if he is a technocrat who can answer for the party attacking his country.]

Interviewee: “They have achieved nothing. What they have achieved is they have strengthened the regime [yes, Iranians are patriotic too; it is normal to put domestic politics aside when your country is being attacked with missiles]; they have realised that like China that maybe they are not a military force against America, they don’t have a nuclear bomb, but that they can turn the war to the economy, which affects everyone including you and I, our standard of living. So, they kill thousands of Iranians, Iran got stronger, Iran’s going to support the forces against Israel, the Hezbollah and the terrorists, and they’re going to get their money. The conversation is that the Europeans are going to ease the sanctions on Iran. By the way the whole sanction business will always say that sanctions should be aimed at governments not at the ordinary people; why don’t they release food and medicine for Iran; at the moment thousands of people are out of work, Iran doesn’t have social benefits like we have got in New Zealand, so people are struggling, really struggling, the condition of living is really worse for them. The regime has got their own supporters in the street flag-waving and destroying any oppositions; they [ie the aggressors] have achieved nothing but make the conditions worse for Iranians”.

Campbell gets his way in the end, in that the interviewee, who has not been in Iran for over four decades, does kind-of condemn the Iranian government, following a series of leading questions. Good on the interviewee for making his principal points, despite not having been asked (except in a very general way) about the external aggression that Iran has faced, and despite Campbell’s manoeuvres to shift the discussion from the interviewee’s narrative towards a validation of the Campbell narrative. And despite Campbell’s clear desire to push the story away from Israel. Interviewers need to appreciate that listeners want to hear the voices of the interviewees, not the interruptions, quips, and steering by the interviewers.

Campbell didn’t even ask the interviewee who he was supporting in today’s World Cup match!

Campbell’s ‘summary’ of this interview came half an hour later, in another interview, BBC’s Frank Gardner with latest on US/Iran deal signing: “We had an Iranian New Zealander on about half an hour ago, and he said that we have a new regime that in some respects is more hardline and tougher and less sentimental [whatever ‘sentimental’ means here] in its response to opposition in Iran”. These are Campbell’s talking points, John Campbell’s voice; not the voice of his interviewee.

John Campbell wouldn’t think that his style of journalism is propaganda; and he’s probably not pushing his own personal agenda here. Nevertheless, his line of questioning prompts certain kinds of answers and moves away quickly when the answers don’t fit the intended line of response. The propaganda lies in the presumptive Eurocentric narrative(s) which Campbell and his colleagues have absorbed through repetitive exposure to these narratives; and limited exposure to narratives which run counter to these. This uncritical absorption of narratives, unprofessional for an enquiring journalist, is professional practice to social technocrats (people who apply narrative ‘knowledge’ to their daily work practice). Indeed, Campbell treated his guest as a social technocrat rather than as a family member of victims of lethal aggression from the west beyond Iran’s borders.

This kind of ‘journalism’ has of course become commonplace, not only at RNZ. Indeed, almost every time I hear about Israel’s blatant military expansion into Lebanon, the story – whether on TV3, TVNZ, or RNZ – presupposes that every act by the Israeli military in Lebanon is a ‘defensive’ response to some past, present or future act by Hezbollah (subtext, by some Iranian-backed ‘terrorist’).

(Hezbollah, we should note, was formed among the refugee Palestinians and resident [mostly Shia] Muslim Lebanese in 1982, as a resistance movement – not a terrorist movement – in response to the terror invasion of Lebanon by the Butcher of Beirut, Ariel Sharom. I have a book at home – still on my bookshelf unread – called Assassination of the Butcher of Prague – which is about the (often counterproductive) resistance to the Nazi terror occupation of Czechoslovakia in 1942. That Czech resistance movement is never referred to with the disparaging sense of ‘evil’ which our media perpetually apply to Hezbollah.)

Re Lebanon, the New Zealand media almost never reports the ‘double-hit’ tactics by the IDF, whereby – after an allegedly anti-Hezbollah ‘operation’ – there is often a second strike which targets local paramedics or journalists. Further, the New Zealand media – and I mean the likes of RNZ and TVNZ – do not report the ongoing Israel genocide in Gaza (where it is common for ten or so people to have been murdered in their tents or their rubble in a single day and where there is now virtually zero Hamas or other resistance, given that the ‘terrorists’ largely observe the negotiated Cease-Fire). And, even – before 2026 – when there was much Hamas resistance in Gaza, these New Zealand media outlets barely reported the ongoing Israeli military and settler atrocities in the ‘West Bank’, where there was no Hamas, mainly Ghandi-like peaceful resistance.

Another issue with the journalism is the repeated presumption that there has been ‘regime change’ in Iran. Well, no! The democratically-elected president’s the same, the foreign minister is the same, the murdered Supreme Leader has been replaced by his son, and the important Speaker of the Islamic Consultative Assembly (who will sign the deal) has been there since 2020. Not only is the Islamic Republic still the same, three of the four most important personnel are the same, and the fourth appears to be a younger carbon copy of his elderly now deceased father.

The Following Day

This morning’s coverage of the football match was somewhat disrespectful, in that after an excellent game of football with four excellent free-flowing goals scored, the coverage barely mentioned the Iranian players’ contribution to the game. (Refer All Whites draw with Iran at FIFA World Cup.)

While the New Zealand players and fans clearly appreciated Iran’s contribution to the game – as indeed did the many expatriate Iranian fans, some of whom were politically ambivalent – the New Zealand media only described New Zealand’s performance and the excellence of  New Zealand’s goals.

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.