Analysis by Keith Rankin, 1 May 2026.

New Zealand is almost completely dependent on four things for its survival in the contemporary world. Imported wheat, rice, and refined fuel. And ships.

Wheat

New Zealand grows wheat in the South Island, most of which becomes animal feed. Reliance on New Zealand grown wheat is forestalled by a lack of milling capacity, and a lack of inter-island shipping. Eighty percent of New Zealand residents live in the North Island.

In the last week I have seen stories of South and West Australian wheatfields being plagued by mice. It’s a recurring story in Australia. I have also seen a story about a coming ‘super El Niño’ weather event. Such an event would hit the Australian wheatfields hard; drought and fires in South Australia, and too much rain in Queensland’s Darling Downs. Further, coming constraints on fertiliser supply can be expected to hit Australia hard,

In most years, 100% of New Zealand’s imported wheat – on which the North Island is totally reliant – comes from Australia. Much of that comes in processed form, given the constraints on flour milling in northern New Zealand.

What if Australia get better offers for its possibly compromised wheat crop? New Zealand may find itself in a diminished bargaining position for its usual slice of the Australian wheat pie.

New Zealand could transition to an economy based on balanced farming, with crop-farming and horticulture taking an essential and strategic place. But that would take time. It could only happen in the medium or long term.

Rice

Rice is a second staple food in New Zealand; a grain food which is entirely imported. Reliable supplies may become hard to secure in the future; though New Zealand’s traditional reliance on Australian rice means that there may still be a degree of rice-supply security.

We note however that rice is a staple of Asia, and that East and South Asian countries are likely to be among the most adversely affected by the imminent blockade-induced global economic crisis. Rice is a Giffen good, meaning that, as its price increases, Asian consumers eat more rice, not less. (Such Asian consumers can be expected to respond to a severe economic crisis by cutting back on the kinds of foods New Zealand exports, and to eat more rice instead; this is because rice will remain cheaper in Asia than long-haul imported foods, even when the rice price increases markedly.)

New Zealand should, from next week if not last week, establish a store of rice to ensure food security during a coming crisis; a crisis which seems increasingly likely. Rice, available now, may not always be available. Rice, once cooked, can be eaten directly; it does not require milling.

Ancient Romans, at times, depended on a universal bread allowance (as well as on circuses!). A society under deep strain depends on food benefits. For New Zealand in a future crisis, rice could be the best option as a dominant emergency food staple.

Fuel and Ships

While a producer of crude oil, New Zealand imports practically all the oil-based refined fuel that it consumes. 43% of New Zealand’s diminishing oil exports went to Australia for refining in 2025, down from 99% of a much larger amount of oil in 2011. Most of the rest is now refined in South Korea and Singapore.

For fuel, New Zealand is almost completely dependent on long-haul imports on fuel-consuming ships. At least this is a two-way trade with Korea and Singapore, though imports far exceed exports. So oil tankers taking New Zealand’s oil can at least be guaranteed to return with oil. But there is no guarantee that the rest of New Zealand’s scheduled oil imports will not be redirected, in response to better offers.

On the matter of fuel, it’s very distressing to see Ukraine – now a NATO proxy – doing its best to exacerbate the global fuel crisis by destroying the oil-export capacity of Russia, the one country best placed to relieve the present global crisis. When shortages of Ukrainian wheat threatened Africa’s food supply in 2022, arrangements were made between the combatants to free-up wheat exports. I see no sign of Ukraine or NATO taking the responsible option re the global fuel supply. (Even worse, King Charles – in the King’s speech – tried to incite the United States’ president to escalate the Ukraine-Russia war; a war that can never be resolved by escalation, but which can be resolved by a neutrality deal which would ensure that German troops would never again occupy places like Kharkiv.)

Finally, there’s the issue of ships. What is happening in the world’s shipbuilding industries at present? Are aging and eroding oil tankers and container ships being replaced as they normally would be in peace times? Will there be too few ships next decade to sustain re-established global supply chains; chains which, if similar to those of recent years, almost disregarded shipping as a cost?

Conclusion

For its most basic living commodities, New Zealand is almost completely dependent on long-haul shipping; or, in the case of wheat and rice from Australia, medium-haul shipping. By sea, Adelaide is a long way from Auckland. And New Zealand has minimum short-haul (ie coastal) shipping, which could serve – in a crisis – as an efficient domestic distribution mechanism.

To avoid a food security catastrophe, New Zealand needs to store more food. Food stores facilitate any transition in land use. A substitution to the production of food staples which will feed New Zealanders will take many years.

Rice is the best staple food to store, as well as being a staple much more widely consumed in the existing new New Zealand than in the previous century.

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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.

Inflation is a topic which has, for a long time now, been at the forefront of normative economics. Normative economics is the economics of mainstream ideology, not the economics informed by concept or science.

The latest New Zealand CPI-inflation data – released this week – have been called the ‘calm before the storm’. We know that the CPI is going to rise markedly in the June quarter. But will that be due to inflation? Or will it be due to the real costs of war; and in the context that the present war has all the elements of global cost, not just local or regional cost. If the latter, then the present ‘war of choice’ – a euphemism for a war of aggression waged by traditional allies – also becomes a ‘cost-of living crisis’ of choice.

Can we characterise other cost-of-living crises likewise, as crises of choice which have downside foreseeable consequences (though, like all crises, may have a mix of upside and downside unintended and unforeseeableconsequences)? Such choice-making would be clear instances of ‘functional stupidity’, as outlined in the 2016 book The Stupidity Paradox: the Power and Pitfalls of Functional Stupidity at Work (by Mats Alvesson and André Spicer). We may note that the stupidity paradox applies to academic workplaces as well as to corporate workplaces.

With regards to ‘unforeseeable consequences’, there is also a category of ‘underforseeable consequences’, meaning plausible consequences only imaginable by people capable of genuine critical reflection. Such people appear in all walks of life; certainly not only in academia. It was Cassandra, in Troy, who foresaw downside consequences which others could not.

Inflation as a Concept: Inflation versus CPI-Inflation

Inflation, as a concept, is defined as a depreciation of the purchasing power of money. (It means that a dollar will buy less in the present than in the past.) Deflation, thereby, is defined as an appreciation of the purchasing power of money. Thus, a symptom of inflation is rising prices. This does not mean, however, that all cases of rising prices can be categorised as inflation.

(There may be cases of inflation where prices are not rising; where falling costs – that is, rising productivity – are offset by monetary depreciation. Indeed, a comparison of the twentieth century with the nineteenth century suggests that inflation may have been more ubiquitous in the twentieth century than is commonly realised. And that much of the hidden inflation of the twentieth century, rather than being a problem, was actually an unrecognised solution to the very real nineteenth century problem of CPI-deflation.)

A depreciation of money – inflation – may be a problem, may be a solution to a problem, or it may be neutral. For inflation to be a significant problem, economists normally understand it to be an ongoing process – like an out-of-control train – rather than a one-off or two-off event.

CPI-inflation has a separate definition. It is defined as an increase in the general – that is, average – level of consumer prices. Consumer prices are prices incurred by households of people within a defined territory; typically, we think of a territorial nation-state, though we could be interested in a province, or we could be interested in a geopolitical region, or the world as a whole.

There are essentially four quite separate versions of CPI-inflation. Only three of these meet the definition of inflation as monetary depreciation. The other version is increases in the cost-of-living, and has been a substantial problem in the world this decade; this version is about real supply, not about money supply. Further, this can become a process of ongoing real-supply cost-of-living increases, not just getting through a limited cost event such as a pandemic or short war; such a process is a significant problem, but it is not inflation. An appropriate policy response is to address the real supply costs, and to stop pretending that it’s a depreciation-of-money problem.

A cost-of-living crisis of choice is a politically imposed real-supply crisis. Conceptually, such crises may be the result of ‘evil’, but more likely they are the result of ‘stupidity’ (refer Bonhoeffer, Cipolla, and Alvesson/Spicer). ‘Stupidity’ can be a technical word; indeed, even words like ‘evil’ can be given a technical meaning, just as the word ‘genocide’ has both technical and popular meanings.

Understanding these conceptual differences is very important, because different kinds of CPI-inflation problems require different kinds of policy remediation. Sometimes the best policy is a political or administrative choice to do nothing; to watch and wait. And certainly a very important part of the policy response to processes of CPI-inflation is to work out which kind – or which kinds – of CPI-inflation are taking place. Getting this analysis wrong can mean the implementation of a policy which is worse – possibly much worse – than doing nothing.

The four kinds of CPI-inflation are these:

·         increases in the aggregate demand for commodities and services; this is primary inflation

·         increases in the supply costs of commodities and/or services; this, in itself, is not inflation

·         a corrective process facilitated, by increases in the supply of or the circulation velocity of money, and that may under certain circumstances go awry; this process is known as secondary inflation

·         a process arising from the presence of different denominations of money – for example, American dollars and New Zealand dollars – and changes in the exchange prices (ie exchange rates) of one such money vis-à-vis others such monies; a process of localised inflation

One: Primary Inflation; exceptional increases in aggregate demand

This is the demand-pull inflation which dominates Economics 101 textbooks. It is commonly understood as ‘too much money chasing too few goods’; though that pithy maxim needs some unpacking.

The best way to understand demand-inflation is through the concept of a demand shock (an acute event) or a demand-stress (a chronic event). An example of a demand-shock is an unfunded increase in the demand, say, for medical services. By ‘unfunded’ we mean that it’s not offset by a decrease in demand for other goods or services. (Though there is an adjustment issue that arises from demand ‘switches’.) Demand ‘events’ or ‘boosts’ can be characterised as shocks, stresses, or switches.

An unfunded increase in spending means, essentially, a withdrawal of money from bank accounts; such withdrawals increase the circulation velocity of money. More generally, a reduction in savings is a sell-off of financial assets, noting that a bank deposit is a financial asset. Alternatively, an unfunded increase in spending means an increase in borrowing – especially borrowing from banks – that is not offset by someone else’s increase in saving; this is new money. This can be called an increase in credit. A demand shock can also arise externally, by money being sent to or brought into a country.

Demand shocks can, potentially, bid up the prices of goods and services. ‘Potentially’, because if there have been ongoing productivity increases, then more spending should be accompanied by more output, and not by higher prices. (If productivity is increasing and there are insufficient demand-boost events, then prices should be falling; that would result in CPI-deflation. Such deflation indeed was the norm in the capitalist world in the nineteenth century; including New Zealand.)

Going back to my example of increased spending on medical services, a demand shock is strictly an increase in demand because people have increased wants; that is, more purchases of ‘nice-to-have’ items. Or it could mean more people moving into older age groups, spending their savings. Or it could arise from more babies being born; as in the New Zealand ‘baby blip’ at the end of the 1980s. It does not mean more purchases of medical services arising from a general deterioration of the health of the population; this example is an increase in real costs, and comes under the label of ‘supply stress’, not ‘demand shock’.

Primary inflation is not a problem in itself. Rather, it’s a feature of the market economy working as it should do; in particular it’s a source of information that production systems are tight, and that new investment would be helpful to deal with the ‘too few goods’ part of the demand-inflation experience. In this last circumstance, higher interest rates are appropriate; they result from increased market demand for production capacity, not from policymakers raising interest rates to discourage the very productive investment that’s required.

There is a special case of demand-inflation, whereby the government sector outcompetes the private sector for new credit. This may or may not be capricious – ‘evil’ as Peter Thiel might say – on the part of government; more often it’s the government borrowing for more essential purposes than the purposes of private borrowers. The capricious case is called ‘crowding out’. In this special case, there is a role for interest rate increases; essentially to ration credit.

It is to the capricious version of this special case that monetary policy as we have come to know it may apply. But this policy – an engineered recession – arguably harms the private sector most. To achieve more private spending and less government spending, it is fiscal austerity rather than monetary austerity which is most pertinent. But even that budgetary policy of ‘fiscal consolidation’ tends to backfire, because so much private income arises from businesses supplying goods and services to government sector organisations; much private investment arises to satisfy governmental demands. Indeed, Air New Zealand always did well supplying air travel to government-connected personnel.

Primary inflation is a mix of rationing and incentive. The more rationing that is required when the economy is responding to increased demands, the more primary inflation there will be. Rising wages, at least in some production sectors, is a part of the resource reallocation process; and is also appropriate to an economy which is experiencing rising productivity.

An important coming example of primary inflation will be the increased spending of accumulated retirement savings; ie from KiwiSaver and other managed funds. Those spending from the biggest funds will be queue-jumpers at a time of inflation-facilitated rationing.

Demand-pull inflation is rationing goods and services by market price, rather than rationing by need or by equity. Most economists will say that ‘rationing by price’ is the most efficient method of rationing. So, the inflation is not really the problem; rather the problem is the unresponsiveness (strictly the ‘under-responsiveness’) of the economy that creates the requirement for rationing. The biggest potential problem is that of inequitable rationing.

Of course, unanticable demand-shocks and demand-stresses are a problem. But they are rare; most demand-events that are heading our way are fully visible, so long as we choose to look. Failure to anticipate the future market demands arising from an aging population (eg healthcare expenditures) and from maturing retirement-savings funds represents a primary-inflation crisis of choice.

Second Case: ‘Cost-plus’ CPI-inflation which is not actually inflation

It costs more to pick, from a tree, high-hanging fruit compared to low-hanging fruit. The process of moving from the easy-to-pick fruit to the hard-to-pick fruit is not a process of inflation. It is a ‘cost event’, however.

The most problematic form of CPI-inflation is the one known in the textbooks as ‘cost-plus inflation’. The only thing is that primary ‘cost-plus’ inflation is not inflation at all. Although cost-plus inflation can under certain circumstances facilitate a process of secondary inflation; secondary inflation definitely is inflation, and may or may not be an important economic threat.

Supply-cost price increases most certainly are a threat; they are a cost-of-living threat, but not an inflation threat. They relate to supply shocks (acute) and supply stresses (chronic). Supply switches may also occur; for example, as certain resources run out or become too scarce.

Examples of supply shocks are disruptions to supply chains arising from a pandemic. Such disruptions may arise from the disease process itself, or from measures taken to address the disease process; or from a mix of the disease and the prescribed cure.

Supply shocks are especially relevant today, because our globalised supply chains are technically efficient – at least in the short- and medium-term – yet vulnerable. They mean that a country like New Zealand can suffer severely if the boats stop coming; if those supply-ships are reprioritised. This century, New Zealand has become dependent on imported food.

Another form of supply shock is war. War can also be a supply stress; for example, some forever wars. The Ukraine-Russia forever war has proved so far to have been a supply-shock. Workarounds came into effect after a few months. The Israel-Iran War – which threatens to be another forever war – may prove to be more of a global supply stress. The stalemate over the Strait of Hormuz chokepoint may never return to its prewar state.

Climate change is another supply stress; as are many other environmental costs. The real costs arising from climate change keep outpacing the workarounds; and some of the workarounds – for example, air conditioning – aggravate the root causes of these costs.

Another possible supply stress is rising labour costs. Labour costs are ambiguous. Higher wages granted to keep up with supply-cost price increases are a feature that sustains secondary inflation. But higher wages arising from shortages of skilled labour – from structural labour supply issues, including demographics and impediments to migration – are supply shocks if easily remediated, or supply stresses if largely irremediable.

Supply stresses set off a process of ongoing CPI-increases; for example, as pickable or minable low-hanging-fruitgive way to ‘higher-hanging fruit’.

A fourth important supply cost – again a shock if acute, and a stress if chronic – is the use of interest rate intervention to raise capital costs; to raise the cost of borrowing and therefore of economic investment, and also to squeeze existing debtors.

Raised interest rates, as a policy measure, may generate primary deflation; the problem of falling aggregate demand. Policymakers may juxtapose a non-inflation cost-of-living crisis with a primary deflation; making it look (superficially) as if neither problem is taking place when in reality there are two separate and serious problems being brushed under the carpet.

With one ‘policy lever’, we both create a cost-of-living mess and sweep away the more obvious evidence. Hidden ooze is even more problematic than its visible form.

A fifth important supply stress is the use of restrictive fiscal policy to delay or forever postpone vital works of public infrastructure. Inadequate civilian infrastructure – and this includes education as well as engineering projects – represents one of the most potent chokepoints in the supply chain; indeed, that’s why such infrastructure is so often targeted in a war of aggression.

Restrictive fiscal policies – ironically often implemented in the name of intergenerational equity, not saddling younger generations with public debt – are a clear example of a cost-of-living crisis of choice, with the crisis being most imposed upon the very population generation for whom that public-austerity policy was claimed to benefit. The classic case here remains Ruthanasia. New Zealand’s current water-supply woes are a direct result of 1990s’ fiscal austerity. (See The $49 billion cost of fixing water infrastructure woes laid bare, RNZ, 23 April 2026.)

(A topical example – see Australian company plans $3b lignite-to-fertiliser plant in Southland, RNZ 22 April 2026 – is that if there had been public support [adequate funding, not just talk] for investment in urea-fertiliser production in Southland ten years ago, when New Zealand had been moving further in the direction of complete dependence on Persian Gulf supplies, then New Zealand’s present accelerating cost-of-living crisis might have been preempted. Investing is borrowing and spending money, not hoarding it in Sovereign Wealth Funds which play the global markets and facilitate the very wars which are a large part of the cost-of-living problem.)

Third CPI-Inflation Case: Secondary Inflation

This is the adjustment case; the situation where inflation is a natural and probably necessary part of any post-shock economic correction. (That is not to say that all secondary inflations are OK.)

This is the one that the theory of anti-inflation monetary policy focuses on; fixing a problem which is often (but not always) a part of the most efficient (and market-led) corrective solution.

Secondary inflation is one of two options for a restoration of normality once a demand-shock or a supply-shock event is over. The most obvious – though least likely – option is a simple restoration of the pre-shock status quo. Thus, in the case of a primary event connected to rising petrol prices, in this option petrol and other prices would return to what they were before the shock. A primary CPI-inflation would be followed by an equal-and-opposite primary CPI-deflation.

An in-between case would be that the higher shock-related price increases are not reversed but the CPI-inflation rate quickly returns to something like normal. (Noting that normal inflation of two percent per year is generally regarded by policymakers as better, as more efficient, than zero inflation. Normal inflation is forever providing a bit of readjustment and a bit of demand stimulus.)

Another case would be that general prices rise further, beyond the shock phase of inflation, as relative prices re-adjust, meaning that the adjustment process itself has an inflationary component; albeit a decelerating inflation as the new-normal arises. This is a process of market-led disinflation. It is not at all clear that this market solution could be regarded in any way as a problem.

The fourth variant of the post-shock economy is the extreme case. In this case, there is a surge in ‘inflation expectations’, and secondary inflation accelerates, taking on a ‘mind of its own’, supposedly leading, if unchecked by authoritarian power, to a state of hyperinflation. This is the hypothesis of accelerating secondary inflation, and real-world examples are extremely scarce. (There have been historical examples of hyperinflation in particular countries in particular circumstances; these generally come into the localised inflation case; see below.) I know of no examples of either global hyperinflation or of hyperinflation in an economically unweakened country.

Nevertheless, the Great Inflation of the 1970s has often been presented as such an example. A careful unpacking of the inflations of that era tell a different story; a story of multiple shocks of different types. The evidence is that, globally, those events represented overlapping cases of primary inflation, supply-cost CPI-inflation, and slowly decelerating secondary inflation; despite instances of many countries implementing policies that amounted to ‘cost-of-living crises of choice’. The slow pace of the decelerations were most probably due to ‘anti-inflation’ monetary policies which raised interest rates to cause stagflation. Stagflation is most-commonly a contrived mix of high-interest-rate cost-of-living crises and suppressed secondary inflation. Suppressed secondary inflation eventually leads to a primary deflation; the result is apparent CPI stabilisation, but in reality two serious problems with opposing consumer-price symptoms that cancel each other out.

As well as ‘cost-of-living crises of choice’, the adjustment process of secondary inflation is extended by misinterpretations between inflationary and non-inflationary price increases. An important example is wage-setting, whereby trade unions seek to negotiate inflation adjustments to hourly wage rates based on overall CPI-inflation and not just on the monetary depreciation. This process is called price-indexing; it is partly necessary and partly misguided, depending on the actual diagnosis of the cost-of-living event.

For countries mired in private debt denominated in local currency, the only way out, really, is secondary inflation – initially, double-digit inflation. (For small countries with a weak presence in the financial world, government debt looks to international creditors very much the same as private debt.) Mass bankruptcies (on generous terms) are another form of reset. Other options which help with private debt are expansionary fiscal policy (as in Japan in the 1990s), universal incomes, charity, and forgiveness. Fiscal accommodation (opposite of ‘fiscal consolidation’) and inflation are generally the most efficient market – or marketish – mechanisms for accomplishing a restorative reset.

For countries mired in foreign-denominated debt, then international inflation is required. (Or default and forgiveness.) Under these conditions, global interest rates should be generally lower than inflation rates. Interest rates can be negative; indeed should be, if money generally is being transmitted from many ‘have-nots’ to relatively few ‘haves’. From 2014 until the early 2020s, Denmark, Sweden, Switzerland and Japan all had negative wholesale interest rates; and it worked, low inflation and fewer other problems.

Türkiye in the 2010s has been an example of a country with high inflation and high but often lower interest rates. Türkiye is a significant global economic player; arguably unweakened, maybe even strengthened, by its inflation experience and its refusal to yield to the ‘slam-on-the-brakes’ narrative which constitutes western monetary-policy orthodoxy. Türkiye’s average annual economic growth in the last two decades has been five percent.

When necessary inflation is suppressed, capitalist economies just grind to a halt, which is a form of collapse. New warlords – eg druglord types – fill the vacuum. Capitalism as we know it cannot continue if the indebted many have to keep paying more and more interest to the privileged few.

Fourth Case: localised Exchange-Rate driven inflation

The previous three cases of CPI-inflation apply to the world as a whole, as well as to individual countries. In today’s world, each nation-state has a currency which is ‘legal tender’; for most countries it is their own national currency.

When one national currency depreciates against a ‘basket’ of other currencies, that cheaper money can be expected to buy less; hence inflation has occurred, money has depreciated. Likewise, many of the other currencies in the basket will have appreciated, on average, so they will experience monetary deflation.

Such inflation or deflation may or may not show up in CPI statistics; it all depends on what other CPI-inflationary events or processes are taking place at the same time.

Very high national rates of inflation – indeed most hyperinflations are of this type – driven by devaluations or depreciations of countries’ domestic currencies. They represent fundamental weaknesses of such countries’ economies; although such countries’ weaknesses may well be hidden from global market scrutiny for a long time (eg for several decades).

This kind of inflation is often presented as a kind of bogeyman; presented to naïve politicians as a possible consequence of not following ‘orthodox’ monetary policy. So, such politicians find themselves facing a binary choice: to have a cost-of-living crisis of choice (but to pretend its something else), or to risk an exchange-rate collapse leading to the kind of hyperinflation which Zimbabwe experienced in the 2000s. So the politicians devolve the policy to unelected central bankers; they can blame someone else while suggesting that the ‘fix-up’ will be next year, always next year.

War Inflation

Finally, a note on war inflation. Inflation has always been associated with war. War circumstances require fiscal and monetary policies that redirect resources from ‘guns’ to ‘butter’, as the postWW2 economics’ textbooks used to say. Inflation gets forever worse during a war, though the measurable symptoms of wartime inflation are typically suppressed through other forms of rationing and the deprioritisation of data collection. So, it’s commonly immediately after wars that countries’ inflation rates explode, though often that inflation subsides as debts are reset.

The USA can be different, because it alone has the privilege of printing money without consequence; generally, the rest of the world responds to an American demand-shock by producing more and exporting those surpluses to the United States. In most of our lifetimes, capitalist economies have been responsive to demand shocks and stresses. Wars, though, create supply shocks and stresses. Generally, though, it has been surprising to what extent countries at war have been able to overcome those deprivations.

War experiences show that the inflation bogey has been generally overstated; with the few cases of genuine postwar hyperinflation – like Hungary in 1946 – proving to be the exception rather than the rule.

Conclusion

Inflation is much less of a problem than it is commonly presented as. As often as it’s a problem, it’s a solution.

The biggest problem of inflation is the contrived fear of inflation. Fear of inflation – combined with popular ignorance about it – becomes an important reason why we have cost-of-living crises of choice.

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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.

My first paragraphs here feature Steve Keen, Australian economist, who was a panellist on Al Jazeera’s Inside Story 12 April 2026 (Could the Iran war pose lasting risks to global food security?, or here on YouTube):

Interviewer: “You’ve warned that the world could face famine within months … an extraordinarily stark prediction.”

Keen: “Thirty percent of the world’s fertiliser passes through the Strait, which has now been disrupted for over a month. There’s no sign of this war stopping any time. … There’s not going to be enough fertiliser available. Without fertiliser the carrying capacity of the world is about two billion people. Six billion of us are alive because fertiliser flows freely. … This could have catastrophic effects in all sorts of countries which could not ever imagine that they might face a famine. … That could apply to places like England. … The usual bias we have is that it’s always going to be a problem for brown people; let’s be frank, we’ve got masses of racism in the way we think about the world, and the West doesn’t worry when brown people die; well, what will happen when white people start dying; people might pay more attention.”

While Keen overstates the case, given that seventy percent of the world’s fertiliser flows through other pathways or is used near to where it is produced (though high transport costs, more generally, impede fertiliser flows; not just the blockade of the Hormuz Strait). Thirty percent of six billion is potentially 1,800,000,000 people at risk. And of course there is much food wastage at present. And many people, indeed most people in ‘England’, could survive eating less than half of what they do eat; they may even be less malnourished, by eating better food. Keen later acknowledged the issue of first world food wastage.

Nevertheless, when there are food shortages, ‘rational’ market behaviour – as understood by ‘game theory’ – means that much food would be bought up by speculators and hoarded; profiteering, in other words, a not uncommon feature of famines. (This is similar to the issue of ‘ticket scalping’.) Keen is correct to point out the problem of Euro-supremacism. One feature of the new world food order, noted by the Indian panellist on the program – Avinash Kishore – will be export bans. India, for example, is an important exporter of wheat and rice.

Keen: “Because it has such a market-oriented non-government approach to virtually everything, the United Kingdom has insufficient stocks of fertiliser, diesel fuel, and it imports about forty percent or more of its food. It’s very vulnerable to being told ‘we cannot supply you’. And it doesn’t really have any bargaining ploy in the opposite direction [unlike Australia].”

People assume that, whatever happens, Aotearoa could always feed itself; after all it’s a ‘specialist’ food producer, isn’t it? I’ll come back to that. But we note that the United Kingdom could survive foodwise with a reduction of 40% of its food supply, given that its domestic food production is in better domestic-international balance than is New Zealand’s. The fertiliser question becomes the bigger issue for the United Kingdom, and I’m guessing that it has nearly enough fertiliser stocks for 2026 spring planting, and could redirect some food exports to the domestic market. 2027 though? Incidentally, in the later 1980s, under pressure from Rogernomics, New Zealand got by for a few years with substantially reduced fertiliser usage.

Interviewer: “Just how vulnerable are modern food systems to international shocks like this?’

Keen: “The Trump administration [ie regime] had no idea what it was blundering into when it started this war. … We have a mindset of ‘perfect competition’ which implies numerous different sources, if one supplier gets knocked out then others can [immediately] take its place [as in the case of the New Zealand apple crop after Cyclone Gabrielle in 2023]; there’s no sense of urgency for the physical imports to production. … [Most] economists are completely naïve about the production systems. … There is such a thing as a critical input, and four of them pass through the Strait of Hormuz. … Yes, it’s too late to fix it, you cannot make up for missing ships.”

Keen: “I’m not overstating the potential. It might not happen, we might be lucky, shipments might arrive just in time. … The other possibility is still there. Now what happens if you don’t talk about it. … I would rather have people be too alarmed than too ignorant.”

Keen: “We think we eat green stuff. Ever since we invented fertiliser, we’ve been eating brown stuff. The green wrapping on the outside is basically us turning fossil fuels into food. … We think we have enormous resilience, but in fact we have enormous fragility. This was going to be exposed by global warming, but Donald Trump is like a Force Six cyclone coming in before the natural ones start turning up. … Our production systems are very dependent on specific inputs from specific locations. They cannot be easily replaced once damaged, and at the moment the supply is shut down completely.

Avinash Kishore, from the Indian ‘Food Policy Research Institute’: “The worst outcome would be if production itself suffers and then trade also suffers; [for example] with export bans. … China is the largest producer of fertilisers. If it restricts exports of both urea and phosphate … that makes the situation [much] worse. If trade keeps flowing, we’ll have less vulnerability, as we saw after the Ukraine crisis.”

Interviewer: “If the Strait of Hormuz were somehow to open tomorrow, and calm somehow holds, does this crisis end quickly, or has lasting damage already been done?”

Keen: “Lasting damage. One of the urea plants has already been damaged, and is not producing urea. We have to replace that facility, and these things take time. … This is showing the danger of the ‘just in time’ efficiency versus robustness [business model].’

I would note that ‘just-in-time’ can be robust, given the prevalence of the specific conditions which Keen mentioned; the conditions that most economists presume to be almost always true.

But geography can be capricious, and so can concentration of production reflecting the giant international economies of scale we see in production and transport; economies which minimise cost when disruptive forces are not at play. I would also note that many components of supply chains come as complements; thus, air freight remains largely a complement of passenger movements, fertiliser is a complement of fuel, and shipping works best when ships can carry a return load or an onward load.

New Zealand’s food security depends on its exports continuing to justify high two-way shipping capacity. What if, due to consumer prioritisation, demand in say China for New Zealand’s exports falls away; the reverse of the recent booms? This is the capriciousness of ‘income elasticity of demand’.

Some sobering statistics about New Zealand’s food and fertiliser imports

These ‘harmonised trade’ data (from Statistics New Zealand’s soon-to-be discontinued Infoshare database) cover, for us, in particular the period from 2000 to 2025. Inflation for imported food has been low for that period, given that the exchange rate for the $NZ was at an all-time low in 2000, and that not-so-high New Zealand inflation has been consistently dominated by non-tradable items. We also note that New Zealand’s population has grown by 40% since 2000.

These data are ‘value-for-duty’, meaning for our purposes (and given that New Zealand is a free-trading nation) that they are exclusive of transport and insurance costs. Of course, we now know that transport and insurance costs are going to increase dramatically; especially for a geographically marooned population.

New Zealand’s spending on imported staples has increased from 3½-fold to five-fold since 2000. Annual increases in spending on food imports were even more dramatic in the 1990s, though tradable CPI-inflation will have been higher then. (New Zealand’s data on tradable inflation only commences in the late 1990s.)

New Zealand is dependent on Australian wheat. For other staple food items, the huge increases in food imports have come from other countries. Rice, the best staple food of all, soon will become much harder to get from the non-Australian sources we now prevail upon. Pasta, rice, and pre-prepared vegetables have become dinner-staples of student flats and other income-poor or time-poor households. Further, firms which process New Zealand grown vegetables – Watties and McCain – are planning to scale back their domestic operations. (See my Frozen Vegetables, Food Security, and the New Zealand Dollar, Scoop, 312 March 2026.)

Three other points are noteworthy.

First, spending on imported fodder – imported animal food – has increased dramatically, nearly fourteen-fold, since the three years centred on 2000.

Second, most imports of fertiliser, which have increased more than threefold since 2000, are not from our neighbour across the ditch. (They – the unassembled food matter which underpins the supermarket food we eat – are byproducts of the petroleum industry; hence they come to us from Singapore and South Korea.)

Third, total imported food is now 12% of all imports, up from 6% in 1990 and from 7% in 2001; and now less than 30% of it comes from Australia. ‘Total food’ includes a huge category of imported food simply labelled ‘miscellaneous’. (We also note that little more than ten percent of New Zealand’s total goods’ imports now come from Australia.)

New Zealand’s ‘Perfect Storm’ of food vulnerability

New Zealand’s worst – or at least most immediate – problem might not be fertiliser. Rather, it might be dependence on imports of both human food staples and animal feed. New Zealand’s food production system is now so specialised re the international marketplace, that the short-run and even medium-run supply costs of pivoting to a robust more domestically-oriented model are probably prohibitive.

New Zealand’s main source of staple food is still Australia, but to a much lesser extent than in the 1990s. (Before the 1980s, New Zealand produced most of its own starch-carbohydrates.) How well will we be able to persuade Australia to keep sending us food when there will be many more other mouths to feed in the Indo-Pacific region? And how much will Australia’s food production be curtailed by restricted fertiliser and other supplies?

In terms of the Indo-Pacific food and fuel supply chain, we already see most other (indeed much bigger) nations facing major impacts from the supply-chain crisis, and putting their domestic interests ahead of international considerations; they are effectively queue-jumping, undermining the rationing process by reducing fuel taxes and by increasing food subsidies and export barriers. (Note RNZ today about Asia.)

Not all governments are as complacent as New Zealand’s. The reduced fuel taxes do not only lead to queue-jumping; they also constitute a fiscal stimulus which may help in the process of a reorientation towards more secure staple food supplies. The New Zealand government is obsessively and irrationally opposed to any kind of fiscal stimulus.

Since 2000, New Zealand has enjoyed an export windfall and rising terms of trade, thanks to the high income elasticity of demand for dairy and other protein-rich foods. That’s due in particular to high per capita growth in East and South Asia. The problem for New Zealand is that when those economies stop growing – indeed when they recess – the fall in demand for luxury foods can be equally dramatic.

On RNZ’s Business News this morning, Corran Dann noted: “For a country like New Zealand, we’re a trading nation, we need to see growth in our trading partners because they buy our goods. That is how we make our way in the world. And likewise, for them.”

Reciprocal trade – ie multilateral exchange – is economics’ foremost example of a win-win ‘game’. But humans can be capricious, narcissist, supremacist. ‘Win-win’ competitive games can be disrupted by stupid players, or even by advocates of disruption as a greater good; giving way to rivalrous zero-sum, negative-sum, or ‘lose-lose’ games. (On ‘stupid players’, we may note, in passing, Carlo Cipolla’s 1976 essay – recently republished – The Basic Laws of Human Stupidity.)

New Zealand’s highly specialised export-oriented food production system can be expected to face sudden and simultaneous supply and demand shocks. Supply shock because New Zealand farming is now so dependent on imported fuel, fertiliser, and fodder. Demand shock because New Zealand specialises in the production of luxury foods, not staples, and faces a steep fall in the demand for luxury foods.

So, in terms of Steve Keen’s comments, New Zealand is arguably much more food-vulnerable than the United Kingdom, which Keen cites. And note Avinash Kishore’s comment about the food consequences of a general breakdown in international trade. (Unlike Keen, Kishore is an optimist!)

A crisis on top of a crisis

On present food insecurity in New Zealand, this from Google’s AI overview (search: ‘NZ food insecurity’): “Food insecurity is a widespread issue in New Zealand, affecting 1 in 3 households (33%) in 2025, with 18% facing severe insecurity.” See One in Three New Zealand Households Faced Food Insecurity in 2025, IPSOS, published by Scoop15 April 2026.

It can only be regarded as disgraceful that when, under the most favourable of circumstances in the food-supply system, a food-specialising country such as New Zealand has such record-high levels of food insecurity before the coming food crisis. This ‘insecurity despite abundance’ reality is not helped by Australia also having higher levels of food insecurity than most so-called developed nations. Continued access to Australian-produced staples is New Zealand’s main means to famine-avoidance.

Another part of the possible perfect storm is New Zealand’s lack of inclination and ability to queue-jump. When staples are scarce, ‘game theory’ comes into play. The staples of game theory are scarce-product-hoarding, joining queues to gain access to these staples, and a willingness to pay a bounty for such scarce essentials. New Zealand – marooned in the South Pacific – can expect to be at the end of the queues this country finds itself having to join.

(Other concepts of game theory include: ‘arms race’, ‘race to the bottom’, ‘prisoners dilemma’, ‘tragedy of the commons’, ‘survival of the fittest’, and Hobbes’ ‘war of all against all’. Game theory assumes that individuals and nations adopt ‘economic man’ postures of ‘rational self-interest’; meaning selfish strategies. Other thought perspectives suggest that such strategies are ‘stupid’ rather than ‘rational’, and that they miss out the widely-held concept of enlightened self-interest which incorporates visions of the public good and the public interest. Adherents of rationalism usually dismiss their academic adversaries as ‘altruist’; whereas they are really public-minded, not the same thing.)

Historical Points of Reference

New Zealand faced a similar trading and shipping crisis almost exactly 100 years ago. Though it was not a food crisis then; New Zealand was not then reliant on imported food staples, though it was reliant on other imports.

The issue was the 1926 British General Strike, which focussed minds in New Zealand then on how dependent New Zealand had become in its crucial trading relationship with the far-side if not the dark-side of the world. The New Zealand economy started to tank in late-1926. 1927 then became New Zealand’s own particular annus horribilus.

New Zealand already faced very high levels of private debt, falling export prices, and a tightwad government. With the shipping constraints tipping the country over the edge, farmers walked off their farms in greater numbers than during the later Great Depression, rural New Zealand depopulated, bank balances plummeted, and the country went into a sharp recession.

The Reform (think National) government had been elected in 1925 with 47% of the votes and 69% of the seats. In the 1928 election, that government was unceremoniously turfed out of power, falling to 34% of the vote and 34% of the seats. The faded Liberal Party – under the new name of United – formed a government with the support of the new Labour Party. The economy recovered. Though the new governing arrangements didn’t last; Reform came back into government as the junior coalition partner. Eventually – in 1936 – United and Reform joined forces to create the National Party.

Another historical story of relevance is about how Germany lost World War One, through hunger. That war, in full, lasted 4¼ years; an amount of time the present Russia-Ukraine War will soon surpass. Essentially, Germany – on the battlefield, and with its lethal submarines – won the first four years (including a comprehensive defeat of its main adversary, the Russian Empire) but lost the last three months.

The critical factors in the end were the British Royal Navy blockade on German shipping, a staunch French fightbackin July 1918, and an influenza pandemic arising from an existing battlefield flu strain combining with a new strain brought over by greenhorn the American latecomers. The shipping blockade induced severe famine in Germany. That famine was so severe that it was later used to justify carpet bombing (aka area bombing) in World War Two, on the basis that no amount of RAF bombing could be as bad for German civilians as that blockade-induced famine.

Finally

The supply chokepoints around the Arabian Peninsula – the southwest of Southwest Asia – might ease sooner rather than later. Though I, unlike New Zealand’s Prime Minister, wouldn’t bet on it. New Zealand has engaged in a slow game of Russian roulette; there is now an extra bullet in the revolver’s chambers, and the pace of the game has quickened.

Will New Zealand, having played its game of chance, become collateral damage? New Zealand almost certainly was not Binyamin Netanyahu’s target.

Steve Keen focussed on the fertiliser chokehold; the core of the world’s food supply which is in fact a byproduct of the petroleum industry (and of the discussion about refined oil supplies). New Zealand’s plight is actually significantly worse than that; it’s a potential and dramatic shortfall of imported human and animal feed – a shortfall that would precede a fertiliser shortage.

What happens if or when the food ships are redirected elsewhere? Those ships burn a lot of fuel coming to and going from New Zealand. Would the world prioritise five million whitish lives, marooned in the South Seas, over ten million brown lives more easily saved? Should it? I guess not. Will future historians refer to the Great Aotearoa Famine of 2027?

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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.

On 14 April 2026 I heard this on TV3 News (about 8 minutes in):

Sharon Zollner, ANZ Bank chief economist: “We were earlier picking that the Reserve Bank wouldn’t need to hike until December, but the news out of the Middle East has kept getting worse. It does seem clear that disruption is going to continue for quite some time. Oil prices are going to remain elevated. It is counterintuitive that you would raise interest rates when the economy is already struggling, but that’s why these people are appointed, they don’t need to worry about getting elected because they are basically paid to take the longer-term view; to accept the short-term pain for the long-term gain.”

What!!! We should have been thoroughly alarmed by such anti-democratic anti-liberal pro-bureaucratic sentiment, justifying reckless technocratic adventurism. And we note that the long-term gain never seems to come for the populace; only for the elites who inflict the pain. (Zollner, by the way, has had a past record of pressurising the Reserve Bank to go early, by making similar ‘predictions’, and has been willing to apologise later for inaccurate predictions.)

Towards the end of an earlier interview Zollner (RNZ, Morning Report, 14 April 2026) said: “How high inflation goes in the initial direct impact isn’t the key point for the Reserve Bank. The key point for the Reserve Bank is how quickly it comes down again.”

Let’s look at some facts, using Trading Economics’ 10-year charts for interest rates and inflation. Take United Kingdom, Australia, and Norway. Their interest rates stayed high after their 2024 peak, and their CPI-inflation rates stayed high too. Now consider New Zealand, Canada, Sweden, Denmark, and Finland. Their interest rates came down much more from their 2024 highs, and their CPI-inflation rates came down much more as well. This is simple comparative economics; economics that any schoolgirl could do. This directly contradicts what Zollner has been saying.

There’s more. On RNZ’s Business News this morning:

John Campbell: “Kiwibank is coming out swinging against interest rate hikes. They are essentially having a go at the ANZ, right, and Sharon Zollner in a way; the economists.”

Coran Dann: “Yes, sort of the hawks versus the doves, and Kiwibank would sit in that dove category. They are basically saying that it’s way too soon to be calling the potential interest rate hike in July, there’s not enough data, it runs the risk of throwing New Zealand back into a recession, it’s just too fragile to do that. The Kiwibank chief economist, he’s saying that it would heap pressure on already struggling households and businesses.”

Kiwibank chief economist [Jarrod Kerr]: “I think that, given the shock that we’re feeling, what we are hearing from our customers – businesses and households – is that this is just another cost that they [must] absorb; this is not a demand-push [sic; should have said ‘demand-pull’], this is a supply-shock, and its hurting … So, to increase interest rates at this time we think could be reckless [emphasis added], actually, and it’s definitely unwarranted.”

Two-and-a-half years of government idleness, following one very bad call

The worst thing the present NZ Government did was the first thing it did; ie after the 2023 election. The government changed the (monetary) Policy Targets Agreement to require the Reserve Bank to do what it believed it had to do to keep CPI-inflation between one and three percent, and to follow no other objective.

The government knew that the Reserve Bank (and most of the other banks’ economists) believed that – and as a matter of faith, not evidence – whatever the actual state of the economy was, CPI-inflation rates above three percent should trigger a policy intervention in the capital market to raise the cost of capital. So, it was the government’s intent that, in the event of a situation like we have at present, the Reserve Bank should override an otherwise efficient market to raise one of the most critical costs in any capitalist economy. As the common-sense ‘schoolgirl’ data mentioned above shows, this policy increases CPI-inflation (or keeps it high when it otherwise would fall) when we are fraudulently told that it will decrease inflation. It’s a wonderful game for the loud-squawking hawks within the economic-policy community; their policy generates the very inflation expectations that the policy is supposed to snuff out. It keeps them in work; at the centre of public attention as ‘experts paid [well] to inflict pain for long-term objectives which never seem to materialise.

The government does not know that such interest-raising policies raise CPI-inflation (above what it would otherwise have been) – not lower it. But it should know that; this is the ignorance of convenience. Like Donald Trump, on certain matters our governments just listen to a very close coterie of self-promoted advisers. A coterie whose advice would have been considered mad by most mid-twentieth-century economists. A coterie who waged a successful academic coup d’etat in the United States and United Kingdom in the 1970s, and in New Zealand in the 1980s.

This kind of monetary policy doublethink and groupthink is an example of orwellian tyranny. See my Binyamin, Adolf, and Benito, Scoop, 10 April 2026. War is peace. ‘Higher costs’ is ‘lower inflation’. Israel is conducting a defensive war.

Don’t believe the veracity of what Binyamin Netanyahu says. Don’t believe what Donald Trump says. And don’t believe Sharon Zollner either. All three talk the totalitarian talk, while pretending to be in some sense liberal or democratic.

PS: Heavy Lifting

Some other strange language came from that same TV3 story. This time it is the suggestion that increased ‘fuel costs’ have done ‘heavy lifting’! Zane Small: “The retail association … has looked at electronic card spending data … which showed a 0.5% increase in spending in March. Their analysis has found that it’s actually fuel costs that are doing the heavy lifting. After accounting for that rise in fuel costs, retail spending has actually dropped by 1.2%.”

At least Zane Small did not try to deceive TV3 viewers. But the framing here was quite confused.

The story is that, while retail purchases have decreased by 1.2% in March, higher prices have created the illusion of a spending increase. While more money may have been parted with, that’s entirely illusory and largely misses the point. Consumers spent more to buy less; inflation and recession in one hit. Stagflation.

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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.

Despite the mega-commentary about the Israel-Iran war, and especially the United States’ participation in that war, almost nothing is being debated about how the war is being funded.

I’ll make some comments about Iran later. But we need to focus on the United States, which is by far the most profligate party to this war. And Israel is being funded, like a charismatic and entitled teenage brat, by its (American) sugar daddy.

Most of us should have noticed that, with the exception of new tariffs which are not a significant source of United States government revenue, there has been no move to raise taxes. (The President has clearly invoked the use of tariffs as means of leverage through extortion; though he doesn’t properly appreciate that these taxes are paid by American residents.) Nor has any explicit ‘war loan’ or ‘war bond’ been floated in Wall Street.

The United States is ‘printing money’ to fund the war. This expression is both pejorative and a misnomer. Because printing money is an unmentionable, it’s hardly ever mentioned! Though it should be, because it’s an important financial mechanism, and it is not as sinful as it’s made to sound.

‘Printing money’ is not a literal expression; actually printed (or photocopied) money, counterfeit money, is illegal. Printing money, a figurative moniker, is in fact the day-to-day business of banking, with billions of dollars printed every day (and a near-similar number of dollars unprinted). The technology of printing money is that of double-entry-bookkeeping. Money is a social technology, as is double-entry bookkeeping.

What matters most to us is the role of the central bank – the Reserve Bank – in creating new money. And in particular the relationship between the Reserve Bank and its privileged customers, most of which are governments’ Treasuries and commercial banks. Even more particularly, we are interested in the most highly privileged relationship of all, that between the United States Federal Treasury and the United States Federal Reserve Bank. This exceptional relationship arises because the United States Dollar is the world’s reserve currency.

The War

Here are two quotes from Al Jazeera’s This is America: War on Iran: Cost of weapons and shift in the nature of warfare, 1 April 2026

Richard Gaisford: “It’s a significant contribution being made to the US economy by the defence industries. The last figures we have were for 2024, and that showed that it generated [?] something near one trillion dollars …”.

This comment reflects a wide belief that money is made by economic activity, and that the United States makes money by making, among other things, military hardware and software. The reality, of course, is that the money is made first, and is then used to purchase such hardware and software.

Interviewer: ‘Who has got the means to keep fighting at those levels the longest?’ Kenneth Katzman (a former senior analyst on Iran at the US Congressional Research Service): “The US Dollar is the main reserve currency of the globe, which means that the United States basically has the capability to manufacture money. Your viewers may not understand the mechanics of it, but basically the United States can print money.” (Actually, not only the United States.)

He goes on to address the military asymmetry between Iran and the United States: “The United States is a 28-trillion-dollar economy; Iran is a 400-billion-dollar economy”. Here he is talking about each country’s capacity to produce goods and services; not its capacity to manufacture money. Any amount of money can be made by any country’s banking-government nexus, and at trivial cost.

The interviewer (New Zealand’s Anna Burns Francis), and the other panellist did not respond to that seemingly provocative comment about printing money; there was no further discussion about how the war is being financed, only about how much it is costing. Discussion about the mechanics (and constraints) of printing money would go against the grain that most of us are fed. The public is not supposed to know – and generally does not know – that money is itself costless and can be manufactured, at will, in smaller or larger quantities.

Kenneth Katzman’s comments are not controversial; they are a statement of fact that no economist would disagree with. All countries’ banking systems (of which the central government is a component) have the capacity to print money; indeed, the New Zealand system (and other countries’ systems) necessarily did so in 2020.

The United States has fewer constraints on printing money than do other countries, but not zero constraints.

We note that money, like all financial and financialised assets, is not wealth; it is claims on wealth. So, the affordability of money – in practice – is measured by the ability of the economy to meet those claims, in the event that those claims are presented. (Indeed, the world can afford an octillion dollars’ worth of financial claims if it can be 100% certain that those claims will not be exercised; will not be spent on goods or services. The current world is awash with massive private holdings of financialised assets which, for the most part will not be spent on anything other than other financial assets. In technical language, such money has a very low ‘velocity’.)

We note also that newly printed United States’ dollars permeate into New Zealand through exports, including New Zealand made supplies to America’s war industry; to the United States’ military/industrial complex, which includes the space industry.

How does a country fund a war by printing money?

There are two key issues: rationing, and responsiveness.

The liberal critique against governments’ printing money is a general claim that governments are untrustworthy and spendthrift. In the eighteenth century when the liberal critique emerged, one principal concern was government adventurism in the form of warfare. This classical liberal critique presents one consequence of such government largesse as inflation (extra spending coming up against finite resources), and also presents any instance of general price increases as a consequence of government largesse. When governments consume relatively more resources, then – through the catalyst of inflation – private households and businesses consume relatively less.

The classical liberal critique emphasises this rationing issue, known as crowding out; in doing so, that critique presumes that private spending on goods and services is, per se, more efficient than public sector spending and redistributive transfers. There are two parts to this rationing argument: first, private parties are deemed to better assess (compared to bureaucrats and politicians) which items of spending translate to greater utility (ie happiness); second that relatively more private spending can be classified as ‘investing’, meaning spending for future rather than for present happiness. (Neither of these two propositions is generally true.)

The second issue, less emphasised by classical liberals, is responsiveness or ‘supply elasticity’. Classical liberals tend to assume that spending enabled by printed money does not elicit new production; ie does not bring-about a supply response. While this is true by definition for a hyper-taut economy, for the most part, economies are not hyper-taut and are indeed responsive to additional spending.

In the present case of the United States, the Israel-Iran War – on the pro-Israel side – is being funded substantially by new money printed for the United States government by the United States federal banking system; in the public accounts, this shows up directly as a huge increase in the United States’ fiscal deficit.

While prices are rising faster in the United States than before, this increase in general prices would appear to be substantially due to the supply-side cost-impact of the war itself, and not by increased aggregate demand inside the United States and the countries the United States imports goods and services from.

The United States domestic economy is not as supply-elastic as it might have been, given what ICE is doing to that country’s labour force. Nevertheless, the United States’ economy has been sufficiently depressed that it is now able to increase output without much difficulty. Hence, extra United States’s government spending has not in itself caused consumer prices in the United States to rise. The present chokehold on imports – a result of the war – is however causing CPI-inflation in the United States and the rest of the world. Prior domestic underemployment is one reason why money-printing may not be inflationary.

The second component of a country’s economic responsiveness to wads of newly printed money is that much production can be outsourced to the rest of the world. Thus, United States’ imports increase, the United States’ current account deficit increases, and the rest of the underemployed world gets to benefit from this as an economic stimulus. So, if the New Zealand banking-government nexus refuses to print money as a form of stimulus, the present Trump-printed money does create an alternative stimulus in New Zealand.

Certainly, New Zealand has very high visible and hidden unemployment, so (at present) is easily able to respond to the Trump stimulus. On that basis, New Zealand’s economic growth this year may not be as slow as is widely anticipated; though domestic confidence – in itself, a form of stimulus – may be countering the stimulus coming from the United States. In New Zealand too, any rise in CPI-inflation will be almost entirely due to the global supply chokeholds, and not to the American president’s money printing largesse.

Essentially, the United States is funding its war through its twin deficits: the United States fiscal deficit, and the United States current account deficit. The war is being funded through increased utilisation of underemployed resources throughout the world. In New Zealand’s case, we can see this easily and directly, by observing New Zealand’s increased exports to the United States.

How easily can other countries print money?

Technically, it’s as easy to print money in New Zealand as it is for the United States. However, the New Zealand dollar is not a global reserve currency, so a flood of new New Zealand dollars into the global economy is likely to generate financial risk; or at least perceptions of financial risk. ‘Investors’ – that is, financial traders – out there most likely would be more cautious about holding large quantities of New Zealand dollars (or $NZ assets) than they would be about holding large quantities of United States dollars. That caution generates an exchange rate risk; a risk that would be communicated to financial-asset-holders by the New York based rating agencies such as Standard and Poors.

When the exchange-rate risk is not widely seen as a matter of concern, New Zealand benefits mainly through its routinely-high current account deficit; that is, just the same way as the United States is able to benefit from printing money and enjoying the economic bounty of the world.

If the exchange rate risk becomes a concern however, the world would discount New Zealand dollar assets, and New Zealand would experience high levels of domestic inflation; that is, higher inflation than most other countries. The resulting low New Zealand dollar would confer a ‘competitive advantage’ on New Zealand; the current account deficit would close, exports increase, and reduced imports would create an increased demand for New Zealand- made goods and services.

The issue then becomes how responsive (ie supply elastic) the New Zealand economy is. If the domestic economy is able to respond to these new circumstances (which is the more common experience of other countries), then New Zealand would recover and soon prosper. The alternative is that New Zealand would go into an inflationary tailspin; that is, if its productive system is so hamstrung that it cannot respond to the stimulus of a low dollar exchange rate. One bad sign is over-dependence (as distinct from over-reliance) on imports. A dependent economy cannot switch away from imports. A country which relies on imports by choice, because imports are easily funded by exports, can usually pivot – if required to do so – towards more ‘tradable production’.

So, New Zealand can print money too, though printing in the proportion that the United States does certainly would be unadvisable. However, if a country overprints money, the normal situation is that the extra money just sits there in the banking system. (The brief real estate boom of 2021/22 has been widely attributed to excessive printed money stimulating a process of real estate speculation; though the unique circumstances of that few months – including labour and capital pandemic lockdowns – have not been properly researched. The government could easily have borrowed and then parked that money, but chose not to.)

Generally, the rest of the world is accommodating when some countries print more money (though not when all countries print too much money). The world has been very responsive to the United States for the entirety of post-WW2 history; it was American spending of new money that drove the economic growth of the capitalist world for 80 years.

The present US money printing to fund a globally-significant regional-war can be expected, sooner or later, to encounter an inflationary wall of its own making. The consequences of this war are to make the world economy much less responsive (ie are breaking the world’s economy) just as the American military-industrial complex – indeed the world’s expanding military-industrial complexes – are placing so many extra demands on the world’s economic environments.

War funding under pressure

Countries’ invaded or otherwise attacked on the perception that they are ‘easy meat’ tend to be much more capable of defending themselves than is widely understood. Their monetary systems are not integrated into the orthodox channels of the wider capitalist system; but their domestic monies work to keep domestic economies fully employed while on a war-footing. Yes, Iran will be printing money, and Iranians will be facing substantial visible and suppressed inflation. For Iran, that monetary process is a necessary part of its own defence. Money printing facilitates both necessary rationing in favour of the public sector, and also necessarily pushes the production system to its limits.

War times, historically, have shown that our economic systems are generally much more responsive than we presume them to be. Surprisingly often, the bullies neither win nor even achieve a limited range of objectives. Syria may be coming right today, despite rather than because of the nation which set off that 2010s’ war; a war which cruelly sandwiched the Syrian people between foreign bullies and a consequently more oppressive domestic tyranny.

We note that, when the United Kingdom was under threat during the first years of World War Two, it was able to import much on credit – especially from the United States, which was then a neutral country. China has played a large role in facilitating the United States’ more recent wars, through its current account surpluses. This time China will be helping to fund Iran’s war; as well as accommodating the United States through its ongoing – almost infamous – trade relationship with that country.

Indeed, when the Israel-US-Iran War is eventually over, it will be China’s version of the Marshall Plan which will revive the degraded world economy; part of that revival will be to write-off war debts, just as the United States – through plenty of printed money – eventually accommodated Germany’s reparations bill after World War One, and the West’s war debts after World War Two.

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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.

The human world changed twice during the twentieth century. The first transition lasted from 1914 to 1945. The principal cause of World War Two was World War One. So, to understand the drivers of that long transition, indeed a great levelling event, it is necessary to investigate the causes of World War One. What happened between those wars was not inevitable, of course. But those inter-war events formed part of a comprehensible transitional sequence.

The next transition began, I would argue, in 1967 and lasted until 1980. Though key pre- and post-transition events took place in 1948, 1953 and 1956; and 1989/1990. The 1967 to 1980 transition significantly involved both Israel and Iran. As a result, the post-war world of cold war and decolonisation gave way to a neoliberal world order in which the new financial and political elites increasingly ruled under the titular covers of ‘liberal democracy’, ‘global rules-based-order’, and the ‘unipolar moment‘.

Are we today in a new transition, away from neoliberalism; maybe into a bleak zero-sum order (or negative-sum) of right-wing identity politics? An order in which national or cultural identity groups seek to harm other such groups more than they benefit their own group. An ultra-Hobbesian world in which individuals and groups gain pleasure directly from the pain they cause to others? Or will such gratuitous and predatory behaviour be limited to a transition now under way? While such behaviour happened markedly during the last years of the 1914 to 1945 transition, there were also substantial precursors to it in the lead-up to World War One. Not least the Judeophobic pogroms in Ukraine and some of its neighbouring territories.

These remain open questions. My aim here is to outline the 1967 to 1980 transition, noting some parallels between that transition and present times.

Before that, I’ll just mention that, in 1948, Israel and Palestine were both granted, by the new United Nations, the status of sovereign nation states. The Palestine nation was stillborn, for a number of reasons, one of which was that the eventual borders of Israel split the Palestinian territories. And I’ll mention that, in 1953, the United States instigated a political and military coup in Iran, converting a developing independent democracy into an absolute monarchy whose role was to acquiesce to Washington’s stated and unstated interests.

Suez Canal: the First Crisis

Most wars start with a pretext, an event manufactured or exploited by the true belligerent to justify its aggression.

One country which had been subjugated – indeed occupied – by the United Kingdom for many years was Egypt. That’s why Egypt came to be so important for the New Zealand military in both WW1 and WW2.

The critical strategic asset in Egypt was the Suez Canal, built by French interests, opened in 1869, and effectively wrested by the British from 1882 (though France maintained a strategic interest). For the steamship age, that canal became the critical conduit for the British Empire, connecting London with India (which included modern Pakistan and Bangladesh), East Africa, the ‘Middle East’ (meaning the Persian Gulf), the ‘Far East’, and the Australian colonies which became Australia.

The Egyptian Revolution took place in 1952, and Egyptian president Nasser nationalised the Suez Canal in July 1956. The result was a war in the latter part of 1956, in which the British and French persuaded Israel (only created in 1948) to invade Egypt’s Sinai Peninsula. (These events were covered in an episode of The Crown.) The Israeli attack took place as Operation Kadesh. Less than two days after this pretext, presented as a threat to Israel’s security, Britain (and France) started bombing Egypt at Port Said, in an operation to ‘secure’ the Canal.

The end result was an ignominious defeat for Britain and France, unsupported by the US, but with no meaningful withdrawal by Israel; the Israel-Egypt border had become permanently militarised, noting that Gaza had been (by agreement) under Egyptian control since 1949.

The Suez Canal was closed for nearly six months, until April 1957.

Suez Canal: the Second Crisis

Ten years later, in June 1967, Israel went for broke. This was the much bigger second crisis for the Suez Canal. In six days, Israel conquered the entire Sinai Peninsula – therefore including Gaza – meaning that Israel had annexed the eastern side of the Canal. In addition Israel conquered East Jerusalem, which in 1948 was supposed to have become the capital of an independent Palestine, the West Bank (which the State of Tennessee, in an act of appeasement towards Israel, now wants to call Judea and Samaria; refer Bill requiring Tennessee to use ‘Judea and Samaria’ instead of ‘West Bank’ advances, Fox17, 6 March 2026), and Syria’s Golan Heights.

The principal consequence was that the Suez Canal, an even more important waterway than the Gulf of Hormuz, was closed from 1967 to 1975.

With hindsight, we can see that the global economic crisis of the 1970s began in 1967. It is understood as a crisis of inflation which morphed after 1973 into a crisis of stagflation; for an overview, biased towards the US and towards the received narrative, refer to The Great Inflation, in Federal Reserve History.

The closure of the Suez Canal had little impact on oil prices. But it did lead to a surge in the cost of international transportation, as Asia to Europe trade had to be diverted to the South African and Panama routes. The other two drivers of that inflation-surge in the late 1960s were the escalations of the Vietnam War, and the prevalence of a corporate structure – outlined by John Kenneth Galbraith in The New Industrial State (1967) and Economics and the Public Purpose (1973) – which made the global marketplace less responsive towards increases in global spending. That last point means that large corporate firms, like today’s energy companies, became predisposed to respond to increased demand by raising prices rather than by raising the quantities of output supplied.

Wartime is almost always associated with inflation, because it both raises costs and constrains the supply of consumer goods. (American wars since the 1970s can be an exception, because they are financed by instant money and readily-available imports; by US government-deficits and US economy trade deficits. Deficits which the rest of the world is eager to facilitate.)

Israel 1967 to 1973

With the partial exception of Syria’s Golan Heights, Israel did not formally incorporate the other conquered territories. This retention of these territories as subjugated territories was partly due to international pressure to not recognise conquests, but was probably more to do with their implications for the demographic balance of Israel. Integration would have led to the possibility of Jews becoming a minority of Israel’s population, and Arabs a majority.

(We should note that, for the secular Jews who run Israel, to be Jewish is understood more as an ethnicity than as a religious faith. Hence, Israelis tend to juxtapose Jews and Arabs, whereas people in the rest of the world juxtapose Israelis (understood to be mostly Jews) and Palestinians. Israelis favour the word ‘Arab’ over ‘Palestinian’, because of a popular Israeli narrative that the indigenous population of Palestine is descended from immigrants from Arabia.)

The 1973 Arab-Israeli War happened in October 1973, beginning with a surprise attack by Egypt, during the Yom Kippur holy day (and noting that the 2026 attacks on Iran occurred during Ramadan, Islam’s holiest period). Basically, Egypt wanted its Sinai Peninsula back, in part so that it could reopen the Canal. Other nearby countries joined-in, especially Syria, but also Jordan and Iraq. Not Iran, which was then under United States hegemony.

Despite Egypt’s initial advantage of surprise, Israel not only fought back defensively, but counterattacked. The counterattack included an Israeli army contingent crossing the Suez Canal and marching on Cairo; ie approaching the Nile River. Potentially this war could have led to the creation of a Greater Israel; from the Euphrates (in Syria and Iraq) to the Nile. But again, the problem of conquest becomes the problem of having to incorporate supposedly ‘inferior’ populations into the expanded nation state.

(We note that surprise attacks often do not bear fruit; noting the American president’s tasteless and quasi-triumphant comparison between 28 February 2026 with the ultimately unsuccessful attack on Pearl Harbor on 7 December 1941. See Trump jokes about Pearl Harbour in meeting with Japan’s PM, TVNZ, 20 March 2026. For a brief moment, I wondered if the President was going to refer to the surprise attack of 6 August 1945, or that of 10 March 1945.)

Further, the international community had interests other than appeasing Israel. The biggest of these concerns was the price of oil. In the end the international community got its way, but at a cost of making Israel itself into a significantly more belligerent state than it had been hitherto.

Oil Prices

The 1973 Oil Crisis led to a quadrupling of crude oil prices by 1977, most of that taking place in 1974. Given the general inflation, much of it instigated by the oil price increases, real oil prices only increased by 150 percent in United States’ dollars.

The main reasons for the huge price increases of oil were the roles of the likes of Saudi Arabia and Kuwait – through the Vienna-based OPEC cartel – being able to push back against the encroachment of the Zionist project in their region, by using their effective near-monopoly power. In turn, these high prices led to the further development of the petroleum industries in the Persian Gulf, and of the Gulf States themselves. Additionally, we should note that oil was underpriced prior to the 1973 war; much as it can be argued that oil was underpriced in January 2026.

This had a much bigger economic impact on countries like New Zealand than anything we’ve either seen or projected in the present March 2026 crisis. (In my case, it brought forward my OE plans. At the end of 1973, for $400 I bought a ticket to sail to England via Acapulco, Panama, Curaçao and Barbados. By time the ship sailed in April 1974, the fare had been subject to two surcharges and I ended up paying more like $480. It could have been worse if the ship had not had access to cheap Venezuelan fuel in Curaçao.)

The result was a series of massive financial imbalances across the world; between oil-importing and oil-exporting countries, and also within larger oil-producing countries such as the United States. (New York’s loss was Texas’s gain.) While those 1970s’ financial challenges were navigated by the world’s finance ministers and central banks with a large measure of pragmatic success, the turmoil of the times let in a new and simplistic narrative around money and inflation; an unnuanced narrative that harked back to the classical stories about money during World War Zero (that’s the Napoleonic Wars of 1798 to 1815).

That new narrative was monetarism/neoliberalism, and placed itself perfectly to exploit the economic crisis – the Great Inflation– to create the neoliberal anti-intellectual hegemony which has ruled over the western world and hence over the whole world since the early 1980s. The guru of monetarism was a Chicago School economist; Milton Friedman. As an academic, Friedman and his acolytes had been plugging away through the 1950s and 1960s; well-placed to take advantage of a good crisis, especially a crisis centred around the word ‘inflation’. Chicago School economists experimented on Chile following its 11 September 1973 military coup.

If Israel had simply returned Sinai to Egypt in say 1970 – in circumstances similar to the eventual return of Sinai – allowing the Suez Canal to reopen, then the 1970s and 1980s could have turned out very differently.

Revolution, and Oil Prices again

One of the consequences of the political crisis in the Middle East was further crisis in the Middle East. Various latent nationalisms in the region intensified markedly; these intensifications turned for inspiration to the common faith in the region, Islam.

Hence, there was a direct – albeit convoluted – pathway from the 1973 war to the 1978/1979 Iranian Revolution. In February 1979 the Imperial State of Iran gave way to the Islamic Republic of Iran.

(I could have gained a personal glimpse of revolutionary Iran. Returning from my OE in September 1978, my partner and I were on a PanAm flight from Rome to Istanbul. The flight originated in New York, and terminated in Tehran, and was running late. Many of the passengers were agitated, because the flight was now projected to arrive in Tehran during the evening curfew. I guess it was always possible that PanAm would take the decision to overfly Istanbul, in order to arrive in Tehran on time. The plane did land in Istanbul, later than scheduled, so I know not about what dramas may have unfolded in Tehran later that evening. I expect that the return flight out of Tehran was fully booked, given the deteriorating situation there for American citizens.)

An important result is that oil from Iran, a founding member of OPEC, came off the world market for a few years. (Although, Aotearoa New Zealand, in its own pragmatic navigation of the crisis, came to do a swap deal with Revolutionary Iran. Despite the fact that, for a few years instances of capital punishment in Iran came to exceed those in the United States, New Zealand negotiated a sheep-meat for oil swap, thereby saving this country’s critical sheep-farming industry.)

The result of the loss of Iranian oil from the word market led, in 1979, to a further doubling of the world price of crude oil. In the second half of the 1970s, many countries – including New Zealand and United States – cut their speed limits to 80kph (or 50 miles per hour). (I still remember, in October 1976, riding in a Greyhound Bus in Pennsylvania, watching big trucks traveling very slowly along the United States’ interstate motorway system.)

In 1979, the crisis became so difficult that the New Zealand government made the sensible though since-derided decision to ration petrol by requiring motorists to observe carless days each week.

Governments in oil-importing countries made the pragmatic decision to both conserve oil and, for balance of payments’ reasons, to develop their own oil, gas and exportable reserves. New Zealand electrified its North Island Main Trunk Railway, doubled its aluminium production capacity (in order to export renewable energy), substantially expanded its oil-refining capacity, developed the Maui gas field; and developed the Glenbrook steel mill as a means to gain export receipts from the sale of west coast iron-sand.

Eventually, in 1986, the world oil price collapsed, ushering in a new (and environmentally discordant) era of cheap oil. Inflation-adjusted oil prices in 1999 were even lower than in 1972.

The Great Deception

World price-inflation was on a substantial downward path once the leading economies’ central banks allowed interest rates to fall (through liberalising monetary policies) in the years 1983 to 1985, and once cheap oil resumed. But in some countries high consumer-price-inflation persevered until the end of the 1980s’ decade, especially as they shifted towards goods and services taxes.

New Zealand pioneered a particular form of illiberal monetary policy in 1989, when inflation was already falling back to normal levels; and claimed that the new simple-minded monetary policy was the sole cure. This policy, which was in fact very much associated with the aforementioned monetarist project, became akin to a biblical truth; and was successfully exported to the consolidating globalised political and financial elites, making this new quasi-biblical truth into a bedrock policy-of-faith in the post-1980 world order.

Today, we can easily observe how false this ‘truth’ of faith is. By looking at the United Kingdom and Australia, two countries which have minimally reduced interest rates since 2022, we can see how their inflation rates have remained stubbornly higher than those with lower interest rates.

The next political and financial world order?

Are we in a new transition? Probably yes. Will it take a decade or so? Probably yes. While there are many calamities that could happen – and remembering that the world faced the possibility of global nuclear war early in both the cold war world order and the neoliberal world order – an optimistic take is that the world will move into a multipolar principles-of-engagement world order in which no single polity (or alliance) can dictate terms to the rest of the world with apparent impunity.

A unipolar world order is an illiberal geopolitical monopoly. Present events may either entrench or destroy the forces pushing for geopolitical illiberalism. Multipolarity is geopolitical liberalism.

The next world order should not be reliant on cheap oil nor indefinite economic growth nor the idolatry of money. Money is a means, not an end; it is a technology, not a commodity. Capitalism can become a peaceful private-public partnership. If enough of us want it to be.

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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.

I heard this on RNZ News 11am 12 Feb 2026:

“The government’s finances are in better shape than expected due to lower [government] spending and a higher tax take. Treasury figures … show a deficit of $5.2b for the six months ended December, almost $1.6b below the half-year forecast. The tax take was $138m higher, while expenses were about $1b lower, because of lower spending on core government services: health, housing programmes, and the cost of carbon units. Net debt was slightly lower than expected, at 43.5% of the value of the economy.”

It was framed as good news, or at least as “better” news: government spending less than expected (despite the many dire needs for more, better funded, government-funded services and infrastructure) and a higher tax take (despite the needs of many people to have more spendable dollars).

I mention this quote from economic historian Adam Tooze, from his 2018 book Crashed, re the downward spiral that arises from policies of fiscal consolidation.

“Not only was [Greece, in 2010] slow to push through the changes the Troika demanded, but when it did the results were counterproductive; in a classic Keynesian downward spiral, demand fell and unemployment surged further, reducing incomes.”

We note that when private incomes are reduced, then income tax receipts are also reduced, meaning government income is reduced. (In idiomatic vernacular, this is known as cutting your nose to spite your face. “The idiom is often used in political and economic commentary to describe actions by a political actor, party, corporation or nation that appear to damage the actor’s own interests”.)

New Zealand is lucky at the moment in that it is benefitting from record high terms of trade – external stimulus, a commodity-led export-led boom – which is to some extent offsetting the fiscal doom loop that Tooze describes.

What will happen when those record-high export receipts fall-off? Tooze tells us: “a classic Keynesian downward spiral”.

Note that Greece was doing these policies, not out of political free-choice but because the EU Troika demanded that Greece follow this counterproductive policy path. At least Greece resisted, conferring upon itself some dignity.

New Zealand is today implementing similar policies; partly because the government is nominally free to choose, but also because it is heavily influenced by the false narratives peddled by another powerful Troika: the New York troika of Standard and Poor’s, Moody’s, and Fitch. New Zealand governments would rather lose elections than get on the wrong side of these big three.

Democracy or empire?

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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.

Over the last few days, there has been plenty of media chatter in relation to the government’s proposal to pass a law enabling police to forcibly shift street dwellers from Auckland’s CBD. (Refer ‘Move On’ orders penalise those with the least, Scoop 22 Feb 2026.)

While Labour likes to express outrage, neither Labour nor National have given as much as a hint as to a solution they would commit to implementing. National sees street vagrants in much the same way as the Israeli government sees Palestinians; in both cases, they just want the ‘problem people’ to go away.

New Zealand, like most countries, has a long history of vagrancy, and of mean-spirited laws to deal with it. New Zealand, however, in 1938 introduced a universal welfare state; a political contract which gained broad bipartisan support until 1984. Over the 1938 to 1984 period the vagrancy problem was minimal. I remember being shocked at seeing beggars in Ireland in 1976; that was depression-era optics, which I thought had long passed in the developed world.

The most recent time I ventured out of Australasia was in 2019, on a trip to Canada, Scotland, and London. I remember remarking that Vancouver seemed to have fewer homeless people than Auckland. The next day I changed my mind; I discovered that the problem in Vancouver was more on the edge of the CBD, whereas in Auckland it had already become normalised around Queen Street and the city’s main library. I note this point, because the problem cannot be blamed on the Covid19 pandemic, and it was a problem that neither Labour’s Jacinda Ardern nor Phil Goff were willing to prioritise during their terms in office (as Prime Minister, and as Mayor).

(In Scotland, while Aberdeen did have a problem, it was less obvious than in Auckland; and even less obvious in Edinburgh. In London, I stayed in Stepney Green, a social housing area close to Whitechapel, and did not particularly sense a ‘street dweller problem’ there; nor in closer-to-the-City and now-gentrified Spitalfields.)

The current chatter focuses on homelessness, while only noticing in passing that many street occupiers are also beggars; meaning that, at its core, the problem is one of income insecurity.

Hardly anyone has connected the dots between begging and the regression of social security in New Zealand. The universal welfare state has lost its way since 1984. My sense is that many of today’s vagrants are not receiving any social security money; and that that may be in large part because it is too difficult – and humiliating – for them to deal with a Kafkaesque system that calls beneficiaries ‘jobseekers’, and is forever looking for ways to not support vulnerable people into constructive engagement. While the general public would regard vagrants as being unemployed, Statistics New Zealand does not even count them as unemployed. Our governmental systems are oriented around the ‘labour force’, and are largely blind to working-age people ‘not in the labour force’.

It is not my role here to analyse the way that our untweaked version of capitalism creates vagrancy. Rather, it is to note that our vagrants need these three things: an amount of unconditional income, a place better than the street where they can sleep and wash, and something fulfilling – maybe, even, productive – to do.

While, for the rest of this essay I’ll focus on the former, I’ll just mention the latter briefly. Minimum wage laws put most of these people out of the reach of the formal labour market. That leaves them two choices for something societally connected to do; voluntary work, or petit-entrepreneurship (aka non-criminal hustling). (Two other options, both disconnected from mainstream society, are: ‘hanging out’ in ways that intimidate, or participating in underworld crime.)

A Very Basic Universal Income (VBUI)

As our income-tax scale stands at present, a Very Basic Universal Income of $150 – payable to every tax-resident aged over 18 – could be mostly funded by abandoning the 10.5% and 17.5% tax rates. All annual personal income below $78,100 would be subject to a 30% tax rate.

Non-beneficiaries earning less than $53,500 would gain, because their VBUI would be more than their extra tax. (For these people in fulltime work, the gain would be small; $12 per week for a minimum wage worker working 40 hours per week; $16 per week gain for a minimum wage worker working 37½ hours per week.)

In technical economists’ language, the VBUI would be called a ‘refundable tax credit’, or maybe a ‘demogrant’.

People earning more than $53,500 per year – and beneficiaries – would have an unchanged net income situation. (For beneficiaries, the first $150 of their benefits would become universal; an accounting change only, from a costing point-of-view.)

People on benefits would have the first $150 per week of their benefit recategorised. People losing their jobs would continue to receive their VBUI, unconditionally. People not in the labour force would have their VBUI payments made directly, and there would be an opt-out mechanism; not an opt-in.

The biggest gains come to non-beneficiaries aged over 18 defined in the official statistics as either ‘underemployed’, ‘part-time’, or ‘not in the labour force’. The most important gains are that the $150pw VBUI constitutes an unconditional safety-bridge for those in danger of becoming redundant, or of having their hours reduced to part-time; and that it thus acts as an ‘automatic stabiliser’, meaning that people who lose their incomes can still maintain some of their usual spending.

The VBUI also means that people who gain work, or who gain extra work, still get to keep all of their Very Basic Universal Income. There is no income or poverty trap (as there is now), whereby gains in income from a new source lead to reductions in income from existing sources.

And it also substantially reduces the cost of administering social security, if people who lose their jobs automatically retain a very basic income to help tide them over losses in market income. The only information needed about non-beneficiaries in New Zealand would be their date and place of birth, their bank account number, and their immigration status. People receiving no publicly-sourced income other than a VBUI would at no stage be required to provide the authorities with any further information; they would pay tax at the going rate to the IRD based on market income connected to their IRD number.

Very Basic Universal Income is an ‘opt-out’ mechanism, which means that everyone receives it unless they have specifically asked to not receive it. And, even then, opt-outs should be managed as ‘temporary’. (All people legally allowed to earn income in New Zealand would have at least an IRD or NHI [Health NZ] number; ‘bank accounts’ at Kiwibank could be opened by Inland Revenue or Health New Zealand for people without other known access to banking facilities.)

In addition to reduced administration costs, there are several other ways that a miserly government could recoup its not-very-onerous outlays on VBUI. The two most obvious ways would be to raise the company tax rate from 28% to 30%, and to reduce the income threshold for the 39% tax down from $180,000 per year. A centre-right government which has done all these things – all very much consistent with centre-right philosophy – might then aspire to removing the 33% tax rate. That would leave a two-step tax scale: 30% and 39%.

We note that the introduction of a VBUI would, in itself, mean only one change to the existing benefit structure. That one change would be the accounting formality to categorise the first $150 per week of a benefit as a universal income, as a ‘duty-of-care’ income integrated into both the tax system and the benefit system.

A VBUI is not generous, and it’s not a Universal Basic Income (UBI). But it does act as an income that acknowledges both human rights and economic efficiency. Once the mechanism and mindset are in place – noting that the ‘mindset’ issue is analogous with that associated with the introduction of proportional-representation voting in New Zealand in the 1990s – then it becomes comparatively easy to tweak the numbers. In time, the VBUI might become a BUI, a Basic Universal Income; more like $250pw than $150pw. We need to start at a low amount, to sooth the apprehensions of the professional naysayers; those unimaginative people too ready to block social and economic progress.

A Teenage Basic Universal Income (TBUI) for adolescents

Late in 1979, Robert Muldoon raised the universal family benefit to $6 per week – a benefit (which commenced in 1946) payable on behalf of all children without any means testing. If we adjust that $6 by the CPI changes we get an equivalent of $42 today. Or if we adjust by GDP per capita – a better measure than the CPI, a measure which allows for economic growth – that $6 in late 1979 becomes $70 today.

My proposal is to pay a TBUI of either $42 or $70, to all New Zealanders aged from 14 to 17. For many of these teenage recipients, the amount would be paid directly to the recipient, and deducted from the Family Tax Credit payment presently paid to their caregivers.

I have calculated that recipients of a $42 (or even $45) TBUI should face a special flat tax rate of no more than 20% of their market income. And recipients of a $70 TBUI should face a special flat tax rate of no more than 23% of their market income. I favour fourteen- and fifteen-year-olds – all still legally at school – to receive the $42; and sixteen- and seventeen-year-olds to receive the $70 and pay a bit more tax.

The TBUI acknowledges that a significant minority of New Zealand’s vagrant population is in the 14 to under-18 age range. They would receive payments in the same way as older vagrants; if necessary, through an account opened for them by the IRD or Health NZ.

Call it ‘pocket money’, if you like. All New Zealand residents would receive this from when they turn 14, unless they opt-out. Fourteen is the age, in New Zealand, when children may be legally left-alone, unsupervised. Thus, it is the first age to directly signal that a young person should have a degree of independence, of economic autonomy.

Finally

All of the payments I have suggested are very basic and somewhat stingy. What matters is that they are unconditional, and confer a sense of citizenship onto our most vulnerable adults and semi-adults. There are no poverty traps; no impediments to recipients from ‘bettering themselves’, from being aspirational. Universal Incomes are not withheld when persons’ circumstances improve.

I personally would prefer less parsimonious payments; deficit-funded payments which would give an underdone economy a necessary bit of stimulus, realising that the arising increase in collective prosperity itself recoups such fiscal deficits. (The 1938 introduction of Universal Superannuation and other reforms turned out to have a fiscal cost significantly less than the projected costs. Refer Elizabeth Hanson’s 1980 book: The Politics of Social Security…) I note that we live in austere times; without really knowing the reason for these fiscal blindspots. Nevertheless, I am suggesting that, even with Scrooge in charge, we can do much better than we do today.

Further, with these universal incomes in place, everyone will know that everyone else will know that all of our vagrant population is in receipt of at least some income. (Refer Steven Pinker’s 2025 book: When Everyone Knows That Everyone Knows…) As it is, some of the beggars on the streets may be receiving substantial benefits, while others are receiving absolutely nothing; today we, in the public, are unable to tell any individual vagrant’s actual level of need.

There are solutions to these ‘all-rhetoric no-solution’ difficulties. It just takes the political will to see past our blindspots. Some form of rights-based universal income guarantee is a necessary but not a sufficient solution to the compounding vagrancy problem; and to other problems too, especially those problems affecting young people. (Note: Youth facing more psychological distress…, RNZ, 25 Feb 2026.)

Note on the Politics of Achievement

When Michael Joseph Savage in 1938 proposed (and then legislated for) a universal welfare state – with special emphasis on an initially very basic Universal Superannuation – he converted what could have been a political losing hand in that election year into New Zealand’s greatest ever electoral victory. There were many on the left and on the right of Savage’s parliamentary caucus – political people without political nous – who seemed to be eager to snatch defeat from the jaws of victory. Fortuitously, Savage was not one of them. By not being one of them, by not losing courage, he became the New Zealander of the twentieth century. Savage didn’t solve every problem. But he did make a difference, for the better; and was loved for that. While a modest man himself, his political leadership for New Zealand was far from austere.

Do our current lot of politicians even want to win in November? My advice to both National and Labour is to pursue the politics of success, and not the politics of nihilism.

(In this regard we might note that the Labour Opposition in 1931 suffered an ignominious election defeat, despite the appalling economic catastrophe which was then taking place. Labour went on to win in 1935, by promising a universal welfare state. It came close to electoral embarrassment in 1938; it came close to failing to deliver on its 1935 promise.)

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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.

If Israel and the US attack Iran, the cosy worlds of Europe, Australia and New Zealand could be swept up in an economic catastrophe.

Should the Iranians survive a terrifying onslaught, they have vowed to strike back in a way that could crash the global economy.  How they could quite possibly do this is the topic of this article.

The leaders of the Islamic Republic — love them or hate them — know that they face an existential threat; that the continued existence of a unified state called Iran is imperilled.

They also know that the collective West will not stand up for international law and the proscription on launching wars of aggression. Under these circumstances a state will sacrifice anything to survive, including hitherto unthinkable acts like sinking the USS Abraham Lincoln, the glory of the American war machine.

All the signs are pointing to a new Shock and Awe campaign by the United States.

The goal, as it was in the 2003 US invasion of Iraq, is a fast knock-out. Mission Accomplished in a few weeks.

War, however, seldom goes entirely to plan — the Americans never expected they would spend 20 years in Afghanistan and waste trillions of dollars to move from the Taliban regime to . . .  the Taliban regime.

Here is a selection of options open to the Iranians if they survive the initial onslaught.

Shut down all civilian flights for the duration of the conflict
Without firing a single missile, Iran can likely bring all flights into and out of the entire Gulf region to a shuddering halt. That’s 500,000 passengers per day.

More than 180 million passengers pass through Doha, Abu Dhabi and Dubai every year.

Simply issuing a warning that the entire Gulf region is an air combat zone will put the brakes on all major airlines, effectively severing the primary link between Europe, Asia and Australasia for as long as Iran hangs on.

Insurance companies would issue a cancel note on all policies (for airlines, passengers, airports, provisioners) for the entire region.

No airline will defy this interdiction. Would Qantas, for example, fly one of its A380s loaded with mums, dads and kids into a potential kill zone?  The Iranians could underscore the seriousness by firing a couple of missiles onto runways or using EW (electronic warfare tools) to spoof or harass planes.

In an interview with @CBSNews , Iran’s FM Seyed Abbas Araghchi said uranium enrichment is Iran’s legal right under the NPT, reaffirming peaceful nuclear policy and commitment to diplomacy
More: https://t.co/XqHaDqxOfl https://t.co/3tGlg9SJKL

— Government of the Islamic Republic of Iran (@Iran_GOV) February 22, 2026

Shut down all oil and LNG shipments
Iran will likely mine the Strait of Hormuz 33 km (21 miles) wide, making it instantly uninsurable for any oil or LNG tanker to move into or out of the Gulf.  Huge numbers of smart mines (that can recognise the acoustic signature of a tanker) will be deployed as well as hundreds of semi-submersible drone boats.

Spread out across the Gulf are thousands of short-range anti-ship missiles that will be virtually impossible to suppress.

Article by AsiaPacificReport.nz

Papua New Guinea is under a close watch for money laundering, running a risk of being abandoned by global investors.

The Financial Action Task Force (FATF) has placed PNG on its “grey list” due to “strategic deficiencies” in government oversight.

The grey-list means that watchdog officials are monitoring closely, and that the government is time-bound to address their blind spots.

PNG is now one step away from the far more precarious “black list”, where other countries are compelled to stay away in order to protect the international financial system.

There are only three countries on the black list: North Korea, Iran, and Myanmar.

Prime Minister James Marape told local media outlet NBC that he accepted the conclusions of the FATF and welcomed their support.

“There is no point blaming the past. What has been identified, we will fix,” Marape said.

Need secure economy
“It is in our country’s interest to have a secure economy, not one with gaps that can be exploited.”

Marape said that investors could be assured the PNG government was doing all that is can ahead of elections in 2027.

“Our investors will not run away . . .  Papua New Guinea will work its way out of the grey-list and towards a trusted, credible financial standing,”

But as many as 30 banks have publicly ruled out the possibility of investing in Papua LNG, an Exxon-backed project in the Gulf of Papua, as reported by AAP.

The project owners, seeking to produce six million tonnes of LNG per annum for a predominantly Asian market, have yet to make a final decision on whether to move forward.

Far-reaching consequences
A note from the International Monetary Fund (IMF) in November 2025 called PNG “a fragile state” noting an “unstable social and political environment”.

It’s a judgment of PNG’s institutions, weakened by conflict and poor governance, thus creating ideal conditions for money laundering and corruption to thrive.

Michael Kabuni, an anti-money laundering researcher at Australian National University, told RNZ Pacific the grey-listing sends a signal to overseas banks and investors that business in PNG is rife with danger.

“We were saying all along that PNG was going to be added to the grey list. The evidence points to it.”

PNG’s greatest vulnerability is the exposure of each MP, bureaucrat and public servant to bribes and corruption, Kabuni said.

The more powerful an individual, the more likely they are to be targeted by criminals, and the greater those incentives to bend the rules would be.

“There was the anti-corruption body that was set up in 2014 called the task force suite,” he noted.

“It did an impressive job in confiscating proceeds of crime, arresting, prosecuting and jailing those involved. But eventually they went after the Prime Minister, and that task force was disbanded.”

Kabuni noted that MPs are given 10 million kina (NZ$3.9 million) each year in the course of their work, but rarely is it all accounted for.

He said it was also common for less money to be allocated to “integrity agencies”, such as watchdogs and enforcement bodies, than they are actually budgeted.

“It’s a combination of factors, from political interference, whether it’s appointments or interference into the investigations, to capacity and resources,” he said.

In the case of Papua LNG, Kabuni said he “would think” that the bank boycott was motivated in large part by the grey-listing.

“Investors use the mutual evaluation reports as a risk matrix to determine whether this country is safe.”

“It’s going to be difficult to draw investors finances . . .  we’ve never actually had an investor come in during the grey-list period.”

Risks for New Zealand
The Reserve Bank of New Zealand said banks were required to assess the associated risks with the countries that they dealt with.

“This may mean that transactions to or from Papua New Guinea may be subject to greater scrutiny,” it said.

Meanwhile, the Department of Internal Affairs said all customers from PNG are considered “high risk” under the Anti-Money Laundering and Countering Financing of Terrorism Act 2009.

“This could be a PNG company operating in New Zealand or a non-resident individual (such as a person on a temporary work visa),” a spokesperson said.

“As a result, an enhanced level of customer due diligence must always be applied.”

Anti-money laundering expert Kerry Grass told RNZ Pacific that businesses dealings with PNG were inherently risky.

“Trade-based money laundering (trading value for value) is not captured as an activity under the AML/CFT Act for international reporting obligations of trade,” Grass said.

Escaping obligations
“Hence I can trade you a shipping container of car parts for 1kg of Cocaine hidden in a container of coconuts. That type of international trading is escaping obligations of reporting under the AML/CFT Act if no wire transfer is relied on.”

In an ideal world, Grass said, customs officials would be able to manage risk based on knowledge of the source, but this could be disguised.

Efforts to stop ill-gotten gains from PNG to NZ would depend on their ability to decipher this information.

“I don’t think New Zealand is actually operating at a jurisdiction level where these controls or knowledge are actually down to that level,” she said.

This article is republished under a community partnership agreement with RNZ.

Article by AsiaPacificReport.nz

Politicians are under fire overseas. But New Zealand should take note too.

The US Justice Department’s release of more than three million Epstein files (including 180,000 images and 2000 videos) has blown the doors off the most protected social network of the late 20th century.

What these documents reveal is not just a catalogue of one man’s depravity. It is, as Helen Rumbelow wrote in The Times, like “taking the back off the world clock”, exposing how power actually works at the top of the Western world.

And the implications reach all the way to New Zealand.

New Zealand media has done useful work tracking the Kiwi names that appear in the files.

Paula Penfold at Stuff searched more than a thousand New Zealand references. Joel MacManus at The Spinoff, Ben Tomsett and Ethan Manera at The New Zealand Herald, and Steve Braunias at Newsroom have reported on the local angles — Peter Thiel’s investment relationship with Epstein, the New Zealand Defence Force couple who managed Epstein’s properties, Auckland academic Brian Boyd, physicist Lawrence Krauss and his pursuit of Epstein money for an Otago University role.

These stories matter. But the fixation on which Kiwis appear in the files misses the real story. The Epstein scandal is not fundamentally about which individuals had dinner with a monster. It is about what kind of political systems allow monsters to operate at the centre of global power for decades without consequence.

On that score, New Zealand should be paying very close attention, because our systems are weaker than those now failing spectacularly in countries around us.

The Mandelson masterclass
The most instructive case study is not American but British. The fall of Peter Mandelson (the architect of New Labour, the self-described “Prince of Darkness”) is a textbook case of how politics and money have gone rotten in liberal democracies.

The Epstein files revealed that Mandelson, while serving as “Deputy PM” to Gordon Brown, and in the position of Business Secretary, forwarded highly sensitive government tax plans to Jeffrey Epstein.

He told Epstein he was “trying hard to amend” a planned tax on bankers’ bonuses and suggested that JPMorgan’s CEO should “mildly threaten” the Chancellor to water down the policy. He gave Epstein advance notice of a €500 billion EU bailout before public announcement.

On Christmas Day, he wrote to a convicted paedophile: “I do not want to live by salary alone”.

So, a sitting Cabinet minister was leaking government intelligence to a convicted sex offender, lobbying against his own government’s financial regulation on behalf of that offender’s banking contacts, and angling for post-politics employment — all at the same time.

Within weeks of leaving office, his lobbying firm Global Counsel was chasing work with the Russian state investment fund and the state-owned China International Capital Corporation.

The Starmer government is bleeding credibility. Police opened a criminal investigation, Mandelson’s properties were searched, and yesterday Starmer’s chief of staff Morgan McSweeney resigned, saying the appointment decision “has damaged our party, our country and trust in politics itself”.

The Economist magazine has called it “Britain’s worst political scandal of this century”. UK Labour now trails Reform UK in the polls.

As former Prime Minister Gordon Brown wrote in The Guardian last Friday, in a remarkable act of public contrition: “I greatly regret this appointment . . .  He seems to have used market-sensitive inside information to betray the principles in which he said he believed”.

Brown’s piece was not merely an apology. It was a manifesto for integrity reform. Brown called for an independent anti-corruption commission with statutory powers, a fully accountable vetting system for major political appointments, mandatory parliamentary hearings for senior ambassadors and ministers, a five-year cooling-off period for former ministers entering lobbying, and the creation of corruption as a new statutory offence.

Brown argued for nothing less than a “century-defining rebalancing of power and accountability”, and he warned that without fundamental change, the revelations would be “acid in our democracy, corroding trust still further”.

Heather Stewart, writing in The Guardian, drew out the structural lesson: Mandelson’s personal disgrace is “deep and unique, and may yet bring down a prime minister — but by laying bare the dark allure of the filthy rich, it also underlines the need for tougher constraints on money in politics”.

Stewart documented how Epstein’s efforts to influence government policy — working to water down Alistair Darling’s bonus tax at a time when the banks had crashed the economy — “underline the powerful forces with which politicians are faced”.

She noted that Transparency International warned last summer: “We stand at the beginning of a new and dangerous era, where big money dominates in a way that has corroded US politics across the Atlantic”. The campaign group Spotlight on Corruption warned the current system is “full of major loopholes and gaps”.

The real takeaway is this: when it comes to money and politics, whether post-parliamentary employment, lobbying, or party funding, it is unwise to take honesty and decency as a given. As Stewart concluded: “It is not too late to pull up the drawbridge . . .  by introducing stringent new rules to protect British democracy from the malign influence of powerful companies, and dodgy billionaires”.

The global rot at the top
What is striking is the convergence. Left, right, and libertarian commentators from across the ideological spectrum are reaching the same conclusion: the Epstein network was not an aberration. It was a symptom of what happens when wealth, power, and access operate without transparency or accountability.

As Josie Pagani observed in The Post, “there appears to be a high degree of crossover between the sort of people who attend World Economic Forum jamborees at Davos, and the sort of people who hung out with Jeffrey Epstein”. The Economist noted the files read “like a ‘Who’s Who’ which has gathered only a thin layer of dust”.

These are not fringe figures being exposed. These are the people who run things.

Pratap Bhanu Mehta, a political theorist at Princeton, described the files as “a sobering x-ray of some of America’s elites — immature, full of impunity, corrupt, venal, venial, and venereal all at once”. He warned that “an elite so needy, greedy, and now so vulnerable can hardly be trusted to exercise good judgment”.

Owen Jones put it bluntly: Mandelson is “the logical culmination of the career politician, attracted to government office not because of any commitment to a set of values or public service, but simply for power, position, and profit”. Jones asked the question that should haunt every democracy: “What is being done now by ministers and politicians to secure preferment and nice jobs later?”

The Economist observed on the Epstein-Mandelson scandal that “a weakened elite is also more vulnerable to populism” and that “public opinion is less tolerant of hypocrisy than of sex scandals or corruption”. A record 43 percent of Americans surveyed by Gallup now say they have “very little faith” in big business.

The political lesson people take from the documents is broader: elites protect elites. And once voters accept that as a general pattern, they start to look at their own politics differently. They see the local versions: the donor dinners, the quietly arranged appointments, the lobbyists writing submissions, the ministers lining up post-parliament careers. They start to interpret routine insider politics as corruption-by-another-name.

So what does this mean for New Zealand?
It’s easy to shrug this off as a foreign horror story. That shrug is the vulnerability.
New Zealand has no lobbying regulations. None. No register, no code of conduct, no cooling-off period for ministers who walk out of the Beehive and into lobbying firms or corporate boardrooms.

We rank 42nd out of 48 OECD countries on lobbying transparency. NZ is ahead of only Slovakia, Luxembourg, and Turkey. Yet Justice Minister Paul Goldsmith has said lobbying reform “is not a priority”.

As The NZ Herald editorial argued on the Epstein scandal, “what this all reveals . . .  is how utterly certain those in power are that they will be protected”. That certainty, and that sense of impunity, is not confined to Manhattan townhouses and Caribbean islands. It operates wherever wealth and politics intersect without adequate transparency.

Our own political history provides uncomfortable parallels. Minister Stuart Nash was sacked in 2023 for emailing confidential Cabinet information to wealthy donors, a mini-parallel to Mandelson’s alleged leaking of market-sensitive information to Epstein.

But in Nash’s case, he lost his ministerial role without ever facing a police investigation. The structural failure is the same: the revolving door, the undisclosed lobbying, the donation loopholes, the absence of any meaningful cooling-off period.

If the Mandelson affair teaches one lesson, it is this: weak integrity systems do not just allow bad behaviour, they incentivise it. New Zealand has all of these mechanisms for embedding soft corruption, in weaker form than the UK. We rely on a “she’ll be right” attitude in place of the institutional safeguards that comparable democracies take for granted.

The example of Peter Thiel sharpens this further. Thiel is a New Zealand citizen. He is also a billionaire power broker in Silicon Valley and a funder of rightwing politics who appears prominently in the Epstein files.

That is a reminder: New Zealand has granted citizenship, and effectively social legitimacy, to a man who sits inside the very global plutocratic networks now being publicly scrutinised for moral collapse and elite impunity. Thiel is symbolic because he represents something New Zealand has not seriously confronted: the country’s relationship with the global super-rich, and the way money can smooth entry into our political community.

Meanwhile, public trust in New Zealand’s institutions has collapsed. The 2025 Edelman Trust Barometer showed New Zealand’s trust index falling below the global average for the first time: 47 percent compared to 56 percent globally. Political parties are the least trusted institution, at just 32 percent according to the OECD’s 2024 survey. And the anti-politics mood is deepening.

The recent McSkimming police corruption scandal, where a Deputy Commissioner’s misconduct was systematically covered up, has already forced a national debate about the “C-word”. The ground was prepared before the Epstein files even arrived.

An election-year wake-up call
So what happens when this mood hits an election year? November 7 is nine months away, and the Epstein scandal feeds directly into a public mood that was already getting toxic.
The danger here is not that the public demands accountability. The danger is that the public concludes accountability is impossible, because the system is so captured by insiders and vested interests that reform cannot come from within.

Scandals like this feed anti-politics. People conclude that “they’re all the same,” that it’s a rigged game, that power protects itself. But the same disgust can create reform pressure. When trust collapses, political promises about integrity stop being an optional add-on.

They become central. Voters start demanding answers: who is lobbying whom? Who is funding whom? Why do politicians leave office and immediately cash in? Why are conflicts of interest treated as personal errors rather than structural failures?

No party in New Zealand “owns” the anti-corruption space. That’s also both a vulnerability and an opening. The party or leader who takes integrity reform seriously in 2026 — who makes the lobbying register, the donation caps, the Integrity Commission a genuine campaign commitment rather than a footnote — will be tapping into something powerful and real.

The party that ignores it will be betting that public anger stays diffuse. That would be a bad bet.

The global mood of elite scepticism will shape this election whether our politicians like it or not. Voters are more suspicious than ever of cosy relationships between politicians and the wealthy. They are less willing to accept opacity, conflicts of interest, and the revolving door as the price of doing business.

Chris Trotter, writing today in The Interest, argues there are “heaps of lessons New Zealanders can learn from what is unfolding in the United Kingdom”. He is right. New Zealand has an opportunity to get ahead of the global backlash. We can build the transparency infrastructure — the lobbying register, the Integrity Commission, the cooling-off rules — that most comparable democracies already have.

Or we can keep pretending that we are too small and too decent for this kind of corruption, and wait for the next scandal to prove us wrong.

Starmer’s warning to his own cabinet, that “the public don’t really see individuals in this scandal, they see politicians”, applies here too. New Zealanders are watching the Mandelson affair, they’re reading the files, and they’re drawing the obvious conclusion: that the people who run the world are not to be trusted, and the systems meant to hold them accountable are broken.

A country can’t keep shrugging at unregulated influence while telling voters to trust the system. If New Zealand’s political class wants to avoid the kind of legitimacy collapse now unfolding overseas, the time to act is now. Not after the next (inevitable) scandal.

An immediate test
And here is the immediate test. Transparency International is releasing its annual Corruption Perceptions Index. For the last couple of decades, New Zealand’s showing in the index has been in decline. Our score has slipped from the mid-90s to 83, and our ranking has dropped to fourth globally, now seven points behind Denmark.

Will this decline continue? If it does, it will be one more data point confirming what voters already sense: that the gap between New Zealand’s self-image as a clean, transparent democracy and the reality of our thin integrity architecture is growing wider.

The Epstein files have taken the back off the world clock. New Zealanders can see the mechanism now. The question is what do we do about it?

Dr Bryce Edwards is a political commentator and analyst. He is director of the Democracy Project, focused on scrutinising and challenging the role of vested interests in the political process. Republished with the author’s permission.

Article by AsiaPacificReport.nz

On 14 January, Al Jazeera produced an episode of ‘Inside Story’, their daily current affairs feature programme: Why is the US Fed chair criminal probe causing global alarm? The context is the conflict between the Federal Reserve Chairman Jerome Powell, versus the man who appointed him to that role, President Donald Trump. In the sense of this conflict, Powell is the archetypal technocrat (the spokesperson for his craft guild), and Trump is playing the role of the democrat (the spokesperson for the American people).

(We note that, in New Zealand, something similar but different is happening; effectively a conflict – for a tiny slice of the historical narrative – between former Reserve Bank Governor Adrian Orr and the current Minister of Finance, Nicola Willis. It may be said that power is held by those who control the money, and by those who control the narrative.)

The format of Inside Story is that of three remotely-located expert or otherwise-interested interviewees, interviewed by a news-anchor studio interviewer. (Former Newshub newsreader Tom McRae serves as one such interviewer.)

For this episode, the interviewer was Adrian Finighan. The interviewees were: an American political commentator, Eric Ham; a London-based commentator representing the finance industry, Justin Urquhart-Stewart; and a celebrity Irish monetary economist, David McWilliams. (McWilliams was speaking in New Zealand last October; claims have been made that he is the “Attenborough” of economics.)

It is to McWilliams that I particularly wish to focus my comments; so, below, I have transcribed his contributions to the panel discussion. (I will confine my comments re McWilliams to his contributions to the Al Jazeera programme, and not to his writings or other presentations.) But first I have transcribed opening words from Finighan, Ham, and Urquhart-Stewart. There are also comments from Jerome Powell, reporter Fintan Monaghan, and German Chancellor Friedrich Merz. (To maintain focus the transcriptions have been slightly condensed; the original interview is available, see above.)

Finighan, Ham, and Urquhart-Stewart

Finighan: “A criminal investigation into the Chair of the Fed, Jerome Powell … could have implications well beyond the US … a swift and sharp response from central banks around the world, a joint statement expressing solidarity with Powell.”

Powell: “The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President … [through] political pressure or intimidation.”

The general tone here is that Powell – the chairman of a committee – is the good guy, and Trump the bad guy. In this sense the discussion falls into the trope that if there’s a bad guy [ie Trump], then the bad guy’s adversary must be a good guy. Note how Powell presents himself as the ‘man of the people’, even though in reality he is anything but.

Of course, it goes without saying that a narrowly focussed criminal law investigation is not an appropriate forum for discussing democracy and monetary policy. And there is no doubt that President Trump is intimidating, and has a tendency for ad hominem flights of fancy. We should note, for clarification, that the criminal charges referred to relate to the expansion of a building, and not to misconduct in the setting of interest rates.

Reporter, Fintan Monaghan: “The two [President and Chairman] have been at odds over the setting of interest rates for most of the past year. Trump wants cuts. That might give the economy a short-term boost by bringing down the cost of borrowing money, but Powell has resisted because it could cause inflation. … Heads of major central banks around the world, including the ECB’s Christine Lagarde, have voiced support for Powell and the independence of the Fed. Central Banks have traditionally operated separately from the central government. That keeps long-term decisions about the health of the economy separate from short-term political [aka democratic] interests.”

Friedrich Merz: “I hope there will remain a broad consensus that central banks must remain independent because independent central banks are a guarantee that a currency can remain stable in the long term.”

We may note these themes are emphasised by those who we might call ‘monetary policy hawks’; and most central bankers are monetary policy hawks in that they emphasise the notion of raising interest rates as the sine qua non [without which not] of anti-inflation purgative emulsions.

To claim that Reserve Banks have traditionally operated separately from the central government, indicates that some commentators have a very short sense of history. Most central banks operated as a long-arm of government for most of their histories (and most are less than 100 years old; the RBNZ has existed since 1934). The American Fed is usually regarded as having been independent since 1951, though it’s always been a political organisation with politically appointed leaders. Most Reserve Banks have a single shareholder; the Government. During Abenomics, Japan’s central bank was fundamentally a part of Shinzo Abe’s macroeconomic program. As was New Zealand’s Reserve Bank in, say, the late 1930s, when it played a crucial role in implementing the economic policies which launched New Zealand into the position of a global exemplar for a modern egalitarian economy.

We note also that central bankers generally favour the cynical word ‘political’ over the much happier word ‘democratic’. And we note that Friedrich Merz may be confused. He appears to be referring to a national or imperial ‘currency’ such as the Euro, whereas monetary policy at its highest calling seeks to protect the internal value of money; not its external value. (The internal value relates to inflation and deflation; external value relates to currencies’ exchange rates.)

Eric Ham [author and political commentator]: “… that very independence which has actually fuelled United States’s monetary growth.”

Justin Urquhart-Stewart [chairman of an investment platform]: “There is one vital word that central bankers have to give out and that is confidence … this is the first time that I’ve seen central bankers getting together almost as a ‘trade-union’ … [in response to] political interference.’

Ham, like most political commentators, is all-at-sea when trying to comment on monetary matters. I presume that he meant to say ‘economic growth’ rather than ‘monetary growth’. Certainly the wizards of money – ie the Lords of Finance [in the 1930s, the Bankers Who Broke the World] – believe, or claim to believe, that central bank independence fuels long-run economic growth.

Yet, I have a sneaky suspicion that Ham meant what he said. In the mercantilist worldview, a worldview upheld by President Trump, ‘monetary growth’ and ‘economic growth’ are tantamount to the same thing. New Zealand’s Prime Minister, Christopher Luxon, is also a businessman who believes that making hard-won money represents the economic purpose of human life.

In the golden age of mercantilism, from around 1500 to 1800, money was understood to have been legitimately made by mining, exporting, or stealing. (Queen Elizabeth the First was the monarch best known for having resorted to the latter; she boosted the Royal navy for that purpose.) In this view, only mining represents a legitimate addition to the global money supply. Kings and Queens however sometimes resorted to a fourth method, ‘debasement’; modern monetary bankers are still fighting that battle of yore, with ‘public debt’ representing their principal concept of debased money.

On the ‘other side of the coin’ from monetary philosophers – or is it the ‘other side of the ledger’ – there were accountant bankers. One of their clever tricks was double-entry bookkeeping. Another closely related trick was fractional banking. These (along with a clearing-mechanism developed from medieval Italian banking) became the central technologies of modern banking practice. (Many of the earliest bankers were goldsmiths, who on-lent other people’s gold and silver deposits – albeit by issuing receipts, the forerunners of paper money – without telling the depositors. When in trouble, these fractional moneylenders required a fast horse, and contacts who could smuggle them out of the country! The final piece of the modern-banking puzzle was limited-liability status, facilitating an appropriate amount of risk-taking. These are the initially-disreputable technologies that lubricate capitalism and give it its dynamism. Bankers were not alchemists trying to make money independent of the economies it serves.)

Re Urquhart-Stewart, he emphasised the role of confidence – ie belief – in monetary policy. A word widely used by monetary economists is ‘expectations’. Thus, the role that twentyfirst century monetary authorities have assumed is to manage public expectations, even if they have to resort to some kind of poker trick to do so. An important part of this is to maintain a druid-like sense of authority; to tell a good collegial story – not necessarily an accurate story – in order to give themselves an arcane aura of credibility. Democratically-elected politicians – among others – are required to believe their story.

This may be the first time that Urquhart-Stewart has been aware of central bankers getting together as a union or college or guild; but their recent “joint statement” is by no means their first rodeo. Central bankers of the world – like staunch cowboys – regularly get together at a place called Jackson Hole in Wyoming, USA. (And the lords of finance of the late 1920s – the preeminent central bankers of the United Kingdom, United States, France and Germany – were all in regular contact with each other.) On this note, New Zealand’s own Reserve Bank governor, Anna Breman, was one of Urquhart-Stewart’s unionists; and, for her efforts, she had her fingernails clipped by Nicola Willis. (In the recent state of New Zealand’s political cycle, Willis and Luxon have been more in Trump’s camp than in Powell’s, expressing frustration with an unnecessarily slow process of lowering interest rates. This runs counter to their position in the summer of 2023/24; then the new government’s first act in Parliament was to raise the monetary policy bias in favour of generally higher interest rates.)

In the earlier days of central banking, central bankers were more likely to have been well-connected bankers. Nowadays they are more likely to have been economists, specialising in monetary economics and finance. The division between these two cultures goes back at least as far as to the disputations in the 1840s and 1850s between the economists’ Currency School, and the bankers’ Banking School. While the Banking School may have had the better of the argument, as demonstrated by the ongoing development of monetary practice, the Currency School won the culture war.

Before I go on to reveal economist David McWilliams’ substantial contribution to the Al Jazeera programme, we should note that the setting of interest rates through monetary policy is a fundamentally interventionist overriding of the market determination of a price; it represents an exception to the sanctity of the price-mechanism which is fundamental to economics. Neoliberal anti-interventionists tend to show strong support for interest rate intervention; just not intervention by kings or queens or presidents or ministers of finance; they favour intervention by someone they have confidence in. It is part of a wider belief on the part of economic liberals that it is good for our health that money (unlike sugar) should always be scarce; and that the technocratic authorities, if they must err, should err on the side of money being too scarce.

David McWilliams’ ‘Testimony’

I transcribe McWilliams several contributions to the Inside Story programme:

Contribution One: “I’m speaking to you as a former central bank economist … authoritarian leaders from Nero to Lenin, from Hitler to Henry VIII have always tried to interfere with who prints the money, who gets the money and at what price. … This issue is about who gets to set the growth rate of the American economy. Is it the Federal Reserve or is it the President? … Typically, it is the Federal Reserve that gets to set the growth rate, consistent with a low rate of inflation, is going to be X, and were going to drive our monetary policy and our rate of interest according to that. Politicians are always wanting to put their foot down on the accelerator, more growth, more election success, more people feeling good in the very short term. Central bankers push their foot down on the brakes … because we are worried about the rate of inflation. … The central bankers get [their extraordinary power] because they are concerned about the long-term rate of inflation. Politicians are not concerned about the rate of inflation, and as a consequence they want things to accelerate quicker. … The rate of inflation, which affects poor people more than rich people, will go up. The long-term rate of interest, which affects your mortgage rate, will go up. I think, for the world in general, the idea that the people who actually manage and preserve the integrity of the US dollar are no longer concerned about the integrity of the dollar and much more concerned about short-term politics; that will scare people, not just in the High Street, but also in financial markets.”

Re “printing money”, it’s an intentionally pejorative label for money creation through banking based on double-entry book-keeping. Before ‘printing’, there was ‘minting’, which has been the necessary historical privilege of all kings; not just Nero and Henry VIII. McWilliams conflates printing with minting. When money was principally coins, it was the ‘head’ of the king on the coin that gave the public confidence in that coin; the minted coins represented the liability of the kings to the public. It’s not the place here to comment on the monetary policies of Lenin and Hitler. But, re Henry VIII, I recommend the book Gresham’s Law, by John Guy. Thomas Gresham served as banker to four of the Tudor monarchs, in the middle decades of the sixteenth century. Securing additional public debt for Henry VIII – ie, additional to the minted coinage – could be a difficult and hair-raising experience; actually tantamount to smuggling.

McWilliams posits that the technocratic monetary Tzar, Powell, has – and should have – the power to “set the growth rate of the American economy”. This assertion is problematic in that it is neither accurate nor democratic. Attributing the GDP of the United States to one man does a huge disservice to the other 330 million Americans, and grants Powell more concentrated power than Nero ever had. McWilliams doesn’t mention the word ‘productivity’ once, which is unusual for a media economist; it is more common to hear that long-term growth is determined by productivity than by central banks.

McWilliams goes on to say that elected politicians want economic growth rates higher than what monetary economists think they should want, effectively claiming that democracy is inherently inflationary, that inflation is the greatest of all economic sins, and that “politicians are not concerned about inflation”.

The whole discussion reveals overemphasis on a false conflict or dissonance between ‘long-term’ and ‘short-term’. In reality the long-term is no more than a sequence of short terms. We, all of us, all the time, live in the short-term.

His incorrect argument that inflation adversely affects poor people more than rich people is patently false, made most obvious by the facts that higher interest rates clearly favour the receivers of interest, and that past inflation has played a major role in establishing the wealth of today’s rich. We should note that active ‘inflation-fighting’ does not necessarily mean that prices become lower than they would otherwise be; central bank inflation-fighting is a costly process that contributes to the cost-of-living. If we are constantly inflation-fighting in the short-term, and the long-term is a succession of short-terms, then the cost of inflation-fighting becomes a ubiquitous presence in our lives.

Basically, his argument is that if we [ie people like himself] don’t put interest rates up [in the short-term] then interest rates will go up [in the long term]. We need to raise interest rates in order to lower interest rates, he claims. This illogical argument is essentially that inflation necessarily connects low interest today with high interest tomorrow (and vice versa); that interest rates act like an unlubricated seesaw in which one end is labelled ‘short-term’ and the other end is labelled ‘long-term’.

In his last two sentences above, McWilliams claims that a political appointee to replace Powell – compared to a career appointee – would undermine the “integrity of the US dollar”. There is a sense that the US dollar should be the master of the world economy, not its servant. By the way, all appointments by politicians are political; democracy is political.

Contribution Two: “Central backers are charged with – dully obsessed with – the rate of inflation. The rate of inflation is in effect the value of your take-home pay. … The second thing is of course ‘distribution effects’, who pays most. What you find is that, when the rate of inflation goes up, poor people pay more than rich people. Because a higher percentage of a poor person’s income is going to be going on basics … everybody is affected badly, but the poor are affected worse. And then the final point is that for anyone who has a mortgage … inflation means that interest rates will go up. Donald Trump is so keen to reduce interest rates because he is an endemic debtor. There’s always a split in the world between those people who are creditors, who lend money, and debtors, those people who borrow money. As a general rule those people who borrow money want the cost of borrowing to be as low as possible. And if you’ve spent your lifetime defaulting, borrowing, defaulting again, then your DNA will be biassed towards lower not higher interest rates. But who rewards the saver if the rate of interest is artificially low?”

Central bankers, but not McWilliams, make a virtue of themselves being dull technocrats.

The rate of inflation is not the value of your-take home pay. Inflation is an increase in prices, not a level of prices. Inflation, meaning a decrease in what a dollar will buy, strictly affects all prices, including wages; and including luxuries as well as necessities. What McWilliams is arguing is that inflation, though itself not about relative prices, nevertheless has a biased impact on relative prices. Relative prices are in fact caused by market forces; changes in the demand for and supply of different commodities and factors of production. Certainly, changes in interest rates represent a change in relative prices, because the rate of interest (comparable to the wage rate) is the price of a factor of production. If inflation is the only thing that’s going on, a four percent increase in prices will be matched simultaneously by a four percent increase in wages, so the value of your take-home pay is unchanged. All inflation does is reduce what a person’s money-in-the-bank will buy, and make it easier for a person to repay debts. It’s true that markets will respond to inflation by raising the money cost of future debt. Do markets really need help from the monetary druids who claim that interest rates should be raised in an interventionist manner, not only in response to inflation but also ahead of what they claim is expected inflation.

The line from people like McWilliams is that debt is akin to a form of sin, whereas squirrelling money away at four percent annual interest is a virtue. This is religious metaphysics, not science. How many people who have made a lot of money did so simply from squirreling away their wages? Not many. Rich people, except those who simply inherited from daddy, incurred debt to become rich. Rich nations incurred debt – private and public debt – to become rich. Debt has played and continues to play an absolutely fundamental role in economic and civilisational development.

Even in nature the squirrels are not rewarded. They earn no interest on their nuts, and they are subject to a ‘use it or lose it regime’. Nuts which are saved for too long become inedible, or simply go missing. Yes, savers should be rewarded when capital is scarce and people with unspent income need to be induced to take investment risks. In the twentyfirst century, however, the world has been awash with private stashes of idle money; central bankers should not be using public policy to serve the interests of the owners of these stashes.

Contribution Three: “Is the institution stronger than the personalities? I think what we are talking about is a power grab, and we know there’s nobody more powerful in society than the person who controls the money. Money is the glue that gels society together. It is an awesome weapon on the part of governments, which is why I suspect central banks have been independent for so long. We’ve largely seen a revolution of the central banks in the 1970s; by the 1990s with the exception of the UK most were independent.  … This is about power and the exercising of power; and I would say that money is a far more powerful tool than ideology, than even warfare, than certainly all sorts of other weapons in the hands of presidents. So, what we are seeing here is a man who doesn’t really understand – or isn’t bound by – the rules of the game, so he’s tearing up the rules as we go along. This is a particularly acute tearing-up. Why? Because he’s actually affecting financial markets, corporate interests, Wall Street’s interests, so there may well be a massive pushback. But to answer your question, if there is a patsy at the helm of the Fed it will undermine the credibility of the United States dollar at a time when the dollar is under credible threat. The United States is no longer the overwhelmingly dominant economy in the world; it is technically number one, but it is being gradually dragged back downwards by China and in the long term by other countries as they grow. So, I think President Trump doesn’t understand the exorbitant privilege that the United States has as [having] the reserve currency of the world. There is nothing more powerful than that you can print money for free as the reserve currency, and people have to give you real stuff to buy that currency that you print for free. How amazing a deal is this? And for the Americans to self-sabotage from the White House seems to be the politics of idiocy.”

Here McWilliams reveals the power agenda of the monetary church. Money should be controlled by the church, themselves; not by the people through their elected or unelected representatives. Henry VIII struggled with the Rome-based Catholic Church in the 1530s. Henry won. What we see today, in McWilliams’ words, is the new church in another power struggle; a struggle – possibly a struggle to the death – that the new faith is probably winning. Who should we trust; the king or the church? The “rules of the game”, by the way, were set by the monetary economists – the currency school – of the nineteenth century. Those rules went quiet in the 1930s, but they started to reassert themselves in the 1970s; in the mid-1980s in New Zealand.

McWilliams does understand the power of double-entry bookkeeping as applied to banks – the power to “print money for free”. And he is correct that Trumponomics – Trumpian mercantilism – is an unwitting policy to self-sabotage the United States’ economy. But to transfer power to a college of druids is not the answer, either. Rather, lay people should all be better educated about money; but not so-educated by these monetary Jesuits. Henry VIII was taught statecraft by Cardinal Wolsey. He overthrew Wolsey – his mentor and his tormentor – but was unable to seek, let alone find, a better counsellor; Henry lost his way. Today we have democracy; a civilisation-project that is still immature, a project whose survival cannot be guaranteed. For all Trump’s faults, he is nevertheless more sensitive to ‘the people’ than are the technocrats who, while really serving the church of sacred money, claim to “serve the public”.

Contribution Four: “I would like your viewers to just remind themselves that the key word here is ‘trust’; what keeps money sacred, almost has an alchemic value, is trust. I trust it, you trust it, we trust each other. Now if you chip away at that trust, which is ephemeral, entirely in our heads, you begin to chip away at the very foundations of the system that we all have in, that system remains stable. So once you put the trust in the currency in the hands of somebody who is untrustworthy you begin to open all sorts of dilemmas about what’s the value of money, who prints it, will it buy what it says it buys, and can I save it. These are massive, massive issues.”

I can say here that ‘sunlight is the best disinfectant’, that delegating our credulity to a college of wizards and metaphysicians is not our best way forward. What David McWilliams (and the people he speaks for) says here, while more Hogwarts than hogwash, perhaps belongs in the Age of Aquarius; like Christian Hawkesby’s ‘North Star’ (refer Reserve Bank cuts OCR 25 basis points, RNZ Morning Report, 29 May 2025). That, of course does not redeem President Trump.

In an important sense, McWilliams is correct. Money is free; freer than a piece of paper. But it’s always an accounting liability; a liability incurred by whoever’s signature or head is on it. Neither kings nor bankers have an incentive to overcook the money supply. It’s their heads that are on the line. The secrets are to always have enough money in circulation; and that it is better to err on the side of too much than too little. Value can seemingly be created from nothing; that’s always been so. But money, and any other form of promise, is not itself ‘value’; rather money is a set of claims on value. The alchemy perception is that a piece of paper with a signature – or a metallic disc with a king’s head etched on it, or a deposit entry in a bank account – may have intrinsic value, may in itself be wealth. But no, such things are only promises. If promises are to be kept, then sabotage – including self-sabotage – should be avoided.

(As an aside, it has often been believed that a destructive weapon of war was to flood a country’s economy with credible counterfeit money. The Germans allegedly tried it in the United Kingdom in World War Two, but to no avail. The Japanese also tried it in the Philippines; I have actually seen a case of counterfeit money recovered from a Japanese crashed aircraft in Mindanao, Philippines. Fascinating!)

Conclusion

The monetarists’ essential argument is that if the policy objective is to have future lower interest rates you have to have higher interest rates now. That is, the preventative for high interest rates is high interest rates! (By ‘monetarists’, I refer to the monetary bankers and the growing numbers of ‘finance-experts’ of the new Currency School, distinct from the now-scarce practical banker-accountants of the old Banking School.)

Mysticism about money is rife, and ripe, especially within the guardian church. The Church of Money is a part of the New Technocracy that is surreptitiously overwhelming the institutions of democracy.

Re John Maynard Keynes, on the short-term versus the long-term. Keynes said: “In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is long past the ocean is flat again”; meaning that actual life is always lived in the short-term, and that the distinction between the short-term and the long-term is essentially vacuous.

The monetarists’ view is normative; that in the event of an economic stagnation or decline, those who had already built ‘nest eggs’ (portfolios of financial claims) should have priority access to diminished goods and services; priority over the workers and capitalists who would be producing those goods and services. That is, priority access to a diminished ‘economic pie’ should be given to rich old gentlemen and gentlewomen, with the greatest priority to be given to those with the biggest portfolios regardless of how those nest eggs were obtained. This is not a policy to benefit the poor.

Further, the implementation of neoliberal monetary policies – today’s Currency School or Currency Church, which favours intervention on the side of less money and dear money – substantially increases the likelihood of national and global economic decline, in the short-term and in the long-term. Just as a car with insufficient lubricating oil will not go well. Such a car may complete a short run, albeit inefficiently; but it will not complete a long run.

*******

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.

Will maximising investment returns override ethics? That is the question the tertiary sector posed to UniSaver, the academic equivalent of KiwiSaver, now revealed to invest in Israeli weapons and military intelligence.

In 2024, some 400 university staff appealed to UniSaver to divest from such companies.

The fund initially ignored the call.

The fund issued a statement in September 2025 emphasising its fiduciary duty to ensure best performance, arguing divestment was unnecessary because the New Zealand government had not imposed sanctions against Israel, and noting its Israel-linked exposure is only 0.11 percent of total assets.

After a November open letter signed by 715 staff, nearly double the earlier number, UniSaver agreed to meet representatives of the group.

What should the tenor of those discussions be?

And why should any of this matter to the average New Zealander returning from the summer lull, facing a new year that looks uncomfortably like the last, with no sign from the Prime Minister’s State of the Nation last weekend that domestic pressures will ease?

The core question
This is the core question: with so many local concerns, why should the Israel–Palestine conflict matter?

Or, more pointedly, why should 0.11 percent of a pension fund belonging to a relatively privileged cohort matter to those worried about jobs, the cost of living, and healthcare?

Global issues are closer than we think. The suffering of Gazans and the anxieties of New Zealanders share a root: public policy framed as instrumental and amoral, where the wellbeing of persons is sacrificed to detached abstractions of markets and efficiencies while morality and integrity are treated as incidental.

These attitudes yield the same harvest everywhere: dehumanisation, insecurity, and the corrosion of civic trust.

Our only defence is a moral standpoint that declares “thus far shall you come, and no farther”.

When a society publicly avows that certain principles, human dignity and the integrity of persons, are non negotiable, it restores those ideals to the centre of the public square.

This is what a rules-based order is for: to foreground the human person before power and profit. Where such an order is honoured, flourishing follows; where it is neglected, flourishing is the first casualty.

Small acts of moral probity — even a mere 0.11 percent — may appear inconsequential.

Beacons for human progress
Yet as articulations of what we hold valuable, they resound deeply in the moral universe. They are the lit matches that, gathered, become the beacon that lights human progress.

Recent years have seen our public life dominated by the contrary impulse: to measure every policy by an economic yardstick calibrated to austerity.

As we enter an election year, two paths lie before us: one paved by slavish adherence to instrumental rationality, the other by a politics that puts people in a place of honour and treats wellbeing, security, and human flourishing as the purpose, not by product, of policy.

We have precedents. In the 1930s, as the world entered a moment not unlike our own, New Zealand, small, distant, still reeling from the Depression, adopted what became known as a moral foreign policy.

After that most devastating conflict, we added our voice to a chorus that helped shape a rules-based international order privileging human rights, cooperation, and diplomacy over war.

From the gradual undermining of that settlement, particularly after the crisis-ridden 1970s, one can trace many of today’s global and national disorders.

So what has all this to do with UniSaver?

Instability gathering pace
From our relatively safe redoubt at the bottom of the world, we watch instability elsewhere gather pace. Shall we respond in the same polarising, amoral terms or recover the loftier stance that once gave us outsized moral influence?

The UniSaver Board now faces a profound opportunity. In opposing the 715 who call for ethical investment, it has chosen expediency over ethics.

But morality often begins with small, unfashionable acts that grow, over time, into the juggernaut of social change.

Consider how a small student-led divestment campaign in the 1950s catalysed what became the global movement that helped topple South African apartheid.

Such actions shift the parameters of the values debate. Even if it concerns only 0.11 percent, UniSaver can redraw the moral horizon.

If its decision signals that we value a fair go for all — yes, even for far off Palestinians — it will achieve far more than a simple reassignment of assets.

It will have reminded us who we are.

And it will return UniSaver to being an institution to be proud of, one that affirms that people matter at least as much as the return on investment.

Dr Vincent Wijeysingha is senior lecturer in social work and social policy at Massey University. He is a member of Uni Workers 4 Palestine but writes here in a personal capacity.

Article by AsiaPacificReport.nz

The logbook of presidential flights in Indonesia reveals an unusual pattern — from the Merdeka Palace to the Land of the Bird of Paradise.

By 2023, then President Joko “Jokowi” Widodo had set foot in Papua at least 17 times — a record in the republic’s history, surpassing the total visits of all previous presidents combined.

Each touchdown of the presidential plane on the land of Papua or at the new airports he inaugurated was more than just a working visit. It was a statement of presence as a political message: Papua is no longer marginalised; it exists on Indonesia’s main political map.

Yet, behind the roar of the presidential plane and the welcoming traditional dances, lies a critical question: Has the physical presence of a national leader, accompanied by the rumble of massive infrastructure projects, touched the core issues of Papua?

Or has it merely become a grand symbol of integration, while social fractures, injustice, and sorrow continue to flow?

This analysis evaluates the multifaceted impact of President Jokowi’s dozen plus visits and draw crucial lessons for the new administration of President Prabowo Subianto and Vice-President Gibran Rakabuming Raka (Jokowi’s Son) in weaving a more just and sustainable Papuan policy.

The multidimensional impact of Jokowi’s visits
From a national political perspective, the frequency of President Jokowi’s visits to Papua, was a smart and unprecedented political communication strategy. Each landing in the Melanesian land has not merely been a routine agenda but a powerful symbolic political performance.

Handshakes with tribal chiefs, meetings with traditional leaders in public arenas, and speeches amid crowds function as direct counter-narratives to long-standing issues of marginalisation and separatism.

This physical presidential presence is an undeniable visual declaration: Papua is an inseparable part of Indonesia, and the nation’s highest leader is consistently present there.

This presence serves as a potent tool of state legitimacy, shortening the psychological distance between the centre of power in Jakarta and the easternmost Melanesian region, while demonstrating the intended political commitment. However, beneath this symbolism, the legitimacy built through physical presence is temporary if not supported by real structural change.

The critical question often raised by the community, especially Indigenous Papuans (OAP), is simple yet fundamental: “After the president’s planes and helicopters leave and the protocol frenzy subsides, what has truly changed for our lives?”

The narrative of integration through presence and physical development often clashes with demands for self-determination and historical grievances still alive among indigenous Papuans, as reflected in the ongoing armed conflict in the Central Highlands, indicating that this approach has not fully addressed the deep-seated roots of dissatisfaction.

The most visible legacy of the Jokowi era in Papua is none other than the infrastructure revolution — thousands of kilometres of the Trans-Papua Road cutting through wilderness and remote mountains, the magnificent Youtefa Bridge in Jayapura, and airport modernisations like Ewer Airport in Asmat, Wamena Airport, and the construction of the trans-Wamena-Jayapura road, Wamena-Nduga road, and other physical developments.

The government’s logic is that connectivity is an absolute prerequisite for growth. With good roads, the price of necessities in the interior is expected to drop, tourism can develop, and public services like health and education can become faster and more equitable.

Data from the Ministry of Public Works and Housing indeed records significant accessibility improvements. However, behind this physical progress, reports from organisations like the Pusaka Foundation and Greenpeace Indonesia warn of massive and often overlooked ecological impacts.

The opening of certain segments of the Trans-Papua Road is judged to accelerate deforestation, threaten Papua’s unique biodiversity, and disrupt watershed areas.

More profoundly, the issue of community involvement and consent in land acquisition processes often becomes a source of new conflict, sparking tension. As Indonesian human rights activist Usman Hamid has stated, infrastructure development is like a double-edged sword: on one side, it opens isolation and shortens distances, but on the other, it paradoxically erodes customary land rights, damages the environment that is the source of their cultural life and subsistence, and ironically, is enjoyed more by new settlers with greater capital and networks.

On the socio-economic level, the government vigorously distributed various social assistance programmes such as the Indonesia Health Card (KIS), Indonesia Smart Card (KIP), and various forms of Direct Cash Assistance (BLT).

These affirmative policies aim directly at catching up on welfare gaps and, statistically, have succeeded in reducing poverty rates in cities like Jayapura, although they remain the highest nationally. Sectors like Youtefa Bay tourism also show rapid growth. However, the economic growth created is often enclave-like and not inclusive.

Maria, a small business owner in Jayapura, illustrates this reality — large infrastructure projects are handled by contractors from outside Papua, hotels and medium-scale businesses are often owned by non-Papuan investors, while local SMEs struggle to compete due to limited access to capital, training, and marketing networks.

The structural gap between OAP and non-Papuans in ownership of means of production and access to quality job opportunities remains wide. Consequently, many Papuan sons and daughters only become manual labourers or contract workers on the grand projects building their ancestral land, an irony that deepens the sense of injustice.

In the socio-cultural realm, President Jokowi’s presence, often adorned with Papuan cultural ornaments and humbly participating in traditional dances, was a powerful form of symbolic recognition. This gesture sent a national message that Papuan culture is respected and valued at the highest state level.

However, this symbolic recognition on the political stage often does not align with the daily reality in Papua. The late Papuan peace figure, Father Neles Tebay, once described that in Papuan cities, “two worlds” often coexist but do not integrate: the modern world of migrants dominating the formal sector and modern economy, and the world of indigenous communities, often marginalised in culturally insensitive development processes.

Ethnic-tinged horizontal conflicts that have occurred, such as in Jayapura and Mimika, are clear indicators of how fragile social harmony is and how deep the unresolved socio-cultural gap remains.

The darkest and most challenging point of this entire development narrative lies in human rights issues and the unending armed conflict. Although presidential visits often include a conflict resolution agenda, incidents of human rights violations and armed clashes between security forces and the TPNPB (West Papua National Liberation Army) continue to recur, with unarmed civilians often becoming trapped victims, as in the tragedies in Nduga and Intan Jaya highlighted by Komnas HAM and LBH Jakarta.

An approach relying almost solely on physical development, unaccompanied by sincere efforts towards historical reconciliation and fair, transparent law enforcement for past human rights violations, is considered by many in Papua as merely “covering a festering internal wound with a bandage”.

This unresolved historical pain and injustice continues to be the main fuel for resistance and demands for independence, proving that concrete and asphalt roads alone are not enough to build lasting peace and justice felt by all the nation’s children.

Valuable lessons for the Prabowo-Gibran era
The current administration under President Prabowo Subianto and Vice-President Gibran Rakabuming Raka must not continue the Papuan policy with business as usual. The previous administration’s legacy offers a clear roadmap, as well as warnings about dead ends that must be avoided.

Four critical lessons should form the basis for transitioning from symbolic development to substantive, just transformation.

First, policy focus must undergo a paradigm shift from mere physical development towards the holistic empowerment of Papuan people. This means massive investment in quality education with curricula relevant to social contexts and local potential, as well as vocational training that equips Indigenous Papuans with skills to manage the economy on their own land.

Firm and measurable affirmative schemes must be designed to ensure Indigenous Papuans are not merely spectators, but the primary owners and managers of strategic economic sectors, from culture-based tourism and organic agriculture to creative industries.

Without this step, magnificent infrastructure will only become a channel for an extractive economy controlled by outsiders, perpetuating dependency and disparity.

Second, the government must enforce the principle of absolute harmony between development, cultural preservation, and environmental protection. Every major project, especially those touching customary lands and indigenous forest areas, must undergo credible, participatory, and legally binding Environmental and Social-Cultural Impact Assessments (AMDAL & ANDAL).

Development must no longer sacrifice local wisdom and ecosystems that are the soul and identity of Papuan society. Development models imported from Java or Sumatra must be reviewed and replaced with approaches born from dialogue with local ecology and culture, so that progress is not synonymous with environmental destruction and cultural marginalisation.

Third, this new era must open space for conflict resolution through a courageous approach of dialogue and reconciliation. The government needs to initiate inclusive dialogue involving all elements of Papuan society, including pro-independence groups willing to discuss peacefully, to address the roots of historical and structural dissatisfaction.

This complex issue has been comprehensively formulated by the Papua Peace Network. The establishment of an independent and trusted Papua Truth and Reconciliation Commission could be a monumental step to heal past wounds and build a foundation for sustainable peace, recognising that true security is born from justice.

Fourth, Special Autonomy must be revived in its meaning and spirit. A comprehensive evaluation of the implementation of the Special Autonomy Law, along with its trillions of rupiah in fund flows, is a necessity.

These funds must be shifted from physical projects that are often off-target to investments in enhancing the capacity, health, and economy of indigenous Papuans. More importantly, Special Autonomy must be interpreted as a political recognition of the special rights of Indigenous Papuans.

This means strengthening traditional institutions and providing real and decisive participatory space in every strategic decision-making at the provincial and district levels, so that policies are no longer felt as something imposed from Jakarta.

Ultimately, the main challenge for the Prabowo-Gibran administration is to demonstrate that commitment to Papua goes beyond rhetoric and showcase projects. Success will be measured not by the length of roads built, but by the fading of tension, the reduction of disparities, and the rise of self-confidence and economic independence among Indigenous Papuans.

Only by making these four pillars — human empowerment, harmony, dialogue, and living autonomy — the foundation of policy can Papua be truly integrated into the Republic of Indonesia in a dignified and sustainable manner.

A revolutionary approach model
To translate the lessons from the previous era, the current administration requires a radical change in its approach model, moving from a centralised development paradigm towards participatory governance based on Papuan native institutions.

The most revolutionary option is to form a special ministry focused on empowering Indigenous Papuans, inspired by the Ministry of Māori Development in New Zealand.

This ministry is not intended to manage regional administration, but specifically to guarantee the fulfilment of indigenous Papuans’ rights, as mandated in the Special Autonomy Law.

By placing the Governing Body for the Acceleration of Special Autonomy Development in Papua (BP3OKP) and the Papua Special Autonomy Acceleration Executive Committee under it, the government can create centralised, strong, and accountable coordination, thereby avoiding programme overlap and leakage of Special Autonomy funds.

This institutional revolution must be supported by data-based governance and authentic participation. Every policy and fund allocation, especially the massive Special Autonomy funds, must arise from rigorous data studies and in-depth dialogue with the community, rather than just technocratic planning in Jakarta.

Transparency and accountability in fund use must be guaranteed through independent oversight mechanisms that actively involve representatives of traditional councils or institutions, religious institutions, and local NGOs as watchdogs. Only then can the allocated funds truly become an instrument of change, not merely an instrument of expenditure.

Another key pillar is building equal and formal partnerships with Papuan traditional institutions, such as the Papuan Customary Council (DAP) and various stakeholders. These institutions are not merely ceremonial objects but must be recognised as strategic government partners in every stage of development, from planning and implementation to evaluation.

As socio-cultural anchors, understanding the pulse and real needs of the community, their involvement can prevent social conflict and ensure development programmes align with local wisdom and customary rights.

Furthermore, meaningful decentralisation becomes a prerequisite for success. Local governments in Papua must be given substantive authority and massive capacity building to independently manage natural resources and public services.

Moreover, the development approach must start from the grassroots, making participatory development at the village level the standard method. This method ensures that community aspirations are heard directly and the projects implemented truly address their priority needs, not merely pursuing physical targets.

Ultimately, this approach aims to reverse the traditional relationship between the central government and local governments in Papua. From a relationship that has so far seemed patron-client, to a partnership based on the sovereignty of indigenous communities and substantive justice.

Thus, development is no longer felt as something given from above, but something built together from below, creating a sense of ownership and sustainability that will become the foundation for long-term peace and prosperity in Papua.

Indonesianising in the Papuan Way
Reinterpreting the term “Indonesianising” Papua is a main task for the current administration. This concept must no longer be interpreted as an assimilation process erasing distinctive identity, but must transform into an integration that respects uniqueness.

True integration is not homogenisation, but an effort to embrace diversity as a strength. In this context, Indonesia is not a single mould, but a mosaic that gains its beauty precisely from the differences of each piece. For this, a multidimensional approach grounded in four main pillars is required.

First, in the field of education, the national curriculum must become more flexible and inclusive. Enrichment with local content — such as the history and wisdom of Papuan tribes, local languages, and inherited ecological wisdom — should not be merely supplementary, but the core of the learning process.

Schools must become places where Papuan children are proud of their identity while mastering global competencies. Second, in the field of the economy, self-reliance must be built on local strengths.

Easily accessible micro-financing systems, entrepreneurship training, and strong marketing support for flagship products like Wamena arabica coffee, sago, matoa, or high-value marine products will create a sovereign economy that empowers, rather than displaces, the indigenous people.

Third, recognition at the legal level is the foundation of justice. Recognition of the customary land rights of indigenous communities in land and natural resource governance must be guaranteed and integrated into national regulations. This is a concrete step to prevent agrarian conflict and ensure development benefits return to the rightful land owners.

Fourth, building intensive cultural dialogue through student, artist, and youth exchange programs between Papua and other regions, or other countries. This direct interaction will break the chain of prejudice, build empathy, and strengthen a true sense of brotherhood as one nation.

Towards a ‘Just Papua’
The legacy from the previous period is ambivalent. On one hand, there is magnificent infrastructure and symbolic integration strengthened through physical presence; on the other, deep disappointment remains due to unbridged gaps and a persistently pulsating conflict.

The Prabowo-Gibran administration now stands at a historical crossroads. The choice is between continuing the visually spectacular yet often elitist “concrete development” model or taking a more winding yet dignified path: namely, the Papuan human empowerment model, which places indigenous Papuans as the primary subject and heir to the future of their own land.

This strategic choice will be fate-determining. It will measure, later at the end of their term, whether presidential and vice-presidential visits to Papua are still met with cold protocol performances, or with new hope and genuine smiles from a people who feel recognised, valued, and empowered.

Ultimately, genuine national integration can only be realised when Indigenous Papuans can stand tall with all their identity and dignity, not as a party being “Indonesianised,” but as fully-fledged Indonesians who also shape the face of the nation.

The future of Papua is not about becoming like others, but about being itself in the embrace of the Bird of Garuda.

Laurens Ikinia is a Papuan lecturer and researcher at the Institute of Pacific Studies, Indonesian Christian University, Jakarta. He is also an honorary member of the Asia Pacific Media Network (APMN) in Aotearoa New Zealand, and an occasional contributor to Asia Pacific Report.

Article by AsiaPacificReport.nz

New Zealand has scrapped a project to build an airport in Tokelau after sinking NZ$3 million into the design phase.

A spokesperson for the Ministry of Foreign Affairs and Trade told RNZ Pacific that the Tokelau government had been advised of their decision.

Tokelau is completely inaccessible by plane, with visitors and its roughly 2600 residents required to travel via boat from Samoa. A return fare on the boat, which runs once every two weeks, is approximately NZ$306, with a travel time of around 24-32 hours.

“This decision was made in the context of the high cost of the project and the constrained fiscal environment currently facing the New Zealand government,” MFAT said in a statement.

“We recognise that air services have been a long-held aspiration of the people of Tokelau. ”

The government had spent around $3 million on feasibility, design, business casing and procurement planning since 2020, with funding agreed to the year before. The project faced delays due to COVID-19.

Stuff reported in 2022 that tenders for the project that had been put out for one provider who would be willing to work with the council of elders, or Taupulega, on a design concept.

Intended design
An Official Information Act request from October 2024 confirmed that the intended design included one terminal with an 800m by 30m runway on Nukunonu, the largest of Tokelau’s three atolls.

A tender for a construction contractor had been placed as late as September 2025, with an expected timeline reaching out to 2030, according to MFAT’s DevData tool.

“There’s not enough land to have an airstrip . . .  and it’s also the environmental impact — it’s a pristine environment,” Teao said.

“I just don’t see any any justification for an airport.

“Maybe in the future, if they have sea planes or things like that.”

Teao said he hopes to see the money spent on something more useful, such as improving the existing boat system.

Bridging the gap
The New Zealand Labour Party’s Pacific spokesperson, Carmel Sepuloni, said this project was intended to bridge the gap between Tokelau and the world.

“While the details are unclear, it’s disappointing to hear this news,” she said in a statement.

“There are real risks that come with having no access to an airstrip. With a population of about 2500 and almost 10,000 Tokelauans living in New Zealand, travel to and from Tokelau is difficult.

“There’s a clear need and given Tokelau is within the realm of New Zealand, I’d expect the government to offer a clear explanation as to why they’ve scrapped these plans.”

An election in Tokelau for their General Fono is set for January 29. Each village is selecting their candidates for just over a week of campaigning.

The Fono consists of three Faipule, or village leaders, three Pulenuku, or village mayors, and 14 general delegates, elected for a three-year term.

This article is republished under a community partnership agreement with RNZ.

Article by AsiaPacificReport.nz