Keith Rankin, 23 September 2026 – I recently read Annie Jacobsen’s Nuclear War; a Scenario (2024), and it’s a sobering reminder of what’s at stake when the world’s elites play existential geopolitical games.

What use is geopolitics? Is it just a super-elite sport? A form of evangelism? As one astute American geopolitician said around 1992, following the passing of the Soviet Union: “What does the preacher do when the Devil dies?” (Refer, The Real History of the Forever Wars, Neutrality Studies, YouTube, 20 September 2026.)

Whoops, some numpty dropped the ball!

What’s the chance that an elite rugby player will drop the ball in a high stakes’ game? One in ten maybe? Would anyone choose to play elite sport if they had a one-in-ten chance of (literally) eliminating themselves and their opponent? I guess the Roman gladiators took those kinds of chances; but they typically did not have the option to choose.

The Heuristic Scenario

A heuristic scenario of a cataclysm is one used for exploratory or teaching purposes; not necessarily the most likely version of such a disaster.

Jacobsen presents her scenario by positing an unhinged North Korean regime initiating what would become a 72-minute cataclysm, by striking with a double-nuclear-warhead both a nuclear power station in California, and the city of Washington DC. She never really suggests why North Korea might do this; but her aim was to show how events might unfold, following an event which represented a failure of ‘deterrence’.

And she aims to show that nobody can really defend a successful nuclear strike of this type; and that war-game game-theory suggests that, once started, humans (taken collectively) do not have the intellectual bandwidth to avoid nuclear escalation and hence annihilation. And she aims to show that a nuclear death is not a nice way to go; not ‘pretty’. (Around 200 years ago, some Romantics – participants in a philosophical tradition which emphasised aesthetics – thought that a death by tuberculosis could be ‘pretty’; ‘cults of privilege’ can have deeply problematic belief systems. Refer to ‘Tuberculosis in the Romantic Era of Consumption’, chapter 14 of Epidemics and Society from the Black Death to the Present, Frank Snowden, 2019.)

Questions which were not raised by Jacobsen

What if the Jacobsen-narrated warhead which struck the California nuclear power station was not a nuke, and if the one which targeted Washington missed and did not explode? Would a dead-hit by a non-nuke on a nuclear power station be considered a nuclear war? Would the nuclear-retaliation algorithms be activated? And is there any sense of the word ‘rational’ which could justify a fullscale ‘murder-suicide’ response to a small or large ‘first-strike’ nuclear attack?

Fitting Aotearoa New Zealand into Jacobsen’s picture

Jacobsen’s Nuclear War is very northern hemisphere centric. New Zealand gets a single mention near the end, with the underexamined assumption that New Zealand, Australia and Argentina would have a few survivors; survivors even after a holocaust in which the United States and Russia both ‘shoot their (nuclear) wad’. The scenario that all life might be extinguished was too much, even for Jacobsen; though she did compare her event to an extinction event like that which killed most of the dinosaurs.

The scenario harks back to one possible event in paleontological history. Indeed, there may well have been a human near-extinction event in the past, tens of thousands of years ago; such as a super-volcanic eruption which killed everybody not living in southern Africa.

What matters for New Zealand is to understand that there are mid-range nuclear war scenarios, short of a complete apocalypse, which might lead to between say one-quarter and three-quarters of humanity surviving a year after the last nuclear detonation. In some of those scenarios – especially some of possible asymmetric scenarios – New Zealand could be an early target; meaning that all New Zealanders would be among the ‘definitely dead’.

The best way for New Zealand to avoid such an asymmetric nuclear scenario would be for New Zealand to be – and to be seen to be – strictly neutral. Unarmed neutrality; meaning that New Zealand could be a threat to nobody. Security through peacemongering rather than the absurdity which is ‘security through war’. As such, New Zealand, while welcoming genuine tourists and seasonal workers, should be wary of hosting millionaire pre-refugees; people who seek to buy their way into New Zealand [exit] in preference to advocating peace to their own countries’ governments [voice]. (Note this: Real estate agents reveal how A-list celebrities buy property in New Zealand, Catherine Smith, New Zealand Herald, 22 Sep 2026. People famous-for-being-famous might attract the most media attention. There are others who compromise New Zealand’s security by using New Zealand as a bolthole to shelter themselves from the consequences of their own follies.)

What happens to New Zealand in a ‘limited’ nuclear war which only destroys half of humanity? That could mean zero war-related deaths in New Zealand.

And what is the probability of such a war occurring by the end of this decade? I would say that the probability of such a war is greater than one-percent. That’s the probability of a person’s town being hit by a one-in-one-hundred-year flood; and we know that there have been plenty of those events in New Zealand and elsewhere, in recent years.

Everyone should be making their own estimate. And the elites should be publicly discussing, justifying, and contesting their estimates. Not wishful estimates; rather, estimates based on realism.

The world situation is this. We currently have a nuclear super-power (Russia) at ‘fullscale’ war with a non-nuclear power. Most realists would argue that the non-nuclear power – Ukraine – is serving as a proxy of Nato, the world’s most assertive nuclear super-power. Rhetoric coming out of Europe is more bellicose than anything coming out of Russia. Non-nuclear Ukraine just last weekend attacked – and killed people in – the capital city of its nuclear-armed adversary.

Historical Precedent

I remember a similar situation, in October 1962. In that year, the Ukraine-equivalent country was Cuba; Cuba was hosting nuclear-capable missiles aimed at the United States, the world’s biggest nuclear power. At the time, almost everyone would have said that the odds were ten-percent (or higher) that there would be a world-ending nuclear conflagration. Maybe another ten-percent possibility that there would be a non-world-ending nuclear conflagration. Some would have argued that I am being conservative here.

That game of Russian roulette was averted then, thanks to the then relatively wise incumbents in the White House and the Kremlin. Cuba’s loose-cannon president and his 2IC – Fidel Castro, and Che Guevarra – were disappointed that Cuba did not get to fire some sort of salvo at the United States.

The odds of a nuclear war, soonish, may now be similar to what they were in 1962. We should be talking about it. And, just as when we talked about climate change, the talk needs to be about adaption as well as avoidance; about survival in a world in which there is sea-level rise or a nuclear fallout.

Could anyone imagine President Kennedy not ordering as escalatory response in 1962, if Castro (and, by inference, Khruschev) actually fired missiles at Washington? Well, we all saw the recent attack on Moscow; that’s all who still watch the news. If we think back to 1962, such an attack should have shortened the odds. The issue is not whether Vladimir Putin is a ‘bad guy’ or a ‘good guy’. The issue is what his response will be, ‘justified’ or not. The second issue is what will happen to Putin if his response is seen by powerful compatriots as ‘too weak’. We do know what happened to President Kennedy thirteen months after his response; a response which was considered by some domestic political adversaries to have been a ‘climb down’.

Could New Zealand face a post-nuclear famine?

Consider a scenario that, despite mass destruction in the northern hemisphere, the climate and radiation levels are relatively unchanged in New Zealand. New Zealand’s present economy is heavily predicated on trade with the northern hemisphere; undertaken by northern hemisphere ships using northern hemisphere fuel, and returning with northern hemisphere consumables and fertiliser.

Would Australia save New Zealand by sending wheat and rice as food aid? Maybe Australia, assuming it has also survived largely intact, will have other priorities?

New Zealand would have to shift rapidly into arable farming, away from export-oriented meat and milk. The price of potatoes would soar. People would be fighting to pay megabucks for produce for sale in farmers’ markets. Kiwis would be regretting the bulldozing of New Zealand’s best horticultural land for housing developments.

On Monday, RNZ ran this interview: Arable farmers ‘checked out’ as farm struggles continue, RNZ 21 September 2026. The process of replacing staple food production with export-oriented meat and milk products continues unabated. New Zealand’s ability to feed itself diminishes, as New Zealand pursues a self-unreliance strategy which fails to acknowledge the geographic isolation of this archipelago.

I’ll finish here by noting that two of the most famous historical examples of preventable famine occurred within the British Empire, and to two food-exporting nations: Ireland in the late 1840s, and India in the early 1940s. The capacity to export meat and milk and space technology is not the same as the capacity to pivot, quickly, to staple domestic production sufficient to keep 5.4 million people alive and healthy.

About the writer:

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

Keith Rankin, 18 September 2026 – The KiwiSaver policies of both National and Labour are deeply problematic for a number of reasons. It is Labour which seems to be more intent on gaslighting and scapegoating employers; but my critique is also applicable to National, which is showing tendencies of becoming dirigiste according to some commentators (eg National supermarket shock: Why the ‘party of business’ has taken a hard left turn – Audrey Young, NZ Herald, 17 Sep 2026).

Labour’s policy is particularly tone deaf, in that it explicitly seeks to mine employers – to extract revenue from them, especially small and medium size businesses in hospitality and retail etc – without acknowledging that that’s what they are doing, and facilitating the flows of New Zealand wealth towards the darlings of the world’s equity markets; such as the Magnificent Seven. At least regular taxes get recycled back into the domestic economy, rather than leaving the country.

National is more of an equal opportunity miner than Labour; rhetorically seeking to extract more, in equal proportions from employers and employees. In reality, the burden of today’s financial mining is shared between all stakeholders in an ordinary business; regardless of the language used by the policy advocates. Extracting ever more value from businesses represents additional cost; not relief during cost crisis. The explicit contract – signed for us rather than by us when compulsion is present – is that the extracted revenue will be returned, with compound interest, to employees decades into the wildly uncertain future.

It’s worse than I have described above. It’s a policy to further drain an already substantially leaking domestic economy. New Zealanders desperately need their income, today, for their own needs.

We need to remind ourselves of some very basic economic principles.

Economy 101 Basics – The Circular Flow ‘valves’ which serve as ‘policy levers’

When I learned and later taught Economic Principles, the introductory concept of basic macroeconomics was the circular flow of income and spending. Basically the market economy works as flows of spending, production, and income. (GDP – gross domestic product – is computed by measuring these ‘flow’ measures; indeed we have statistics for GDP based, separately, on each of these measures.) Circular flow analysis, while not fashionable among today’s economists, remains a highly valid and intuitive way for lay people and economists to understand upturns and downturns.

The economy is in balance when the spending intentions (especially but not only of households) match up with production intentions (of business firms); production for sale, by definition, creates income. The circular flow is about income being spent, and spending in turn generating production and income; it’s a feedback process. It is widely accepted that optimal policy is for some growth rather than pure balance; principal policy targets are three percent realeconomic growth and two percent inflation, adding up to five percent nominal annual growth.

In the global economy, there are two forms of ‘leakage’ (unspent household income): saving and taxation. And two forms of ‘injection’ (production induced by financial borrowing or asset liquidation): investment spending by firms, and spending by governments. In individual countries’ economies – national economies – there is an additional injection (export sales) and an additional leakage (import purchases). These six forms of injection and leakage are all normal flows; issues arise when they change from normal stable patterns.

Some of these economic ‘valves’ may be understood in net terms. Thus consumer borrowing is a form of dis-saving; of negative saving. And welfare benefit payments are understood as dis-taxation; ie, as negative taxation.

Thus we note that net taxation is tax revenues minus cash benefits; an increase in benefit payments is equivalent – in circular flow terms – to a reduction in taxes. And we note that deficit spending by governments is an injection, identified in the 1930s by Keynes as the most powerful of injections into an anaemic economy; equivalent, in the more extreme cases, to giving a bleeding patient a blood transfusion or giving a diarrhetic person electrolyte-laden fluid. We may say that a failing economy is haemorrhaging; or some other comparable metaphor.

We may think of the ‘body economic’ as the physiological infrastructure through which nutrients flow. Leakages (of nutrients) weaken (ie shrink) the economy unless they are balanced by injections. To sustain a growing economy, injections should slightly exceed leakages.

These six forms of ‘injection’ and ‘leakage’, serving as the valves of the economy, represent the government’s levers to politically manage ‘the economy’; just as doctors manage patients through prescriptions of nutrition, exercise, medicines, or surgery. Some levers can be pulled or pushed directly by governments. Other policy levers work indirectly, relying on incentivised responses of households and business firms. (The Reserve Bank also has its own very blunt and poorly understood lever; interest rates, widely believed to represent the price of money.)

Policy Stimulus versus Policy Constriction

Policy ‘doves’ have a bias (ie leaning) towards stimulatory circular-flow political management, and policy ‘hawks’ have a bias towards constrictive circular-flow policy. Economic liberals claim to have a bias towards zero political management of these levers; which means they prefer that inflationary booms and recessionary busts work themselves out, no matter how long it takes. Hawkish policies also rely to a degree on a process of eventual self-correction. Hawks and liberals tend to accuse doves of short-termism.

The present New Zealand government is arguably the most hawkish that this country has ever had; and the economists who influence policymaking are also unusually hawkish at present. (Myself, I would be classed as a policy dove; though that does not mean I’m an advocate of unmitigated economic growth.) The only contenders for a more hawkish previous government would be the National Government of 1990 to 1993, and the Reform-United Coalition Government in 1931 and 1932.

Stimulus takes place in a country’s economy when there is an increase in injections or a decrease in leakages. Constriction – collective austerity – takes place when there is an overall decrease in injections or increase in leakages. New Zealand’s major economic problem today is that it is too constricted, too anaemic, meaning that many people – but not economic liberals – are arguing for some form of stimulus to revive it. The kinds of stimulus most favoured by policy hawks are ‘tax cuts’ and export incentives.

Let’s look at the six valves in turn; valves which serve as policy levers.

For the entire last quarter-century, the New Zealand economy has received a substantial external stimulus through the export valve. This has impacted on – and continues to impact on – New Zealand mainly in the form of rising market prices for the commodities which New Zealand sells to the rest of the world. This stimulus represents remarkably good fortune, and is not a result of any recent cleverness on the part of New Zealand businesses or New Zealand governments. This accumulated export stimulus is comparable to the stimulus Norway received from North Sea oil; New Zealand has indeed been a ‘lucky country’, arguably more so than Australia. (Australia may have managed its luck better.) Some countries’ governments offer export incentives as a stimulus; generally New Zealand doesn’t, although it promotes exports through free-trade agreements and the like.

An export-based economy does best when the export revenues take the ‘scenic route’ though the body economic (and geographic and demographic), rather than the direct route from exports to imports; just as the corporeal body works best when the nutrients take the scenic route through all the different anatomical bits, and not the direct route from the mouth to the large bowel.

The New Zealand economy has incurred a huge counter-stimulus from the import valve. Generally, the humongous import leakage has exceeded the generous export stimulus. Thus, ‘net exports’ has been a counter-stimulus for New Zealand; perhaps more so this year with higher petrol and diesel prices, though import volume growth is well down. The main drivers from 1985 to 2025 of the very high levels of imports have been both an overvalued New Zealand dollar –caused in large part by the speculative carry trade from 1985 to 2020 – and fortuitously rising export receipts.

We note that the direct restriction of imports is a valid way to stimulate a country’s economy; though not a fashionable way. Most capitalist countries recovered in the late 1930s – from the Great Depression – through import-restricting policies reviving domestic markets; this is not widely acknowledged by economists today. New Zealand, however, largely recovered from that depression before it moved in December 1938 to restrict imports; though the rationing of imports from 1938 did help to stimulate New Zealand’s post-war infrastructure growth.

New Zealand’s recovery in the mid-1930s came from other sources: essentially currency devaluation in 1933, and the early recovery of the British market facilitated by Britain’s 1931 devaluation and its evolving system of empire tariff protection. Also from an easy monetary policy in 1936, following the creation of the Reserve Bank in 1934, enabling large-scale government and private investment in housing.

The investment valve works mainly through business confidence, and represents capital rather than current spending. Increased capital spending (debt- or equity-funded) is undertaken to generate future benefits rather than present benefits. In the simple circular flow description, investment spending is undertaken by business firms. Government investment on infrastructure and housing is also an important stimulus, which is covered in basic textbooks mainly under the government spending valve (see below).

The investment valve was emphasised by John Maynard Keynes in his 1936 General Theory. Keynes coined the term ‘animal spirits‘, meaning that businesses could become spontaneously optimistic prior to an increase in spending on their products. One could say that at present, in the global economy, there’s high animal spirits in the AI industry. A few years ago, there were high animal spirits in the military-hardware industry; but now that ‘big-gun’ industry is driven by actual sales rather than by anticipation.

Business surveys in New Zealand suggest that business confidence remains low (albeit uneven) in New Zealand. The reporting of business confidence is problematic, because, when business confidence is very low, it may nevertheless be increasing. We tend to report whether it is increasing or decreasing, not whether it is high or low. On balance, business confidence in New Zealand today is acting as a constriction or counter-stimulus on the New Zealand economy. The business investment valve works through increased business borrowing (or spending of retained earnings, or sharemarket floats); generally, by businesses incurring more debt or other liabilities which they plan to service out of future sales.

Looking at the saving valve, high levels of saving are a leakage; by definition, more saving means less spending. Saving means ‘non-spending’. So, a choice by households to decrease present spending leads to a process of austerity or constriction – a diminished flow making the national waka (‘economic ship’) leak more, not less; a set of choices more appropriate for an obese economy than for a lean economy. More saving can only be beneficial in: (a) an overstimulated economy; or (b) in an economy where the extra saving is matched by more spending through one of the other valves, where extra leakage is matched by extra stimulus.

We may note that a policy making it easier for people to withdraw KiwiSaver money before savers are aged 65 is a form of stimulus; it’s dissaving when people respond to that incentive, and spend their savings early. A policy to raise the ‘retirement age’ to say 67 is a leakage policy (a counter-stimulus), in that it means that more savings – savings of 65 and 66 year-olds – are deducted from the circular flow. We note that many New Zealand households counter the austerity of KiwiSaver by borrowing more funds (eg from credit cards, or parents) to pay for consumer goods otherwise unavailable to them.

Compulsory non-spending creates bad financial habits, by requiring households to counter this restriction by incurring more debt. Borrowing money to counter the austerity of forced saving is the antithesis of true financial literacy and freedom. KiwiSaver is a device through which ‘Kiwis’ become two-time customers of the finance industry, both by putting money into KiwiSaver accounts, and by borrowing more money to pay outstanding bills resulting from contractually-deducted savings.

The first-tier of extraction is the higher level of profits to financial businesses made possible by governments granting them a captive market. The second-tier is represented by the eventual destination of those funds.

Repaying debt is a form of saving; sometimes contractual saving, sometimes discretionary saving. Increased debt repayment is additional leakage from the circular flow of the economy; a counter-stimulus. Paying interest – servicing debt – is a funds transfer from debtors to creditors; that process amounts to a leakage from the circular flow – from the body economic – if the interest payments diminish overall spending, meaning that the recipients of that interest save it rather than spend it.

Reduced saving – dissaving – is a stimulus, and it can take place in ways we don’t often appreciate; for example, through increased consumer debt, increased withdrawals from savings’ accounts, retirement of term deposits, or from the sale of assets such as shares, bonds, gold, or real estate. The so-called wealth-effect, which provided buoyancy to the New Zealand economy in the late 2000s and in the 2010s, arose from households incurring more debt, borrowing more. More consumer debt secured against rising real estate prices, was the form of dissaving which kept the New Zealand economy in stimulus.

Additional spending through the government valve is a stimulus; ‘unfunded’ government spending is directly injected into the circular flow, unmatched by funding tax increases. This most likely happens through government borrowing, which initially increases government debt; debt which is serviced and repaid by the revived circular flow.

(Japan, with around 250% of GDP as government debt, has government deficits every year, yet its government-debt-to-GDP ratio is falling. Italy is even more striking. From 2020 to 2023 its government debt ratio fell from 154% to 134%, yet in each of those years its fiscal deficit- its additional borrowing – was between 7% and 10% of GDP. Subsequent to getting close to fiscal surplus, after 2023, Italy’s government debt increased to 137%. A government policy of ‘getting to surplus’ commonly increases that government’s indebtedness.)

Commonly, government spending is split – in an important accounting sense – into government investment (capital spending such as physical infrastructure), and government consumption (such as spending on administration, education, healthcare, military capacity, and on prisons and courts). The divide can be artificial; for example, education is often cited as the acquisition of human capital; though we should note that the actual purpose of human life is not simply to be an increasingly productive labour input into the national economy.

Conventionally, the main purpose of debt is to fund capital spending. As most government spending is properly understood as capital spending, governments should not be shy about debt finance. The boost to the circular flow from such spending induces substantial amounts of taxation revenue. But spending on wars of aggression should be financed through direct taxation; that would make capricious wars less popular. Bombing other countries does not generate government revenue in the way that boosting education and healthcare does.

New Zealand’s present predominant political-economy narrative is that more government borrowing and more government spending is in some sense ‘bad’. That narrative – which, in isolation, promotes anti-growth constriction rather than pro-growth stimulus – doesn’t adequately spell out where offsetting stimulus should come from. (Though, implicitly, the favoured offsetting stimulus is usually a mix of ‘tax cuts’ and private borrowing.)

The final ‘valve’ – the final policy lever in the body economic – is that of net taxation. Increases in taxation are constrictive; decreases in taxation are stimulatory to the extent that they are spent rather than saved. Under present taxation structures in most countries, the principal beneficiaries of taxation reductions are those households in the top income deciles. The stimulus of such tax cuts is blunted by the fact that people already with lots of purchasing power often do not spend much of their increased disposable income.

There’s a more nuanced (but very significant) problem. When already-rich people receive pecuniary windfalls, they spend extra on luxury goods rather than on wage goods. Wage goods are the kinds of goods and services purchased by everyone and produced at scale. Industrial capitalism is predicated on mass-production; on the process of keeping unit costs low through economies of scale. When we increasingly rely on the very rich to maintain the circular flow of spending and income, they buy personal services, luxury travel and hospo (‘hospitality’), and bespoke jewellery and fashionwear. When the new rich buy disproportionately more bespoke stuff, which is not produced at scale, increased luxury spending undermines the industrial system which made the lovers of luxury rich in the first place.

A more practical and equitable version of stimulus by reducing net taxes would be to raise benefits. This would be an easy matter if there is a UBI (or other form of universal income) in place; just borrow, raise the level of universal income payable, and collect the resulting income and expenditure taxation revenue. Otherwise, this stimulus is a complex matter of navigating disjointed social income mechanisms, such as Superannuation, Job-seeker Benefits, Student Allowances, Working for Families and/or Accommodation Supplements.

Today New Zealand needs a second stimulus, in addition to reliance on rising export prices. If New Zealand households increases their KiwiSavings, a constriction to the body economic, then New Zealand needs an extra additional stimulus to counter what would otherwise be an increasingly leaking domestic economy.

A Fourth Pair of Valves

In relation to countries’ foreign transactions, there are two more ‘valves’ – opportunities for leakage or injection – in addition to exports and imports: foreign financial inflows and outflows. These are commonly called ‘foreign investment‘, but they are quite different from the investment valve described above.

When New Zealanders sell assets (especially financial assets such as shares or bonds) to foreigners, it’s an inflow to New Zealand’s circular flow; a stimulus, an injection, for New Zealand. The must ubiquitous example for New Zealand was this country’s participation in the carry trade from 1985 to 2020; it was the carry trade which caused New Zealand to have permanent annual deficits on net exports, despite highly favourable export prices.

When New Zealanders buy such assets from foreigners, it’s an outflow from New Zealand’s circular flow; a counter-stimulus, an anti-stimulus. An increase in purchases of foreign assets represents a domestic leakage. This is what both Labour’s and National’s KiwiSaver policies promise to do; they promise to haemorrhage the present New Zealand economy.

There’s a counterpoise. When assets generate a yield – for example, interest – there is a flow in the opposite direction. An increase in interest (and similar) payments to foreigners represents a leakage; an increase in interest payments from foreigners represents an injection. This last part today relates to present yields from international financial investments made in the past. Interest payments to foreigners are treated in the accounts as equivalent to imports; interest receipts are treated as exports.

KiwiSaver foreign financial investments are expected to compound overseas for decades. Meaning that the advertised counter-inflows into the New Zealand economy are expected to peak in the 2060s. And those inflows might not happen. British and French holders of Russian bonds in 1914 did not receive any interest at all, let alone compound interest; rather, they received practically noting at all on the liquidation of their ‘investments’.

(We should note that much of the present portfolio of the New Zealand Superannuation Fund – New Zealand’s sovereign wealth fund – is equivalent today to such Russian bonds in the 1900s. And on the matter of compound interest, I heard last Monday Sam Stubbs (of Simplicity Finance) – refer Sam Stubbs reacts to Labour’s KiwiSaver policy, RNZ 14 Sep 2026 – mentioning “the power of compound interest” in his argument that Labour needs to extract even more than it is promising to do; Stubbs’ comments were divorced from the economic growth fundamentals which make the real realisation of compound interest possible in some circumstances.)

These transactions – relating to financial capital crossing international borders, crossing from one currency into another – are neither leakages nor injections for the world as a whole. For the global economy, there are just four circular flow ‘valves’: investment (in its economic rather than its financial meaning), saving (meaning ‘non-spending’), spending by governments, and taxation by governments.

When the global circular flow is in some semblance of balance, more saving by Kiwis means more spending by some other party – in New Zealand or overseas. Such other parties may be households, businesses, or governments.

KiwiSaver Compulsion

Both Labour and National are advocating larger KiwiSaver deductions which will become fully compulsory; today KiwiSaver deductions are only compulsory for the majority of the population who have previously opted in. This makes such deductions tantamount to a tax which is paid to funds’ managers rather than to the Treasury.

The basic (fiscal) social contract is that income-shares extracted by the collective (ie government) as taxes are paid to the collective, for the purpose of collective well-being.

Tax-equivalent extractions paid to funds’ managers break this social contract. They represent the worst of both worlds. These circular flow leakages from households do not go to government; in all likelihood they don’t facilitate business investment either. Increased net investment requires positive ‘animal spirits’; significantly positive business confidence. These income deductions largely go into the pockets of people selling assets, funding the consumption of upper income decile households; with perhaps half of these already-rich consumers not being New Zealand residents.

Bernard Hickey’s recent Kaka podcast on YouTube – Hickey being a widely respected independent financial journalist in New Zealand – contains a chart (8′ into podcast) labelled “61% of KiwiSaver contributions invested overseas”. The chart shows a big jump in overseas ‘investments’ in June 2026 compared to March 2026. Hickey goes on to note that “it’s worth remembering here that that’s a large chunk of money which will no longer be invested or spent into the New Zealand economy … we are looking at [61% of] $24 billion dollars. … When you withdraw that money from New Zealand circulation it needs to be replaced by something else, or you’ll get a depression [my emphasis] or at least a contraction in your GDP.” That’s three percent of New Zealand’s present GDP; a massive counter-stimulus.

Much of this substantial circular flow leakage represents purchases of assets on the world’s primary markets; meaning that it will be spent as new business spending (especially by the Magnificent Seven who are the darlings of the world’s sharemarkets – such as SpaceX building rockets to fly to Mars and AI hyperscaling, or Super PAC election bribery in the United States, including the huge Crypto-funded PAC Fairshake and the Leading the Future AI sponsored Super PAC mentioned on Al Jazeera’s Let’s Focus, What makes these midterms so pivotal? 15 Sep 2026, from 7′ into video). And on hyperscaling, note this What’s at stake in AI’s trillion-dollar gamble? David Rotman, MIT Technology Review, 15 Sep 2026.

In other words, New Zealand’s KiwiSaver contributions are increasingly ‘feeding the beast’; or the ‘beasts’ that are United States’ big tech in particular and the world’s stockmarket bubble in general. A growing number of financial commentators see a major global financial crash coming soon; compulsory levies which feed the beast – such as KiwiSaver deductions – forestall such a crash, but only exacerbate it when it happens.

A small part of this new ‘foreign investment’ by New Zealand households will be advanced to foreign governments seeking to boost their national economies. Much new government borrowing – especially in the Global South – is non-discretionary; it’s to keep ‘the lights on’ or the schoolteachers paid. While many poor countries’ governments borrow money from the world’s financial markets, often at excessive interest rates, the poorest countries – and the richest countries – are net ‘foreign investors’. Funds are increasingly leaving New Zealand because of the lack of domestic borrowers willing and able to compete for these funds; New Zealand is increasingly behaving like a poor country lacking investment opportunities outside of the export-oriented sector.

So

A lack of domestic borrowing in New Zealand – except for distress borrowing by overstressed households, and speculative borrowing – is the missing piece of the New Zealand narrative. Too many New Zealand businesses are practically insolvent – a balance-sheet recession – and central government chooses to minimise borrowing, preferring to preside over an increasingly leaky body economic; favouring a sinking waka with a bit of top-end glitter over a proud sailing waka.

KiwiSaver expansion increasingly represents the symptoms of a failing economic nation. But New Zealand is changing fast; and will recover, as an increasingly Asian nation state, hopefully still with its underlying personality intact.

About the writer:

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

Keith Rankin: September 11, 2026 – Yesterday, much of the corporate and government media ran a story about AI [Artificial ‘Intelligence’; not AW, Artificial Wisdom]. (In some contexts, ‘intelligence’ is another word for ‘stupidity’.) The story is about how industry insiders are predicting that there is a ten percent chance that AI will kill all humans within a decade (or, even worse, “by the end of the decade”).

Here is the RNZ version of the CNN story: ‘Gambling with our lives’: Another AI employee quits over safety concerns. The story on ThreeNow News showed armies of robots looking anything but intelligent, but with humanicide on their minds.

It is not clear how AIs are going to kill us, but its unlikely to be through mindless humanoids going on a shooting spree. They will be more ‘clever’ than that.

What is strange is that, for anyone following the war between Russia and the E3 proxy that is Ukraine, the chances of an apocalyptic nuclear exchange in the next ten years would appear to be somewhat higher than 10%. (The latest news seems to be that Canada is having a ‘me-too’ moment, seeking to create an A4 [Atlantic Four], volunteering itself as a nuclear target. See, among many other stories largely absent from the New Zealand media, Canada pledges support for Ukraine air defense as Zelensky visits, France24, 10 September 2026.) The way that ‘The West’ is presently taunting the world’s equal-greatest nuclear power, Russia, daring it to deploy its nuclear arsenal, seems to me far more scary than any story about AI. Just as bad, if not worse, is our mute denial of this threat.

On this basis, there would appear to be a race going on to see which of these can first commit species suicide: Nuclear Weapons or AI. (There is of course a dreadful possibility that the answer is ‘both’; that AI does the deed through nuclear weapons; but I’ll ignore that.)

My key point is that a nuclear apocalypse would be more than a single-species suicide: it could be a murder-suicide that would destroy all life on Earth; indeed all life in the Universe if Earth is the only place with life.

So, could an AI holocaust be a good thing? The answer has to be ‘yes’, if AI gets there first, killing only all humans and not all life.

About the writer:

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

Keith Rankin, 10 September 2026 – Last Sunday’s state election in Germany was particularly interesting from an MMP point of view, as well as from a ‘direction of politics’ perspective.

In the chart above, results sourced from Wikipedia, I have made some changes to the parties’ colours, so as to better align with New Zealand’s colour schematics, and so as to show the different party-blocs more clearly. In particular, I have reversed the colours for the AFD and the CDU.

The chart shows that the four established ‘non-far-right’ parties gained 39 seats, the same as the ‘far-right’ AFD. It means that the relatively new BSW party – the party which got 4.98% of the vote in last year’s federal election – now has the balance of power in Saxony-Anhalt.

The Eastern Bloc

Not a bloc of parties, this is a bloc of both physical and political geography. The Eastern Bloc is most of the former DDR (East Germany), which was emancipated by the West in 1989 when the Walls – the Berlin Wall and the Iron Curtin – came down. The exception is the political city of Berlin, which – like most national capital cities – is better known as a bastion of the liberal-left (aka the soft-left).

The liberal framing in Germany is that Germany’s Eastern Bloc is now becoming ‘pro-Putin’. Saxony-Anhalt in particular is considered by the Berlin elite to be a ‘fly-over state’. This evolving alignment with Russia is an interesting irony, because this is the part of Germany ‘liberated’ from Soviet Russia.

Magdeburg – the state capital of Saxony-Anhalt – is considered by the liberal-left to be Germany’s equivalent of Whanganui; and, indeed, it is a river city. (For me, Magdeburg was a ‘train-through’ rather than a ‘fly-over’ city. In 1974 I took a return train-trip from Hanover to Berlin; indeed East Germany was then an amazing place for ‘steam train buffs’. The trains from West Germany were, practically, sealed trains; like Lenin’s train in 1917. I remember the rather intimidating East German border guards waking everyone up at 3am. While I travelled at night in both directions, I do remember dawn over Magdeburg with a vista over the Elbe river; the river which culturally dominated, and traditionally divided, Germany. The three states with ‘Saxony’ in their names are the states of the Elbe; and of course Saxony – especially Lower Saxony – represents the origin of the English [Anglo-Saxon] people.)

There is another state election in the Eastern Bloc scheduled for 20 September, in Mecklenburg in the northeast.

The Liberal Bloc

The four parties in Germany which now constitute the Liberal Bloc are the four parties which, to a greater or lesser extent, have governed Germany since 1949. (And the SPD was Germany’s most significant governing political party in the pre-Nazi era.)

The word ‘liberal’ is today overused to the point of being meaningless. Nevertheless, in my context here, we can take that word in the context of its present geopolitical meaning; that meaning of ‘liberal’, in a nutshell, is ‘anti-Putin’. (We note that the words ‘liberal’ and ‘conservative’ are not opposites today – neoliberalism and neoconservatism are essentially the same – and they have not always been opposites in history, either. The Australian Liberal Party is, and always was, a conservative party. The CDU – National in Germany, for a New Zealand context – can be understood as a liberal conservative right-wing party; whereas the AFD is non-liberal conservative right-wing, commonly labelled as ‘far-right’.)

In Saxony-Anhalt the national ruling parties – combined – got just 38% of the vote and 37% of the seats. (The discrepancy arises because the FPD – now equivalent to New Zealand’s ACT party- did not reach the 5% party-vote threshold.)

The four liberal parties operate a firewall against the ‘far-left’ as well as the ‘far-right’. Hence, grand coalitions have become normalised in German politics; the firewall has meant that the SPD has preferred to govern with right-wing parties than with Die Linke. In 2021, the SPD (like NZ Labour) formed a coalition which included FPD (like NZ ACT). [We remind ourselves that, in the New Zealand context, ACT was a breakaway from Labour, not from National.]

The firewall, as it has been generally applied, operates against parties which – in Saxony-Anhalt – have a combined total of 52 out of 83 seats. While the liberal parties may be softening in their attitudes towards Die Linke, it is not at all possible for Die Linke to align with the conservative CDU, the largest non-AFD party in the new Magdeburg parliament. Further, to form a government which excludes the AFD, the BSW also would have to join with the liberal parties.

The geopolitics underpinning the present political environment in Germany

In terms of geopolitics, the Liberal Bloc labels all parties which are not ‘anti-Putin’ as ‘pro-Putin’. It’s a case of, ‘if you are not with us you are against us’. Die Linke, rather than vocally opposing this framing, is now claiming to be both ‘anti-Putin’ and ‘pro-peace’. The BSW and AFD parties reject the liberal framing; they label themselves as ‘pro-peace’ and the liberal parties as ‘pro-war’. The BSW and AFD are more nuanced than their liberal opponents; they point out that there are three positions – not two – re the present European war. Russiaphobic, Ukraine-phobic, and neutral. They both favour neutrality.

The geopolitical debate – and it is the geopolitics as well as the economy which has driven this election result – is being conducted between ‘realists’ and ‘liberals’. The realist position favours an Eastern Europe which is neutral rather than western-aligned.

The philosophical opposite of ‘realism’ is ‘idealism’. Realism accepts the world as it is, warts and all, and seeks for peaceful resolutions which include the maintenance of balances of power; a multipolar world order, if you will. Idealism, in philosophy, sees the current world as an imperfect copy of an achievable ideal world; that the historical process is one of making – progressively – a world which is decreasingly imperfect. Reality supposedly evolves towards a unipolar perfection.

Liberal geopolitics is an example of Darwinian idealism; in particular where the good guys are ‘Democracies’ (with mainly European individualist values) and the bad guys are ‘Autocracies’ (with mainly Asian collectivist values), and – in order to achieve less imperfection – the Democracies must prevail in a power struggle against the Autocracies.

In liberal idealist geopolitical reasoning, if you are not pro-Democracy then you must be pro-Autocracy. And, to these idealists, a better world is a world in which Autocracy is eventually exterminated. (On the frontline is Jerusalem which is seen by many in the West – especially many ‘liberals’ in Germany – to be populated by a mix of liberal Eurosupremacist ‘good-guys’ and Asian autocracy-supporting ‘bad-guys’. This issue clearly separates Die Linke from, say, the SPD; pro-Palestinian Die Linke is not liberal in this sense.)

In 2026, however, it’s all a bit confusing to Germany’s shrinking liberal coalition; they look across the Atlantic Ocean and observe that global Democracy – the ‘free world’ – is currently led by a bullying unimpeachable narcissist autocrat; an autocrat who congratulates their AFD opponents, understood by these liberals as the growing domestic wing of the Enemy.

The Left Bloc

This is Die Linke and BSW. BSW split from Die Linke a few years ago, and is seen as representing the former ‘Communist’ wing of Die Linke. This split means that Die Linke is more acceptable to Germany’s liberal ruling class than is BSW. Further, on the left, BSW was relatively popular in the Eastern Bloc in the 2025 general election; Die Linke was more popular in the (larger) former West Germany. (See here for a conversation with the leader of the BSW: Sahra Wagenknecht: Europe Subjugated & Propagandised for War, The Greater Eurasia Podcast, 2025.)

So there is no real Left Bloc any more; just as AFD and FDP – parties well to the right – do not in any sense form a right-bloc.

To the liberals, especially the Berlin establishment, a nearby AFD state government supported on confidence by BSW would be tantamount to a Fascist-Communist alliance. On closer examination, however, the AFD leadership has more in common with Italy’s Giorgia Meloni than with Adolf Hitler. And the BSW has more in common with John Maynard Keynes than with Karl Marx; it’s economically ‘left’ and socially conservative (much as the New Zealand National Party was in the 1960s and 1970s).

There is an interesting framing, however, from the young German left; that the AFD is not really the right-wing ‘peace party’ which it proclaims itself to be, and that the establishment CDU has an agenda to push the peace-vote towards the Israel-sympathetic AFD and away from the Palestine-sympathetic left-wing parties. The supposition is that, sooner rather than later, the CDU will drop its liberal mask, form an alliance with the AFD; and that that alliance will then purge itself of its peace-favouring faction. (Refer How the AFD is using Israel to Rebrand Germany’s Far Right, BreakThrough News, 9 Sep 2026.)

Finally

Germany is a country undergoing societal collapse – as in the Great Depression of 1930 to 1933 – and which is only keeping its economy ‘above-water’ by resorting to militarism. In the 1930s, the liberals failed big-time, and the population turned to the far-right for solutions. This time, it looks like the failing ‘liberals’ may be morphing into a new-far-right. The SPD – Germany’s equivalent of New Zealand’s Labour Party – is becoming increasingly irrelevant in the process.

About the writer:

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

Keith Rankin, 8 September 2026 – Prime Minister Christopher Luxon has a complicated relationship with historical truth. His reputation is that he has little sense for history; this can make him come across as more tone deaf than he means to be.

A deeper problem may be that his generation (X) and the two following generations (Gen Y and Millennials) – the generations which predominate in the corporate media – are generally weak on historical nous; this means that New Zealand’s politicians tend to get away with egregious historical and statistical gaffs.

Part of the problem is that two humanities’ disciplines – languages and history (especially world history and economic history) – have been increasingly undervalued in the New Zealand education system. Too many New Zealanders in the media come across as culturally and factually sub-literate.

Communist Russia in the 1990s?

Three News from 7 September: (8′ in; originally from a Newstalk ZB interview with Mike Hosking) reports Mr Luxon saying: “It’s sounding a bit like Communist Russia isn’t it; I mean some of us lived through the 1990s or grew up in that era; it sounds very Soviet to me.” (The story was in relation to the Green’s proposed KiwiMart; see this from National and this from Green.)

Now Mr Luxon could have chosen the 1920s, the 1930s, the 1940s, the 1950s, the 1960s, the 1970s, or the 1980s; when ‘Communist Russia’ (aka the Soviet Union) actually existed. But he chose the 1990s, when Russia was arguably the most capitalist country in the world! That was the decade, after the fall of the Soviet Union, when the Russian oligarchs emerged and plundered Russia’s public infrastructure; subsequently they bought up London’s Belgravia and the nearby Chelsea Football Club.

And, if Communism is or was a problem for him, why was Mr Luxon cosying up to the Communist Party leader of Vietnam, just last month. (And see RNZ: Vietnam’s ‘most powerful leader’ since Hồ Chí Minh visits New Zealand, 13 August 2026.)

I accept that Mr Luxon probably meant to say the 1980s rather than the 1990s, but the parts of the 1980s which he may have remembered were the years of glasnost and perestroika; not the years of Josef Stalin, or even of that ‘cosy’ Russian Bear, Leonid Brezhnev. (Brezhnev, with US President Richard Nixon, ushered in the brief Cold War détenteof the early-mid 1970s.)

I am nearly 20 years older than Luxon, but I clearly remember (ie not just from books or docos) the difference between the 1960s and 1970s; the decades when I was the same age as Mr Luxon was in the 1980s and 1990s. (Maybe I’m a memory nerd? I still clearly remember shaking Walter Nash’s hand at the 75th Jubilee of the Paekakariki School in 1961. Maybe I wasn’t actually there, because I do remember the 1960s!)

Trans-Tasman Migration: facts, but not the whole Truth

This is RNZ’s Jo Moir and Ingrid Hipkiss reviewing an interchange with Mr Luxon relating to Trans-Tasman migration:

Hipkiss: “… National’s policies, he says, will keep people in New Zealand. So do you think this will make more Kiwis stay; because they’re still leaving?”

Luxon: “No, that’s wrong, I’ve said to you many times; we’ve had a 14% growth in Kiwis coming home from Australia … and Kiwis’ leaving is declining.”

Hipkiss: “So we’ve got 19,000 coming back; 47,000 still leaving though.”

Luxon: “I’m happy to send you the detail, but we’ve had a 14% …”

Hipkiss: “But net migration is 28,000.”

Luxon: “I’m happy to send you the numbers.”

Hipkiss, after Jo Moir enquired with his office. “What has the PM said?”

Moir: “You were both right … but the important number was the net migration … which shows an [ongoing] significant loss … he obviously made the comment that you were wrong [well he didn’t, but he sure gave the impression that he rejected Hipkiss’ figures] … I went back and asked what is it that he thought he was responding to? … I got a statement back saying ‘the point the PM was making is that it’s wrong to assert that the number of Kiwis leaving New Zealand is growing’; now that’s a point you didn’t make, but the spokesperson said that that’s how the PM interpreted your question … a few people commented that they were a bit surprised at the tone from the PM…”.

Hipkiss: “So, if none of the numbers were wrong, what is the strategy behind what Christopher Luxon was saying?”

Moir: “So basically he’s answering the bit of the question he wants to … and ignoring the rest of it … now this isn’t a new strategy … it doesn’t suit the government’s narrative to be talking about [a net] 28,000 Kiwis ditching New Zealand for Australia, so it’s a case of finding a way to only talk about [bits of the issue, not the nub of the issue] … which leads to obfuscating and evading other questions.”

The famous quote attributed to former United Kingdom Prime Minister Benjamin Disraeli was: “There’s lies, damned lies, and statistics“. Indeed this reputation is why the quoting of facts is commonly interpreted as the equivalent of a damned lie.

The factual statistics presented by Mr Luxon were clearly intended to deceive; so Mr Luxon (or his office) were being dishonest. The method of deception is to tell a bit of the truth but not the whole truth. Mr Luxon’s apparent guilt was accentuated by his perception that Ingrid Hipkiss was playing the same game; his office argued that he interpreted her statistical facts as being deceptive in the same way that politicians know they are routinely deceptive. But she wasn’t; her fact was the more important one. She just wanted the Prime Minister to respond to that core fact, which was the 28,000 net emigration figure.

The whole episode revealed the deceptive intent of the Prime Minister’s office; and showed that Mr Luxon has a rigidity about him; a preference to double-down rather than to fess-up when he discovers that he’s been caught out being ‘economical with the truth‘.

Congratulations to RNZ for their follow-up in this instance.

Making Sense of the point that Mr Luxon was trying to make

Yes, it’s true that there has been an increase in one-way travel by New Zealanders who were residing in Australia. But that need not indicate that New Zealanders in Australia are increasingly dissatisfied with life there. All it says is that there are now more New Zealanders in Australia; which means that, say, 5% of New Zealanders moving from Australia to New Zealand must be a bigger number than it was before.

Likewise, Mr Luxon’s mention that the number of New Zealanders going to Australia is decreasing doesn’t necessarily mean that the desire on the part of (especially young) New Zealanders to go is decreasing.

There are two issues here. The first is that emigration has both push and pull explanations. If the New Zealand push factor does not change but the pull factor from Australia diminishes, then that will see fewer emigrants, despite an ongoing high desire to leave New Zealand.

The second issue is that a single emigration follows something like a ‘bell curve’ over time, rather than a uniform pattern. Imagine the four years from 2023 to 2026; and a certain cohort of young New Zealanders coming to perceive that they would rather be making a go of life there than here. The actual departures start with a trickle, then accelerate as people make the various necessary adjustments and arrangements. Eventually, most of those with the greatest motivation to go have already gone, meaning that – after a while – that emigration impulse becomes less intense. Fewer people leave when most of those most wanting to leave have already left.

Conclusion

Our present generation of political leaders seem to find the known truth – the known knowns – a source of political tension and defensiveness. The reason that they don’t have the skills to negotiate facts when challenged is probably because the corporate media has hitherto done a particularly inadequate job of challenging them. Good on RNZ, this time, for ‘stepping up to the plate’.

About the writer:

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

Keith Rankin, 1 September 2026 – There is a lot of recent material on YouTube about a coming global financial crash. The text is the bond markets in, especially, the United States and United Kingdom. Medium and long-term interest rates will soar, it is alleged; these rates are set by the market, not by central banks. The subtext is that masses of money will flow from bond-markets into already-inflated sharemarkets. And that governments – if they are not already – will become helpless, hapless, and hopeless bystanders.

Refer The Bond Market Just Broke – A Financial Crash Could Be Next, Eureka UK. This is an orthodox commentary.

4’16”: “You have two arms of the same government trying to do the opposite things at the same time. The Treasury wants borrowing costs down, because it is drowning in interest payments. The Central Bank is worried about inflation, and the standard tool for fighting inflation is high interest rates. Both cannot win.” … 13’5″: [Joseph Brusuelas] “Governments will be forced either to tighten their belts or let inflation run riot. Mortgages will get more expensive. Investment in roads, schools and hospitals will have to shrink. Taxes will have to rise. Businesses will struggle, jobs will be lost, economies will falter.” [emphases mine]

The problem is being presented as a contradiction whereby the Treasury does not want higher interest rates while the Bank of England does want higher interest rates.

The solution is presented as the elected Government [represented by Treasury] having to bow down to the unelected Central Bank. ‘You are wrong, we are right, eat that!’, the Bank might proclaim.

The problem is presented as excessive government spending raising ‘borrowing costs’. In other words, the commentators – the Eureka UK presenter is a typical commentator – resolve the contradiction without examining it. The presumption is that a non-austere Treasury cannot have what it wants, and the Central Bank must have what it wants.

The presenter ‘concludes’ that there will be a financial crash and that: “the underlying cause [is] governments spending far more than they raise”. She does not once attempt to address the real underlying cause, the verifiably false narrativeabout ‘inflation running riot’ if central banks do not manage interest rates with an upward bias.

The unexamined parts of the conundrum are those parts I have emphasised: ‘The standard tool for fighting inflation is high interest rates’ and ‘or let inflation run riot’. There is simply no evidence that fighting a general inflation with high interest rates works, or that any of the inflations in western capitalist countries this decade have been defeated by higher Bank interest rates.

The ‘standard tool’ for fighting rising prices doesn’t work; further, it seems that there is no other tool. Clearly, if there is only one tool which doesn’t work the best thing is for the would-be inflation-fighter to do nothing. So, if the Central Bank stops fighting inflation – or ‘inflation expectations’, a phenomenon which may or may not be a phantom (or a bogey) like a psychosomatic pain – with high or rising interest rates then the whole conundrum goes away.

If we resolve the contradiction by requiring the Bank of England rather than at the Treasury to change its policy direction, then the dire fiscal prognoses itemised need no longer be a matter of concern.

This is a contradiction of the commentators’ – ‘expert’ and otherwise – own making. There is too much at stake; wiser heads should be sought to contest the pedlars of austerity who transfix governments.

The above notion of ‘inflation running riot’ is a farce, and needs to be called out as such. As noted in my Context: The New Zealand Residential Property Market yesterday, New Zealand (and other countries) had record low interest rates in 2019. Far from running riot, both inflation and house prices were subdued. And in 2007/08, with interest rates at 15-year highs, in New Zealand at least, both CPI-inflation and housing-inflation were ‘running riot’.

About the writer:

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

Keith Rankin, 31 August 2026 – Yesterday, RNZ played this episode of Context – Property Nation: NZ’s Housing Obsession, 27 August 2026. Contextis a podcast series in which well-known GenX audio-journalists Guyon Espiner and Corin Dann take a superficial historical journey on a topical social issue.

My first point here is that Espiner and Dann do what most commentators do; they conflate the urban real estate market (a land market) with the market for houses (a built market). The reason of course for this conflation is that both markets are substantially secondary markets – resale of developed land, resale of existing houses – in which houses and land are bundled together. It turns out that much of the history of housing is really a history of the financialisation of the land that houses sit on.

Good quality analysis will separate out the two components of this bundled retail market. But here I simply acknowledge that the dominant factor, historically, has been land prices. And I acknowledge the observation by Espiner and Dann that, as apartments feature more largely, that in itself is a matter of fundamental change in the economics of housing in New Zealand.

Having said this Espiner and Dann raised at least four further important points about what we may simply call the market.

First, that the market – especially in Auckland, New Zealand’s largest city – is in a prolonged bear phase; it’s been a falling market for four years, since 2022. Espiner and Dann underplayed the fact that, except for about eight months in 2021 and 2022, the housing market has been static or falling since 2017; that’s nine years ago. This skewed emphasis on the mini-boom of 2021/22 over the much more prolonged boom of 2012 to 2016 reflects, I presume, the story that Corin Dann in particular wanted to tell. I will come back to this first point, in my conclusion.

Second, that the pattern of the market which we have become used to is one of alternating periods of boom and stasis. Thus, the naïve wisdom which even serious commentators believed was that, if you stay the course, you cannot lose money on housing; a ‘wisdom’ especially applied to the Auckland market. While Espiner and Dann never really explained that ‘bull’ reality or its ‘bear’ successor, they at least acknowledged both realities.

I say “naïve” in particular because academics in finance should know that, in the long run, the fundamental market value of houses/land is the yield (ie, in this case, the rental value) of the asset. The most fundamental part of the rental value is the capacity of would-be renters to pay. If renters cannot pay more rent, sooner or later the market must stall.

Finance academics know that, in the medium term, market prices can outrun fundamentals because market players focus on ‘returns’, not just yields. Returns exceed yields when the expectation of capital gain is built into players’ expectations. We continue to have some important parties – especially the Labour Party – who have built-in expectations of capital gains in a market for which, in most years since 2017, there have been minimal or negative capital gains.

There are good reasons, in fact, to believe that the present correction to fundamentals still has a way to go. Further, there are good socio-demographic and financial reasons to believe that the lack of capital gains in residential property is a new structural reality. Cohorts of younger people are smaller and poorer; and the financial world has moved on to other more esoteric assets which players can game. (In this last sense though, we may note that after the next great depression – ie after the next global financial reset, the last reset began in the mid-1940s – when the next long cycle begins, there may be a return to real estate as a favoured asset. After the Black Death of the 14th century, land became very cheap.)

Third, Espiner and Dann uncritically parroted the industry-cemented narrative that the last boom – the mini-boom of 2021/22 – was solely a product of loose monetary policy. They should know that most phenomena have more than one contributing cause; and that when there are multiple candidates for the attribution of guilt, one or more of those contenders may not be responsible at all. Pursuing the model of guilty until proven innocent – and contemplating the possibility of innocence – is what we traditionally associate with totalitarian systems of ‘justice’.

In terms of the 2021/22 event – which was both a brief bout of real estate inflation and a slightly less brief period of annual CPI inflation above three percent – there were other causes.

Re the property market, there was the expectation that, by about 2021 or 2022, the market was due for a new round of capital gains; that is, regardless of monetary policy. (In most decades going back at least to the 1970s, the property market took-off in the years ending in a ‘1’ or a ‘2’. This is because the cycle, as widely understood by players, was a ten-year cycle. The cycle would be at its flattest from years ending in a ‘7’ to years ending in a ‘0’. For specific reasons, the property cycle was late to restart in the 1990s, but it did restart in 1993. In the 1980s, I was a party to a house purchase in mid-1982. It was $60,000. In early 1988 the house, with just a few added improvements, sold for $180,000.)

In 2021, it was only Aucklanders who were quarantined in their city, from August to December; though all New Zealanders were effectively detained in their country. And non-Aucklanders, far from the scourge of the Delta strain of the virus, were subjected to substantial pandemic policy overreach. There was a huge fear then that Covid19 mutations were escalating the pandemic, and that new money would be needed for New Zealand industry and the New Zealand government to invest in substantially-modified supply chains.

New Zealander households which had not faced income decreases – and there were many such households – had significantly fewer options about how to spend their incomes compared to in a normal year. There is no real evidence that a property boom in the second half of 2021 would not have happened if interest rates had been (say) two-percentage points higher.

Property bubbles are actually quite insensitive to interest rates. In the modern financial environment of floating and short-term mortgage interest rates, almost zero property investors in 1921/22 would have been expecting their interest rates to have stayed at their early-2021 lows. Players in the property market may be naïve; but not that naïve.

With appropriate hindsight, everything was in place for a new round of property inflation to commence in 2021, regardless of what the interest rates were at that particular point of time. Banks were flush, not only because of monetary policy. For a short while, they had few other customers they could profitably to lend to; their perception at that time was that business lending was more risky than property-market lending. And businesses, facing deep uncertainty, were cautious about taking on additional debt; the situation had the appearance of a balance-sheet recession, in which it is the role of government to become lead-borrower.

The real story about the 2021/22 property mini-bubble was not what started it, but what stopped it in its tracks. What happened was that, when the pandemic restrictions ended – pretty much all at once in January and February 2022 – banks quickly rediscovered their business customers; and saw that most were not insolvent. The pivot in the flows of money was determined by the changed state of the pandemic, not the interest rates which in New Zealand had been prematurely raised. Economic growth rebounded sharply in 2022, despite cost-inflation arising from both from the Ukraine-Russia War and from interest rate escalation. CPI inflation soon dropped, as interest rates also dropped. (Compare New Zealand’s recent CPI inflation with countries which kept their interest rates high.)

Fourth, Espiner and Dann mentioned that the property boom of the late-2000s happened despite rising interest rates. (Regrettably, they did not consider the possibility that the property bubble happened, at least in part, because of rising interest rates.) They did not dig deeper into this issue. Just as President Trump only seems to remember what the last foreign head-of-state or technocrat told him, Espiner and Dann used 2021/22 as a sample-of-one to form the basis for a much-repeated generalisation about a simple causal relationship from monetary policy to housing-market outcomes. The earlier examples were presented as contextual candy floss.

Consider the 2010s. Interest rates were low for New Zealand in the early 2010s, but high by international standards. The New Zealand Dollar exchange rate was overvalued, and the New Zealand economy was slow to recover despite improving terms of trade. Money moved into the property market after 2010 because punters thought it was time for a revival of that market and because banks still considered other forms of lending to be riskier.

Once underway, the market gained its usual momentum. The rise in interest rates in 2024 – at a time when European interest rates were falling to zero or less – failed to cool the property market, and also slowed down the economic recovery. Interest rates were lowered again in 2015, back to 2013 levels (OCR of 2.5%). In 2016 they were further lowered. It was really only in 2017 that the economy – with Steven Joyce as Finance Minister – that the economic cycle moved into a new expansionary phase. Interest rates continued to fall, bringing the OCR to just 1% in late 2019.

The historically low and falling interest rates from 2016 both revived the New Zealand economy and stemmed (ie not invigorated) that decade’s real estate bubble. CPI inflation remained at the lower end of the target band of one-to-three percent. In late 2019, the New Zealand economy had moved into its sweet spot of low interest rates, a stable (though still overpriced) property market, and low annualised rates of price increases. Low interest rates put an end to the property bubble by diverting money away from the property market and reviving the economy.

While theoretically low interest rates stimulate all types of borrowing from banks, in reality they mostly stimulate business borrowing and have least impact on real estate borrowing. Money is most pumped into real estate when interest rates are high, because banks are then less interested in other forms of lending, and because (in our world of flexible and short-term mortgage lending) real estate punters expect that interest rates will soon fall; property punters are interested in expected interest rates over the life of a mortgage, not just the interest rate on the commencement date.

Consider the 2000s. The New Zealand property market turned upwards in 2001/02, on cue, at a time of geofinancial and geopolitical turmoil. Interest rates were briefly ‘low’ after the 911 attacks (the OCR dropped to 4.75%!). By mid-2002, the OCR was back to 5.75%; that’s when the property bubble really got going. Following a brief fall to 5% in 2003, the OCR was steadily pushed up to 8.25% in the first half of 2008! As noted by Espiner and Dann.

In the years from 2004 to 2008, New Zealand’s tradeable economy tanked despite an improving terms of trade, the NZD was increasingly overvalued, and bank money was increasingly channelled into the property market because it had fewer other places to go. Much of this was New Zealand’s version of sub-prime mortgages, injected into the top end of the property market through finance companies such as Hanover. Almost all of those kinds of finance company crashed from 2006 to 2008, in what remains New Zealand’s greatest untold – or at least under-told – financial scandal. It was the high interest rates, and the ensuing increased concentration of money in property, which fuelled that devastating property boom.

Espiner and Dann presumed that that property cycle happened despite high interest rates; no, it was because of high interest rates.

The 2000s’ property boom was followed in New Zealand by only a mini-bust; conditions remained more conducive to money being fed into property than to ordinary businesses.

In the 1990s there was a sharp property boom confined to the mid-1990s. It started late in the wake of the economic devastation of 1991 and 1992. And it finished prematurely with the Asian Financial crisis of 1997 bringing interest and exchange rates down, soon reviving the real economy while disinflating the property market.

In the 1980s, the property market boomed on cue in 1981, at a time when CPI inflation was approaching 20%, meaning that properties were looking very cheap, and when interest rates – well below the inflation rate during a global economic crisis – pointed the way to reinvigorate the property market. After a pause in 1982 (when I bought that $60,000 house in Wellington) that market really ramped up in the mid-1980s, after the full introduction of Rogernomics in 1985; a package of financial deregulation, very high mortgage and other interest rates (like 20%), and a rising exchange rate making New Zealand an emporium of imports. The markets stabilised after the crash of late 1987 and early 1988, but neither the did economy nor the did the property market recover until election-year 1993.

Possibly the biggest property boom in New Zealand’s history happened in 1972 and 1973, with the big ‘favourable’ spike in the terms of trade and the revaluation of the New Zealand dollar, creating new previously unheard of opportunities to consume imports and to travel overseas. I was lucky in that I embarked upon my OE in 1974, when despite the crashing British financial markets, my New Zealand dollars were uniquely valuable on the world’s foreign exchange markets (and I put my money into US dollars and Swiss Francs rather than British pounds). The New Zealand property market had a longer than usual slump in the late 1970s, not because of New Zealand monetary policy, but because of a mix of world events and the rapidity of the 1972 and 1973 property boom.

Conclusion

New Zealand property market booms have never been driven by low interest rates compelling people to buy real estate. Rather, loanable funds have gone into real estate in large amounts when there was a lack of other compelling destinations for those funds; and when governments were reluctant borrowers despite a huge availability of loanable funds at favourable interest rates.

Our commentators Guyon Espiner and Corin Dann were good to make a number of important observations about New Zealand’s property past. But they made no real attempt to join the dots, to question the narratives they have repeatedly heard, or to understand the actual relationship between banking and real estate.

Coming back to Espiner and Dann’s central narrative about the housing market and monetary policy – a narrative which emphasised the 2021/22 mini-boom and subsequent reversion to stagnation or bust – the Reserve Bank must make new money available when it is likely to be needed. The Bank can ‘take horses to water – or water to the horses – but cannot make them drink’; if the money doesn’t get consumed by the horses which need it, it is more the unhydrated horses’ fault, not the Bank’s. In this case, the horses were the government – which could have borrowed the new money, not spending it all straight away – or the many businesses which were not yet in a position to recommence large-scale borrowing.

The New Zealand Reserve Bank did not make a huge mistake in 2021. It did what it had to do in an economic environment clouded in uncertainty. Yes, property borrowers got the money first; but the problem was that other parties were too slow to respond to the market signals being conveyed by the Bank.

It’s a convenient story for pundits today to attribute all our economic woes to the alleged Reserve Bank’s mistakes during the Delta-strain height of the Covid19 pandemic. That story of piling into the then Bank does no credit to today’s uncritical commentators, and perpetuates the problem of economic policy today being founded on a mix of historical unawareness and myths derived only from the very recent past.

About the writer:

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

Keith Rankin, 25 August 2026 – My sense is that, noting both the proposed social media ban and the India New Zealand Free Trade Agreement, Christopher Luxon – leader of the National Party and Prime Minister – would be more comfortable working with Labour on a longer term basis than with New Zealand First or Opportunity. But probably only if National is ‘top dog’ in such a grand coalition.

Ireland (STV) and Germany (MMP)

Ireland and Germany use voting systems familiar with New Zealanders (although STV is not familiar to Aucklanders). Both countries have ‘grand coalition’ governments.

In Ireland it’s the traditional parties Fianna Fail and Fine Gael in a minority grand coalition. The main Opposition is Sinn Fein, seen essentially as a party of the populist Left. There is no plausible coalition which could govern as an alternative to Fianna Fail with Fine Gael.

In Germany there is an unfortunate grand coalition which has majority support in the Bundestag, though only getting 45% combined party support in the 2025 election. There, one party (BSW; a party of the conservative-Left) got 4.98% of the vote, and missed out entirely. Another party to miss out entirely was the FDP (4.3%), once a centrist liberal party, but now a right-wing analogue of New Zealand’s Act Party.

The new Opposition in Germany is the populist-Right AFD (Alliance for Germany), which may soon assume government in Saxony-Anhalt (a federated eastern province west of Berlin), but which is no more viable as an alternative government for Germany than Sinn Fein is for Ireland.

The CDU/CSU (Germany’s ‘National’) got 28.5% of the vote last year, and the SPD (Germany’s ‘Labour’) got 16.4%; together these add to 44.9%. As a result of the coalition deal, Chancellor Friedrich Merz controls the Parliament (Bundestag) with the party support of just a quarter of the electorate. The SPD really had no choice but to participate, and the SPD’s ‘gung ho’ Defence Minister, Boris Pistorius, is really a man of the right.

If the BSW had got 5.00% instead of 4.98%, the outcome in Germany would have been a minority grand coalition with Green Party support, or a ‘grander coalition’ with the Green Party in Cabinet. Merz would still be in charge. The Greens and SPD combined have three fewer seats than does the presently all-powerful but unpopular CDU/CSU.

Germany has had CDU/CSU/SPD grand coalitions before. There was 2005 to 2009, and 2013 to 2021, under Angela Merkel. (Also in 1966 to 1969, in West Germany, under Kurt Kiesinger.) We note that all these grand coalitions were dominated by the conservative CDU – ‘National’ in Germany – the leading party of the CDU/CSU alliance.

An Aotearoan version?

As in Germany, I can only envisage a grand coalition in New Zealand with National as the larger partner. I cannot see a Labour-National government led by Chris Hipkins.

In a sense, Opportunity is Luxon’s opportunity. By choosing a ‘sleepwalk’ strategy for the 2026 election, Labour is vulnerable to losing votes to the more charismatic Opportunity Party; meaning that, no matter how small National’s party vote ends up being, it is likely to prevail – as in 2017, and 1993 – in the head to head battle against Labour.

The difference this year is that the only alternative to a National-Labour government most likely would be an awkward four-party arrangement led by a weak Labour Party with spineless Labour leaders. There would not be much of a dog for the tails to wag.

The lesson from Germany though is that, while these grand coalitions have been humiliating for the SPD, that party has survived these humiliations, and has even been able to lead – albeit with little spine – a subsequent government (2021 to 2025).

So a grand coalition in New Zealand in 2027 is a rat that the Labour Party might be prepared to swallow. Most National voters would probably favour such a grand coalition of the establishment-centre over a four-party right-wing government which National couldn’t dominate; most Labour voters would have to bite their tongues, but would still support Labour in 2029 as the most probable lead-party of an alternative government going into the 2030s.

An Aotearoan vision?

This would become a possibility if Opportunity could play a substantial role in a three-party coalition. New Zealand is not condemned to ongoing stale establishment centrism. That was the lesson of 1935 and 1938.

I see the two most probable outcomes for government in 2027 as a New Zealand version of the present reactionary-centrist German government, or a cautiously-radical pro-capitalist centre-left government in which the Greens and Opportunity together can inject a bit of spine and vision into Labour.

A spineful centre-left administration would pursue liberal economic policies, while rejecting the prevalent economists’ narrative of economic liberalism; economic liberalism – the gospel according to Act’s David Seymour – is also known as ‘neoconservatism’.

A spineful centre-left government would move away from fiscal conservatism, and stop prostrating itself to the God of ‘balanced’ Budgets. Governments are meant to be capitalism’s last-resort borrowers, and last-resort insurers, with a duty-of-care towards their citizens; and central banks are capitalism’s last-resort lenders. At present the grand coalition parties are behaving more like insurance companies which look for opportunities to renege on their obligations; like collectives unwilling to perform their societal function.

These days, governments only want to perform their requisite roles as borrowers of last resort (and borrowers of best resort) when they wish to increase ‘defence’ spending. Such military keynesianism – used with initial success in Germany to extricate that country from the 1930 to 1934 great depression – is the now-accepted exceptionalism which reveals economic liberalism as morally bankrupt and profoundly opposed to twentieth-century liberalism.

Germany, with its grand coalition, is once again heavily into military keynesianism. So too is Finland, which like New Zealand is a darling country which doesn’t live up to the hype which emanates around it.

There are ways out of the fiscal conundrum which Aotearoa New Zealand now faces. We start by imagining our way out of the intellectual treacle – the accepted narrative of bankrupt social science – within which we have become enmeshed. As well as good ideas, we also need to imagine some lesser ideas – such as the grand coalition – in order to pre-empt such intrigues, to avoid having them creep up on us as fait accompli with Christmas beckoning.

About the writer:

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

Keith Rankin, 21 August 2026 – On RNZ (Morning Report) on Monday, John Campbell said “Recent figures from Stats NZ show more than a third of 15 to 24 year-olds are unemployed or underemployed.” It’s still there on the website, in print, so has not been corrected. (Refer Butchery bucks trend with good job prospects, 17 August 2026.)

The above charts show what young New Zealanders actually were doing (and not-doing) around May 2026. It’s actually quite hard for researchers to compile these statistics properly, because of the ways they are presented by Statistics New Zealand; the diminishing number of RNZ backroomers probably do not have the time or the conceptual knowledge for this task.

To see the people in the categories mentioned by RNZ – unemployed or underemployed young people – look at the chunks of the pie charts from dark green to brown. For both charts, its just over a quarter; just over 25%. (In fact it’s 27% for 15-19 year-olds and 28% for 20-24 year-olds; “more than a third” means around 34%, or more.)

But even these more accurate numbers need to be unpacked. The major malaise intimated by Campbell is confined to two sub-categories shown: ‘job-seeker not student’ and ‘no described activity’. That’s 10.2% for 20-24 year-olds and 13.7% for 20-24 year-olds; bad enough for sure, but nowhere near the alluded-to 34%.

One of the other ‘problem’ sub-categories is much smaller than it used to be: ‘caregiver, no other activity’, aka ‘fulltime mum’. That sub-category, along with the two mentioned in the previous paragraph, are the so-called NEETs: ‘not in employment, education and training’. Actually, it is inappropriate to include fulltime mothers as part of a problem classification. (In the 1950s they would have been more like 25% than 3% of 20-24 year-olds!)

The majority of those 15-19 year-olds mentioned by John Campbell are in two other sub-categories: ‘student seeking employment’ and ’employed but underemployed’. If we add these underemployed to the NEETs we still get under 20% of that age-demographic.

The sub-category which most needs examining is ‘student seeking employment’. These are part of the official unemployment tally. Some of these 7.5% of 15-19 year-olds – perhaps a third of them, 2.5% of 15-19 year-olds – are functionally unemployed, in that they would leave education immediately as soon as they get a job, meaning that their ‘education’ is really youth childcare. But most of these 7.5% are part-time or fulltime students who are actively seeking some paid work, willing and able to commence work immediately, but who would continue to be students; they are aspiring to join the light-green group rather than the tan group.

The real tally of unemployed and underemployed 15-19 year-olds is about 22% (2.5%+4.5%+5.7%+8.8%) of their demographic. And, similarly, the real tally of unemployed and underemployed 20-24 year-olds is 24% (0.7%+7.3%+6.4%+9.7%) of their demographic.

Both are high – too high – but not over 33%!

The following two charts show these data for every quarter-year from January 2004.

As we would expected, the education data is seasonal, with people in holiday jobs during the holidays. Looking beyond that, the NEETS and underemployed are those shaded at the top, from purple to brown.

In May 2004 there were about 33,000 NEETS aged 15-19, out of a population of 300,000. In May 2026 there were about 70,000 NEETS aged 15-19, out of a population of 360,000.

In May 2004 there were about 49,000 NEETS aged 20-24 (including 17,000 fulltime parents), out of a population of 280,000. In May 2026 there were about 87,000 NEETS aged 20-24 (including 10,000 fulltime parents), out of a population of 330,000.

The NEET problem has doubled for 15-19 year-olds, and more-than-doubled for 20-24 year-olds.

Two particularly interesting young-person statistics for 2026

One. Since the end of the Covid19 pandemic quarantine (January 2022), the total population of 15-19 year-olds has increased from 315,000 to 360,000 (14% increase). Before 2022, the population of 15-19 year-olds had been steady at around 315,000 ever since 2006. While New Zealand today may be seeing rising numbers of older people, it is also seeing significantly higher total numbers of teenagers. Indeed, unlike many other countries with majority European or East-Asian populations, New Zealand should continue to have a proportionately adequate working-age population. New Zealand’s number one socio-economic priority is to invest in the capabilities of our substantial population aged 15-19, and our remnant and immigrant population aged 20-24. Investing means spending money now and soon, not squirreling it away.

For 20-24 year-olds, while the population increase since 2006 is somewhat higher than for 15-19 year-olds, the post-Covid19 population increase is negligible; and total population is well-down on what it was in the late 2010s. New Zealand is seeing a substantial impact, through emigration, of its failure to invest in its young adult population; a result of the government’s emphasis on a futile attempt to get back to fiscal surplus while sanctioning the depreciation of the government’s revenue base. Government cutting off its nose to spite its face.

Two. The number of people aged 15-19 in employment as their only measured activity was in May just 16,500 out of 360,000; that’s just 4.6%! In the Great Depression years of the early 1930s, this figure would have been over 50%, with another 30% seeking more hours. And it would also have been around 50% in the 1960s.

For 20-24 year-olds, this employment-enough figure is now 40%, along with 3% as fulltime caregivers. In the 1960s, the total of these two numbers would have been around 90%.

Education and Training and Daycare

Some might say that, with education and training much more dominant today as measured activities, New Zealand is investing in its young people. But investment in people is a ‘game of two halves’. New Zealand is only really playing the first half; that is, formal education.

Further, it’s not entirely clear that secondary and tertiary education in New Zealand really are investment activities; to some extent, it might be argued, they are becoming a young-adult extension of childcare, a place during the day to put (physically or virtually) a growing excess of people because there is nowhere else for them to go. Young people are not scarce. Not yet.

About the writer:

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

Keith Rankin, 26 August 2026

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Note on Net Immigration

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

Finally

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

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

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

About the writer:

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

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

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

Universal Income

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

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

Universal Basic Income

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

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

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

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

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

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

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

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

A specific ‘bottom-line’ suggestion

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

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

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

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

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

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

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

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

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

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

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

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

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

2027

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

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

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

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

About the writer:

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

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

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

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

Events in more Recent History, unmentioned yesterday

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

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

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

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

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

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

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

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

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

1957, Sid Holland and Keith Holyoake; and 2017

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

Events which were mentioned yesterday

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

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

Have we finished yet this year with party leadership switcheroos?

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

Conclusion and Warning

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

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

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

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

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

About the writer:

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

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

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

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

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

The Arithmetic

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

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

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

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

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

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

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

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

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

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

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

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

About the writer:

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

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

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

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

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

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

Chart 1

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

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

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

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

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

Chart 2

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

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

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

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

Conclusion

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

About the writer:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Comparative Economic Growth

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

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

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

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

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

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

Conclusion

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

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

About the writer:

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