New Zealand has an election coming up this Saturday. Given the way the United States (and Illinois) spends money, I thought this political ad from the National Party* was interesting:
Look again at the first two promises in National’s economic plan:
“One, we’ll live within our means.
Two, we’ll start paying off debt.”
And the amazing thing is they mean it. In the early 1990s New Zealand’s gross government debt as a percentage of GDP was around 60%, slightly less than the United States. By 2007, under both National and Labour-led governments, the level was cut to 20%. Due to the global economic crisis, debt levels increased back above 30% since 2008** (here and here), but the government is projecting a slight surplus in the current fiscal year and actually paying down debt thereafter (here and here).
It’s amazing. It shows what a country can do when it wants to, both its voters and its politicians. Unfortunately, it seems that the United States (and Illinois) has neither the politicians nor the voters who care about this.
One final point: New Zealand is a small country. (It has slightly fewer people than Louisiana) If it needs money, it has to borrow it. It can’t just print money. Actually, I suppose it could print money, but after a very short while who would take New Zealand’s money to buy things from overseas? A small country in a global economy has to run a sound economic policy and a sound budget. At some point, it will be necessary for the United States (and Illinois) to do the same. The longer we wait to start to get our budgets in shape, the harder – and more painful – it will be when we finally have to do it.
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* The National Party is currently heading up a center-right coalition in New Zealand. New Zealand has a mixed-member proportional representation system very similar to Germany’s. The result is that almost all governments are coalitions.
** Comparable figures for the United Sates would be a little over 60% in 2007 and 100% today (here and here).
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