Economic outcomes show reformist governments are managing current global conditions far better than conservatives, asAlan Austinreports.
THE NUMBER OF New Zealanders looking for paid work hassurgedfrom 96,000 in late 2022 to 156,000 in this years March quarter.
This and multiple other recent adverse economic outcomes are the opposite experience of Australians, just across the Tasman. So why these figures?
One possible explanation is that the government changed in 2023 from the progressive Labour Administration led for five years byJacinda Ardernand then for nearly a year byChris Hipkinsto a conservative National Party Government led byChristopher Luxon.
We can test this hypothesis by examining several comparable economies. Like petri dishes in a sterile Swiss laboratory, these five countries allow us to observe the transformation of their domestic economic culture over time.
New Zealand from left to right in 2023
Since the last federal election, New Zealands jobless rate has jumped from 3.6% in mid-2023 to 5.1% in the latest report. See chart below.
(Data source:Statistics NZ)
New Zealands NX50 stock marketindexclosed at 12,853 on Friday, well shy of last years levels above 13,000. Retail sales year-on-year have declined for eight of the last ten quarters. Consumer spending for the last two quarters of 2024 was below that in the first quarter of 2022. See chart below.
(Data source:Statistics NZ)
New Zealands turning point for most indicators was actually before the 2023 change of government. Its unemployment rate began to sneak up in 2022, although it remained well below historic averages throughout Labours term.
So we cannot claim with certainty that the changed policies by the Nationals were the only cause of all these downturns. We can assert, however, that the new regime has not arrested the deterioration.
Worlds best economy flourishing
We sawhereearlier this month that Denmark now has the worlds best-performed economy on the Independent Australia Ranking on Economic Management (IAREM).
Since the 2019 Election swapped the conservativeVenstreAdministration for a progressiveSocial DemocratGovernment led byMette Frederiksen, Denmarks economy has boomed in virtually all areas.
In 2018, Denmarkranked38th in the world with negative growth in gross domestic product (GDP) and low wealth per person, but it has advanced since. From11th in 2020, Denmark reachedeighthin 2022,fifthin 2023,secondlast year and top spot this year. Thats almost certainly the most spectacular rise in the IAREMs 11-year history.
After a dip during COVID, exports surged under the policies of the reformist Frederiksen Administration. See chart below.
(Data source:Trading Economics)
Other outcomes which improved markedly include employment,wages, budget surpluses, governmentdebt to GDPand consumerspending. See chart below.
(Data source:Statistics Denmark)
Finland from centrist to progressive to conservative
Finlands economy struggled through the four years ofJuha Sipils Centre Party administration, then improved significantly under the reformist policies of the centre-left coalition led bySanna Marin.
Strongoutcomesfrom 2019 to 2023 under Prime Minister Marin were recorded in jobs, wages, budget deficits and consumer spending, despite the COVID recession of 2020. See chart below.
(Data source:Statistics Finland)
In a surprise result to many, given the apparent success of Marins progressive coalition, Finns opted for a right-wing coalition underPetteri Orpoin June 2023.
Many have regretted this since, with worsened outcomes on GDP growth, unemployment, government debt and consumerspending. See chart below.
(Data source:Statistics Finland)
Italys uncertain future
Georgia Melonihas now led Italys right-wing coalitiongovernmentfor two years and nine months. If she manages to survive for three full years, she will become the second-longest-serving Italian Prime Minister of the last 18.
Her administration appears to have enjoyed a continuation of the gradual economicrecoveryfrom theGlobal Financial Crisisset in train by her more reformist predecessors, with exports rising, consumer spending steady and unemployment gradually declining. See chart below.
(Data source:Italian National Institute of Statistics)
The last six months, however, have seen the total jobless rate sneak up, youth unemployment jump back above 20% and GDP growth remain close to zero.
If these negative trends accelerate, Italy will confirm the observation that right-wing policies deliver worse outcomes than leftist policies. But only if. We shall soon see.
Australia from strength to strength
Of all the economies transformed by progressive policies, Australias is Exhibit A.
Almost every variable tumbled through the nine years of the conservative Coalition from 2013 to 2022. Since then, the advances have been impressive.
Australiasinflationrate has been below 3.0% and itsjoblessrate below 4.5% for a record ten months straight. Wages have risen faster than prices for 18 months. See chart below.
(Data source:ABS)
Fresh records continue to be notched up inexports, corporate profits, housing starts,constructionoutput,taxescollected, wealth per person,povertyalleviation, debt reduction and consumer spending.
Retailsalesreached an all-time high both in dollars and as a percentage of GDP in this years March quarter. See chart below.
(Data source:ABS)
Economies teetering elsewhere
Recent changes of government in the USA, the UK, Germany and elsewhere are likely to yield equally intriguing economic shifts in due course. For now, it is too soon to tell.
Suffice it to say that inDonald Trumps first six months, the U.S. economy has seen a collapse in the value of theU.S. dollar, a surge inbankruptcies, steep increases in monthly budget deficits and thefederal debtblown out by more than half a trillion dollars to US$36.7 trillion (AU$55.9 trillion) last Friday.
There is a real possibility that the title for the worst four-year period of economic mismanagement in the developed world in modern history may shift from AustraliasScott MorrisontoDonald Trump.
Alan Austinis an Independent Australia columnist and freelance journalist. You can follow him@alanaustin001.
