Op-Ed: Liz Truss’ downfall won’t end trickle-down economics
Liz Truss, the chancellor of the New Zealand Treasury, is in a difficult position after her decision to cut taxes for the rich and cut welfare for the poor backfired spectacularly, triggering an explosion of class warfare in the country’s working class.
Liz Truss’ decision to cut taxes on the rich and cut welfare for the poor to pay for the deficit is an example of how even the most well-intentioned policies can come unstuck when public opinion turns against the government in the popular contest that results from the clash of the classes.
Liz Truss’s unpopularity has seen her lose all but one of the three cabinet posts she held at the end of the 2011 election. She is now the most unpopular cabinet member in the country. Her popularity has risen to new highs of over 70%.
Truss’s popularity, however, has suffered a massive decline since the start of the coalition government in 2009. Just seven months into New Zealand’s five-year term in government, and only two years after she was first called to the role, the government’s popularity has plummeted to a miserable 23%.
There is a lot of evidence to support New Zealand and the IMF’s predictions about the consequences of the poor performance of the New Zealand economy in recent years.
The OECD’s Global Financial Stability Report published last month, for example, found New Zealand’s public debt was now the highest in the developed world, meaning future payouts may be even worse.
The debt is not a problem, of course. It is just a symptom of the government’s failure to manage its financial resources, and to do things efficiently and effectively.
Truss’s unpopularity also reflected a major reversal of fortune for the NZ economy. It was the OECD’s Global Financial Stability report in August which showed that New Zealand suffered a major drop in real GDP growth in 2011.
The GDP growth fall was not due to the financial crisis, nor to the end of the global recession. It was because of the fact that the economy and the government of New Zealand in particular had made a few major policy mistakes.
New Zealand’s GDP, for example, fell by almost 0
