Mike Hosking: Our high wage growth has been engineered

In watching the Prime Minister yesterday in the house, I once again wondered to myself whether he either has a clue economically, or whether he actually does but just assumes the people who may vote for him don't, so he can pull the wool over their eyes.  

This time it was about the wages. He was crowing about the wage stats, saying the wage stats are up, hourly earnings are up and the median wage is up. Everything is up!

But - it's up above inflation.

Despite what the Prime Minister is desperately trying to tell you, that is not good.

By being above inflation the wages are inflationary. We do not want things that are inflationary because that means the Reserve Bank are going to punish us all further.

Wages are of our doing and as such, make up part of what they call the non-tradable inflation figure.

The figure that came out the other day is still at 6.6 percent, a lot higher than the overall inflation figure, which is also made up of stuff we can't control, like oil.

If you have forgotten, or don't care, inflation should be about 2 percent.

It is obviously nowhere close and until it is Adrian Orr and the Reserve Bank is going to be all over us and keep us in this parlous state of recession. At best, we will eke out anaemic levels of growth.

On a personal level if you got a 7 percent wage increase, what do you care? The cost of everything is through the roof so you need the help.

But here is the insidious part of it all - we are only here because the Government borrowed and printed money and ran the economy into the ground at a time when a lot of the economy wasn't open.

Then when it was open it couldn't grow because we had no people, because they wouldn't let them in, hence you get inflation exploding.

Now, it happened most places. But clearly it happened worse here, hence our recession and the possibility of a double dip recession.

If you want an example, look at Australia. They haven't had the wage growth we have and therefore don't have a cash rate anything like ours, nor mortgage rates, and they aren't in recession.

So the fact Chris Hipkins crows about this stuff is either because he is thick or deeply Machiavellian. Given his GST policy, I suspect it's the latter.

Either way, next time you hear him spruiking high wage rises, remember, they aren't real. They aren't healthy, they come at a cost and that cost is a recession, or two recessions.

So the big question is - just how long do you want to be stuck in this hole for?

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