Bob Jones: Modern economy doesn't make dollars or sense

My company owns the most Wellington CBD buildings and has spent about $15 million so far, in accord with the new rules, on building weakening. Photo / Getty Images

Modern economics certainly works in strange ways. "Quake and related jobs helps crank up economy", I read a week ago in my newspaper. This relayed a jargon-ridden study ("drivers", "solutions" et al) by something clumsily entitled The Grow Wellington Quarterly Economic Monitoring Report, about the new zip in the capital's economy through earthquake-induced building strengthening.

In fact, much of this work is not strengthening. My company owns the most Wellington CBD buildings and has spent about $15 million so far, in accord with the new rules, on building weakening. It's about balancing buildings' structural elements rather than necessarily strengthening them. The rest has mainly gone on bracketing the adequately strong beams and columns together.

Similarly, we constantly read of the economic boost to New Zealand, and also the Government's election prospects, from the Christchurch rebuild. It recalls the story my generation repeatedly heard from our depression traumatised parents about the unemployed being paid to dig ditches while others filled them in. I suspect this was a fable but the principle is similar.

In the past we viewed increasing prosperity as a result of greater productivity, but no longer. Today, full employment is everything even if that means more dog groomers, personal trainers and grief counsellors. If the Christchurch rebuild boom makes sense then we should buy an old bomber and have the air force flatten several towns and cities each year, having first ensured their inhabitants got out of town. Great wealth would presumably flow. Some such as Kaikohe and Westport we wouldn't rebuild, thereby saving on the welfare budget as their inhabitants moved to places of employment.

The possibilities are endless.

I woke to this oddity in the early 1980s when Radio New Zealand asked me to stand in for Leighton Smith at 2ZB for a week, so he could have a holiday. On the first morning I hijacked the news and had them announce the planned introduction of the Compulsory Parrot Acquisition Act, whereby to boost the economy (parrot breeding and selling, cage manufacturing, seed growing, etc) everyone would be compelled to buy a parrot.

All hell broke with the lines flooded as people called to complain that they didn't want a bloody parrot. I urged them to consider unselfishly the national interest and even converted a couple of women callers. Then a message came from Parliament demanding I desist and retract as the volume of protests to the ministers was disrupting Monday's Cabinet meeting. Some hope, indeed the following morning I had David Lange in as my guest. Always a starter for mischief, David gleefully piled into the government over this fiction.

But here's the point. That Monday evening my oldest friend, Professor Margaret Clark, called to advise that her husband, Bernie Galvin, then head of the Treasury, had told her that following my announcement some of their economists did a quick analysis and said it made excellent sense.

In other words, not just full employment, no matter doing what, but also constant consumption, again no matter buying what, is what makes things work, explicable because today it takes only a small percentage of the workforce to provide the basics of shelter, clothing and food. Thus governments brag when consumption rises while simultaneously urging more savings, this anomaly being typical of modern economics.

An interesting dimension of this was how people believe what they hear or read. Call it gullibility or call it trust but even journalists succumb. A few years later, writing about monetary policy I mentioned then deputy governor of the Reserve Bank Rod Deane, whose role I added, "in the Dalai Lama's flight from Tibet has never been revealed", hardly surprising as it was non-existent. I forgot about it but the following week when it appeared I was hounded in my Auckland office by frantic reporters wanting details.

"Mr Deane refuses to comment," they complained, for it transpired they'd all turned up at his office, but Rod, who enjoys a laugh and having read my column and anticipated this reaction, told them modestly that it was not something he liked to talk about. Then I remembered he had a Chinese secretary. "You will have noticed his Tibetan secretary," I observed.

Apparently, they all surged back again and grilled her but she played along, refusing to comment. An ounce of forethought would have told them that Rod was a schoolboy when the Dalai Lama fled to India in 1959, nevertheless it does show, like contemporary economics, that nowadays, absolutely anything is credible.