Taxpayers’ Union smacks up Robertson for making it up

The left love to talk about ‘trickle-down economics’ and destroy its validity.

The trouble for Grant ‘less pies’ Robertson and Russel ‘give me my flag back’ Norman is that the ‘neoliberal theory’ is a figment of their imagination.

They were both on Radio Pravda (sometimes called Radio NZ) this morning bleating on about the latest OECD report calling for us all to be poorer so the poor feel better.

The Taxpayers’ Union has republished a piece which destroys Robertson’s credibility as Labour’s finance spokesperson.

Trickle-down economics is an example of a “ridiculous beyond belief” idea; that giving money to the rich will eventually trickle down to the rest of the economy to benefit all. Indeed, the refutation of this theory of trickle-down economics dominates the discourse.


The problem is, there is no such thing as trickle-down economics. In fact, it is an oxymoron: it has no “economics” in it whatsoever. Thomas Sowell, senior fellow at the Hoover Institution argues convincingly that the theory is a straw man argument – a flimsy invention of those arguing against it so they can easily knock it down. Sowell writes that the idea cannot be found in “even the most voluminous scholarly studies of economic theories”.

Trickle-down economics is a complete caricature of the original arguments supporting economic growth. No economist has ever argued that in order to make a poor person richer you should make a rich person richer first. Economists have, however, argued that economic growth can make us all better off, whether we are rich or poor.

The left can’t argue the theory to recreate what the right are saying and make it up with scary ‘neoliberal’ language.

“We’re disappointed that Mr Robertson continues to refer to the made up economic theory of ‘trickle down economics’. Mr Robertson must know that no such economic theory exists. No economist has ever argued that in order to make a poor person richer you should make a rich person richer first. Economists have, however, argued that economic growth and freedom makes us all, rich or poor, better off.”

“The biggest cost of living is people’s tax bills. Instead of wanting to solve inequality by cutting government waste and taxes at the low end, politicians immediately want to tax more so they can distribute it to constituencies.”

“Mr Robertson is now shadow Minister of Finance. He should be focused on arguing real economic data, not taking on his own straw men arguments,” concludes Mr Williams.

This is the problem Labour faces with book learned policy wonks who have never had real jobs infesting their party.


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  • Salad Dodger

    BUT… 2 of the 3 countries – Spain and Ireland – who did have good “equality” went tits up in the GFC so the “poor” or “disadvantaged” had obviously not looked after their money, whereas the countries who had “bad equality” did well – where the “rich” held onto their wealth and the countries were saved from the GFC
    On top of that Ireland has the biggest unaffordable housing problem in the western world
    So what do we want. Financial stability and fiscal prudence with those who save and work hard buying houses…….or like the loser who wins lotto , seeing our countrys wealth frittered away and everyone generally stuffed like a Christmas Turkey (and in the same place)

    • In Vino Veritas

      Salad, income inequality in NZ hasn’t changed since 1995, and the MSD has the numbers. So Robertson is either outright lying, or being disingenuous, since he must know this. I opt for lying. Since that is the only other weapon Labour has in it’s arsenal of feather pillows.

      • OneTrack

        I opt for both

  • Allyson

    Robertson is simply misplaced as an Economics spokesperson. He is better suited to the role of All-Backs captain.

    • Sooty

      A what ?

  • Shane M

    I think you are too kind to call anyone from the Labour Party book learned when it comes to economics. As this article makes clear, there is no such economic theory as trickle-down economics, it has been made up by the progressives to discredit capitalism (and they have done a fairly good job, I might add).
    If Grant Robertson were to read one book on economics, could I suggest he read Economics in One Lesson, by Henry Hazlitt. It is only about 200 pages long, and would fundamentally alter his understanding of how the price system works.
    In fact, it’s nearly Christmas, I might send him a copy to help him out.

    • If you want him to read it, better make sure it has lots of pictures in it ….

  • Jimbob

    The repeated use of “trickle down theory” has always annoyed the bejesus out of me. I’ve known since varsity days it doesn’t exist so bloody good on you for re-emphasising it here! Of course all the numpties on both sides of the house read this blog so hope it finally hits home and they all shut up for good on this fallacy….

  • simon

    I heard Bill E getting all tied up by the presenter on Radio NZ. I can never understand why he can’t just bluntly say “Socialism has failed wherever it has been tried. We’re not a socialist party, we didn’t get elected three times on a socialist manifesto and we’re not going to change to socialist economic policy. If the people of NZ want socialism, they should vote for Labour or the Watermelons next time.”

    • burns_well_eh

      Mate, please apply for a job as media Advisor to the Nats as quickly as possible, you’ll do great. You could advise John Key to say “It’s none of your business who I do or don’t text, now sod off” while you’re at it.

  • Second time around

    Robertson did not get any point across in his Morning Report interview. He was reminded that Labour (Douglas-Lange) introduced monetarist policies to NZ and that much of the OECD data is old, belonging to the Clark era. In the end Robertson could promise only that Labour would now do things differently, but again became coy when the interviewer (Susie Ferguson) reminded him that CGT would have to be at the core of any big redistribution of wealth.

  • john Doe

    Being untruthful may run in the family. I see Grants old man, an accountant, was sent to prison in 1991 for pinching $120k of his clients funds. I feel a different portfolio, that doesn’t include money, would be more suitable Mr Robertson.

  • Captain Darling

    Robertson left uni with a Bachelor of Arts, so has all the qualifications needed for finance spokesman. Since then his involvement in any sort of business environment is, well nil really. So the fact he has no clue what he’s talking about should come as no surprise.

    • But he always reads the finance column in Busdrivers Weekly!

    • OneTrack

      He asks Russel if he has any questions.

    • Kiwibabe

      Oh heck!

  • redeye

    If you want to spend your life waiting for someone else’s wealth to trickle down to you then you really are a loser.

    • Kiwibabe

      Yep, can’t escape bloody hard work and long hours. Work life balance? Dreams are free!

  • ozbob68

    But hang on, the economy actually is prospering and wages actually are rising above the rate of inflation. So the strategy of the government is working; calling it “trickle-down” is essentially quibbling over terms.

    • All_on_Red

      That’s probably more due to creating an environment where production/ output is increased (ie Free Trade Agreements)and work being put into lowering costs to enable increased production which in turn means more jobs are being created.
      Wealth for all is created by generating jobs and lifting the poor up to the middle class.

      • Kiwibabe

        Partly true although just fattening pay packs, sadly, does not generate near full employment, vast majority of businesses run narrow margins most of the time, a few do very well, but most will not expand and invest if wages throttle margins needed for investment in creating jobs. All tricky, no free lunches as they say. It is doubtful you can make lower skilled wealthy enough to bolster an economy. Not aware that has ever worked anywhere long term.

  • All_on_Red

    “, it is a theory that has been created so that the left can accuse advocates of market-based solutions of not really doing things to help the poor, and in particular is aimed at people who think that raising taxes has its limits.”
    “The left want to spend and they want to tax and are irritated by arguments that suggest that higher taxation does harm, and especially to the poor.”
    Steve Kate’s, an Australian economist, exposed this last Jan. Nice to see it being aired here.

    Next we should discuss the failure of Keynesian economic theory as applied in the last 100 years.
    Amazingly Francoise Hollande stated Says Law correctly which had been butchered by Keynes.
    “The time has come to work through the number one problem in France: which is production. Yes, that’s what I said, production. We must produce more, we must produce better. Hence, it is upon supply that we must concentrate. On supply! This is not in opposition to demand. Supply really does create demand.”

    Supply really does create demand

    • Dave_1924

      “Supply really does create demand”….. at the right price of course this is true

      • All_on_Red

        The “right” price doesn’t necessarily mean cheap ( if that’s what you are inferring). Other factors influence how the market responds to pricing goods. Quality, durability, brand perception for instance.

        • Dave_1924

          No not cheap… but the right price

  • symgardiner

    People should really listen to the Red Radio interview with the nutter who wrote that OECD report. He’s a nuts. He was wanting us to go back to the days of Muldoon. People too easily forget things like carless days and 30,000 people not working on the railways.

  • BJ

    As Magaret Thatcher said “they would rather the poor get poorer than the rich get richer”
    And there in lies the root of the problem: Those in politics that don’t feel like they’ve ‘made it’ turn their inferiority into self-righteousness and doing what they perceive they do well, by creating a scene of a population of downtrodden, helpless and hopeless they get to be right and seen to be the saviours against the dark force of capitalism – all due to their own envy – and they project that onto other people to avoid addressing it in themselves.

    • burns_well_eh

      I realise that nobody like a correcter, but in fact Thatcher said “you would rather the poor got poorer, just as long as the rich don’t get richer.” It’s not quite the same thing but I take your point.

      • BJ

        You’re right.

      • Kiwibabe

        And for all those Thatcher haters, the UK is possibly the strongest economy in Europe aside from oil rich and producing Norway. This from a reasonably balanced economy, triggerd by Thatcher. Even that other socialist bastion Sweden is not so strong.

  • All_on_Red

    To expand on my post.
    James Mill 1808
    “No proposition however in political economy seems to be more certain than this which I am going to announce, how paradoxical soever it may at first sight appear; and if it be true, none undoubtedly can be deemed of more importance. The production of commodities creates, and is the one and universal cause which creates a market for the commodities produced.”
    Steve Kate’s then comments;
    “Mill was arguing was that if there is to be demand at the aggregate level, what must come first is supply. It is production of goods and services, and production alone, which will create a market for other goods and services.
    That’s where demand comes from. It comes from supplying what other people want to buy. And if sellers do not supply what others want to buy, that is, if what they produce is not bought, the result is recession. This too is from James Mill in what is more or less a throwaway line since in this discussion the causes of recession were not the issue: “All that here can ever be requisite is that the goods should be adapted to one another.”
    Mill is making the point that if purchase and sale are going to increase, each person’s production must be adapted to the wishes of others. It is producing what others want that creates demand.”

    Using QE to create demand doesn’t work. It’s the wrong way round.

    • dumbshit

      I fully agree that supply must come first, but the buyers must have a disposable income to be able to purchase those commodities, therefor I wonder if that is why the likes of “Soros” and other big investors are lefty supporters, as the left seem more generous at handouts, thus there is more disposable income in the hands of the “right” people?

      • All_on_Red

        True, but labour is required for the means of production, which means jobs and income. It also sort of explains why reducing tax rates and the direct costs imposed on consumers ( High Energy and Council Rating costs are examples which inhibit spending) can stimulate economies.
        When the Govt starts indulging in the market and trying to pick winners, that tends to distort how a market should work.
        Russell Normans Green Tech Bank, apart from being classic crony capitalism, is an example of that. Overseas experience has shown it would inevitably fail as it’s not based on true market demand but on subsidies.
        As an aside I have always believed that the way to solve poverty is through the provision of cheap energy as that enables production to be started far easier.It’s starting to work in the US despite Obamas best endeavours to screw the economy.
        Australia spent 43 Billion on their stimulus and frankly their economy is completely (redacted) . Total waste of money.

  • Timboh

    Maybe David Parkers and Robertson have been trying trickle down with the goat and it was not an enriching experience.

  • Mountie

    Take the money off the rich! Yes that will work, most of us will be out of a job. When was the last time an unemployed person hired a staff member.

  • James

    And if you read the actual OECD report that this left-wing PR piece is based on (here: – figure 7, page 23) then you see that it is quite clear that there is a limit to the amount of redistribution that can be done without affecting growth rates. You can redistribute up to about 13 gini points before you start seriously affecting the economy.

    So how many gini points does New Zealand currently redistribute? Tables 2 and 3 from here are the relevant ones:

    Table 2 shows our gini pre-redistribution as 0.455, and Table 3, post redistribution, as 0.330. So we currently distribute 0.125 gini points and are right up at that “13 point barrier”.

    Can somebody point me to where our journalists “trained and skilled” are asking these politicians how they plan to redistribute more than we currently are without hitting that 13 gini point barrier that the report that they are regurgitating unthinkingly from the PR from refers to? Or do we need a better class of journalists “trained, skilled and capable of intelligent thought”.

  • kayaker

    “The best way to help the poor is not to become one of them.” -Laing Hancock

  • johnnymanukau.

    The OECD report meant nothing as it had an attachment that said it was not an official report and was only the authors opinion. More manipulation by the MSM,it makes me sick.

  • Curly1952

    Oh Cam your last comment – “This is the problem Labour faces with book learned policy wonks who have never had real jobs infesting their party.” brings a tear to my eye. My sentiments exactly!!

    • Kiwibabe

      Yeah and trouble is the media will love this left spin about inequality which Labour will make big noise about through to next election. Just as well economy and jobs market are great.

  • FreeMack

    I loved Rawdon Christie on TV One Breakfast referring to Robin Hood. The clueless twit doesn’t get that Robin was recovering peoples money from the government, the exact opposite of what he is advocating. The boy can’t even get a children’s story right