The world has entered a new era in economics, and we all have to get used to a harsh new reality. That was the stark warning from economist Cameron Bagrie in a hard-hitting talk to road transport operators at The Road Ahead conference, which was held in Invercargill this week.
Bagrie said the coming era is going to require a different approach. “Disruption is the new normal. One plus one equals 11. You have to take risks because doing things the same old, same old is not going to work. As well as dealing with disruption, the laws of economics are back in play.”
Containing inflation involves some pain, Bagrie warned. “Weak players will be eliminated. Do you want to be the hunter or the hunted? A big economic experiment has just ended. We need braver and real leaders to negotiate us out of a tough prickly economic time.”
He said “economic reality” had sunk in over the last week after the UK announced a big spending package and tax cuts. “The pound got absolutely smashed and interest rates increased. The market was telling the politicians the days of the bottomless pit in terms of money is over. We need substance to decision-making, not politicians spreading money or tax cuts about like confetti.”
US Federal Reserve Governor Jerome Powell got it right by warning about the dangers of inflation and saying it needed to be fixed. There was also some other good news. “House prices are not going to keep going up. Perhaps New Zealanders need to invest in real productive assets and banks need to change their culture and invest into the real productive part of New Zealand.”
Bagrie also stressed the need to invest more in education, health and in infrastructure.
“Will a change of government support infrastructure spending and address education or simply put money in people’s pocket to appease voters? We do not need tax cuts. Witness what happened in the UK. We need policies with real substance.”
Other speakers at the two-day conference focused on coming changes to the industry, including the challenges and opportunities of attracting new and younger people into the industry, and introducing new technology, including hydrogen and electric vehicles.
