KiwiSaver Policies Criticized for Facilitating Wealth Flow Abroad

The KiwiSaver policies of both National and Labour in New Zealand are problematic for several reasons. Labour's policy is particularly tone deaf, as it explicitly seeks to extract revenue from employers without acknowledging that this is what they're doing. This facilitates the flow of wealth towards global equity markets like the Magnificent Seven, with no benefit to the domestic economy.

On the other hand, National's policy aims to extract equal proportions from both employers and employees. However, in reality, the burden of financial mining is shared by all stakeholders in an ordinary business. This represents additional costs for businesses during a cost crisis.

The article highlights the concept of the circular flow of income and spending, which is essential for understanding economic principles. The economy works as flows of spending, production, and income, with GDP computed by measuring these 'flow' measures separately. A balance between spending intentions and production intentions maintains an optimal policy target of three percent real economic growth and two percent inflation.

The article also critiques the present New Zealand government for being the most hawkish in history, influenced by unusually hawkish economists. The author identifies this as a major issue in the country's economy, which is too constricted to stimulate growth.