For A Rainy Day

In a world of increasing globalisation, decreasing barriers to immigration, technological fluidity, and ease of daily life: What place does economic warfare have to the national interest?

Let us consider developed nations such as in North America, United Kingdom, Australia and New Zealand, who after the post war era of WWII have enjoyed steady improvements in standards of living, greater ease in trade and capital mobility and an abundance of choices. How do these nations safeguard themselves for a rainy day? Or, rather said; How can a government protect itself against ‘labour/citizen’ flight?

The idea is, that a government can try to ensure that their labour stocks do not take flight, leave, and set up base in another country using the fundamental fiscal and monetary levers.

Those at the top of the income distribution will not be considered in this expose, as they have a greater degree of global and entrepreneurial mobility. However, as people deviate below the top income brackets, their global mobility becomes far less pronounced.

Poverty, is like clipping the wings of aves, no longer being able to soar at heights or take advantage of wind currents to travel distances, in effect, rendering the aves ground ridden. Birds unable to fly are vulnerable to being corralled, encaged, farmed and exploited. Lack of flight and being overfed reduces their range of motion, native instincts, and alters their anatomy.

Grim as this may sound, or, unsavoury as this example is – it is simply a metaphor to cause people to think about people’s economic circumstance from a very different perspective.

Central Bank (Monetary Policy) levers such as decreasing the cash rate, influences exchange rates, increases the liquidity within the economy, effects short-term rates, creates the incentive for mal-investment (when pro-longed) and upward pressure on the price level via either cost push or demand push inflation. Additionally, it can be portrayed as, taxing citizens and those who hold the currency, by reducing their purchasing power, eroding away at stored funds, and more importantly encouraging the increase of household indebtedness.

Consistent government induced economic stimulus severely distorts the economic tides. Citizens face nominal increases in wealth, yet having their real wealth in decline. People are coerced toward further dissaving, inflated asset (equities and realty) prices balloons the size of mortgage repayments, thus reducing disposable household income. This indicates a fall in household wealth and stimulates their need (not want) for debt.

As the water mark (debt mark) increases, households are forced to renege on their global and entrepreneurial capacities, in an effort to service their growing debt obligations. Coincidence, or strategy? Well, if coincidence then there you have it. However, if strategy, then this would be a way to secure the residency of a nation’s current and importantly future generational labour market.

Note* The purpose of this article is to tell an economic story of what people can experience, from a different perspective. The goal at is to get its readership thinking about economic policy in a different way.