Still pondering: why is food dear?

Food and shelter: human economics doesn’t get much more basic than that. These are the basic human needs, the issues we’ve been talking about since our species began to talk.

In 2017 they remain the most popular subjects for any economics column. Trust me, the internet data doesn’t lie.

It’s kind of depressing in a way. In an age when we can immerse ourselves in virtual reality or call up on our phone any song ever recorded — we still don’t have these basics squared away.

Perhaps it’s just human nature to complain about the price of things.

But it also feels as if there is more public anger in the debate about food and house prices than in previous election years.

This is despite a relatively strong economy with low unemployment and good growth prospects.

One of the reasons for the frustration is that housing and food have been outliers in an economy of otherwise low inflation.

Since the GFC we’ve had low productivity growth, low wage growth and low prices for almost everything — except housing and food.

That puts pressure on the poorest and lowest-paid, who use the largest proportion of their income to pay for the basics.

This house price phenomenon isn’t unique to New Zealand and has played a part in populist politics we’ve seen around the Western world.

The low interest rate cure for GFC woes created an asset bubble — investors piled into property and shares.

It could end badly. It’s hard to say, but if you have a house and a KiwiSaver fund you’re probably doing okay. If you don’t have those things, you’re not okay — or you won’t feel like you are — even if you have a steady job.

The best way to deal with this is investing to boost productivity and lift wages, but it is taking too long.

So we’re seeing a shift to the left in mainstream politics where you now have traditionally conservative parties like National dealing in policies that effectively subsidise wage earners.

We haven’t got there on food subsidises yet but it could go that way, because people seem quite het up about prices.

In New Zealand the food issue seems particularly acute.

Bad weather has pushed up the cost of healthy fresh veges. This has coincided with a surge in milk, cheese and butter prices as dairy exports have rebounded.

As I wrote last week, these are good reasons, but not necessarily good excuses.

Other countries have bad weather. If a rainy autumn causes such radical prices spikes in fresh produce isn’t it possible we have broader production and supply issues?

Or is this simply a case of not enough competition in the retail food market. Or is it a bit of both?

Have we become so export-focused that we aren’t looking after our own people?

We risk being a victim of our own success in food production.

It’s great that dairy prices are up again and balancing our trade deficit. What if they quadrupled?

As a nation we get richer but if a large proportion of fixed wage earners are expected to be in free-market price competition with the wealthiest Asian, European and American consumers we may have a problem.

To dial it back a bit, there are strong arguments that despite the way it feels, food cost as a percentage of average income have never been cheaper.

HWhat’s your view? letters@hos.co.nz

But a New Zealand success story built on ever increasing demand for our healthy produce does have that built-in flaw.

Meanwhile, it’s election time but the politics about this sort of thing are frustratingly simplistic — you’re either for or against free and open markets.

I’m a big fan of free-market capitalism and its power to provide me with beer, pizza, comfy sofas and great TV.

But as much as I’m a big fan of pizza, beer and lying on the couch, I choose to regulate these things.

NZ First isn’t bothered by subtleties. Winston Peters is happy to rail against the past 30 years of free market economics as a misery causing disaster. It’s an effective opposition strategy and he will always find an audience.

But those subtleties are problematic for a Labour Party that still understands capitalism has enriched a significant chunk of the working class.

It was thanks to the deregulation of the Labour Government in 1984 that working New Zealanders were able to