Feeling a sudden chill? Movement would help
There are three economic mantras I’d like to see the Government implement in the next few weeks: 1) stay in your bubble, not on your couch; 2) travel within your region with confidence by being careful, not fearful; and 3) massage your wallet daily if you’ve still got a job.
My house is a hive of activity. Day one of level three and the decorators are back on-site cleaning down the decks and painting a wall downstairs. Two other tradies are booked for later in the week.
The wheels of the economy are turning again. But are they? Those wheels, I mean. The success of any economy is 50 per cent psychology. Their cadence lies in each of our hands.
MOBILITY CREATES SPENDING
Alert level three is a funny economic animal. We have a return to work, but very few methods for a return to spending.
Unfortunately, the two things are intimately linked for many businesses. Half a million people went back to their jobs this week, but demand needs to hold up to keep them there.
On day one of level three I did my best to be a consumer, but it’s not easy right now. After ordering 12 bags of compost from Mitre 10, it seemed sensible to leave the tradies to earn a living and get some coffee and exercise.
I grabbed the 72-year-old in my extended bubble and off we drove to Kaiteriteri Mountain Bike Park. Nature has been having a party while we were gone.
Wild pig poo, giant toadstools and tu¯¯ı in full song greeted us. With a little arm-twisting the pensioner promised he wouldn’t get air. Risk management was in hand and the fat tyres rolled forth.
Cycling complete, two breathless consumers went to collect liquid medals in takeaway cups. Ten dollars was deposited electronically after giving a name, phone number, email and physical address. We sat in the beat-up white van, bubble and bikes firmly intact, looking out over the deserted golden-sand beach and street.
Saying there was no queue for coffee would be the understatement of the week. There was barely a consumer in sight.
Yet the news was full of Wellington cafes with their milk frothers going like steam trains. A short distance around Nelson Bay the roads were busy with queues at the traffic lights. Trucks were heading for the port and Picton ferries.
Car parks were filling at Tahunanui Beach. Raglan Roast had a line heading down Rocks Rd and The Sands Fish & Chips was amassing 300 phone orders.
It was a 50-minute drive to Kaiteriteri and therein lies the regional crime.
In a very compliant population of locals, gasps may go up in some quarters. Surely there is a rule about this? Twenty minutes’ drive? Forty-five minutes? What gut reaction did you have to this tale of biking and coffee within my region? It might pull a few triggers. Did I drive too far?
Those triggers are all about the psychology of fairness. Being so restricted under level four has been confronting. One of our coping mechanisms has been to police if others are behaving in a way we agree with. We recreate a system of social norms in the most abnormal of situations. Numerical rules help us do this because they provide certainty about what is fair.
Government communications have now entered an interesting phase. They desperately want to keep us safe. Social lives are still on ice and we all accept this. But do our wallets really need to remain on the couch?
Safe economic production and employment has been a well-delivered message. What has been forgotten is the concept of safe economic spending.
Letting the wallet loose while remaining in your bubble and within your region is a perfectly reasonable concept.
If we only encourage people to spend money in a tight radius around their homes and inner cities, we’re creating crowds that hinder rather than help social distancing measures. The outer economies in our regions then suffer economic poverty and unfairness based on population distribution.
Financially I fear that the ‘‘stay local’’ message is now dangerous and needs to quickly move to a more confident and assertive ‘‘stay regional’’ one.
THE LEVEL TWO ECONOMY
Under level two, our restrictions remain regional and this needs a serious rethink given they could apply for an extended time frame. If we can’t travel outside our regions, internal tourism will fail.
The situation with winter ski resorts is perplexing economically. If only locals are able to use these facilities, will operators even have enough income to pay the power bill on the chairlift? Why would we maintain such crippling restrictions when it’s perfectly possible to have a bubble holiday with social distancing in place?
By travelling in your own car, renting a house or motel and sticking to activities within your own family, we can stay safe while spending. It would certainly help accommodation and food outlets in the winter tourist towns.
The retiree dollar, the sports dollar and the family-travel dollar are all areas of economic spending the Government needs to think carefully about encouraging in level two.
Janine Starks is a financial commentator with expertise in banking, personal finance and funds management. Opinions in this column represent her personal views. They are general in nature and are not a recommendation, opinion or guidance to any individuals in relation to acquiring or disposing of a financial product. Readers should not rely on these opinions and should always seek specific independent financial advice appropriate to their own individual circumstances.