Donald Trump and the Rise of Post Truth

The inauguration of Donald Trump as the 45th President of the US has now happened and like everything else to do with the Trump Presidency.  It has been mired in controversy.  Not, only did A-grade stars refuse to play at his inauguration balls, but the media and other political commentators pointed out that the Trump inauguration was smaller than his predecessors, especially Obama’s 2009 first inauguration.

Trump’s reaction to this has been to call into question the reliability and truthfulness of his opponents. In the case of the Inauguration, Trump and his team responded that they had never asked for A listers to attend; or that he wanted a people’s inauguration which is why there were no A list stars.  These explanations are at odds with previous comments from Trump that he was being approached by stars to attend and that Trump’s team had offered people money and political appointments if they did attend.

The latest controversy came with the observation by the Press and by Trump’s political opponents that the crowd for his inauguration was considerably less than that for Obama’s first inauguration in 2009.  As a clear comparison, many media outlets published photographs from the two inaugurations side by side to prove their point.  Trump’s reaction to this was to accuse the media of lying and creating “fake news”.  He expressed this belief when he was speaking to CIA officials on Saturday morning.

The CIA visit and the resulting speech was a means to repair a rather fraught relationship between Trump and the US intelligence agencies. Trump had been critical of the US Intelligence agencies throughout his campaign. However, he became more critical with the release of a recent report which alleged that Trump was in the pay of the Russians. In the aftermath of that release Trump compared the US intelligence agencies to those in Nazi Germany.

However, Trump largely used the speech to skewer his opponents remarking that the supposed hostility between him and the various agencies was the result of the media.  The media was openly trying to discredit him.  Indeed, the media could not even get the numbers at his inauguration correct.

As the Guardian reported;

His 15-minute speech included boasts about the supposed – and inaccurate – size of crowds for his inauguration; expressions of airily defined love and support for intelligence agencies with which he has been at odds over their belief in Russian attempts to influence the election on his behalf; boasts about the number of times he has appeared on the cover of Time magazine; the supposed fact that it stopped raining when he spoke at the Capitol on Friday (it didn’t); and an insinuation that he might start another war in Iraq.

The US (and indeed the larger international) media was provided with another strange scene later that day when the new White House Press Secretary, Sean Spicer called a press conference and accused the press of dishonest behaviour over its reporting of the inauguration.  Reuter’s news agency reported that;

In an unusual and fiery statement on Saturday night, White House spokesman Sean Spicer lashed out about tweeted photographs that showed large, empty spaces on the National Mall during the ceremony on Friday.

“This was the largest audience ever to witness an inauguration, period. Both in person and around the globe,” Spicer said in a brief statement. “These attempts to lessen the enthusiasm about the inauguration are shameful and wrong.”

In response to questioning about Trump and his assertions, Trump’s team have now proposed that they have “alternative facts” to those that are being presented by their opponents.  (Their opponents appear to be anyone who is opposed to Trump).  The notion of “alternative facts” was presented by Kellyanne Conway, the newly appointed White House “Counselor” in an interview with the Chuck Todd, who is the political director of NBC news.  Todd confronted Conway pointing out that there was no such thing as “alternative facts” merely falsehoods.

The worrying thing is the attitude which appears to be taken by some politicians and is being legitimised by the Trump White House in what some people have euphemistically labelled as a “post-truth” situation.   For the layperson, Wikipedia notes that “Post -Truth” identifies a political culture in which debate is framed largely by appeals to emotion disconnected from the details of policy, and by the repeated assertion of talking points to which factual rebuttals are ignored. Post-truth differs from traditional contesting and falsifying of truth by rendering it of “secondary” importance. Post Truth allows people to repeatedly spread claims even if they have been found to be untrue by the media, opponents or experts.

In the post truth situation, the facts are derided, ignored or it even proposed that there are “alternative facts”.  Alternative facts endorse the idea that facts can be challenged.  As Humpty Dumpty remarked to Alice;

“When I use a word …. it means just what I choose it to mean — neither more nor less.’ ‘The question is,’ said Alice, ‘whether you can make words mean so many different things.’ ‘The question is,’ said Humpty Dumpty, ‘which is to be master — that’s all.

In the past if someone was caught lying then they would often admit it, especially after the facts of the situation came out.  As an example, Richard Nixon admitted that he had been less than truthful regarding Watergate when the facts were eventually revealed.  However, there is no such thing as “alternative facts.” It is nonsense, a fact is a fact is a fact. A fact is based on something that has demonstrable evidence.  Water boils at 100 degrees at sea level, a heavy stone falling on someone’s foot will hurt are factual.  In politics, this rationale does become more problematic due to its subjective nature.  But, we expect our politicians to be reality factual. Further, if they are caught out then they should admit it. Was Richard Nixon behind the break in at the Watergate Hotel? Yes, he was.

The problem is that facts are being circumvented by (political) opinion masquerading as fact.  This is the important difference, you can have alternative opinions but, these are not facts.  If someone offers an opinion on a topic, that is their opinion.  An opinion can be based on facts, and good opinions should be, but they are still opinions.  The worrying aspect of this situation is that these opinions are being stated as valid facts. Further, the public are being told that not only are there no such thing as facts, that any facts or events that you don’t like can be changed.  This has the chilling effect of nullifying facts in the public consciousness. That is, if everyone is right, then no one is right.


Reflection on the Elections – Labour’s Loves Lost

It’s been a long time since I have written a blog. My thesis got in the way and I made a promise to my Supervisors not to write a blog as it took time away from that. I was, I admit, bad at keeping some of the other promises that I made to them but I did keep the one about the no blogging – until now.

After one of Nationals’ inevitable victories when I was a kid in the 1970s, my father, who was a railway worker and Labour supporter, said to me; “You know I often think that the working class is its own worst enemy.” Doubtless, if he was still alive he would have said that last night as well. While I feel it’s an overstatement, there is a large amount of truth in that observation. After all, in 1931 in the depths of the Great Depression, the majority of people marched to the polling booths and voted for the Tories. In 1935, the majority of people again marched to the polling booths and voted for the Tories. The difference was that in 1935, the Tory vote was split and the FPP system favoured Labour which won its first election. In 1938, after three years of a Labour Government, the majority of people finally marched to the polling booth and voted Labour.

Not blogging and not being, until relatively recently, politically active has allowed me time to think. To be honest I am really disturbed by the lack of progress that the left has made in the past decade. Certainly, the Labour party needs to have fingers pointed at it. Simply, the party appears to have lost the plot. It does not seem to have any sort of coherent programme or vision. A friend of mine made a similar observation today on his face-book page commenting that once Labour stood for workers. Back in those far-flung days, when my father supported it, Labour did support workers and the poor and it used to get over 40 percent of the vote. We have been informed that times have changed and as a result Labour needed to move and so it therefore adopted neo-liberalism and the ‘third way’ or as the former deputy leader of the UK labour party, Roy Hattersley described the third way “a series of cliques looking for a coherent thought.” Yet, horribly for David Cunliffe his most successful moments as labour leader was when he was actually contesting the position and in the immediate aftermath of his win. This was when he actually had stated positions on programmes and actually renounced the ‘third way’ liberalism of his predecessors. However, this success stopped at his first conference as leader when he fudged over free trade and then continued to fudge thereafter.

Of course, Labour is not alone in its sins and, in this breath, I could mention certain left-wing bloggers who regrettably appeared to spend their time inventing or promoting conspiracy theories or scandals. Certainly, the allegations behind Dirty Politics need to be fully investigated. However, the most annoying thing is the extent to which Dirty Politics and the ill-named ‘The Moment of Truth’ were promoted by these bloggers as legitimate alternatives to serious debate and analysis.

All of this leads me to ask what precisely is it that the left actually stands for? People on the left used to talk about the ‘grand plan’ or ‘grand narrative.’ Essentially that they (we) had a set of ideals for a better society which set them (us) apart from the Tories or the capitalists. This grand plan used to be generally referred to as ‘socialism’ and/or social democracy. While, socialism is a term which I am comfortable with, but which has many unwelcome connotations for others, it nonetheless promoted a society which accepted social justice, equality and economic democracy as its basis. Social Democrats tended to opt for the phrase ‘equality of opportunity’. However, the idea was that in this society people had the equal opportunity to achieve their various aspirations.

I have been told that the social democratic project is over. I would argue that it barely got started in New Zealand and that we adopted a conservative version of it. The Welfare state with its emphasis on full employment, free health care and education, decent standards of living, etc are an important part of such a society. But, they are only one part of the programme. The other part which guarantees economic and social democracy and participation remains untapped. A recreated social democratic grand vision needs to turn its back on neo-liberalism and agitate instead for the restatement of social, economic and democratic justice as a central part of its programme. It needs to restate the ideal that people’s aspirations are not achieved through the ‘free market’ but through the ability of equality of opportunity.

An integral part of socialism (and of Sesame Street) is the concept of co-operation. This is something that the left (and yes, the Labour party) has particular trouble with. To be fair, so does the National party. Peter Dunne and the new forgettable ACT MP for Epson are not co-operating partners with National. Rather, they are vassals to a feudal lord. National has effectively cannibalized the right-wing vote which will cause it problems at some point in the future. But, quite frankly, having partners on the left is not, as many in the Labour party appear to believe, a bad thing. It is, particularly in an MMP situation, a good thing. It is something that should be encouraged. The reason for this is because such parties can actually contribute to building and strengthening the left. They can go places, engage with people and suggest things that might be an anathema to some of Labour’s own supporters but nonetheless shore up a left-wing vote and actually help develop an alternative programme. It has to be remembered that most of the reforms that we have today – the welfare state, employment rights, public healthcare and education were all someone’s radical and revolutionary idea at some point.

It is, therefore, disconcerting when you decide to ‘kill off’ your potential partners. Last night, Labour killed Internet Mana. It may deny that, but that is what it did. For Laila Harre, it would have been a situation of déjà vu, as she was the leader of the Alliance when the Labour party decided to kill it off in 2002. The outcome of that killing was Labour coalitions with Jim Anderton, Peter Dunne and Winston Peters.

Simply, the days of the Labour party being the only major force on the left is over. Subsequently, it should (needs to) embrace other parties on its left as perhaps bothersome, but nonetheless useful potential allies.
This is already occurring in terms of the party vote. Although, the campaign slogan is “only two votes for Labour can change the Government.” People largely know that this is not true with the result that people are casting their electorate and party votes for different parties. This I feel explains some of the discrepancy in votes in various seats. The media, fixated as they are on simplistic reporting, overlook the combined votes of the Greens and Labour in a seat and instead decide to focus on the single large National vote. Mostly, because the vote for National’s right wing partners are virtually non-existent.

Lastly, there remains the need to engage with people. I have been told, but am yet to check that the turnout in this election is low. If it is low then National’s grand victory is illusionary and that the engagement process has failed. People remain disengaged and feel that the current electoral system does not have a place for them within it. It is little good to encourage people to advance vote if the only people who do so are those who would have voted anyway. If the turnout was reasonable then the left has simply failed in its attempt to engage with people. Certainly, the National party has a simple message to engage people by tying their aspirations to those of its leader. He is a self-made man and you can be too. National’s message is like a Tony Robbin’s advertisement or a verse from Hot Chocolate, “Everyone’s a winner, babe, that’s the truth.” Only, it ain’t.

It would be best at this point to reflect on the attitude of Labour’s first (and only Marxist) leader Henry Edmund (Harry) Holland. Holland knew that the progress of a party was based on more than simply an electoral cycle. It was a long-term project which required patience and education. To conclude this is not the time for fear. Now is the time for reflection and rebuilding. To quote the old catch phrase, “Things are always darkest just before the dawn.” The dawn is coming. It might be a while, but it is coming. People just need to have a little patience and a little faith.

A Long Lasting and Bitter Cuppa

Former UK Labour Prime Minister, Harold Wilson once famously observed ‘that a week was a long time in politics’ and John Key must be painfully aware of that observation at the current time. It has been a week in which Key has effectively gone from ‘hero to zero’ as a consequence of him having a simple ‘cuppa’ with ACT’s Epson Candidate, John Banks. A ‘cuppa’ which, although being held in full media glare in a cafe in Epson, had an unwanted addition, as on the same table, unnoticed by either Mr Key or Banks, sat an inconspicuous little black bag containing a switched on recorder, which was quietly recording their private conversation.

Over the past week, the revelation of what might be on that recording has seen the Prime Minister deny any wrong doing in relation to comments which he made in the course of the ‘cuppa’. He has questioned the integrity of the journalist whose bag it was and then accused the New Zealand media of acting like the ‘News of the World’ and UK tabloid journalism in securing the recording. He contacted and laid a complaint with the police about the recording, he has walked out of press conferences, and he has made bizarre comparisons of the recorded conversation with suicide. The entire thing would be completely laughable, if it did not have the potential to seriously undermine Key and National’s campaign and effectively kill ACT in the process.

Key walking out of a press conference and avoiding comments about the matter provoked Labour leader Phil Goff to comment that he could not have imagined any other Prime Minister back to Muldoon, acting in such a manner. I would have to concur. Certainly, one could not imagine Sir Robert Muldoon acting like John Key. Muldoon would not have dodged any media ‘bullets’ and he certainly would not have run from a press conference. Instead, one could imagine Muldoon meeting with John Banks in an office (probably his office in the Beehive, as cafe’s were never his ‘thing’), bluntly laying down the terms for any political concessions and then, later, equally bluntly facing down any journalist who dared question him about the situation.

But, Key is not Muldoon. Muldoon was a person of many attributes. He was a polarising and aggressive figure. However, Muldoon could also be bluntly honest. Key is completely different and that perception of honesty is one of the key (no pun intended) factors in this matter. After all, what can be said about a man who opinion polls are now saying that a significant proportion of New Zealanders like, but don’t really trust.

However, what is really different about Key to me is that he has always appeared as a media creation. As a result, one of the principle interests of the ‘cuppa’ saga has been it effectively taking the ‘shine’ off the Key persona.

In the past a number of political commentators, including myself, have tended to compare Key to National’s last long serving Prime Minister, Sir Keith Jacka Holyoake. ‘Kiwi Keith’ was perceived as having the ability to rise above political disputes. Moderation and consensus were the key terms of Holyoake’s administrations in the 1960s. Key has tried to project himself in that mould.

However, the real comparison to Key is not Keith Holyoake. It is, rather, former UK Labour Prime Minister, Tony Blair. Key, like Blair, is supposedly media savvy – as are his ‘minders.’ Key, like Blair, carefully cultivated the media to bring across a particular image. Like Blair, that image was of Key being an approachable, amiable, likable everyman who had a ‘realistic’ programme, which was divorced from the ‘old’ ideologies which dominated New Zealand politics. Simply, Key wanted to appeal to mostly everyone. He wanted to be liked. He wanted to be ‘cool’.

Yet, despite his attempts to appear, like Holyoake as a progressive conservative; as a mediator and a moderator, as a ‘cool’ person, Key’s Government has undertaken a number of extremely right wing and ideologically motivated decisions – welfare reforms, tax cuts, and changes to employment law amongst the number. In addition, Key and National have also suggested a number of future policy changes should he and they be re-elected, such as asset sales. That is because, Key, like Blair, is actually very ideologically loaded and like Blair, Key has attempted to downplay and minimise these policy changes, by suggesting that they are necessary and ‘sensible’ reforms – when in fact, they are not. However, Key, like Blair, has been (largely) successful in this course of action as he has been aided and abetted by a compliant media.

The ‘cuppa’ fiasco is trivial and in any functioning, politically aware democracy it would not be worth comment except for a few lines in the paper or a few seconds on the news. But, in New Zealand’s ‘New Idea’ focused, politically unaware democracy it has become central to political debate. Yet, this is not just a failure or comment on the status of New Zealand politically unaware news media this is also a failure of Key and his media minders. Not just because, Key has massively stuffed up the situation, but, because I believe that initially it suited Key and National to have the issue centre stage as it effectively deadened debate and discussion during the latter half of the campaign. Key and his minders actually thought that they could initially ‘spin’ it. But, they were wrong and the problem, thanks largely to Key, is that this issue has now taken on a life of its own.

One of the factors that combined to bring down Blair was the media turning against him. In the end all Blair’s years of skilful and careful media manipulation were for nought. Blair, like the Emperor in the famous Hans Christian Andersen tale, was revealed to have no clothes. With the police now threatening to raid key media outlets such as TVNZ and Radio New Zealand for copies of the recording, Key has effectively isolated himself from them and the media at large. Unfortunately, for Key it has also meant that this entire issue will continue to play out for a considerable time to come – right up, possibly, to Election Day next week.

As Wilson went on to observe…” and, a fortnight in politics is an eternity.”

Devil and the Deep Blue Sea

Why a ‘Cuppa’ with ACT is problematic for National

Guyon Espiner has written an interesting opinion piece about the dangers of National sitting down for a quiet ‘cuppa’ with ACT. Espiner feels that such a sit down and chat over a cuppa could place National in some difficulty and actually hurt its chances at the polls. He comments that the vast majority of voters simply don’t like or trust ACT mostly as a result of the various actions of its MPs over the past parliamentary term. However, I think that National is caught between the ‘Devil and the Deep Blue Sea’ on this issue.

It appears to me that National has two options. Firstly, to go for a majority government which would mean that it needs to get over 50% of the popular vote. Although the polls are suggesting that it might achieve this, it needs to be remembered that this has only happened, as far as I am aware, three times previously (1938, 1946 and 1951). While, polls can provide good snap shots, the final poll that counts is on the day itself. In 1996, National just managed to hold onto Government despite polling well throughout the year. In 2002, Labour, despite good poll results previously, only gained 41% on election night and was forced to put together an unlikely coalition comprising Peter Dunne’s United Future Party and Jim Anderton’s Progressive Coalition.

This leads to option two, which is to ensure that there is a suitable coalition partner in the event that National does get under 50% of the popular vote. If past election results are any indicator, it appears more likely that while National will emerge with the highest percentage of votes and as the largest party in the House. But, it may lack ‘suitable’ coalition partners, especially, those parties prepared to back its economic programme – even the Maori Party is not open to the idea of asset sales and the economic and social restructuring that is being suggested by National. Therefore, the only party that National can count on in terms of being open to its ideological agenda is ACT.

To sit down with Brash over a cup of tea (The Devil) may lead to the outcomes that Espiner is suggesting – as he notes, 99% of people don’t like ACT and the spinoff of such a deal could be bad for National along the lines of voter cynicism toward National and a corresponding decline in its vote. Plus, there remains no guarantee that National voters in Epson will vote for Banks, given the enmity toward ACT in the electorate. Even if Key endorsed Banks, Goldsmith could still win.

However, not to endorse Banks and ACT could lead to National being forced, in the event that it does not get 51%, having to put together a coalition (or being a minority) Government in which its key economic and social planks are scuttled (The Deep Blue Sea).

National has painted itself into a corner – it needs to get 51% or it needs ACT in parliament.

Universality – The Giant Killer

I read today of proposed changes to the legal aid system.  A significant component of the proposed changes lies in getting the wealthy to pay their own legal bills.  Doubtless, a number of people would agree with the Minister, Simon Power in his assertion that the wealthy should not get free legal aid.  Why should they not pay for it? 

The nature of Power’s comment is similar to a question posed by David Lange once in the mid 1980s, when his Government started means testing benefits and services, as to why the wives of Doctors should receive a family benefit like those people on lower incomes.  Surely, he asked, wealthy people should be able to pay their own way and pay for their own services?

I would respond that the answer to Lange’s question and to Simon Power’s allegation about the rich receiving the same ability to access legal aid as the poor lies in the fact that it is fair.  The reason as to why legal aid should remain available to all or why Doctor’s wives should receive family benefit lies in the important principle of universality.  This is the belief that regardless of gender, race, social position or background that everyone is entitled to have equal access to and receipt of benefits and services in healthcare, education and the like to improve their life chances.

A commitment to building a better and fairer world, particularly after 1945, drove many people who were involved in progressive politics at the time.  In New Zealand and the United Kingdom, progressive (Labour) Governments produced programmes as a means of achieving that goal.  No one they argued should be subjected to the poverty and illness that had previously existed.  Everyone they alleged would have the ability to have equal access to services and benefits and the right to further themselves freed from monetary or social constraints.  This became the foundation of the notion of social security.

In the United Kingdom, the wartime coalition Government (Conservative/Labour) established a commission under the Liberal Economist, Sir William Beveridge to investigate the issue of social security and to produce a blueprint for a more inclusive society for the UK after the war.  The report of that committee became known as the ‘Beveridge Report,’ and it opted for universality as a means of delivering social services and benefits.  These would be available to all people. The costs would be recouped through the maintenance of full employment and progressive taxation.  

Beveridge saw the ultimate goal of social security as killing the five ‘Giants’ – these were the Giants of want, disease, squalor, idleness and ignorance.  As a consequence, Beveridge was opposed to the idea of means testing (which was a common strategy at that point) because it established and maintained poverty traps.  Means testing sustained the Giants.

However, since the 1980s, successive Governments have used means testing as a way of achieving social and economic goals.  The universal system that Beveridge and others envisaged has been removed and replaced with programmes that last saw the light of day in the 1930s.

I am of the opinion that the emphasis on using means testing as a means of ending poverty is a bit like using an incurable disease to cure illness.  It is, simply, quite stupid.  Indeed, there is actually something morally Victorian in the approach taken by those who advocate means testing that reeks of the ethos of the deserving poor. 

Writing in 1920 on similar matters, future UK Labour Party Prime Minister Clement Attlee commented that;

“’In a civilised community, although it may be composed of self-reliant individuals, there will be some persons who will be unable at some period of their lives to look after themselves, and the question of what is to happen to them may be solved in three ways – they may be neglected, they may be cared for by the organised community as of right, or they may be left to the goodwill of individuals in the community. The first way is intolerable, and as for the third: Charity is only possible without loss of dignity between equals. A right established by law, such as that to an old age pension, is less galling than an allowance made by a rich man to a poor one, dependent on his view of the recipient’s character, and terminable at his caprice”.

In the social democratic state that New Zealand used to be, everyone, regardless of whether they were rich or poor had equal access to benefits and services offered by the state.  The means by which this would be equalised financially was through a progressive tax system.  Simply, if you earned a good income then you would be taxed at a higher rate than if you were on a low-income.  Benefits were not taxed at all.  

The loss of Universality, I would argue, has made New Zealand a less equal state.  This lack of equality is amply demonstrated in those statistics on crime, poverty, health care, education as well as a multitude of other statistics that have been produced since 1984. 

The ‘reforms’ of the 1980s and 1990s have once more meant that targeting and means testing have become a common feature of government policy and assistance.  Given those events, Attlee’s statement about the ‘loss of dignity’ for the poorer sections of the community once more becomes a real issue.  The loss of universality in terms of services has led people in the middle to upper income brackets to question not only the notion of state provision in key areas of the economy and society but the notion of why they should actually pay taxes, especially since they are now paying for private providers out of their own pockets as opposed to having state providers being paid for out of the common purse.  The loss of universality has therefore meant financial cuts and poorer services.  The people who rely on those services are increasingly economically and socially trapped and impoverished.

Beveridge commented once that, “the object of government in peace and in war is not the glory of rulers or of races, but the happiness of common man.”  

The loss of universality ensures that the Giants once again stride the landscape.  People need to ask how their return benefits the happiness of the common man.

And,the Poor Will Always Be With Us.

Margaret Thatcher is an icon of the free marketers.  It was her Government, in the late 1970s and 1980s, which originally drove many of the reforms that were later copied by other free market governments in the West.  In some cases, such as here in New Zealand, we exceeded Thatcher’s economic expectations, implementing ‘reforms’ which she must have only dreamt about.  But, while, Thatcher may have left the UK political stage in 1990, with her resignation as a consequence of policies such as the ill fated ‘poll tax’, her economic legacy survives.

Her comments, such as there “being no such thing as society” and that “… any woman who understands the problems of running a home will be nearer to understanding the problems of running a country …“ not only provide a fascinating insight into her mind. They, unfortunately, still carry leverage and act as a basis for some people in the current political and economic sphere.     

And, it is this legacy that has found root again in statements made by New Zealand’s Minister of Finance, Bill English over the weekend.  For it was that during the weekend, English and John Key addressed a weekend leadership forum.  This forum was attended by ‘leaders’ from Australia and New Zealand.  Such forums can be dangerous places for politicians and so it proved to be so for English.  As, it was during his forum speech that he committed his latest gaffe by criticising Australia’s high wages and conditions before remarking that New Zealand’s low wage economy was actually a selling point for the country by providing it with a competitive advantage. 

He then criticised the Australians for having a poorer electoral system and a more complicated and restrictive set of economic and financial regulations. 

English’s address was interesting, in that he was telling the truth when he talked about the fallacy of closing the wage gap with Australia.  What English has done is openly admit to all that the Government had and has no intention of closing the 30% wage differential with Australia or indeed with any of the country’s other OECD trading partners. 

English essentially stated the truth that if you live in New Zealand you will need to accept low wages and salaries as well as poorer conditions. 

Rightwing Business Commentators, such as the NZ Herald’s Pattrick Smelliee were quick to endorse English’s comments, while, at the same time, conversely trying to pour oil on potentially troubled waters. Smelliee noted in his opinion piece titled, ‘Hang on, Bill English is Right,’ the following;

“He’s not saying it need be that way forever. That’s just how pessimistic Kiwis hear it. The assumption is either that we could never “catch Australia” – whatever that means – or “who’d want to anyway?”

Unfortunately, for Pattrick, that is exactly what it means.  I remember friends of mine who were devotees of the free market cause in the late 1980s espousing much the same line of thought.  They particularly emphasised that New Zealand’s economic success lay with it being competitive in terms of wage rates.  They consequently argued that low wages were the only way to get high wages. Of course, the absurdity of this argument is very obvious.  If you adhere to such a position then you have to consistently maintain a low wage economy otherwise you become uncompetitive.  Indeed, you need to be prepared to lower your wages even further if you are to successfully compete in the global marketplace.

This is not a short term approach, but a long term and permanent one.  That is exactly, what English has spelt out.    

Further, as English and others of his ilk are aware, New Zealand has actively pursued this policy prescription over the past decades. Its wage and salary rates have fallen behind other OECD nations, significantly so in some cases.  There is now a considerable divide even within the country as to what the mass of people earn compared with what is received by those in the upper wage and salary brackets. This divide, while slowing during the 2000s, has actually increased since National came to power.  

Of course, several decades ago, New Zealand used to be ahead of Australia in its rankings of wages, standards of living and productivity.  At that time, there were no complaints or concerns that New Zealand was uncompetitive or unproductive. While, New Zealand slipped in its rankings during the 1970s, its experimentation with monetarism and the free market during the 1980s and 1990’s have effectively ended any hope of this country achieving any of those rankings again. Since the 1980s, New Zealand has consistently had high rates of unemployment, low wages and salaries (as a result of economic reforms and the Employment Contracts Act) and has consistently experienced low productivity in comparison to other OECD states.

Why is that? Simply, because this is a deliberate outcome of those market led economic and fiscal policies that New Zealand has pursued since 1984.  It is a deliberate outcome of these policies to have a set level of unemployment and it is the deliberate outcome of these policies as to why, New Zealanders must have low wages in comparison with other western nations.  The Government could, very easily, increase wage rates and conditions by supporting expansionary policies combined with a more expansive range of economic targets and by imposing economic regulations.  But, it chooses not to. It has chosen to deliberately pursue monetary and fiscal policies that deliberately hold down and restrict people’s wages and conditions.   

The problem is for Mr English that there is always someone lower down the food chain than you.  Most undeveloped nations have people who earn extremely low wages and have poor or no working conditions.  Maybe Bill English should approach them and tell their populations had fortunate they really are?

AMI – Nationalisation is not a Dirty Word

It comes as no surprise that private insurance firms might be feeling the pitch in the light of the recent earthquakes in Christchurch. So it should not have come as a shock when people were greeted with the news this morning that AMI (Allied Mutual Insurance) is facing a financial crisis as a consequence of the Christchurch Earthquakes.  TVNZ reported that,

“Christchurch-based AMI Insurance is New Zealand’s second-largest residential insurer with 485,000 policyholders and 1.2 million policies across the country. In Christchurch alone it has more than 85,000 policyholders with 225,000 policies – or about 35 per cent of the residential insurance market in the city”  

AMI has stated that although it feels it can meet its existing responsibilities to policy holders who have suffered as a consequence of the recent quakes, it might struggle to meet any future responsibilities. 

 This issue has arisen also after another, considerably smaller, insurance company, Western Pacific which is (was) based in Queenstown was placed into liquidation after the February Quake.  It could not meet its obligations to its 7000 policy holders. 

Apparently, AMI informed the Government of its potentially damaging situation in early March. The Government response has been to bail out the insurance company, a move which it announced this morning.  The Company will pay the Government $15million and the Government will extend AMI $500 Million to cover its claims and to allow it to keep functioning, if it is asked to do so by the Company and only once it has exhausted its own reserves.  Bill English also announced this morning that the real total cost to the taxpayer could be more than $1 Billion dollars.  

In the same manner that private banks had to be bailed out by Government (socialism for the rich), Government could now be asked to bail out the private insurance industry (AMI), this means that the taxpayers yet again pick up the tab for private concerns. 

Of course, to be fair, the situation is completely different. The Banks were largely responsible for their own troubles. In this case AMI and its policy holders were not responsible for theirs.  But, questions needs to be asked.  Questions such as, that in the light of these two insurance companies having problems how many others might be in the same situation? And, whether it is a good idea to have private insurance companies carry the sole responsibility for claims? And, lastly, if the taxpayer is going to guarantee insurance payouts for homeowners etc then should not the state play a more active role in the insurance area?

In 1869 the Government was faced with similar issues in relation to the insurance industry. The area was under-capitalised and those private insurance firms which were involved did so under certain conditions and only covered certain people.  The Government’s solution was to establish a state owned insurance company, Government Life.  In later years, the state came to be more and more involved in insurance and ensuring that the needs of the wider community were met.  They met those needs through the establishment in 1898 of the Government Accident Insurance Office and later of the State Fire Insurance.  All of which were effective and successful in what they did.  Prompting rebel Labour MP John A Lee to note in his 1938 book, ‘Socialism in New Zealand,’  

“Undoubtedly judged on state capitalistic lines the State Insurance Department has been a glittering success.  It has been generous to policy holders, its security has been undoubted, it has effected Liberal improvements in policies … Next to the State Advances Office, the Government life is one of the cheapest lenders in the country…”   

Government Life was renamed and sold off in the 1980s, by that ‘far sighted’ visionary, Roger Douglas.  It eventually became Tower Insurance and is one of New Zealand’s leading insurance agencies.  At the time, Douglas queried the logic of the state wanting to own an insurance company.  Why, indeed? The answer to that question is found in the pages of New Zealand’s political history and economics (never Roger’s strong points) and in the current chaos of the Christchurch streets.

There are two options in this situation.  The first is simply having the Government prop up AMI (and possibly other insurance providers) through a capital injection (in this case $500 million) and then allowing it to run as normal (which I suspect is the Government’s preferred option).  The Government’s current option does allow for Government control and ownership if AMI calls upon the cash injection, but only if it needs to. I suspect also that such ownership would only be for a short period of time.

Another option would be for the nationalisation of the company.  Such a policy would allow the Government to directly meet claims, thereby providing policy holders with long term financial security. It allows the Government a direct stake into an industry, which it should never have been removed from in the first instance. AMI has no shareholders due to it being a mutual company – this means that it is directly owned by its policy holders.  There would be no buying out of shares, merely a taking over of policy responsibilities.

Given the circumstances and the need to provide people with secure guarantees, I would go with the latter.  The Government should be a permanent player in the insurance field.