New Zealand – The way you want it? Can National channel its 1975 Incarnation
Posted: July 16, 2020 Filed under: economy, General Election, History, Labour Party, National Party Leave a commentThe votes are in and after several years of trying, Judith Collins is the new leader of the National Party.
The choic
e is brave – although, I suspect that National’s caucus had little option – as Collins is divisive and polarizing. It is a calculated risk by the party, as while her dry brand of neoliberalism and conservativism may stem the flow to ACT, it might also hasten a drift to Labour. The liberal wing and supporters of the party, which has been latterly associated with Nikki Kaye, will doubtless feel alienated by Collins and Gerry Brownlee. In such a situation they may feel inclined to throw their support behind Labour and Jacinda Arden rather than support a neoliberally dry and morally conservative National party.
On a Facebook page, I follow, one of the supporters of the page made the comment that he thought that Collins will do to Labour what Muldoon did to the party in 1975. Her actions will be like Muldoon’s with the result that the outcome, which was a decisive loss for Labour will be similar. I demurred on that point and noted that this is not 1975, that the Sixth Labour Government is not the Third Labour Government and Jacinda is not Bill Rowling. Muldoon also had a year to prepare for the election.
I stand by those comments.
However, Collins should not be underestimated, and history amply demonstrates the ability of supposedly unpopular politicians to create popular support. Muldoon proved to be a master of building a popular movement in a very short time. Aided by the unrest in the Labour party caused by the death of Norman Kirk and, the economic turmoil caused by the oil shocks and the resulting recession, Muldoon barnstormed the Country speaking to packed meetings and offering an economic programme which resonated with voters.
Further, Muldoon had rolled National’s liberal leader, Sir Jack Marshall, in his leadership coup. The difference was that instead of resigning or stepping back (as Kaye and Adams have done), National’s liberal members and supporters rallied around the flag. Even Marshall supported Muldoon (abet grudgingly) during the election campaign. The result was that Muldoon, despite being reviled by a large section of the population in 1972, was able to mount a cogent, comprehensive and popular challenge that overwhelmed the Labour Government and turned a 23 seat deficit for National in 1972 into a 23 seat majority for National in 1975.
Collins does have the capability to do likewise. Like Muldoon, while she is polarizing, she is also pugnacious, in addition (and, again like Muldoon) to being calculating, intelligent and decisive. Unlike, Todd Muller who spend his first days mired in conflict around a MAGA hat, Collins hit the ground running. Stating her intention to stake out a new direction for the Opposition and promising to hold the Government to account.
She said there is no chance at all that she’s going to “let PM Jacinda Ardern get away with any nonsense”.
“I will hold her to account”. And then: “we will be taking the fight to the government. I can’t wait to do that.”
Like Muldoon, Collins has the capability to build such a movement. I doubt that she can do that in the remaining days before the election but, given a year and a declining economy, the Sixth Labour Government might well be in the same situation as its predecessor in 1975.
Since Collin’s election, my Facebook feed has been invaded by memes all directed at Collins. Snippets from her speeches are repeated, passages from Nicky Hager’s book, “Dirty Politics” are quoted and each quote or passage is accompanied with a picture of Collins, usually in an unflattering pose.
And, I have real problem with these memes – they are short sighted, often poorly researched and they actually empower their opponents by deliberately underestimating them. In short, and this is my main gripe, they are political discussion for the lazy.
There is a tendency by some in the left to underestimate, belittle and laugh at their opponents. In 1974, the left laughed at Muldoon. In 1978 they laughed at Thatcher and, in 1979 they laughed at Reagan. In all these cases, a year later, they were not laughing. History should teach us never to underestimate these types of people.
As Muldoon proved in 1975 (and it has remained consistently true since then), there is a significant number of voters who simply don’t care about contrary allegations, comments, quotes from books or unflattering photographs and memes. They care about material things – jobs, wages, the ability to feed themselves and their families, the ability to buy material possessions. These are the people that Muldoon, Thatcher and Reagan appealed to. These are the people that Muldoon labelled the “ordinary bloke.” Key appealed to the same audience as well with devastating effect.
In 2020, as in 1975, Labour should never underestimate a Tory with their back against the wall. The seemingly most unpopular and divisive leader is capable of building a movement.
Where does the buck stop?– Ministerial Resignations and Operational Responsibility
Posted: July 1, 2020 Filed under: General Election, History, Parliament, Political Culture Leave a commentIn her book, “Diary of the Kirk Years”, Margaret Haywood refers to an incident involving a family who was having problems with their State House rental. Norman Kirk, who was the Prime Minister, had apparently heard about the situation as he had been listening to the radio in his office. Kirk’s solution was simple. He picked up the phone, called the Minister of the relevant state department and sorted the issue.
The reason that Kirk a
nd the appropriate Minister could intervene in such a manner is because there was direct Government oversight over Departments and assorted state agencies.
Shift forward to the present and the situation is dramatically different. There is no actual Ministerial oversight for Departments or Ministries. Operationally, Public Sector Departments are run as commercial entities all headed by a Board and by a CEO. The entire system of state agencies, Departments and Ministries are all answerable to the Head of the State Services Commission. The State Services Commissioner is their employer, not the Government.
Government has little, to no, role in the current system. Ministers are kept at arm’s length. They are governance and, subsequently, they have no control over, or responsibility for, operational processes.
How did such a state of affairs arise?
Prior to the 1980s, the public sector served the public. Hence, the term “public servant”. Regardless of political persuasion, heads of public departments and ministries provided advice to their Ministers and acted on the policy directives that Governments passed in Parliament. Ministers were ultimately the final authority. “The Buck” as US President Harry Truman used to say, stopped with them.
Ministers, were of course, chosen from their responsible political party and were the representatives of the people having gained their mandate through the liberal democratic process which included manifestoes, elections and of course, Parliament. If there was an issue with how a Government was preforming then there were recourses open to the public – petitions, marches, rallies, other political parties, unions, etc and, of course, the ultimate recourse in the form of a general election.
However, after 1984 this process was effectively turned on its head.
The reason was because there was a deliberate move to get rid of public control over the state sector by the “free market loving” fourth Labour Government. That Government’s state sector reforms were consciously conceived to remove political influence and insert more “independent” management. Independent management was an important component in making sure that the public sector operated as efficient state-owned enterprises and fulfilled their new commercial roles. As Roger Douglas observed at the time, special interest groups should not be allowed to interfere in the running of the marketplace. And, what is democracy except one large special interest group.
This separation of control was not just limited to state agencies. Various acts also reformed local government in the late 1980s. They saw local council-controlled organizations being separated from the Councils. When people complain that the local councils are unrepresentative and do not listen to their concerns and that the democratic councilors appear to be incapable of controlling their own councils, the reason is, like central government, local councils have no control over their businesses.
(A recent example was amply demonstrated in Dunedin with the decision by Dunedin Railways to mothball their trains and lay off their staff despite the local council being opposed to the move
https://www.odt.co.nz/news/dunedin/union-claims-%E2%80%98sabotage%E2%80%99-dunedin-railways ).
Further, the new public sector CEOs were not public servants in the traditional sense of the term. They were mostly appointed from the business and commercial sector. They were not accountable to the Ministers in the traditional sense and getting rid of them proved to be difficult.
The new public service is responsible to their “stakeholders”, of which the public is merely one group. The public are there to simply fund the public sector, which neoliberals tolerate but do not actually support.
Simply, the modern public sector acts as a commercial entity with little democratic oversight and, as a result, little responsibility to the public that it supposedly serves.
That is why I have found the calls for Ministerial resignations, from National and its allies, interesting. National knows that the current framework precludes actual responsibility. Ministers do not have operational oversight. The buck no longer stops with them. (Do I think that the Minister in question should resign? Yes, I do. But, for his failings as a Minister overall, not for one specific reason).
Additionally, while, National and their allies call for ministerial responsibility it is important to remember that they are committed to upholding and maintaining the framework that allows the current situation to continue. National has never attempted to amend the State Sector Act (and the other Acts) to ensure more direct ministerial oversight and it has not indicated a desire to do so. While, people could say that they are hypocrites, I would respond that they are merely following their class interests.
Modern democracy is a fragile system which has been hard won. The unrepresentative nature of the modern public service is testament to the strength of those who seek to undermine democratic traditions. People need to ask themselves what is more important – the ability to have control of the departments through their elected representatives or to allow the system to continue with little political or democratic oversight as commercial entities? If people really want responsibility from their public sector and their Ministers, then they need to strongly say so and pledge their support accordingly.
The Way Out of the Labyrinth
Posted: June 9, 2020 Filed under: economy, employment, History, National Party Leave a commentThe big news today is the recent announcement by the Warehouse group that it intended to sack 1000 workers in the near future.
“The country’s largest retailer, which took almost $67.7 million from the wage subsidy across its brands, yesterday said it would be closing six more stores and cutting 130 people from its headquarters.”
The announcement was greeted with dismay from unions, the public and the Government. Jacinda Arden furiously rounded on the group commenting that she had;
“…. she’d been getting hundreds of letters from small-business owners trying to keep their staff and stay afloat by running down whatever reserves they had.
“The Government of course, and taxpayers, are taking a huge hit because we are prioritising keeping as many businesses and individuals employed and up and running as we can.”
She was then attacked by the Tory economic spokesperson, Paul Goldsmith who admonished her to “stick to the knitting” and not criticize firms.
Arden is sticking to the economic knitting and that is why she is criticizing a major New Zealand firm that received a massive Government subsidy to retain employees only to have that same firm announce that it would make over a 1000 of them redundant over the coming months. Simply, you can’t seem to get around the impression that the Warehouse “gamed” the system by taking public money in the full knowledge that they intended to close these businesses sites anyway.
The truth is that the decision by the Warehouse will have dramatic economic impacts on their workers firstly, then on the local communities and, then, lastly, on the wider economy. They have made an economic situation that was already problematic far more difficult. None of this, of course, should be a surprise given, as I have noted previously, the private sector thinks short term and can’t envisage much past their own quarterly profits.
The comments from Mr Goldsmith’s though did cause me to think about National’s economic alternative. Goldsmith announced that National was going to “focus” on the economy and “grow” it. And, that really was it. There was no substance to his utterings. There was no alternative offered. Indeed, there was nothing tangible at all.
I am a bit lost as to what National’s actual economic alternative is –as aside from arguing that they could do the Government’s job better and repeating their mantra that they are going to grow the economy – they don’t appear to have any actual alternative plan.
But, of course, National and their economic lapdogs do have a plan and that plan is to cut debt, slash spending and let businesses (and the economy) generally go to the wall. As the neoliberal economist, Cameron Bagley put it, “…. if they [businesses] need to cut costs to recalibrate for a different economic environment then so be it.”
There is nothing radical about this plan as it is the same plan that they peddled to people in the early 1930s.
To paraphrase Enid Blyton, the plan they support involves “lashings” of “good business sense” and austerity. If the economy goes into Depression and people are driven to the brink then that is the simply the price we pay, Julian!
It is said that those who fail to learn for history are doomed to repeat it. If a society is to grow, then we need to learn from our mistakes so as not to make the same or similar mistakes in the future.
Just like the 1930s, there is a way out of this economic and social labyrinth. And, the way out is to reject the economic direction that the Tories are promoting.
Just like the 1930s, it will mean charting another economic course and walking back from the fundamentalist economic stupidity that we embarked upon 40 years ago. It will be difficult, but the alternative is to go back to the same failed policies and approaches that led us to the brink in the first instance.
The Return of Pygmalion
Posted: June 8, 2020 Filed under: economy, employment, History, Labour Party Leave a comment“What is middle-class morality? Just an excuse for never giving me anything.” – Alfred Doolittle from the George Bernard Shaw play, Pygmalion
There have been a number of articles written by commentators in relation to the 
immediate past Budget and the way forward. As most people are aware, the Government has implemented a series of programmes that are designed to stimulate and maintain employment. Foremost among these has been the implementation of a series of subsidies and the introduction of “special benefit payments” for those people who have lost their jobs because of the COVID 19 crisis.
For those, very few, people who are unaware of the situation a large number of people will have access to these new special payments due to them losing their jobs as a result of COVID 19. However, if you were made unemployed or were on the job seeker benefit prior to the COVID lock down your benefit rates do not change.
With New Zealand staring down the barrel of an economic calamity unseen since the early 1930s, these payments could be perceived as a generous and well-meaning intention by the Government to alleviate genuine economic distress to a large number of newly unemployed people because of a dramatic and unforeseen event.
However, the road to hell is paved with good intentions and the result of this proposal will be to implement an unjust two-tier system that penalizes existing beneficiaries. Simply because a number of them were unemployed prior to COVID 19.
Worse, the payment of the additional money to the new unemployed is a tacit recognition by the Government that the existing levels of unemployment benefit are simply inadequate for people to live on. Additionally, the suggestion of the implementation of a social insurance scheme sounds suspiciously like what happens in the US, where people are paid a high rate equivalent to their job for several months and then drop down to a subsistence level payment afterwards. If this is the case, then such a scheme should be definitely opposed as it would cement in a two tier system.
Of course, the obvious solution to unemployment is employment and the Government’s role in creating employment. In the past, Governments recognized that they had a 
responsibility to ensure the wellbeing of its populace. Part of that responsibility was the maintenance of employment and the right for people to work. (The early Labour party was an advocate for full employment. Its leaders and members knew (often firsthand) what economic and social damage could be done to workers individually and in a wider economic context by unemployment or underemployment. Hence, the demands from the Party for full employment, the 40 hour week and adequate compensation).
Currently, private firms are doing what you expect private firms to do in the face of a recession. They are cutting costs. They are retrenching and this means cutting wages and jobs. The outcome of that will be a drop in employment, wages and effective domestic demand. As an example, people who are paid less, spend less. They spend less in the shops and in cafes with the result that cafes and shops face falling demand. So, they eventually cut costs. They cut people’s wages or make staff unemployed. The result is that people then spend less in the shops …. and, so it goes.
The final outcome is that under these sorts of circumstances a recession can very easily turn into a depression as Walter Nash observed in Parliament in 1931; “I know that the Government has a fairly difficult task to face. I know that that what it has to face is two major problems. The first is to arrest the decline in income by stimulating production and to eliminate waste in production and in marketing. The second problem is how to distribute that income in such a manner as to obtain a legitimate return for the various parties associated with production, primary and secondary production and distribution.”
My suspicions are that the hold up in the Government taking up a number of reforms in the employment area to deal with this situation are due to the conservative political brake on the coalition Government that is New Zealand First. For example, NZF shut down the options of additional holidays and, the move toward the implementation of the Fair Pay Agreements. Both, of these decisions were done on the basis that these were perceived as being unfair to small business.
However, I think that the NZ First opposition to new concepts is creating a disadvantage to those same small businesses that it seeks to champion. For example, the opposition to the fair pay agreements has effectively meant that there is no wage stabilization across sectors at the time when wage increases, and stabilization could be very useful economically as a means of ensuring ongoing demand.
(It is for this reason that I do not support the proposed helicopter payments which have been suggested in some quarters. I do not believe that they will have the ongoing effectiveness that their supporters believe that they will. They are a one-shot solution to economic recession. Once the helicopter bullet has been fired that is it, the chamber is empty).
A fully funded and accessible benefit system can be an exceptionally useful companion to wage increases. Not only allowing people and families to meet their immediate bills but to continue to contribute to society until employment can be created.
Too often over the past decades the debate over social security has been mired in a conversation about morals. It is very reminiscent of the debates that used to rage in the 19th century about the deserving and undeserving poor. It is not a helpful debate. It minimizes the subject and removes blame from the role of the overall economic system in creating and maintaining mass unemployment and hardship. (Actual long-term unemployment was exceptionally rare prior to the rise of neoliberalism).
My own thoughts are that there needs to be significant work done in the Social Security area to restore the idea of benefits to what they were originally envisaged. This was a means to provide suitable support to those who require it during a time of need. Benefits should be Universal (as they were originally intended) and the payments need to be increased to 2/3 of the average wage.
Those on benefits or allowances should not be penalized for being unemployed or sick or old or have a disability etc. This was not the intention of those who originally designed the scheme. Benefits should be based on the need to ensure that people who have suffered an economic or personal misfortune.
National’s New Clothes
Posted: May 25, 2020 Filed under: General Election, History, Labour Party, National Party Leave a commentIn the aftermath of the recent National party leadership coup, I quickly skim read a popular blog which discussed the various reasons as to why the spill was abnormal. The conclusion was that right-wing National members (and voters) had previously tended not to worry about who was the Leader of the Party. It was an interesting post and, it was well researched and argued.
However, it was not strictly correct.
For most of its history National’s parliamentary leadership has been largely stable. However, National leaders certainly did face leadership coups (and, these coups were supported by the membership). But there were distinct differences in how the Party perceived them and how they were dealt with.
Firstly, National, was one of the most successful conservative parties in the Western world from 1935 until 1993. (This period covers the election of the first Labour Government in 1935, the establishment of the National Party in 1936 and ended with the final First Past the Post election in 1993). During that fifty eight year period, National was in Government for thirty two years, compared to Labour’s twenty six years. It was because the party governed New Zealand throughout the 1950s, 60s and 70s (aside from a brief 3 years from 1957 – 1960 and 1972 – 1975) that National considered itself the natural party of Government. And, you stayed as the natural party of Government by not rocking the boat ie. by launching bloody coups against your leaders.
Secondly, National (and, indeed, Labour party) leaders tended to be masters of their respective Caucuses. Muldoon, after “disposing” of Sir John Marshall in 1974 ruled his Caucus and the wider party with an iron fist. Sir Kei
th Holyoake, despite his demure appearance and personality, had done likewise. National’s leaders, despite their commitment to individualism and the seemingly laisse faire approach to caucus membership and authority, have been ruthless in imposing strict discipline that would put the democratic centralism practiced by Marxist-Leninist parties or groups to shame.
My father once said to me that there is nothing more vicious than a Tory with their back against a wall. When leadership coups have occurred within the National party they have tended to be when National’s electoral backs have been against such a wall. The only exceptions have been Sidney Holland, who was replaced by Holyoake as he was ill and could not fulfill his responsibilities and, Holyoake who stood down from the leadership in 1970. (Holyoake’s leadership was being challenged in the late 1960s. But he saw off potential interlopers. However, after leading National to a 4th term in Government, he saw the proverbial writing on the wall and retired). Muldoon, after biding his time as deputy leader, to Marshall, ruthlessly disposed of him in 1974. A coup which had the support of both the caucus and the wider party. This situation came about due to Marshall’s inability to match Norman Kirk. The hapless and luckless, Jim McLay who ‘succeeded’ Muldoon, was likewise ruthlessly disposed of by his predecessor and his deputy, Jim Bolger in 1986. McLay was no match for either David Lange or a vengeful and resentful Muldoon who had rallied a significant section of the National Party (Rob’s Mob) behind him. Bolger was later rolled by Jenny Shipley in 1998.
Modern National party history, since 2000, is equally replete with such spills.
So is the modern Labour party. For the most part, aside from Kirk’s coup against Arnold Nordmeyer in 1965, Labour leaders remained in place for considerable periods despite electoral losses. The first leader of the Labour Party, the Marxist Harry Holland was leader from 1919 until his death in 1933. Labour finally became Government in 1935. Walter Nash was leader from Peter Fraser’s death in 1950 until he retired after 1963. (Na
sh was Prime Minister between 1957 – 1960). Bill Rowling lost the Prime Ministership in 1975 and, likewise led Labour to electoral defeat in 1978 and 1981. Both, particularly 1981, were narrow loses with Labour polling ahead of National on both occasions but losing because of the First Past the Post electoral system.
In 1989/90 and in the aftermath of Labour’s loss in 2008 there have been a succession of leaders until stability was restored by Helen Clark in 1994 and, by Jacinda Arden in 2017.
The reason I think that leadership spills occur far more frequently in both parties now is due to the problematic proximity of the parties to electoral power. The MMP system and the need to connect with sympathetic voters and potential coalition parties means that both the major parties are more readily able to form a Government. MMP has meant that National can no longer perceive of itself as the natural party of Government. Unlike the winner take all approach of the First Past the Post system, MMP requires convincing voters and potential political partners to support you. It relies on you and your coalition partners being able to achieve 50% and more of the total parliamentary vote to become the government. (Previously, National had 45% but no coalition partners. Labour, might have had 40% support but it had coalition partners who shared its general policy outlook. The result is that National loses and Labour governs as it has over 50% support in Parliament). Consequently, parties have become more ruthless in terms of decerning who their leaders are – not only in terms of selling their respective policy but, (and, more importantly) in ensuring that they are able to connect with voters and potential partners.
Consequently, National’s past might be useful in determining its potential future approach. National’s new leader, Todd Muller has realized that appealing to sympathetic voters and parties such as New Zealand First will not be achieved by adopting the approach of National’s first leader, Adam Hamilton and its most recent, Simon Bridges to simply “oppose, oppose and oppose” the Labour Government. The electoral success of the Holyoake Government lay in the ability of that Government to reach a consensus between different parties and different groups. Consensus is reached between those parties who have common principles or policy. It is seldom reached between those who have substantially different views and approaches.
It is not by accident that the new leader of the National party, Todd Muller has seemingly adopted a more collaborative approach and has reached out to New Zealand First as part of the new direction. He recognizes that there is a commonality between both parties and where there is commonality there might be a political consensus. Tracey Martin has recognized the new approach and responded warmly to National’s new overtures. As the old saying goes, “You catch more flies with honey than vinegar.”
Social Democracy (and JM Keynes) rides again…
Posted: May 19, 2020 Filed under: economy, employment, History, Labour Party, Social Democracy Leave a comment
With the hullabaloo about the budget finally dying down it is probably time to reflect on what it meant and, what it portents for the future of the country (and, the Labour party).
I want to make the point that it is probably the most sweeping budget for the past 40 years. Effectively, turning its back on the market, the central role for planning and development was conclusively given back to the State. Further, the Government openly declared that it would not be pursuing surpluses or balanced budgets. Instead, it would deficit finance to minimize the coming recession. In one fell swoop, the Government turned its back on 40 years of neo-liberalism and market led economics. .
It was a budget, that certainly reset the scene for the re-introduction of social democratic principles and policy.
But, it was also a budget designed to reassure both the business community and the voters that the Government had a plan and that plan would not be the heralding in of the red dawn.
The budget instead opted for the principle that the Government had to be responsible for ensuring economic growth, stability, and demand. It also clearly indicated that Government was determined not to throw people into the fire pit of austerity – which had been suggested by some economists, business people and political commentators. Among the suggestion to come from that quarter was to simply let struggling business go to the wall, lower wages and, then, simply wait for a market correction to deal with the resulting unemployment. One of them even suggested that the wage subsidy be turned from a subsidy into a loan which workers would later pay back. The most common refrain was that the Government was placing new generations of people into debt. (Ignoring the simple fact that private debt has considerably risen in this country since the advent of neo-liberalism in the mid-1980s and succeeding generations are poorer than the preceding ones).
Thankfully, the Government ignored the bleating from these people. Listening to them would have had the effect of worsening New Zealand’s overall economic condition, turning solvent workers into insolvent unemployed ones , damping domestic demand and turning a bad recession into a truly terrible one (or worse).
Of course, as Jacinda Arden and Grant Robinson observed we are not out of the woods yet and, I would suggest that the Government might have to delve more deeply into its social democratic/democratic socialist traditions (and bag of tricks) to find policies and procedures to cope with the coming international recession.
As I suggested in an earlier post, one of these means is to have the Government lead and coordinate economic planning and development. However, as a friend of mine observed, Government’s ability to plan has been substantially weakened in the past 40 years. Instead, Government’s have allowed the market and private capital to determine outcomes and the market has proven itself to have an appalling tendency to either think tremendously short term and if it does think and act long term, as major Corporations do, then that thinking and acting is to benefit themselves and not the wider community.
The tendency to let the market determine goals has permeated the public sector to a degree that the State Sector CEOs are little better than state paid business people. In the past, Governments, both National and Labour were far more ‘hands on’ in their management of state sector development and they will need to be so again. I am aware that the State Sector Act is being rewritten by the Government. The redrafted Act promises such an approach and the restoration of parliamentary oversight and democratic control into that sector. This needs to happen.
The other thing that needs to occur is the creation (or recreation) of a coordination and planning Ministry that can spearhead development. A suitable name for this new agency could be the Ministry of Works, Development, and Infrastructure. It could have its own responsible Minister in Cabinet.
A further coordination step would be the recreation of a body bringing together unions, local government, central government, and the private and public sectors to plan and coordinate projects on all levels. This body could be like the old New Zealand Planning Council.
Of course, how far down the social democratic track we go depends on what shape the Government takes in the next term. If Labour wins an outright majority of over 50% (a feat unseen since 1951) then we might expect more far reaching reforms. The same is true is if Labour goes into a Government with the Greens (and, not New Zealand First, which is acting as the conservative handbrake (and footbrake) on the current Government). A Labour-Green Government would be a true Green social democratic government which would probably look at taking some of the more necessary steps in economic, social, environmental, and industrial reform and policy.
Bruce Jesson once observed that New Zealand was a conservative social democratic country and most people had conservative social democratic principl
es and a strong belief in equality. New Zealander’s were so enamored of equality for example, that one overseas observer in the early 20th century said that he could envisage the erection of a statue of Equality and its placement in Wellington harbour. Eugene Victor Debs, the great American socialist was apparently once asked if he could lead the masses to socialism. He responded that he could, but that someone would simply lead them out again. In 1984, New Zealander’s were led away from social democracy into the far harsher and more cruel set of beliefs and principles of neoliberalism.
Necessity will make the majority of us, at the very least, social democrats again in the immediate future.
Don’t Fear the Reaper
Posted: May 4, 2020 Filed under: economy, employment, History, Uncategorized, US Politics 1 Comment
“… So, first of all, let me assert my firm belief that the only thing we have to fear is … fear itself — nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance.” Franklin Delano Roosevelt 1933 Presidential Inauguration Speech
In the very early and mid-1990s, I worked for Para Rubber in Dunedin. Para Rubber was a NZ institution that had been established in 1910 and survived a Depression and two World Wars. It was a national wide chain with shops in most of the country’s cities and towns. However, that was to come to a shuddering halt in the mid-1990s when it was split off from Skellerup Industries, broken down and, then franchised. The new franchise operators could not deliver the same products or provide the same service as the old national chain. So, they cut back. Frustrated customers went to other stores to get the goods that they could not longer get at Para with the result that the stores cut back again. Eventually, the franchised stores closed, staff were laid off and a great nation-wide chain was reduced to a few desultory outlets.
What happened to Para is the template for how businesses operate in a crisis. COVID 19 has produced such a crisis and private businesses are taking the appropriate action and measures. They are retrenching, cutting costs and reducing services. It is a survival mechanism for businesses in a recession. They need to turn a profit to survive. Consequently, those additional costs (such as labour or wages) that prohibits them from surviving is jettisoned.
Private businesses are hard wired to think short term. Their economic survival depends upon them turning a profit in the appropriate quarter. Subsequently, they are ill equipped to encourage or lead long term economic growth or planning. Long term planning and growth needs to be undertaken by other bodies and usually this other body is central Government.
The problem is that the New Zealand economy since 1984 has been run on largely commercial lines borrowed from and influenced by business. Businesses have led the way and influenced not only the economic priorities that the country has followed but, also the way in which governments have structured and conducted themselves and the language that Government uses. For example, the New Zealand public service is not really a public service. It is run on largely commercial lines. Ministries, Departments and state agencies are administered by boards and led by a Chief Executive who operate on commercial lines. They refer to the public as clients or customers. Outside organisations or agencies are referred to as service providers. People are charged for advice or for resources. Simply, they are run as de-facto commercial organisations.
The problem for New Zealand is that we are seeking answers from people who have now been heavily influenced by a set of priorities and principles that are outdated and deeply problematic. Simply, the beliefs that they subscribe to do not provide answers or rather they will not provide the answers to questions that people are asking about jobs, standards of living and opportunities etc. To provide those sorts of answers to those sorts of questions, the Government (and the New Zealand economy) needs to step away from a set of economic beliefs and priorities that benefited one small set of people over the well being of the community.
There is a reason why US President, Harry Truman quipped, “Give me a one-handed Economist. All my economists say ‘on hand…’, then ‘but on the other…”. Simply, economics is not a valueless system. It is hotly contested and there are countless economists with different prescriptions based on different values.
This is because economics is not a science. It is deeply political and, as such, economies and economic frameworks are determined by what (certain) people think that a society wants and needs. If a people want a society that provides people with housing, jobs, comprehensive public health care and education and a high quality of life, then an economy has to be designed that provides those outcomes. However, since 1984, we 
have had an economy that has largely benefits the wants and needs of a select group of people. The theory was that these ‘captains of industry’, once they were ‘engorged’ enough on low taxes, low interest rates and low financial and economic restrictions, would then throw some money to the great masses of people and somehow, society at large would benefit. (It is comparable to the same manner that medieval Lords would throw scraps to the dogs from the banquet table).
Simply, it has not worked. But that is hardly surprising, given that it did not work in the 19th century, or in the 1930s, or in 1987 and in 1997. It will not work now, either. It will only make a dire situation more dire.
In the early 1930s when the same economic systems and prescriptions were in play as they are now, there was a growing belief by economists, governments and a growing number of people that the business as usual/classical economic approach had failed. It had failed to provide business stability, it had failed to provide employment, it had failed to provide a standard of living for millions of people. It had only benefited the very rich (who continued to make money at this time) and it had led to the greatest economic depression in the modern world.
And, Governments and parties reacted to this breakdown. The failure of classical economics to provide basic living conditions and stability saw Sweden’s new Social Democratic government turning its back on the classical approach in 1932. New Zealand did so in 1935. Of course, the most significant rejection was when the newly elected President Franklin Roosevelt announced his ‘new deal’ in his 1933 Inauguration speech. It was the final confirmation that the ‘business as usual approach’ advocated by the business community and their allies (and which had contributed to widespread economic and social pain for millions of US citizens) was over.
New Zealand and the world stand on the edge of an economic, social and environmental, abyss as large as that which swallowed the world in the 1930s. It is folly to believe that the same economics that contributed to the calamity that now exists are going to solve the situation and lead the world to a new golden age. Already, their prescriptions are clear. Governments need to cut, retrench and do less and, somehow, society will be restored.
As in the 1930s, Governments and communities need to be strong and turn their backs on the harping from failed neo-liberal economists and their political ilk. As Roosevelt said the only thing that we have to fear is fear itself.
Universality – The Giant Killer
Posted: April 13, 2011 Filed under: economy, employment, History, National Party, Social Security Leave a comment
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.
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