Friday, 9 September 2016

The Great Tightening 2.0

Trading Sovereignty For Investment Capital - Again: The suppression of local democracy is absolutely crucial to the success of the second “Great Tightening” exercise in New Zealand history. Unless the responsibility for making critical resource allocation and/or conservation decisions is taken out of the hands of elected local representatives and placed in the hands of unelected officials appointed by central government, then foreign investors will not feel sufficiently confident to risk their capital in major development projects.
 
ECONOMICALLY SPEAKING, it is difficult to define New Zealand as anything other than a colony. Its biggest export earner, agriculture, remains a price-taking not a price-making industry, and the other big foreign exchange earners: tourism and education; are essentially extractive. The former “mines” our spectacular scenery; the latter our status as a first-world, English-speaking nation.
 
That New Zealand is able to classify itself as a first-world nation is actually rather remarkable. A reliance on agricultural commodity exports and tourism is an economic condition generally associated with third-world states – most of which, only a century ago, were colonies of the major European powers. Officially, these former colonies are now free and independent states. But, if post-war history teaches us anything, it is that winning political independence, and becoming economically independent, are two very different things.
 
In order to grow and prosper, price-taking economies require a patron. For most of New Zealand’s history that role was fulfilled by Great Britain. It was British capital which financed the extensive infrastructure of its far-off farm, and it was in British markets that the produce of that far-off farm was sold. Without her capital and her markets, Great Britain’s far-off-farm would have failed. Certainly, New Zealand’s home-grown capitalists were too few and too poor to build a “Better Britain” in the South Pacific on their own.
 
More recently, the role of New Zealand’s principal economic patron has been taken over by China – which currently absorbs the lion’s share of New Zealand’s agricultural exports. If its history as a British colony is any guide, then the capital required to finance New Zealand’s future development will, increasingly, come from the Peoples Republic.
 
Like their British predecessors, Chinese investors are already attempting to secure control of the key supply chains to their domestic market. Just as New Zealand lambs were once raised on farms financed by British-owned banks; slaughtered in British-owned freezing works; transported to Smithfield in British-owned ships; and their frozen carcasses sold to British-owned retail outlets: New Zealand milk will soon be extracted from Chinese-owned cows; raised on Chinese-owned farms; processed into infant formula in Chinese-owned factories; shipped in Chinese-owned containers; and sold in Chinese-owned supermarkets.
 
One of the most interesting themes developed by the New Zealand historian, James Belich, in his 2001 book, Paradise Reforged, is what he calls “The Great Tightening”. In a nutshell, this describes the ways in which New Zealand politicians bound their countrymen ever more tightly to the British economy. New Zealand’s primary production went out to Britain; British manufactured goods came back; and woe betide anybody who got in the way (like visionary economic nationalists, socialist trade unionists, and other assorted pests).
 
It is rapidly becoming clear that a very similar tightening exercise is underway in twenty-first century New Zealand. In order to attract the foreign direct investment it believes New Zealand must have to keep its economy growing, the National Government of John Key is methodically emptying the statute books of every legislative impediment to economic development.
 
The suppression of local democracy is absolutely crucial to the success of this second “Great Tightening”. Unless the responsibility for making critical resource allocation and/or conservation decisions is taken out of the hands of elected local representatives and placed in the hands of unelected officials appointed by central government, then foreign investors will not feel sufficiently confident to risk their capital in major development projects.
 
Stripping local politicians of their power to manage and develop key infrastructure is an equally vital element of the same tightening programme. It’s what lies behind the draconian provisions of the Local Government Reform Bill currently before Parliament. Under this new law the unelected Local Government Commission will have the power to force local councils to hive-off key services, such as water reticulation, energy, ports and transportation to so-called “Council Controlled Organisations”. These Orwellian entities are, of course, anything but council controlled – as anyone living in Auckland, where they have been operating since the creation of the “Supercity” in 2010, will attest.
 
Auckland has not been the only laboratory in which the anti-democratic elements of National’s tightening have been tested. The people of Canterbury have been without democratic representation at the regional level since the Government sacked Ecan’s elected councillors and replaced them with appointed commissioners – also in 2010. With commissioners safely installed, the irrigation schemes deemed essential to dairy intensification in Canterbury could proceed without fear of democratic interference.
 
When most of the population of colonial New Zealand could trace their origins directly to Great Britain; and when the patriotic mists of Imperial Albion largely obscured the predatory commercial interests of the City of London, the first Great Tightening proved broadly acceptable.
 
The second will be very different. Those wondering how it feels to see one’s country subordinated to foreign interests should probably consult a Maori.
 
This essay was originally published in The Press of Tuesday, 6 September 2016.

10 comments:

Guerilla Surgeon said...

One of the ways they seem to be suppressing local democracy is by making local government huge. I swear if I was in Auckland, I probably wouldn't know who the hell to vote for at least on the council. It's bigger than most electorates for Christ's sake. In my own local government election I'm voting for someone who's got the guts to put their labour affiliation up on their posters, and Ken Laban – I have no idea about his politics but I do actually vaguely know him, and he has talked a lot of sense in my presence. As for the rest of them, am I supposed to take it on trust that they will govern on behalf of the whole of the electorate rather than the business elite? If they're not prepared to indicate that by suggesting their party affiliation I'm not voting for them.

jh said...

The difference between then and now is (also) development. We have built the dams, paved the roads, broken in the hill country and built the meat works and incomes have stopped rising, but what is left: intensity, direct investment (ownership of farmland), immigration and property development?

jh said...

Chinese tour drivers had no licences, police allege
http://www.stuff.co.nz/national/crime/84044806/chinese-tour-drivers-had-no-licences-police-allege

Like hexachlorphin they get in.

peter petterson said...

All will change with the election of a Labour/ Greens Govt. If what you say is true, Winston will support a left-wing coalition govt next year. Parliament will be called early for some emergency legislation.

greywarbler said...

jh
Uber taxi drivers may not have licences either. These taxi driving people people are just eager to make a living or get extra money, in a competitive world. Protective legislation is breaking down. Outsiders are coming in and taking away your living. Guilds or the type, are being demolished.

And central government politicians and their high paid flunkeys and extra-terrestials out of the Beehive, now less a political meeting house and more a Colosseum arena, continue with subterfuge and determination, and indifference to those outside the charmed circle.

David Stone said...

Hi Chris
Ditto JH ... The requirement for development finance during our colonial beginnings is not remotely comparable with any present day requirement . We are in many ways a more advanced economy than that which seeks to take us over now , no longer a forrest covered wilderness . And we don't need anyone else's money either except when we buy everything we should be making here from overseas. Governments can direct their central banks to make their own money and direct it to whatever investment they choose. Ever heard of Quantitative Easing? Money is just a system of keeping account and the way it is allocated and applied is a matter of choice and arbitrary agreements.
Any economy dependant on exports is a price taking economy unless as in rare examples they have the only source of some raw material that everyone needs. And if it could ever eventuate that our agricultural produce could sell freely on world markets at a price based on quality and nothing else we would certainly need no one else's money.
Cheers David J S

Jens Meder said...

Is not the natural and constructively effective way out of an "economic colony" status for a country in more indigenous capital creation and ownership ?

And does not the same apply also on the individual level ?

And is it not true, that without capitalism - the saving and useful (profitable)investment of the capital saved - civilization would be impossible, also of the "socialist" kind ?

With the answer of YES to all these questions (unless someone can credibly argue for NO, NOT TRUE) -

then regardless of whatever normal, realistic political persuasion, is it not obvious what needs to be done on the economic level -

for a more prosperous, fair and egalitarian democracy and civilization ?

Nick J said...

Civilization without capitalism you may be surprised to find out has existed multiple times.
I fail to see the linkage between saving of capital and the public good. In your model capital is private and stored for individual benefit. Given that capital is a manifestation of effort / energy by the collective how can it's capture and privatisation by the individual be anything other than at the expense of the collective?

Charles E said...

The huge majority here can still trace most of their ancestors to the UK & Ireland, including almost all Maori. There has been some change in the last 20 years but not that much.
So no, just because we trade more with China than where our blood and most of our culture comes from will not mean we have to surrender to China in any way at all. China has zero soft power and that will not change even if they ever become the biggest economic power, not that that will happen either I would bet. Remember the great economic based 'threat' of Japan in the 70s & 80s? Where is it now, even though they are still very large economically. And Germany is enormous economically yet again, not much of an influence in the world. So economics may partly rule the world but it's not just having a big economy that makes a ruling power.
China wants to be taken seriously and be at every big table but I doubt it expects to lead the world or wants too.

Anonymous said...

Despite ongoing low dairy prices there have been very few distressed dairy farm sales, and very few sales full stop. This is because the losses being made are usually less than one percent of investment so the banks are hanging in there having already cut loose the inefficient operators. As such I don't think there is much need for the concern that all our land will be snapped up by overseas investors - particularly as the land price for dairy farms is more out of proportion of revenue earning potential than ever.