Sunday 18 August 2019

Paying For Your Party’s Promises.

Fully Informed? Labour’s 2017 promises raised expectations that were little short of revolutionary. Unfortunately, they were never adequately shaken through the fiscal sieve. The hard economic work was not done – and it shows. Prime Minister Jacinda Ardern’s critics have long complained that her grasp of the way the New Zealand economy works is alarmingly weak.

“HOW ARE WE going to pay for it?” If you are in the business of “transformational” politics, that is the $64 billion question. It was a question aspiring transformers were always tasked with answering back in the days when the Alliance was a “thing”. A big thing, too. For a few intoxicating years in the early-1990s, the Alliance regularly outpolled the Labour Party.

It frightens me to think that there will be people voting in next year’s general election who weren’t actually born when the Alliance was going strong. Not for them the memories of a rampant Jim Anderton leading his rag-tag left-wing coalition to an 18 percent showing in the 1993 election. No memories at all of when the Greens were not a party in their own right, but a leading constituent party (alongside the socialist NewLabour Party) in Anderton’s merry throng.

It was one of the things that I most admired about Jim Anderton: his absolute commitment to showing the voters exactly how he planned to pay for his promises. Every year John Lepper and Petrus Simons, the two economists Anderton had retained to advise him, would get together with the young – and not so young – policy wonks that flocked to the Alliance’s colours and thrash out what Anderton called his “Alternative Budget”.

The Alliance never ran from the accusation that they were “tax and spend” socialists – they embraced it. Those Alternative Budgets were the proof. Anybody who cared to could calculate, with considerable precision, by how much their taxes would rise, and identify exactly on what the additional revenues would be spent.

Of course there were sceptics, both in and out of the Alliance, who questioned this approach. “Why would people vote for a party promising to raise their taxes?” – they demanded. The patient reply was perennially supplied by Professor James Flynn: “Because promising people progressive changes without first detailing how they are to be paid for is unethical.”

Flynn understood that real change could only come when the people offering it enjoyed the confidence of those who make change possible – the voters. If you hadn’t already convinced them that it should be done, then it wouldn’t be – couldn’t be – done.

The Alliance made a great many mistakes before it finally imploded in 2002, but its greatest mistake (or, more accurately, its leader’s greatest mistake) was to set aside Professor Flynn’s sage advice in the interests of consolidating a coalition agreement with Helen Clark’s Labour Party.

Labour, however, was promising too little to accomplish real change because it was unwilling to tax the voters too much. Even worse, it was point-blank refusing to roll back the “Rogernomics Revolution”. Given that rolling back Roger Douglas’s neoliberal revolution was the Alliance’s raison d’être, Anderton’s acceptance of Labour’s refusal to challenge the status quo amounted to political suicide.

But, surely, all this is the dead-and-buried politics of the unlamented twentieth century? What has the long-defunct Alliance got to do with today’s politics?

Two word answer: Jacinda Ardern. The Prime Minister’s performance at the lectern in the Beehive theatrette on Monday (12/8/19) was a sad and deeply frustrating vindication of both Jim Anderton and Jim Flynn. All those transformational chickens set loose by Jacinda in the election campaign of 2017 are now flocking home to roost.

Labour’s promises, raising little short of revolutionary expectations, were never adequately shaken through the fiscal sieve in the manner of the Alliance’s fully-coasted manifesto. The hard economic work was never done – and it shows. The Prime Minister’s grasp of the way the New Zealand economy works appears weaker than that of the humblest Alliance parliamentary candidate. The latter were thoroughly schooled in basic economics by Messrs Lepper and Simon. It was always the case with the Alliance that, from the very beginning, its leaders understood which questions they absolutely had to be able to answer.

It makes me wonder whether, in the gloom of all these gathering economic storm-clouds, Labour’s leaders ever wish that they had a Jim Flynn to remind them of the ethics of knowing how social and economic transformation will be paid for – before it is promised.

Probably not. Very little provokes the scorn of Labour MPs like a favourable reference to the Alliance. Hardly surprising, really, because the Alliance was always the party Labour could have been; should have been; but wasn’t.

This essay was originally published by The Otago Daily Times and The Greymouth Star of Friday, 16 August 2019.


swordfish said...

Look, I hate to be the Poll Police once again, Christopher, & I know this is a mite pedantic ... but, you know, for the good of historical accuracy & all that (and obviously because I'm a bit of a smug, self-satisfied Know-it-All to boot):

You argue: " ... back in the days when the Alliance was a “thing”. A big thing, too. For a few intoxicating years in the early-1990s, the Alliance regularly outpolled the Labour Party."

Not regularly. Only in one or two consecutive TVNZ Heylen polls (& by the tiniest of margins) in very late 91 / early 92.

Throughout almost that entire first term of the post-1990 Bolger Govt (save the first & last few months), Labour were the most popular party, the Nats were generally 2nd but were pushed into 3rd place on several occasions by the rise of the Alliance.

Throughout the 1990-93 term, Moore's Labour were almost always in the 40s, just occasionally dipping down to the late 30s, the National Govt fell as low as the early 20s (a record low for any NZ Govt), but mainly fluctuated between the mid 20s and late 30s, while the Alliance largely fluctuated between the late teens & late 20s, though briefly spiking up towards 40% a year or so following the 1990 Election.

All of which meant that the combined ratings for the Opposition - Labour + Alliance - hit unprecedented heights ... reaching an astonishing 73% at one point.

In other words, Ruth Richardson's 'Mother of all Budgets' did not go down at all well with the punters. Indeed, you might say they were livid.

Anonymous said...

What have labour promised and not been able to deliver cause of the lack of costing ie failure to budget for? Genuine question. I know there have been compromises on their promises, but I believe that comes down to the reality they have a coalition partner they have to negotiate with

Patricia Smith said...

A sovereign country that issues its own currency and has a floating exchange rate can buy anything in that currency. It does not need to borrow. New Zealand is such a country but all its poor citizens have are politicians, of all colours, who do not understand that basic principle. Al lthey can talk about are the evils of deficits and how we must have a surplus without understanding that to have a surplus they are taking money out of the economy. Then we have a RB Governor who lowers interest rates to enable people to borrow more! Stark raving mad. Give people money by increasing benefits on a large scale and make those benefits indexed to inflation. Or create jobs so that those people can work for their money. That money would be spent within the economy while making loans cheaper does not. It only keeps the housing Ponzi scheme going.

Slugger said...

I don't agree with much of what Michael Bassett says or thinks. But he probably got it right when he said of Jacinda that a 'Bachelor of Communications' (whatever that is) from the University of Waikato (whatever that is)hardly makes her PM material.

And many years ago I took Prof Flynn's political philosophy paper among others. It was a staggering experience by a global academic authority in his field.

Jens Meder said...

But if Labor had taken up
Alliance ideas, would it have become government ?

Guerilla Surgeon said...

How often these days to political parties make specific promises anyway? Local body politicians sometimes do, but they have more to work with. National occasionally, because it knows exactly what farmers want – sometimes. But usually it's pretty much airy fairy and vague. Largely because no one is willing to make hard decisions anymore. National because it will offend their wealthier voters, and Labour because it seems to have accepted as Chris points out the neoliberal paradigm, bullshit though it may be.
We live in a country now where the tax load has shifted from those who can afford it, to those who generally can't. Governments are enamoured of indirect taxes which are easy to collect but hit the poor. And they are scared to raise taxes on the middle class.
We live in a country where in the name of "labour flexibility" much of the country lives in insecurity. And somehow this is seen as okay.
Income has stagnated for most of the people in New Zealand, while prices have gone up. Except for maybe the top 20% who have generally kept pace with price rises and the top 1% who have consistently grabbed most of the income increases. And somehow this is seen as okay.
We have one of the most unequal countries in the world, and research I've been reading seems to show that inequality is what kills community spirit rather than multiculturalism. But again nobody seems to care about this, because everyone now lives in their own bubble, and the middle-class hardly ever speak to a lower class person except perhaps to give them an order – one way or another.
We have a country where 50% of the people in part-time work would rather have full-time work. But nobody is going to do anything about that, because part-time workers are cheaper, and all the problems associated with part-time work and shift work and the like are foisted onto the taxpayer.
The bottom 20% of the country basically has no wealth, and is probably heading towards negative wealth. And this means they have fewer buffers against misfortune and have to rely on the state, which to be blunt, is miserly. And politicians think this is okay.
As I said before, labour is no longer the party of working people, obviously National never has been, and the Greens are also essentially middle-class. Difficult for me to find someone to vote for, and it would be nice for a change to vote for something positive instead of the lesser of the various evils served up to us in the guise of political parties.

David Stone said...

@ Jens Meder...
Yes absolutely! At that time the mood of the electorate was totally aligned with Anderton's sentiment. It was labour voters who vote labour come hell or high water that kept the Alliance out. They would have loved it if labour had adopted Alliance policies.

Anonymous said...

Patricia Smith - your lack of understanding of how economies work is a good example of what Chris is saying about Labour. If we don't have foreign exchange, how do we pay for our imports? How do we get foreign exchange? We either have to sell goods or borrow. If we don't have enough foreign exchange, the exchange rate goes down and those overseas goods get to expensive. All right if they are consumption, but what if they are stuff needed to actually run the country, like say railway tracks or light bulbs?
Chris Morris

Anonymous said...

Issuing new currency is paid for via increased inflation. The total value of the currency does not change - it just means that every dollar is worth very slightly less, and the government's percentage of the total pie is slightly larger.

Issuing new currency is, in effect, a wealth tax on deposits and circulating cash. You can get away with a little bit, but as with any form of taxation, too much damages the economy.

Patricia said...

Chris, it is you who doesn’t understand how the monetary system works. You should start thinking.

mikesh said...

@ Anonymous
We can purchase overseas overseas currency with NZ dollars. Of course too much of this will lower our dollar's value, but this of course will reduce local demand for overseas currency and, in effect, impose a break on the practice.

Odysseus said...

I don't know which terrifies me more. Labour's economic illiteracy or National's enthusiasm for selling this country off to the Chinese Communist Party. It's apparent that good people don't enter politics in New Zealand any more - it has become the province of self promoting careerists, identity cultists and snake oil merchants. And now we face a recession which may be even more devastating than the GFC. The world is awash with debt and the global engines of growth are all shutting down. We may well be in for a transformation but not the one you thought you were getting when a bitter old huckster made his choice for the country two short years ago.

Jens Meder said...

But David Stone - am I wrong in that Helen Clark won elections without support of the Alliance, and Jacinda won it because of Labor's "fiscal responsibility" commitment ?

And that Labor may have a better chance in 2020 by sticking to it and veering towards leadership from closer to the Center rather than from further to the Left ?

Blimp (Lieutenant Colonel Retired) said...

Not to mention how will the left pay for TOW 2,3,4,5,6 (settlements aren't full and final).

Anonymous said...

"...Jacinda that a 'Bachelor of Communications'..."

I still find people who think like this hilarious, people who are still wondering why Jacinda is where she is. It's almost as if she understands how media works and spent years of hard work exploiting this knowledge to make herself the most popular politician in the country. I can't think of a clearer or more effective application of a person's degree in a political career.

It reminds me of people mocking Obama for having been a community organiser (what is that, anyway, they would say), and then watching him whup them.

And people with NZ university degrees making fun of Waikato is also priceless. All our universities suck. Anyone with real brains goes overseas.

Guerilla Surgeon said...

"All our universities suck."
Bullshit. Not worth any more reply than that though.

Slugger said...

@ Anonymous 20 Aug 07.40

Michael Basset's point was Jacinda is woefully out of her depth on the serious international stuff. CT might also suggest she stuggles with the economic detail.

The thing is she can't devote 60-80 hours a week to doing the reading because she doesn't have the time as PM.

As for Obama, he met his wife at Harvard. She creamed it in a top law firm while he worked as a 'community organiser.' And then started his political career.

Not all NZ's universities 'suck'. The current rankings indicate that Otago and Auckland would be the only ones worth time and money. But you're right in one thing, Anonymous, top academic talent does venture overseas.

Oh and Anonymous, the next time you go to your GP and if that GP is either Otago or Auckland trained, by all means tell them that their medical qualifications 'suck'.

Anonymous said...

"The current rankings indicate that Otago and Auckland would be the only ones worth time and money."

Nope. They suck too. They don't really have any money and find it hard to get and keep decent people. It's pretty funny when people try to be snobbish about relative rankings of NZ universities, when all of them are underfunded and just not that great, especially these days. It's like people from Invercargill being snooty about Bluff.

Jeez. When was the last time I had a doctor who was trained in NZ. I don't know. They're all South Africans where I live.

David Stone said...

@ Jens
I recon you are right about Clark wining in without the help of the Alliance in fact she won in spite of it, but not that Jacinda won
because of fiscal responsibility commitment , in fact she won in spite of it.
Unfortunately the 2020 election will be decided on personalities and how people perceive them and will have nothing to do with the economy. Much more to do with things like Ihumatao and who puts their foot in it, unless there is a meltdown of the world financial system in the meantime and no one can sell or buy anything either overseas or locally which would focus everyone's mind.
At the present electoral mood Jacinda will win hands down irrespective of her fiscal policy. It is not her baby anyway, its Robertson's and Cullen's.

Anonymous said...

To continue...

New Zealand universities are woefully underfunded and geographically isolated. The latter is something that just can't be fixed. There are a few good people, but that's the reality of it. Who's going to come here over Boston or London? Add to that the fact that New Zealanders just don't really care about the life of the mind, and you have the strange creature that is the NZ tertiary sector. If you only care about vocational training, I guess they're OK, but universities can be and are about a lot more than that.

In that light, being snobby about Jacinda's academic background is silly. Especially since simple Simon supposedly went to Oxford, which appears to have done nothing for him.

sumsuch said...

Why you're still my speaker.

Your tactics are oft dubious, in retrospect. But your/our goals are golden.

Anonymous said...

"Muldoon's accountancy degree wasn't really worth the paper it was written on in the end."

Although he was a trained accountant, Muldoon didn't have a university degree according to Barry Gustafson's book,'His Way'. This was held against him in candidate selection, and unfairly so to my point of view. And yet despite not having a degree he was a fairly effective politician who tried, and failed, to retain the postwar economic settlement. I'd never have voted for the guy, but he was a mental and moral giant compared to anyone we've got now.

Here's a list of PMs and their educational qualifications:

Jacinda Ardern: BCS in politics and public relations
Bill English: BA (Hons) in English Lit
John Key: Bcom in Accounting
Helen Clark: MA in politics
Jennifer Shipley: Dip Tching
James Bolger: none
Mike Moore (a doctorate, but after parliament–can't see any details on a baccalaureate degree)
Geoffrey Palmer: JD (Chicago)
David Lange: LLB
Robert Muldoon: trained accountant (non-degree)
Wallace Rowling: MA (marketing), BA (economics), qualified teacher
Norman Kirk: left school at 13
Jack Marshall: LLB
Keith Holyoake: left school at 12

Only Palmer has a qualification of international standing, a doctoral degree from one of the world's finest universities. But looking at this list I can't see any correlation between education and achievement as a PM. Palmer was probably the worst PM of all of those.

Guerilla Surgeon said...

Ha! Muldoon might have been an intellectual giant, (cough cough) but he was a moral pygmy. A populist of the first order, who do anything to garner a vote or two. Including riding on the back of a gang member's bike if I remember rightly? Where is all the conservative condemnation of that?

sumsuch said...

You have the details of our careening from what mattered. And the silly arses ( the top two now) who inherit the bad tradition left. David Cunliffe was better, despite and despite. Yourself, and other social-democratic commentators aside.

Some of we talkers, in the realpolitik field, fall on our faces but others go forward. Jesson, amazingly, went forward. Wouldn't ask but there are no leaders really among politicians but plenty among our godzone talkers. 9 out of 10 may die ... Bryan Gould seems determined to enjoy his retirement. We rely on the one in a thousand truth-knowers with one in a thousand drive. Corbyn and Sanders.

sumsuch said...

Stop thinking of Machiavelli, Chris, and go forth. Speak honest. Like a child. You talkers need to emerge from your shells like dear, totally unsuited, Bruce. Labour is ridiculous. Even its burp for the people, Cunliffe.

sumsuch said...

Heard Grant Robertson on RNZ 'Focus on Politics' today saying everything but he'll increase spending as Trotskyite Leftist Reserve Bank Governor Orr suggested emphatically.

And that should come through beneficiaries.

The boy seems as over-awed by the financial elite, as illegitimate pu-ir Scot Ramsay McDonald was by the aristocratic social hostesses during his prime ministership , and we know where that lead.

P.s. McDonald had it long in him, postponed, by wilyness, my g. grandfather's successfully argued vote at a Labour annual congress for the adoption of socialism as the party's official policy by 15 years.

Truth now matters more than anything and immediately. Hence my lack of tolerance of religion, or looking out the sidedoor window while driving.