Friday, 20 March 2020

Nobody Left Behind.

Solidarity Forever: All over the world, the arrival of the Covid-19 virus has exposed the fragility of the walls we erect around ourselves and our loved ones. It has shattered our illusions of autonomy and revealed to us how utterly dependent we all are on other human-beings. Finally, we see the state for what it truly is: the institutional expression of our interdependence; the place where everybody comes together – and nobody gets left behind.

ALL THOSE who criticised Finance Minister Grant Robertson for refusing to break his Budget Responsibility Rules owe him an apology. Steadfastly, for more than three years, Robertson has reiterated his conviction that maintaining surpluses; keeping Government debt levels low; and tightly managing public expenditure; was the only responsible course for an economy as vulnerable as New Zealand’s. His argument: the we needed to keep plenty of economic headroom in anticipation of that proverbial “rainy day”; has been vindicated. Just take a look out the window – it’s bucketing down!

Not that the Finance Minister is sticking to his Budget Responsibility Rules now. The emergency economic package announced on Tuesday afternoon makes it very clear that the Coalition Government will spend whatever it takes to keep the New Zealand economy afloat.

The $12.1 billion of emergency spending announced by the Finance Minister represents 4 percent of New Zealand’s GDP. This is a massive commitment. Proportionately, it is more than twice the size of the Australian Government’s response. Robertson told journalists that his package was inspired by the expansionary policies of the First Labour Government. Certainly, his decision to increase benefits by $25 per week and double the Winter Energy Subsidy for all welfare recipients and the elderly conforms absolutely to the generous spirit of Mickey Savage’s Labour Party.

Though politicians are notorious for not learning the lessons of history, on what, and more importantly, what not to do in response to a sudden economic shock, Robertson and his colleagues have proved themselves more than willing to take instruction.

In the wake of the 1929 Wall Street Crash, the advice tended to President Herbert Hoover by his Secretary of the Treasury, Andrew W. Mellon, was as brutal as it was blunt: “Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate.” In other words, allow the ruthless surgeons of finance to exact the pounds of flesh now owed them by millions of  stricken Americans. Mellon and his fellow laissez-faire capitalists were convinced that encouraging the survival of the fittest, by sending the weak to the wall, was the President’s only rational course of action. The ideology of Social Darwinism, to which all the world’s ruling elites subscribed, demanded nothing less.

Mellon’s advice, as we now know, was wrong in every respect. It transformed a savage sharemarket correction, which was recoverable, into a devastating global depression that lasted more than a decade.

In fairness, the cause of the current economic shock cannot be attributed to Mellon’s neoliberal successors. The unfolding Covid-19 Pandemic is one of those exogenous events (like the asteroid strike that wiped out the dinosaurs) that defy all but the most inspired soothsayers. The species jump that precipitated this crisis cannot be laid at the door of any particular ruling elite.

Where human agency does come into view, however, is in the way responsible authorities’ respond to Mother Nature’s random interventions. For more than three decades, the promoters of the “free market” have been telling us that the state is an impediment to human welfare and prosperity; that “sovereign individuals” are far better placed to promote their personal welfare than politicians and bureaucrats. Well, they are not so vocal now. Just as there are no atheists in foxholes, there are precious few rugged individualists in pandemics. Indeed, it is nothing short of miraculous how rapidly the spread of a deadly infectious disease has reinvigorated sovereign individuals’ faith in collectivism!

All over the world, the arrival of the Covid-19 virus has exposed the fragility of the walls we erect around ourselves and our loved ones. It has shattered our illusions of autonomy and revealed to us how utterly dependent we all are on other human-beings to keep us fed, and watered, and well. For a great many of us that revelation has been both devastating and liberating. Finally, we can see the state for what it truly is: the institutional expression of our interdependence; the place where everybody comes together – and nobody gets left behind.

As the Federal Government intervened decisively in the financial crisis of 2008-09 to rescue the commanding heights of American capitalism, the cover of Newsweek summed up the new zeitgeist. Watching Grant Robertson unfurl our collective umbrella against the Covid-19 Pandemic’s rainy day, I couldn’t help recalling the words emblazoned on Newsweek’s front page:

“We are all socialists now.”

This essay was originally published in The Otago Daily Times and The Greymouth Star of Friday, 20 March 2020.

12 comments:

Tom Hunter said...

On your previous Op-Ed you said that Adern was not an ideologue but a "pragmatic idealist".

I can't help thinking that the same tag could be applied to you, given your sunny Uptalk appraisal of Adern's leadership on this issue which, as other commentators pointed out, has not been as steller on the specfics as was needed, starting with testing.

But when I read the following lines I think you're likely more Labour tribalist than pragmatic idealist:

... maintaining surpluses; keeping Government debt levels low; and tightly managing public expenditure; was the only responsible course for an economy as vulnerable as New Zealand’s....

All of these things were pushed hard by the previous National government, even as they also allowed for big spendups to deal with things like the GFC and Christchurch earthquake. And they were also pushed hard in the leadup to the 2017 election, and were seen to be successful by enough voters that Labour felt it had no choice but to agree to these "neoliberal" Thatcherite arguments.

To the great dismay of many Labour people through 2018 and 2019, including even yourself, as they howled about why Labour was not spending big and why Robertson was kowtowing to Joyce and company on these issues. I saw vast numbers of such complaints on Lefty blogs through those two years, and I saw some especially cutting attacks on Robertson for "carrying National's water".

So it is rather amusing to see you celebrating this fortitude now, as if it was Labour's heart-and-soul belief about such things. It's not and never will be. More spending, more debt and higher taxes are the order of the day, held in check only by the frightening prospect that voters may not agree.

Tom Hunter said...

Oh - and one more thing. In a free and democratic society we can't act the way China did, which is a good thing.

However, that means persuading people to self-isolate if they're sick and for healthy people to minimise their contact with others.

To put it bluntly that is more an example of individuals freely cooperating to contain and then solve this problem than all of us getting behind the Great And Powerful State while we wait for them to tell us what to do.

Kevin Hester said...

Collapse is underway. No amount of 'Helicopter money' will prevent it. It will just postpone the inevitable a little longer and make the hole we are tumbling into deeper.
https://kevinhester.live/2019/09/05/collapse-the-only-realistic-scenario/

Anonymous said...

right or wrong, your comments are ratioanl and well said...not like the usual tambourine banging Labour zombies who pile onto Chris's intelligent posts

Patricia said...

Now is the time for people to understand how the monetary system actually works. To repeat, understanding the monetary system is essential. Listen to Prof. Bill Mitchell on YouTube.

Kat said...

"To put it bluntly that is more an example of individuals freely cooperating to contain and then solve this problem than all of us getting behind the Great And Powerful State while we wait for them to tell us what to do..."

Isn't that exactly what the govt has been advising people to do.

I expect we will be seeing the smattering of like minded one minute Mike's disciples ramping up the diatribe on various blogs to push the anti Ardern coalition govt meme prior to the elections in September.

But wait, next they will be calling for enforced isolation, such as they are so ignorant, confused and muddled.

Geoff Fischer said...

Kia ora Chris
Governments all over the western world are indiscriminately pouring money into a failed system. They are channeling social welfare through capitalism at a time when capitalism is on its knees and the capitalists can contribute nothing to the process of distribution while taking all they can get out of it. Your left wing government is engaged in a heroic but doomed effort to save capitalism at any cost. Many other alternatives open to them, but this is the one they have chosen. As Tom Hunter suggests, in this crisis your left-wing tribalism has overwhelmed your normally impressive capacity for reason.

Steve Alfreds said...

The current market correction has been on the cards for over a year. The US China trade kick started a run of ongoing market volatility. The Covid-19 coronavirus is merely what pushed things over the edge. After the GFC the US Federal Reserve and the European Central Banks pumped trillions into the global money supply through quantitative easing which merely fueled share market and property bubbles across the Western World. I can't help feeling quantitative easing grew out of an opposition from the neoliberal orthodoxy towards Keynesianism and the use of fiscal policy to smooth the effects of the downturn, which is really what our Government is doing now with it latest spending package. I hope our Reserve Bank thinks long and hard before looking at using QE here. With so many of our Government bonds held by Australian banks it could end up on the other side of the Tasman.

greywarbler said...

But our Left wing tribalism split up long ago with factions sticking to the sides of NZ right-wing cargo-cult financialism like barnacles. Some in the Left are still clinging on while underwater divers attempt to prise us off the Crimson Assurance! They are succeeding one by one to free us from this very clever float of legerdemain which includes paying Austalian banks to issue loans to us using systems that we could use ourselves. It's a Trump-like business deal and explains why we're Aussies' poor relations that they have to a meal now and then where they entertain themselves more than they entertain us.

Unknown said...

Must agree with everything you say Chris except perhaps your romantic description of the state. I guess you mean that the state can be a force for the good of all, but notice the priority is still the maintenance of business and banks. A substitute income scheme is apparently being worked on, but many of the unemployed will miss out on that because they have been out of work before the current corona crisis hit.
People before profit: can we expect that to be the guiding principle of the current state?

Geoff Fischer said...

Kia ora Chris.
It is almost as though you are saying that benevolence is the essence of the state. You are not clear whether that applies to all states or just of the Realm of New Zealand.
Most New Zealanders will not see it that way. When Jacinda said that there would be no shortage of food, and no one should "panic buy" many disbelieved her. Why? Because thirty five years ago the Labour Party explicitly taught New Zealanders to trust in the market, and not in the state. They were right about the state being untrustworthy. But they deceived us about the market.
New Zealanders now realize that neither the state nor the market will save them. That is why they are "panic buying" which is, I admit, folly of another kind.
Your eulogy to the state is a premature obituary. You may be anxious that the good done now and again by the New Zealand state should not be interred with its bones. Fair enough. There is a place and a time for historical objectivity. But right now we should be looking to the impending calamity.
You cannot "lock down" a society without providing adequate means for the provision of essential goods to all households. The New Zealand government does not seem to have done that. It is relying on the existing supermarket supply chains which leaves a gaping hole in its strategy of household isolation. Supermarket sourcing will work for the well heeled and mobile part of the population, but not for those who are cash strapped, slow off the mark or lack private transport.
In our rohe we have alternatives to the supermarket supply chain and have adequate food supplies at our disposal for the short term and the ability to commandeer other producers if the crisis continues unabated for months. But most of New Zealand is not so fortunate.
For those others a "rent freeze" and a "mortgage holiday" is a bad joke. How are they to pay exorbitant rents and mortgages if they have no income? Does the government imagine that when Alert Level 4 comes to an end they will be able to pay the backlog of deferred mortgage payments?
This government is floundering. In terms of public support it is on the mat and out for the count, and yet you suggest that now is the time for us to throw the fight and get in behind the colonial state which has given us a civil war, the raupatu, two bloody world wars, laissez faire neo-liberalism and two avoidable epidemics in a century?
Now you are agreeing that the state should censor the news in a futile attempt to conceal the short-comings and gross failures that are obvious to us all.
It will not help. New Zealand will not, cannot and should not return to the way it was in January of this year.

sumsuch said...

So NOW we hear you were against the recommended massively increased benefit and housing spending. I wondered about the silence. I think that would have been just as good in this time, which is about supporting the people and the economy. But, of course, dangerous politics. Realpolitik requires the poor to wait until Kingdom come (but not in Bismarck's Germany strangely where the word comes from, and Trump could carry the same measures).