Warning Signs: The Briefings To Incoming Ministers Reveal A Country Gripped By Multiple Crises.

 Ominous Warnings: The Briefings to Incoming Ministers, released this week, paint a bleak picture of the previous government's consistent under-funding of public services. The veteran political journalist, Richard Harman, puts it like this: “What the Government is confronting is two separate pressures on its spending – one deferred spending from the austerity imposed by the last Government as a response to the GFC in 2008 and a new force in the form of a rapidly growing, ethnically diverse population.”

THE BRIEFINGS TO INCOMING MINISTERS (BIMs) have laid bare the accumulated failures of nine years of National Party Government. In sector after sector senior civil servants paint a grim picture of incompetence and neglect. The clear message which emerges from this sorry record is that New Zealand has been the victim of a nine-year austerity programme that nobody – other than the poor – seems to have noticed. Taken together, the BIMs offer stark proof of just how deep the class divisions in this country now run.

The veteran political journalist, Richard Harman, puts it like this: “What the Government is confronting is two separate pressures on its spending – one deferred spending from the austerity imposed by the last Government as a response to the GFC in 2008 and a new force in the form of a rapidly growing, ethnically diverse population.”

One of the reasons the three parties making up the present government were able to secure the votes necessary to win power was because the National-led Government was no longer able to confine the effects of its austerity programme to the poorest – and brownest – working-class communities. The effects of prolonged underfunding were beginning to be felt in New Zealand’s leafy suburbs as well as in its meanest streets. More and more people shared in the common agreement that something must be done.

An understanding that a great deal more money would have to be raised and spent, should have been at the heart of that agreement – and Labour should have been the party that put it there, imbuing it with the moral and intellectual force required to overcome the Right’s inevitable resistance. This had been the strategy of the Labour Party in the early 1930s, and it succeeded brilliantly. Labour took power in 1935 with a comprehensive and progressive manifesto, backed by the irresistible weight of an informed and impatient public.

Sadly, this was not the case in 2017.

Rather than build a broad consensus around the need for a substantial increase in public expenditure, funded by an equally large increase in taxation, Labour set out to convince voters of the exact opposite. No increase in personal income tax contributions were necessary, they were told, not even from the very wealthy. Corporate taxation, similarly, would not need to rise. The rate of the Goods and Services Tax could remain fixed at 15 percent. There would be no Capital Gains Tax, Land Tax or Inheritance Tax. Labour was at pains to let people know that it intended to cleave faithfully to the broad fiscal and economic settings bequeathed to it by the outgoing National Government. Gusts of rhetorical stardust notwithstanding, the new Finance Minister, Grant Robertson, was determined to run a tight fiscal ship.

In essence, Robertson’s strategy was the same as Steven Joyce’s, his predecessor: keep the middle-classes happy. National had done it with rock-bottom interest-rates, and by allowing the value of their personal assets to soar. Labour hoped to keep them happy with promises of free tertiary education and affordable homes for their kids; decent pay raises for teachers, nurses, hospital doctors and civil servants; and the gradual upgrading of New Zealand’s ailing infrastructure as and when finances permitted. For the working-class and beneficiaries there would be lots of smiles and hugs – and bugger-all else.

But, as Harman puts it on Politik: “There is a subtle but strong message running through the Briefings to Incoming Ministers […] which comes near to putting a price that the Government is going to have to pay to implement its promises.”

Unsurprisingly, given the neoliberal predilections of senior Treasury officials, the price envisaged is a capitulation to the idea of opening-up the renovation of New Zealand’s public services and infrastructure to private investors. Robertson’s principal advisers are steering him, very quietly, in the direction of Public-Private-Partnerships. In this they will be greatly assisted by Robertson’s personal aversion to unorthodox economic ideas, and by his determination to stay within the bounds of his “Budget Responsibility Rules”.

No matter that New Zealand is short 75,000 houses, or that 700,000 Kiwis cannot be sure of the purity of their drinking water. Too bad that there aren’t enough beds for the mentally ill, and that the prisons are full-to-overflowing. Unfortunate that our courts are so under-resourced that justice is being denied by trial delays of up to 18 months. Labour will continue to resist the rising clamour for increased spending via the tax rises essential to the maintenance of a civilised society.

The grim picture painted in the BIMs is the consequence of National’s class-driven programme of austerity. Labour’s seeming helplessness in the face of the multiple crises they reveal, is the direct consequence of its refusal to accept that the wounds of austerity can only be healed by applying the sovereign remedy of substantial increases in state spending – facilitated by a radical expansion of the tax base.

This essay was originally posted on The Daily Blog and Bowalley Road of Saturday, 9 December 2017.

The Superannuation Crisis Nobody's Talking About.

Outdated Assumptions: None of the Right’s nostrums adequately address the devastating impact which the rising trend of young people renting, rather than owning, their dwelling-places is bound to have on the affordability of NZ Superannuation. The key assumption of the present system is that a very large proportion of New Zealanders aged 65-and-over will continue to enjoy freehold possession of their own home. NZ Super simply isn’t configured to provide an income large enough to cover not only the over-65’s basic living expenses, but their accommodation costs as well.

 

THE ACCEPTED WISDOM concerning NZ Superannuation is that it will become unsustainable if nothing is done to make it more affordable. I agree. But what the acceptably wise believe needs to be done, and what actually needs to be done, are two very different things.

 

There is no institution more acceptably wise than the New Zealand Treasury – and its prescription for NZ Super is harsh. Not only does it favour the age of eligibility being pushed out beyond 65, but it also wants that to happen a lot sooner than 2040.

 

And that’s by no means all. To rein-in the long-term cost of the scheme, Treasury also favours changing the way the quantum of NZ Super payments is calculated.

 

As is so often the case with Treasury, however, there is more to these gnomic prognostications than meets the eye.

 

In political-economic terms, Treasury is as dry as the Atacama Desert. As both the fountainhead and champion of neoliberalism in New Zealand, it operates according to a remorseless set of right-wing ideological assumptions. None of these are compatible with the principle of universal entitlement which lies at the heart of the NZ Superannuation scheme, as presently configured.

 

Indeed, Treasury’s recommendations have very little to do with NZ Superannuation, per se. Rather, they are based on what it considers to be an “acceptable” level of long-term government debt. This it has set at 20 percent of GDP.

 

Possible policy pathways to this ideologically arrived-at figure include: quietly enhancing the revenue-gathering effects of fiscal drag; increasing the rate of GST; and significantly reducing government spending on health.

 

It’s easy to see why the Prime Minister chose the option of “reforming” superannuation!

 

Equally easy to see is Bill English’s determination to lead an “Austerity Government”. Reducing long-tern Crown indebtedness to 20 percent of GDP is simply not achievable without savage cuts in public spending.

 

The biggest public spenders, by far: NZ Superannuation, Social Welfare, Health and Education; will be the first to feel English’s austerity lash. If the National-led Government is returned for a fourth term, then New Zealanders should brace themselves for the same sort of harrowing headlines currently besetting the UK and Europe.

 

None of the Right’s nostrums, however, adequately address the devastating impact which the rising trend of young people renting, rather than owning, their dwelling-places is bound to have on the affordability of NZ Superannuation.

 

The key assumption of the present scheme’s defenders is that a very large proportion of New Zealanders aged 65-and-over will continue to enjoy freehold possession of their own home. NZ Super simply isn’t configured to provide an income large enough to cover not only the over-65’s basic living expenses, but their accommodation costs as well.

 

Those Generation Xers who airily opine that “superannuation probably won’t be there for me”, really need to think this through. Are they truly that confident of their ability to save a capital sum large enough to carry them through their old age unaided by the state? And if not, how do they see themselves surviving on a pension currently set at a figure well below their weekly accommodation costs?

 

A Treasury less obsessed with leading us further into the arid wilderness of free market economics would already be grappling with this looming social disaster. A government genuinely concerned with the future welfare of its younger citizens would be demanding answers – right here, right now.

 

Politicians of the Left, in particular, should be looking at the interlinkages between housing unaffordability and the increasingly insupportable burden NZ Super is predicted to become in 30-40 years’ time.

 

This is not a Baby Boomer crisis: it is a crisis which, if a radical revision of New Zealand’s entire system of economic management is not undertaken more-or-less immediately, is going to engulf the Boomers’ children and grandchildren.

 

The re-design of our welfare state must begin now. Not on the basis of meeting the arbitrarily determined targets of ideologically-driven fanatics, but on the basis of meeting the measurable and predictable needs of the entire population. Everything must be thrown into the mix: taxation policy; housing policy; health policy, education policy and, most importantly, how to guarantee a living income to young and old alike.

 

The alternative to systemic change is systemic collapse. With old age becoming, once again, a looming spectre of misery, loneliness and despair.

 

This essay was originally published in The Waikato Times, The Taranaki Daily News, The Timaru Herald, The Otago Daily Times and The Greymouth Star of Friday, 10 March 2017.

The Economic Consequences Of Angela Merkel.

Dragons' Teeth: The German Chancellor, Angela Merkel's, torture of Greece marks the end of the European project. Europe's acquiescence at Versailles in 1919 meant that, within 20 years, Europe was, once again, at war with itself. The EU's refusal to stand in solidarity with the Greeks against German aggression (deploying banks this time, not tanks) has set the continent on the path to ever-increasing conflict and economic sclerosis.

 

Once all the Germans were warlike and mean

But that couldn’t happen again.

We taught them a lesson in 1918

And they’ve hardly bothered us since then!

 

– Tom Lehrer

 

 

YANIS VAROUFAKIS openly compares the Eurozone’s diktat to Greece with the Treaty of Versailles. The former finance minister’s comparison is well made. The Carthaginian peace imposed upon the German people in 1919 was not only intended to devastate their economy it was supposed to crush their spirit.

 

As punishment for launching the most catastrophic military conflict in human history, the Germans were to be kept in a state of economic servitude for decades to come. Nor was the victorious allies claim that Germany was solely responsible for the outbreak of the First World War a matter of mere rhetoric. The British naval blockade of Germany, which was gradually starving the defeated nation to death, would not be lifted until Germany’s “negotiators” (not that these were, in any genuine sense, negotiations) accepted the Treaty’s “War Guilt Clause”.

 

As the brutally punitive intentions of the Versailles diktat gradually emerged, three members of the Imperial British delegation, Harold Nicolson, Jan Smuts and John Maynard Keynes were filled with a terrible sense of foreboding. All three were convinced that nothing good could come from such an inhuman document. Each understood, with a chilling certainty, that the victorious allies were sowing dragons' teeth.

 

John Maynard Keynes: A terrible sense of foreboding.

 

The young economist, Keynes, quit the negotiations and returned to England where he spent the summer months of 1919 writing The Economic Consequences of the Peace. In his book (which instantly became an international best-seller) Keynes argued that the massive reparations demanded of Germany, combined with the Americans’ insistence that all Allied war debts be repaid, could only result in a fundamental derangement of the global economy. Throw in the German people’s Versailles-inspired sense of grievance and disaster was guaranteed. With uncanny accuracy, he predicted that Europe would be at war with itself, again, in just 20 years.

 

Flogging A Dead Horse: The imposition, by the victorious allies of World War I, of impossibly harsh economic conditions on the German people, constituted the first step on the road to World War II.

 

Of course, Greece is not Germany. Her people are not about to pull on jackboots and stomp all over the peace of Europe. But Germany is Germany and it is nothing short of tragic that the nation that went through the experience of Versailles – and all that followed from it – has so easily forgotten how it feels to be ganged-up on by a Europe determined to drive your country to the wall economically and strip it of what little self-respect it has managed to retain.

 

This failure of memory is particularly worrying in the light of what happened in 1953. That was the year in which Germany’s European neighbours, including Greece, wrote off up to 50 percent of her still outstanding Versailles debts. Yes, it was the Cold War. Yes, Germany was divided and it was important to give those Germans living in the West a sense of hope and confidence in the future. Even so, barely 14 years had passed since, as Mick Jagger put it: “the blitzkrieg raged/and the bodies stank”. Europe had considerably more to forgive Germany for in 1953 than it has to forgive Greece for in 2015.

 

Germany's Angela Merkel and Wolfgang Schauble: Executioners of the European dream.

 

The spectacle of Germany’s Chancellor, Angela Merkel, and her flinty-faced Finance Minister, Dr Wolfgang Schauble, squeezing the last drops of blood from the broken stones of Greece has sent a collective shudder through the rest of Europe. It’s a reaction with which Dr Schauble will be well pleased. It has long been the German Finance Minister’s plan to render Germany’s economic hegemony over Europe permanent by turning the continent into a “glorified debtors’ prison”. Greece is to serve as an example of what will befall any Eurozone member foolhardy enough to challenge the one-way flow of wealth to Europe’s biggest banker.

 

Frau Merkel is convinced that by allowing Greece to remain in the Eurozone she has demonstrated her bona fides as a “Good European”. It is, after all, vital that all Europeans understand that debts must be repaid, and that only orthodox economic policies should be pursued. If that requires German technocrats to second-guess the decisions of elected Greek politicians, then so be it. The Greek people need to understand that democracy has its limits; that saying “No” has a price.

 

The economic consequences of Angela Merkel, like the economic consequences of Versailles, will be a Europe at war with itself – within 20 years.

 

This essay was originally published in The Waikato Times, The Taranaki Daily News, The Timaru Herald, The Otago Daily Times and The Greymouth Star of Friday, 17 July 2015.

Yanis Varoufakis: A Hero Worthy Of His Heritage.

Dropping The Pilot: The classical character of Varoufakis’s departure as Greece’s Finance Minister was made even more poignant by the fact that his own personal defeat was announced amidst the echoing tumult of a victory that he, more than anyone, had secured for his people.

 

“WE OF THE LEFT know how to act collectively with no care for the privileges of office.” How long has it been since a left-wing leader talked like that? Yanis Varoufakis may have used a blogpost to announce his resignation to the world, but the sentiments he expressed were straight out of Homer. Like the hero of an ancient Greek legend, he showed that he understood both the duty he was bound to fulfil, and that he embraced it with a glad heart.

 

The classical character of Varoufakis’s departure as Greece’s Finance Minister was made even more poignant by the fact that his own personal defeat was announced amidst the echoing tumult of a victory that he, more than anyone, had secured for his people.

 

Across the whole of Greece, from Thrace in the north to Crete in the south, the Greek people had delivered a resounding “Oxi!” (No!) to the European Union’s demands for never-ending austerity.

 

Beneath a frenzy of flailing flags, in Athens’ Syntagma Square, tens-of-thousands of supporters of the Syriza Party-led coalition government shouted their defiance of the hated “Troika” (the European Commission, the European Central Bank and the International Monetary Fund). But, even as the Oxi voters celebrated, Prime Minister Alexis Tsipras was delivering the “Eurogroup’s” lethal ultimatum to his Finance Minister.

 

In Varoufakis’s own words: “Soon after the announcement of the referendum results, I was made aware of a certain preference by some Eurogroup participants, and assorted ‘partners’, for my… ‘absence’ from its meetings; an idea that the Prime Minister judged to be potentially helpful to him in reaching an agreement. For this reason I am leaving the Ministry of Finance today.”

 

If, as Troy burned, King Agamemnon had asked Odysseus to appease its tutelary deities by falling on his sword, the shock of injustice and ingratitude could hardly have been greater. But Varoufakis did not demur. “I consider it my duty to help Alexis Tsipras exploit, as he sees fit, the capital that the Greek people granted us through yesterday’s referendum.”

 

And yet, even as he abandoned his portfolio for the back-benches, Varoufakis could not resist one final, parting shot at the European hierarchs who, in their petulant fury, had demanded his political head.

 

“And I shall wear the creditors’ loathing with pride.”

 

This undisguised contempt for both the intellect and the character of Greece’s European creditors was, almost certainly, Varoufakis’s hamartia (in Classical Greek literary tradition, the fatal character flaw that causes the hero’s downfall). The son of a wealthy Greek industrialist, Varoufakis was never for a moment overawed by the European Union’s political bureaucrats and bureaucratic politicians. That he was, himself, an accomplished academic economist and author merely heightened his conviction that he had nothing to fear, and even less to learn, from the Eurogroup’s “participants and assorted partners”.

 

That Varoufakis’s professional analysis of Greece’s economic position was correct (as confirmed by at least two Nobel laureates – Stiglitz and Krugman – and, more recently, by the IMF itself) only made him more insufferable to the likes of Germany’s 72-year-old Finance Minister, Wolfgang Schauble. The hard-working German ant did not appreciate being lectured at by some upstart Greek grasshopper with a PhD – and no neckties.

 

Varoufakis’s sartorial insouciance was, of course, as carefully calculated as his economic analyses. His leather jackets and brightly coloured shirts (all-too-often unaccompanied by the required necktie) signalled his determination to carry just a little Mediterranean sunshine and machismo into the grey, staid and deeply conventional world of European finance. That these ageing Teutons in their dark suits and sensible ties felt upstaged by Varoufakis’s big fat Greek virility was as obvious as it was disruptive. A rock star at a Rotary meeting could not have been more out of place.

 

But disruption and non-conformity were essential ingredients of the Varoufakis shtick. What better way to demonstrate his radical new approach to doing business with the “suits” than by refusing to turn up in one? In a world increasingly informed by images rather than words, Varoufakis was signalling that Neoliberalism is not the only game in town: that economic alternatives do exist.

 

His people got the message. And even if he is not there to deliver it in person, Varoufakis’s vision of a better world will continue to dazzle the eyes of the “gods” who demanded this Greek hero’s sacrifice.

 

This essay was originally published in The Waikato Times, The Taranaki Daily News, The Timaru Herald, The Otago Daily Times and The Greymouth Star of Friday, 10 July 2015.

Where, Oh Where, Are The Left's Heroes?

The Face Of The Resistance: Yanis Varoufakis, Greece's Finance Minister, is leading the fight against the European Commission's brutal austerity programme. Policies which, as applied to the Greek people, Varoufakis  condemned, memorably, as "financial waterboarding".

 

“WHERE, OH WHERE is our James Connolly?” I’ve lost count of the times I stepped forward to ask that question. Every 16 June, for the best part of a decade, would be my guess. The song was a regular feature of the annual “Bloomsday” celebration organised by Auckland playwright, Dean Parker. Achingly sad, the Lament for James Connolly offered a brief respite from the raunch and laughter more usually associated with these perennial tributes to James Joyce’s literary hero, Leopold Bloom.

 

Unlike the central character of Joyce’s celebrated novel, Ulysses, James Connolly was a very real Irish hero. A staunch nationalist, firebrand socialist, and peerless trade union organiser, Connolly was the darling of Dublin’s hard-pressed working-class. Seriously wounded in the Easter Rising of 1916, he was sentenced to death by a British court-martial. Because he was too injured to stand and face the firing squad, the British authorities, undeterred, tied Connolly to a chair and shot him sitting-down.

 

It is difficult to conceive of an act more calculated to inspire a nation’s poets and balladeers to passionate outrage. Neither in Ireland, nor in any station of the great Irish diaspora, has the name of James Connolly, or the manner of his death, been forgotten. The Lament For James Connolly is always heard in sobering silence.

 

Yanis Varoufakis is no James Connolly. Far from being the slum-born son of impoverished immigrants, Greece’s new Finance Minister was raised in one of Greece’s wealthiest families. Indeed, with his expensive private education, and his industrialist father’s money, Varoufakis could very easily have ended up as just one more pampered member of the global 1 Percent. Looking down at their new-born son 53 years ago, his parents almost certainly did not see him growing into the firebrand Marxist leader of Greece’s fight against “financial waterboarding”.

 

What makes Varoufakis even more remarkable is his former status as an academic economist. It’s been a very long time since the economics profession was renowned for producing either firebrands or Marxists. On the contrary, most contemporary economists seem content to function as the high-priests of neoliberalism, reconciling the ways of the almighty market to its hapless human victims. That one of their number has not only turned rogue, but armed his critical vision with political power is as surprising as it is encouraging.

 

And no one can accuse Mr Varoufakis of setting about his mission in a dull or conventional fashion. His flamboyant disdain for sartorial convention (he visited the British Chancellor of the Exchequer wearing a tie-less blue shirt, knee-length riding coat and biker boots) is only matched by his disdain for the “Troika’s” (European Commission, European Central Bank and the International Monetary Fund) demand that Greece’s newly-elected left-wing government adhere to its predecessors’ self-destructive austerity programme.

 

After detailing the exploits of the close-cropped and darkly handsome Varoufakis for the ZDF network, German television news-anchor, Maria Slomka, commented: “he is someone you could imagine starring in a film like Die Hard 6”.

 

That Varoufakis possesses a Bruce Willis-like potential for blowing things up is something of which Europe’s finance ministers are only too aware. “Grexit” – or a Greek exit from the Eurozone – is one deeply troubling possibility. Another, even worse, is “default”. But, as Varoufakis commented on his blog back in May 2010: “Simple logic dictates that if you cannot even conceive the possibility of leaving a negotiation, then it is preferable never to enter one.” In other words, if Europe is unwilling to take what Greece is offering, then Greece will exercise its right to leave.

 

Following Finance Minister Varoufakis’s European tour with a mixture of trepidation and exhilaration, the opponents of neoliberalism in this country are asking themselves why New Zealand’s opposition finance spokespeople are so unwilling to embrace the erstwhile Greek professor’s uncompromising economic radicalism.

 

One explanation may be found in Varoufakis’s social origins. Like Franklin D. Roosevelt, whose 1930s “New Deal” policies broke sharply with economic convention, Varoufakis is a member of his country’s upper class. Being one of them, he harbours no deep psychological need to win their acceptance. Indeed, it is very easy to imagine Varoufakis echoing FDR’s famous boast: “They are unanimous in their hatred for me, and I welcome their hatred!”

 

Such morale-boosting confidence is also accessible through conviction: from the certainty that one’s programme is not only the right thing to do, but that it will also work. It hardly seems fair that Varoufakis has both – in spades!

 

Part of the reason for the New Zealand Left being in such a deep funk at present is the absence of any progressive leader displaying even half Varoufakis’s confidence and conviction. Thirty years of political compromises and the ruthless application of a Labour/Green version of the “Tall Poppy Syndrome” has left this country's hero-deprived Left lamenting: “Where, oh where is OUR Yanis Varoufakis?”

 

A version of this essay was originally published in The Press of Tuesday, 17 February 2015.

Can Democracy Save The Greeks?

Ode To Joy! Syriza supporters cheer as their party's victory is announced, But will the people of Greece be able to successfully reoccupy the democratic institutions emptied out by the twin evils of neoliberalism and austerity?

 

GREECE, the birthplace of democracy, is now the test of whether democratic governments still possess the power to effect meaningful change. If it passes the test, then the election of the left-wing Syriza Party, on 26 January 2015, will mark the beginning of the end of the 30-year neoliberal experiment. But, if it fails, then the growing perception that democracy has become an empty shell, incapable of delivering anything more than more of the same, will harden – not only in Greece, but across the whole world.

 

There are those who suggest that, when it comes to democracy, the neoliberal doctrines of the political class have acted like a neutron bomb. For those unfamiliar with the term, the neutron bomb was one of the Cold War’s most abhorrent creations. It’s great “selling point” was that its detonation, while killing human-beings by the million, would leave key infrastructure intact. Ready and waiting, following a suitable interval, for occupation and use by the “victors”.

 

According to the neutron bomb metaphor, neoliberalism has eliminated the vital human elements of our democratic system. The mass participation in political life for which New Zealand was justly famous (roughly a tenth of our adult population once belonged to a political party and the numbers voting frequently exceeded 90 percent of registered electors) has dwindled dramatically, reducing our democratic institutions to empty, echoing shells. The awful uniformity, both in terms of the political choices on offer, and the politicians offering them, is thus explained.

 

The Syriza Party’s stunning victory in the Greek general election is significant precisely because it has allowed the Greek people to re-occupy their country’s democratic infrastructure. The resulting surge of hope that has swept through the Greek population – evident in the highly emotional responses of ordinary Greek citizens interviewed on the streets of Athens by the world’s bemused media – is at once the new Prime Minister’s, Alexis Tsipras’, greatest asset and the source of his greatest vulnerability.

 

The neoliberal financiers of the European Union are adamant that the Greek people will not be released from the debt obligations imposed upon them by the profligate borrowings of corrupt politicians more than a decade ago. The devastating austerity programme overseen by the so-called “Troika” (the European Central Bank, the European Commission and the International Monetary Fund) which has seen unemployment soar to 1 in 4 of the workforce, and the incomes of those lucky enough to still have a job slashed by as much as 40 percent, must, according to Greece’s unyielding European creditors, remain in force.

 

The neoliberal elites’ assumption has always been that by forcing savage reductions in the size and scope of Greece’s public sector, the confidence of her private sector would soar, investment would surge, and before you could say “Long live the Eurozone!”, the Greek economy would have grown its way back to prosperity.

 

In the real world, however, events have unfolded very differently. Health cuts left the chronically ill without medicine. Wage cuts led to mortgage defaults and homeless families. Confidence collapsed. Investment dried up. Emigration soared. And when the desperate victims of austerity protested, their political representatives, pledged to defend the almighty Euro, called out the Riot Police.

 

When the Greeks voted-out the politicians responsible, they discovered to their horror that the replacements were just as committed to implementing the Troika’s austerity programme as their predecessors. When tested, political parties nominally of the Left turned out to be practically indistinguishable from their supposed ideological rivals on the Right. In the end, politicians from the traditional parties felt obliged to join forces against what they saw as the unrealistic and unreasonable demands of the electors. Isolated and vilified as traitors, the Greek political class would have struggled to detect the irony in Berthold Brecht’s famous suggestion that it might be easier for the Government “To dissolve the people and elect another.”

 

Greece’s electors have now delivered their emphatic reply to the brutal economic absolutism of successive neoliberal governments. The halls of the democratic Greek Republic, for long the exclusive preserve of neoliberal technocrats and their local political collaborators, are now ringing with the excited voices of the Greek People.

 

And the peoples of the European Union, themselves no strangers to the brutalities of austerity, are listening. If Syriza is to succeed, it is to this audience that it must appeal.

 

This essay was originally published in The Waikato Times, The Taranaki Daily News, The Timaru Herald, The Otago Daily Times and The Greymouth Star of Friday, 30 January 2015.

Rupert Murdoch's Revealling Tweet

Mission Accomplished: The Australian electorate may have believed they were getting rid of a dysfunctional Labor government, but media mogul Rupert Murdoch knows better. What the Australian election was really about was purging the welfare rolls and getting rid of thousands of public servants.

 

WITHIN MINUTES of Tony Abbott’s crushing election victory being confirmed, the Australian-born media mogul, Rupert Murdoch, tweeted. “Aust election public sick of public sector workers and phony welfare scroungers sucking life out of economy.”

 

Is that really what the Australian election was all about? Did it really have nothing to do with the Australian people’s impatience with a Labor Government seemingly more interested in publicly disembowelling itself than governing wisely? Had Australian voters really forgiven Julia Gillard for reneging on her promise not to introduce a carbon tax? Did Australia’s perennial xenophobia really play no part in the outcome? Was Tony Abbott’s succinct injunction to “stop the boats” really without effect?

 

Former Labor prime minister, Bob Hawke, early on confided to his Sky News audience that: “I really believe this was an election that was lost by the government rather than one that was won by Tony Abbott.” As the grim tally of lost seats mounted, Labor politicians, both successful and unsuccessful, told reporters a very similar story. On the hustings, the message from constituents had been remarkably consistent: if voting for the Liberals was the only way to bring Labor to its senses, then, however reluctantly, that is what they were prepared to do.

 

What, then, are we to make of Mr Murdoch’s tweet? Why did the billionaire owner of nearly two-thirds of the Australian news media characterise Australian public servants and beneficiaries as metaphorical vampires sucking the life out of the Australian economy?

 

The idea that someone as wealthy and powerful as Rupert Murdoch might be driven by the same petty prejudices as the whinging cobber propping up the bar at the nearest RSL is unnerving. Much more reassuring is the notion that someone with Mr Murdoch’s resources is morally obliged to take a more detached and informed position on the challenges facing Australia.

 

Perhaps he knew something we didn’t.

 

Which is, of course, highly likely. The Murdoch Press, long the implacable foe of both Kevin Rudd’s and Julia Gillard’s Labor governments, undoubtedly expended considerable sums on opinion polling and focus groups. Under the right moderator, these latter can deliver information inaccessible to all but the old-fashioned party canvasser: the sort of unvarnished, uninhibited and spontaneously delivered expression of opinion that all-too-often eludes the professional opinion pollster.

 

Deep-seated antipathy to the poor and public servants almost certainly emerged from the research undertaken on Mr Murdoch’s behalf. And there is a good chance that these powerfully negative attitudes were present at both the top and the bottom of Australian society.

 

The working poor, and beneficiaries struggling to escape their situation, have no reason to love either the people they perceive to be “bludging” off their meagre incomes, or the public servants who exercise so much power over their own and their families’ daily lives. For these Australians the emotional connection between personal experience and political response is direct and visceral. Associating it with the name of a political party is a highly effective political tactic.

 

In the case of the wealthy, the hostility towards “public sector workers and phony welfare scroungers” arises out of a more complex series of calculations.

 

The “phoney welfare scroungers” are proxies for the much larger number of economically stressed Australians who might, with the right political inspiration, be persuaded to back an aggressive redistribution of wealth across Australian society. Forestalling such a move requires the wealthiest Australians to convince a majority of their fellow citizens that the poor and disadvantaged are responsible for their own misfortunes. They are lazy and live only for the moment and cannot, therefore, lay legitimate claim to the resources of their more diligent and self-disciplined neighbours.

 

That these “scroungers” are, nevertheless, allowed to gobble up so much of the Australian federal budget, the wealthy argue, is attributable to a “culture of entitlement” fostered by a parasitic class of intellectuals and activists located, overwhelmingly, in the public sector. What’s more, this “new class” of middle-class professionals and managers has become a law unto itself, funded by and lording it over the “productive sector” of Australian society. (A category which embraces not only the captains of Australian industry, but also the “battlers” of the hard-pressed Australian working-class.)

 

Following in the footsteps of the hard-line Republican Governors of American states like Wisconsin and Michigan, and David Cameron’s coalition government in the UK, Mr Murdoch’s tweet signals his expectation that Mr Abbott’s newly-elected government will safeguard the interests of people like himself by attacking the entitlement culture from both ends

 

First, by dramatically down-sizing the public sector. Second, by forcing beneficiaries off the welfare rolls.

 

The massive fiscal savings resulting from such a policy mean that the redistribution of wealth that would otherwise be required can be avoided.

 

In that triumphant tweet, Mr Murdoch let slip his real reasons for backing Mr Abbott.

 

This essay was originally published in The Press of Tuesday, 10 September 2013.

Intensifying The Vicious Circle

More Of The Same: In spite of the ongoing shortfall in the National Government's anticipated Core Crown tax revenues, Finance Minister, Bill English, has reaffirmed his intention to keep tightening the screws on New Zealand's economy.

BILL ENGLISH claims to have cut core Crown expenditure by $1.24 billion. Just as well, given a $1.4 billion shortfall in Government revenue. The latest monthly Financial Statements of the Government paint a dismal picture of relentless economic contraction with Core Crown tax revenue a staggering $946 million below the amount forecast in last year’s Pre-Election Economic and Fiscal Update.

In spite of the Treasury’s consistent failure to provide the Government with even vaguely accurate fiscal forecasts, Mr English’s faith in its policies of austerity remains undimmed. The data’s brutal exposure of the Government's economic inadequacies will, however, powerfully reinforce the criticisms of Mr English’s critics.

The Treasury’s figures certainly vindicate the Opposition parties’ argument that the National Government’s cost-cutting fetish is hampering – not helping – the New Zealand economy’s slow climb out of recession. The falling tax take, exacerbated by the effects of National’s earlier tax-cuts, continues to run well ahead of the austerity drive’s much-vaunted savings.

The situation is likely to deteriorate still further as “slightly weaker labour market conditions” indicate a further rise in the number of New Zealanders without work. With more people unemployed, economic activity is predicted by the Treasury to slow even faster, leading to yet another shortfall in Government revenue.

New Zealand is thus caught in a vicious circle, with falling revenues necessitating further cuts in spending, triggering more economic contraction, more unemployment, reduced consumer spending, lower profits and falling real wages. The Government’s tax-take will fall correspondingly, depressing its revenues still further.

Mr English talks about “limiting our debt to foreign lenders”, but if he wishes to avoid plunging the country into a new and even deeper recession, it is difficult to see how extensive borrowing from overseas sources can be avoided. The value of the New Zealand Dollar will rise on the back of the higher interest rates needed to attract foreign lenders. Kiwi exporters will, as always, pay the price for the National Government’s refusal to raise the taxes of New Zealand’s wealthiest citizens.

Rather than reduce Government expenditure, Mr English should reverse the last two rounds of tax cuts and engage in a quantitative easing of the money supply sufficient to fund a massive state house-building programme. In tandem with the Christchurch re-build, and backed by an all-out effort in trades-training for young, unemployed school-leavers, such a building programme would dramatically reduce the number of people out of work. A commitment to source its building needs locally would further stimulate economic activity, lifting tax receipts and lowering the Government’s borrowing requirement. Interest rates and the NZ Dollar would fall – boosting export receipts.

Mr English will not, of course, adopt such a stimulatory strategy. In response to the latest Treasury release, the Finance Minister simply stated that the official data “reinforces the need for the Government to be disciplined and stick to its plan to get back to surplus in 2014/15, so we can start repaying debt.”

At least for the foreseeable future, New Zealand’s economic performance is set to remain well below the level commensurate with rising employment and fiscal surplusses.

This posting is exclusive to the Bowalley Road blogsite.